Miya

Urban Water Efficiency

Performance-Based

Non-Revenue-Water (NRW) Contracts

in South Africa

PUBLIC-PRIVATE PARTNERSHIPS CONFERENCE

JUNE 5-8, 2012 | DAKAR, SENEGAL

Ariel Moshkovitz, General Manager, Miya EMEA

Presentation Outline

Background on Non-Revenue-Water

PPP Performance-Based Non-Revenue-Water Contracts

– Examples

– Benefits

About Miya

Summary

Section Title Background on Non-Revenue-Water Projects

Section Title

More than 30% of the world’s drinking water is

lost from urban water systems before it reaches consumers

Reducing water losses is the preferred solution to increase the water network capacity

It will help mobilizing private financing for investment

Non Revenue Water (NRW) - Definition

Non Revenue Water (NRW) is defined as the difference

between the amount of water put into the distribution

system and the amount which is billed to consumers.

It consists of:

– Physical (Real) Losses: leaks and system overflows caused by poor infrastructure and maintenance

– Commercial (Apparent) Losses: theft, customer meter under-registration and data handling errors

The economic value of NRW – Example

City with 1,000,000 residents – Water Production: 400 MLD (Mega Liters per Day)

– Physical Losses: 40% (= 160 MLD)

– Commercial Losses: 10% (= 40 MLD)

– Price of Water: 1 $ per m3

– Cost of Water: 0.5 $ per m3

There can be two cases – Case A – The City has enough water for its residents, even

though it loses a lot of water

– Case B – The City does not have enough water

Case A - The city has enough water

The economic value of the NRW is 43.8 M $ per year – Physical Losses: 160 MLD * 0.5 $ / 1000 * 365 = 29.2 M $

– Commercial Losses: 40 MLD * 1 $ / 1000 * 365 = 14.6 M $

If we reduce the losses by 50% we can save 21.9 M $ per year

There are substantial savings will also in energy and CO2 emissions

Enables the utility to provide lower tariffs to low income areas

Case B - The city does not have enough water

In this case – all savings can be re-sold to residents

The economic value of the NRW is 73 M $ per year – Physical Losses: 160 MLD * 1 $ / 1000 * 365 = 58.4 M $ – Commercial Losses: 40 MLD * 1 $ / 1000 * 365 = 14.6 M $

If we reduce the losses by 50%:

– We can save 36.5 M $ per year – We can resell ~30,000 ML per year

In many cities in Africa there is not enough water

Water savings -> Additional Revenues -> additional

investments

Conclusion on NRW

Reducing NRW is the most effective way to

improve the water network and increase

capacity

– Operationally

– Financially

– Management wise

It is the most elegant way to drive a positive

change, a reform

Section Title

Performance-Based Non-Revenue-Water Contracts

Examples

Section Title

Sebokeng/Evaton, South Africa

Project Background

Project Dates: 2005 - 2010

Objectives: – Increase capacity – Improve level of services – Reduce water leakage and levels of wastage in the water distribution system

Design and commission one of the largest and most advanced pressure

management installations in the world

Challenges: – ±500 000 residents with a dire need of leakage reduction due to major water

losses in the municipal system. – Population: 420 000 – NRW: 80%

100% Performance-Based

Section Title

Hourly Savings = 1000 m3/hr

A large swimming

pool every hour

Section Title

Savings after 5 years – $20 million

Before…

After…

Community Awareness and Involvement

Community Education

Schools Education

Job Creation

Results

More than 50 million m3 in water purchases which translates

to a saving of more than $20 million.

The project provides annual energy savings in excess of 14,000 MWh, equivalent to reduced CO2 emissions of

12,000 Tons per annum.

A comparison made by the customer showed that the

alternative of construction a water treatment facility to produce the same amount of water savings, would cost 150 times the investment in this NRW project.

