Transcript Folie 1 - WaterWiki.net

WATER AND SANITATION SECTOR (WSS)
IN ESTERN EUROPE AND CAUCASUS
Strategic Approach of KfW Development Bank
Dr. K. Gevorgyan
KfW Representative in Armenia
6th meeting of the Working Group on the
EECCA component of the EUWI
15th Nov. 2005, Yerevan
Strategic approach of KfW
Development Bank in financing WSS
1. Decentralization,
2. Programme- and competition- oriented approach,
3. Step by step programme concept,
4. Support to Project Executing Agencies (PEAs) by accompanying
measures,
5. Sector advisory services,
6. Supplemental loans from KfW’s own funds,
7. Commercialisation of utility services,
8. Improving sector performance by co-financing and implementation
of mandates.
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1. Decentralization
Supporting:
 Local/regional water utilities, rather than a centralized large water
company;
 Independence of local water utilities by creation of own capacities,
both – financial and in know-how;
 Transfer of water utilities’ ownership to municipalities, because of
their better knowledge in local needs and problems, which enables
the achievement of a tailor-made approach, acceptable to the
population (this proves working better in specific regions).
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2. Programme- and competitionoriented approach
 Design of a programme framework instead of individual investment
projects as a flexible approach to incorporate small investments
and to achieve a country-wide impact;
 Definition of prerequisites/eligibility criteria for programme
participation: such as improvement of financial and institutional
situation within municipalities/PEAs, thus creation and
enhancement of competition between municipalities/PEAs;
 Project preparation can be assisted by accompanying measures
for participating municipalities/PEAs, financed out of grant funds.
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3. Step by step programme concept
 Division of investments into two or more implementation phases:
first phase comprising of the most urgent investment measures and
following phases containing more comprehensive and systematic
rehabilitation and extension of the system;
 Implementation of second and following phases only if defined
criteria and/or milestones are achieved by the PEAs (coverage of
at least operation and maintenance costs at the end of first phase);
 Each phase is designed as a sustainable and reasonable project,
because the following phases might be avoided due to nonfulfillment of defined criteria.
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4. Support to PEAs by
accompanying measures
 Accompanying measures (financed through grant funds) shall
enable the PEAs to conduct financially sound operation of
rehabilitated and extended facilities. Such measure can include:
 improvement of PEA’s staff capacities through financial,
organizational and technical training (billing/accounting, job
descriptions, customers data-base, leak detection, etc.);
 PR campaign and public awareness raising activities.
 In case PEA’s capacities are not sufficient, management or service
contracts with international water companies can be financed.
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5. Sector advisory services
 KfW’s strategy incorporates sector dialog and sector advisory
services;
 Sector advisory services on macro-level shall ensure that:
 there is a clear vision of further development of the sector in
partner country,
 sector framework conditions are improved based on
international standards and best practices,
 If appropriate, additional activities can be carried out on
micro/regional level.
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6. Supplemental loans from KfW’s
own funds
 Given the limited availability of German federal budget funds,
KfW offers additional funds in form of Development or Promotional
Loans (various forms of mixing budgetary and capital market
funds);
 Main features of these loans are:
 competitive conditions;
 applicability of general financial co-operation principles;
 possibility for inclusion of additional grants for project
preparation and training.
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7. Commercialisation of utility
services
 Water is considered a commercial good, thus KfW seeks for ways
to include principles of commercialisation if appropriate;
 Private sector participation can have a form of management,
service, lease contracts, BOT and concession contract;
 Private sector participation provides the possibility to:
 overcome inefficiencies of public sector operation (in most
cases - no direct incentives to commercialisation),
 enhance operational efficiency by fostering technical and
managerial experience,
 mobilize private funds (in case of concessions).
 Prerequisites for success are - sufficient monitoring capacities in
partner country, thorough preparation of contractual arrangements
and transparent/competitive awarding procedure.
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8. Improving sector performance by
co-financing and implementation
of mandates
 Instead of selective intervention, KfW aims at improving sector
performance by co-financing and implementation of mandates;
 Such joint financing:
 increases investment volumes, allowing additional synergies;
 provides for tailor-made financing conditions by combining
available grant and market funds;
 reduces co-ordination efforts of PEAs;
 allows for aligned performance criteria within the sector.
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Thank you for attention!
Contacts of KfW Armenia Office:
Tel.: + 374 10 56 32 88
Fax: + 374 10 54 27 08
E-address: [email protected]