LICENCE ANALYSIS CHECKLIST AND EVALUATION FORM WATER ACT 2016

Name and Address of Water Service Provider:

Homa Bay Water and Sanitation Company Limited

P.O. BOX 4-40300

HOMA BAY

NOWSP APPLICATION CONDITION Minimum RequirementsANALYSIS/ASSESSMENT BY WASREB 
 
1.Preliminary details
           i.        Date received by WASREBDate of receiptApplication dated 31st October 2018
          ii.        Certificate of Company RegistrationCopy of certificate*

·   Incorporation no C125559

·  WSP to provide copy of Certificate of incorporation and Certificate of change of names from South Nyanza Water Services Company Limited to Homa Bay Water and Sanitation Company

         iii.        Geo- Referenced Map of Service Area accompanied by “Shape Files”

·        PDF illustration

·        List of sub-locations*

·        Shape files*Mandatory for mapped WSPs (66)

· Not provided. To provide shape files map of service area.

· Provide status of implementation for service area mapping output as per minutes of 28th October 2016.

        iv.        Copy of letter to county on application

·        Copy of letter*

·      Share application with the county

·         Letter dated 28/10/2018.

·         To regularise official communication to the county on the application of the license.

         v.         Period of License (Agreed per category)

To be defined

To be illustrated in Financial Years, recommended 5 years

·         To be determined.
Institutional profile
i. Compliant memorandum and objects of association to WASREB standardsAs per model memorandum of association*

1.    Memo and articles not compliant with model MOA.

 

2.    Memo and articles should be aligned to the Water Act 2016, Companies Act 2015.

 

3.    Memo and articles still indicate company owned by the erstwhile municipal and Town councils of HomaBay, Oyugis, Mbita Point, Rachuonyo, Kendu Bay and Suba.

 

4.    MOA should be amended to specifically provide that:

·         Company is owned by county government (issue shares to the county secretary, CEC member for water affairs and CEC member for finance.

 

· The company shall be an agent of Homa Bay County

·  Assets shall be for the beneficial use of the community served

· WSP shall only provide water services in the service area prescribed in accordance with standards issued by WASREB

· Tariff to be used for water services shall be approved by WASREB

· All financial arrangements including pension shall be subject to the standards prevailing in the water sector

· Amend clause 68 of Memorandum and articles of Association be reviewed to provide that Directors shall be selected through the stakeholder participation procedure provided for in the governance guidelines in the water sector

· WSP shall have Seven (7) non-executive directors inclusive of the two institutional directors from the county (CEC members for water and finance or their nominees from the county shall be institutional directors).

·   Managing directors shall sit on the board but shall have no voting rights.

· Board members shall sign a code of conduct

·  Board of Directors shall conduct board of evaluation annually

·   Review ground for disqualification of directors to align it with Companies Act 2015 and water sector regulations.

· Only sitting allowances shall be paid to directors and reimbursement for costs incurred to WSP invited meetings.

· Amend all clause referencing the repealed Companies Act. This should be reviewed in accordance with the companies Act 2015.

· Annual Audits shall be conducted every year by the Auditor General

· Real Assets shall not be disposed off without county approval and notification to WASREB

· Managing director shall be done in line with the requirements of Legal Notice No. 137 of 2018.

 

ii. Details of board members meet the governance standards; competence in academic and professional criteria and stakeholder representation; genderInformation sheet on BoD

Company to provide CR 7 detailing particulars of directors.

 

Board meets gender, competence and professional criteria. Been inducted by WASREB.

 

·         Board to ensure compliance with the license conditions, Corporate Governance Conditions and Tariff conditions among others.

iii. Key executive staff meet competence criteria of LN 137 of 2012 (Level 1, 2 & 3)Profile of key staff

· Key staff meet competence criteria save for the Technical manager function currently manned by acting TM with mechanical engineering skills that should be filled with requisite civil engineering skills.

 

iv. Approved Staff Establishment in line with WASREB Standards

Approved Staff Establishment

 

· To provide the approved staff establishment.

·  To undertake skills inventory audit and ensure job-skills match.

 

 Human Resource Management
      i.        Approved Human resource policy manual in line with WASREB StandardsApproved updated Human resource policy Manual as per model·  Comprehensive HR Policy dated 2015 provided
     ii.        Performance management system

·        PMS in place

·        Evidence of appraisal (implementation)

· To provide evidence of appraisal report
    iii.        HIV PolicyHIV Policy·         To develop HIV policy in line with the NACC guidelines and implement the NACC HIV and AIDS mainstreaming activities.
   iv.        Collective Bargaining Agreement in line with WASREB Standards

·        Valid CBA

·    In line with approved tariff

· The company to indicate the status of the CBA.
    v.        Contracts of employment  for  Management Staff with clear terms and conditions of service· Sample Copy of signed contracts for  Management Staff· To provide signed sample contracts for management staff.
   vi.        Contracts  of employment for  unionisable  and other staff with clear terms and conditions of service

·        Sample Copy of signed contracts unionisable  and other staff

·        Link to CBA

· To provide signed sample contracts for unionizable staff if any
  vii.        Approved Organization Structure in Line with WASREB StandardsApproved Organization Structure·         The company to include the NRW function and asset planning function in the structure.
 viii.        Code of Conduct and Ethics for employeesSample Copy of signed code of Conduct and Ethics for employees· To provide signed sample codes for employees
    ix.        Pension Scheme Arrangements whether DB or DC  and Compliance to relevant laws and guidelines (RBA act, Treasury circulars, Scheme roles and deeds)

Evidence of Pension Scheme Arrangements.