New Emfuleni Project, South Africa

Started on March 2012

Financed by SASOL and GIZ

Combination of Fixed & Performance Based

All savings are calculated – and are returned to the project – for further improvement of the network

Thus, a small investment can substantially improve the network

Manila, Philippines

Background

Performance Based Contract with Maynilad structure:

– Fixed fee – Performance-based fee:

received if annual targets are met

Specific annual NRW targets set

Integrated Meter Management

Leak Detection

Training

DMA Instrumentation

NRW Management

Software

Comprehensive training in partnership with Miya

4 training Levels

Examinations and certification

NRW expertise developed in Maynilad will be certified and marketed worldwide

Training and Certification

The situation in 2007 and now

2007:

– 66% NRW 1,530 MLD

– 54% of the system had intermittent supply

– 47% of the system had < 5m average pressure

– 700,000 customers

2011:

– 42.3% NRW 885 MLD

– < 30% intermittent supply

– < 15% < 5m pressure

– 1,005,350 customers

Maynilad has tripled its net income since 2008

1.8 million additional people connected to the network

420 local employees were trained and employed in the project

The situation in 2007 and now

New Providence, Bahamas

Project Overview

Customer – Bahamas Water and Sewerage Corporation

10 years project

Performance Based project

– 30% - Performance fees linked to targets

– 70% - Fixed fees covered by IDB funding of the first phase (Quality Based

competitive bidding process)

The project is designed to repay itself within its lifespan,

with a double digit project IRR for WSC

Over 10 Billion gallons of water will be saved

83 Million USD; 51M by Inter-American Development

Bank

The uniqueness of the project

Output Based Contract

Output-driven contract

– The targets are in NRW level

High Performance Based (PB) component directly related to the actual achievement of the targets

IDB loan is not financing the entire project, but rather assisting WSC in the first years while the project cash flow is still negative

The turn-key holistic approach and the high PB component ensure full accountability of Miya to strive for best results

As a contribution to the community, Miya will run a water efficiency education program in local schools, including implementation of water conservation measures

Section Title

Performance-Based Non-Revenue-Water Contracts

Benefits

Performance Based Contract Benefits

Total Alignment of Interests

– The water utility wants to improve the water network

– The contractor is being compensated according to how it meets or exceeds the customer’s objectives

Risk Sharing with the private contractor

Lower Investment Required

– The contractor is paid out of the increased revenues

Better Performance by the Contractor Higher Project Revenues and Profit

Environmental Benefits: – Less chemicals in the

water system

– Save drinking water

– Save energy

Health Benefits: – Lower contamination

resulting from bursts and antiquated pipes

– Better water quality, less diseases (typhoid and cholera)

There are many benefits to a comprehensive NRW project

Cost & Revenue Benefits: – Increase revenues

– Reduce costs

– Extend the lifespan of existing infrastructure

– Defer investments in alternative solutions

Community Benefits: – Water supply

– Service level

– Creation of jobs - NRW teams, construction teams, etc.

About Miya

About Miya

Miya’s solutions are tailored to the water utility’s budget, needs and priorities

Established at 2007 by the Arison Investments, a leading business and philanthropic group, that operates globally

Miya offers utilities Comprehensive, economic and sustainable solutions through turnkey projects, which increase water supply, revenues and profits.

A global contractor of comprehensive solutions for urban water efficiency and water loss management

Veritec Consulting, North America. Designed and implemented some of the largest water loss reduction programs in Canada

BBL Engenharia is a leading engineering company, specializes in NRW management projects in the Brazilian market. BBL Engenharia has several contracts with SABESP

Crowder Consulting, consultant engineering & software development company specializing in the fields of water supply

WRP, South Africa is a specialist engineering consultancy of international standing in the fields of water resource planning and management, water conservation and environmental management

Regional Headquarter, Israel

Regional Headquarter, Luxemburg

Miya Manila, Philippines

Miya Worldwide

Miya Bahamas

Miya Puerto Rico

Summary

Public-Private-Partnerships are a very effective tool for water infrastructure projects

Reducing water losses and NRW is the first and most efficient program for improving the water service and building capacity and improve water networks

Turnkey NRW projects are the optimal instrument for engaging IFIs

Performance Based NRW projects ensure the contractor and the customer are on the same side

Thank You

www.miya-water.com