Malawi Water and Sanitation Project - Contributing …institute.eib.org/wp-content/uploads/2013/12/...Thomas van Gilst European Investment Bank 1 Malawi Water and Sanitation Project

1 Thomas van Gilst European Investment Bank

Malawi Water and Sanitation Project -

Contributing to the Millennium

Development Goals for Water and

Sanitation

Malawi Peri-Urban Water and Sanitation Project -

Working with NGO’s to increase W&S coverage

24/03/2011 2 European Union Regional Water Seminar, Amman 21-24 March

Within the Union: • Cohesion and convergence

• Small and medium-sized enterprises (SMEs)

• Environmental sustainability

• Knowledge Economy

• Trans-European Networks (TENs)

• Sustainable, competitive and secure energy

Outside the Union: • Private sector development

• Infrastructure development

• Security of energy supply

• Environmental sustainability

• Support for EU presence in Asia & Latin America via

Foreign Direct Investment

EIB: Priority Objectives

EIB Drivers in the Water Sector

EIB water sector lending policy closely linked to EU priorities and

policies including support for:

Compliance with Urban Waste Water Treatment Directive; Water

Treatment Directive, Water Framework Directive, Sewage Sludge

Directive, Floods Directive to name a few,

Implementation of EU Water Blueprint through Water quantity management, economic instruments for efficiency (including in agriculture)

Improved river basin management plans

Green infrastructure (eg wetlands)

Resource Efficiency Initiative under Horizon 2020 Efficient water use and reduced system losses - reducing leakages and managing demand can save both water and energy,

thus also improving the promoters’ financial position

Growth and employment Investing in water services induces job creation in an industry where Europe is leader – through the impact on the upstream

value chain (equipment suppliers & manufacturers)

Declining water service quality and water resources mis-management may negatively affect growth potential

Outside of Europe: Millennium Development Goals for water and

sanitation, Depollution of the Mediterranean (MeSHIP), climate action –

particularly adaptation to climate change (including improved water

resources management and natural resource efficiency)

The Millennium Development Goals

The Millennium Development Goals (MDGs) are

eight international development goals that were

established following the Millennium Summit of

the United Nations in 2000, following the adoption

of the UN Millennium Declaration. All 189 United

Nations member states and at least 23

international organizations committed to help

achieve these goals by the year 2015.

Target 7.C:

Halve, by 2015, the proportion of the population

without sustainable access to safe drinking water

and basic sanitation



670k inhabitants

72% WS coverage

715k inhabitants

70% WS coverage


A different project not in

Malawi…

07/12/2013 7 European Investment Bank

Peri-urban WatSan, Malawi

Main problems:

Highly inefficient water supply system (Leakage >40%, Blantyre 1000 m above source, water 2x/week);

Large poor population un-served;

Low affordability (>5% of household income)


Main Project Objectives

Safe drinking water to 723,000 additional people (half by

735 kiosks) and

Basic sanitation to 468,000 people in low income areas of

the cities of Blantyre and Lilongwe (all by VIP latrines)

NGO/CBO’s

24-hour water supply for 408,000 people in Blantyre who

currently receive it intermittently

Building competent and sustainable Water Utilities

Private Sector Service Contractor with Performance

Based Contract

Project Approach

Concept of the project based on 2 components: works for efficiency gains in the main/existing infrastructure/operation;

extension of network in poor areas => transfer the drinking water saved to the un-served population

Conditions to succeed: partnership with: private company under a PPP to support the public utility on efficiency (O&M + rehabilitat. works);

incentive-based service contract to address the O&M inefficiencies and investment needs;

NGOs to support peri-urban works+Op)

small local concessions for the provision of services through kiosks and associated public sanitation facilities.


Project Cost

EU grant 14.9 m

EIB loan 15.8 m

Water Boards 1.1 m

Total: 31.8 m

Eligible EUWF: 30.8 m

Of which for LIA’s: 7.3 m



LWB

EIB

Ministry of Finance

BWB

EU ACP WF

Contribution agreement

WaterAid

Loan/ grant agreement

On-lending agreements

Partnership agreement

Water For People

Private Service Contractor

Performance Contracts

Implementation agreement

07/12/2013 12 European Investment Bank

Significant EIB involvement in preparation of project in close coordination with the two water utilities;

Active involvement of NGOs in project structure/design (key partner: WaterAid);

Creation of a revolving fund to make connections affordable;

Stakeholders project

Lilongwe Water Board

Blantyre Water Board

WaterAid

Privatisation Commission

NWDP II

World Bank

Two PIU’s

EIB

NGOs, CBAs

Water Users

Low Income Area Users

Ministry of Finance

Peri-urban WatSan, Malawi


Most challenging task is the water and sanitation

delivery in the LIA’s:

Safe drinking water to additional people: 735 Kiosks

Basic sanitation to additional people 70,000 VIP latrines

Key LIA features Unplanned

Limited land tenure

Affordability

Poor payment records

Vandalism

Sanitation practices

Latrine investment hurdle





Replicating successful models: WaterAid

WaterAid (in partnership with LWB) demonstrated a succesful local kiosk management model:

“The Water User Association” built on a strong social/community fabric

WUA’s: manage up to 100 kiosks

Single customer interface for Water Board

WUA’s: charge slightly increased fees to:

Pay kiosk operators & WUA administrators

Recover prior debts

Kiosk design with “superstructure” against vandals/theft

Success has sensitised WaterBoards who now have special LIA unit to deal with WUA’s.

Sanitation marketing vs slab subsidy

Training small entrepreneurs Slab construction

Pit latrine emptying






Scaling up NGO’s service enabler role

through project

To identify kiosk sites in GIS system for PSP to construct 700 kiosks

To set up associated WUA’s

Roll out 70,000 latrines sanitation awareness building and marketing

training slab builders

Setting up private pit latrine emptying services:

Gulper; Nibbler

Did we have the NGO’s ?

Lilongwe: WaterAid – Yes

Blantyre: - No


Procuring an NGO for Blantyre ?

Only identified 3 potential NGO’s at outset;

NGO’s need local grass-root presence They operate

through CBO’s;

Do they bid competitively (WaterAid not);

Open to consultants?

Level playing field ?




Restricted tender carried out

Open tender for Expression of Interest (EOI)

9 expressions of interest from int’l & local: NGO’s

Consultants

JV’s

4 pre-qualified bidders

4 bids received

1 winner: W4P, on price.

Signature in August 2009

Big help: Transaction Advisory Services (Fichtner Consulting) to prepare tender documents, raise market awareness, manage process;


Some early conclusions

NGO/CBO’s can play a very important role in reaching the MDG’s;

Especially crucial on the sanitation side

Including NGO’s in the project structure simply adds mode parties and thus complexity

If sanitation is out of Water Supplier’s remit, even more parties (city council etc);

We walked a thin line to procure competitively, but market is thin: Would other bidders have done as well?

Winning bidder confirmed sanitation marketing approach;

No complaints received from bidders other than tight timing


Documents

Malawi Water and Sanitation Project - Contributing …institute.eib.org/wp-content/uploads/2013/12/...Thomas van Gilst European Investment Bank 1 Malawi Water and Sanitation Project