Should be a DC scheme.

-The company operates a provident fund. The utility to confirm the rate of pension contribution for the employee and employer.

· Contract staff are paid gratuity at the point of separation at 7.5% payment of consolidated salary for those leaving in 1st year, 17.5% for those leaving in 2nd year and 31% for those leaving in 3rd year. It is recommended that the WSP should pay gratuity at the end of the contract period.

Information on Technical Management
i. Water sources and abstraction permits (Own Source or Guaranteed Bulk Supply)

· Water sources and valid abstraction permits

· Bulk supply agreements where applicable

Lake Victoria water source and various river water sources within Homabay County mentioned in the application form.

 

To submit a clear list of water sources and their capacities and attach valid permits for each abstraction point.

ii. Scheme summary water

· Total Population in SA and population served

·  Production and billed water sources and abstraction volumes

·        Water treatment process

·        Billing and collection amount

·        No. of staff (contract and permanent)

·        O+M cost

· Personnel, chemical and energy costs

·  Total (registered, active) and metered connections

Submitted a listing of sources and capacities.

 

· To present the information in the acceptable framework as provided in this summary form as per the checklist.

iii. Scheme summary waste water

· Total Population in SA and population served

· Volumes of influent to be treated

·        Waste water treatment capacity

·        Billing and collection amount

·        No. of staff (contract and permanent)

·        O+M cost

· Personnel, chemical and energy costs

·  Total (registered, active) and metered connections

Submitted the name of wastewater treatment system and capacity.

 

·         To present the information in the acceptable framework as provided in this summary form as per the checklist.

iv. Compliance with WQEMG –last report

·        Latest report for the month preceding the application

· Check against previously submitted reports

·        Determine compliance

Indicated that testing is done but did not submit any reports.

 

· To provide annual Water quality report for the FY 2017/18 in the proper format as per as per schedule 13 of the WASREB guidelines on Water Quality and Effluent monitoring.

· To provide annual Effluent quality report for the FY 2017/18 in the proper format as per as per schedule 14 of the WASREB guidelines on Water Quality and Effluent monitoring.

v. Copy of effluent discharge permitValid effluent discharge permit(s)

Indicated in the application that they do not have effluent discharge permit(s).

 

· The utility to apply for effluent discharge permit from NEMA.

vi. Asset Register – assets owned by WSPCopy of asset registerTo provide an updated and comprehensive register containing the totality of all assets being utilized by the utility, with their respective current Net Book Values after depreciation.
vii. Asset Register- assets from Local AuthorityCopy of asset registerTo provide
viii. Asset Register –assets from Water Service BoardCopy of asset registerTo provide
ix. Asset maintenance scheduleCopy of asset maintenance schedule· To provide an asset maintenance schedule exclusively for each of the assets from office equipment, machinery, waterworks and transmission/distribution networks and appurtenances as appropriate for 2017/18 with differentiated specific timelines. Ensure to include specific components requiring maintenance.
x. Approved Water Safety PlanYes/No·   To be included as a license condition
xi. Signed deed of handover  of all assets including new ones during the previous SPA periodCopy signed deed of handover of all assets· To provide an updated asset register with a signed deed of handover after march 2012 for both water and wastewater.
xii. Details of planned institutional and infrastructural improvementsReview planning documents (strategic plan, master plan, business plan) to determine adequacy/link to performance targets

Submitted an incomplete document that seemed to be a draft and contained extracts, parameters and other details belonging to Nairobi City Water and sewerage company.

· Provide a valid strategic plan for the WSP.

xiii. Financing PlanA plan to support activities in (xii) above·         To provide a valid SP
Information on Commercial Management
i. Copy of Customer contractCheck against model customer contract·  WSP to provide a customer contract aligned to the model customer contract by WASREB
ii. Customer complaint handling procedureCheck against CEG· WSP to develop a customer service policy
iii. Customer Service CharterCheck against minimum service standardsWell provided.
iv. Procurement PolicyApproved procurement policy/or evidence of following PPAD Act 2015·         WSP to provide an approved and signed procurement policy aligned to PPAD Act 2015
v. Evidence of Stakeholder ConferenceEvidence of Stakeholder Conference invitation, list of participants, minutes within the last 2 financial years

· To provide properly written and signed minutes within the last 2 financial years

· Also provide conference invitation, list of participants

vi. Tax compliance certificate/statusCheck validity, validate with iTax

·         To provide the latest compliance certificate/ to submit evidence of payment of statutory taxes

 

vii. Most recent  two years Auditor General Reports

· Audit certificate for the 2 years

·        Signed audit reports

· WSP to provide Auditor General’s report for 2016/17
viii. Website Information on annual reportCheck website for annual report· WSP to upload annual reports on their website.
ix. Evidence of Biennial Customer Satisfaction SurveyReport within the last 2 years

·         WSP to provide a plan to carry out a customer satisfaction survey within the first year of the license period and conduct the same biennial

· To conduct a CIS and regularly update  the database.

x. Adoption of Maji VoiceCheck against Maji Voice list and adoption status (reports)

·   Utility to adopt MajiVoice within the first 2 years of the licence period

· WSP to submit the Customer Complaints Register in use currently

xi. Compliance to WASREB’s website requirementsCheck website against WASREB standards

· To ensure website is in line with WASREB Website Transparency Guidelines

·         Upload annual reports,

· Customer downloadable forms, Payment details for services, Tariff details, How to send complaints

Information on financial management
i. Proposed / Valid Regular TariffCheck validity on websiteWSP was to commence tariff application process before issuance of license.
ii. Maintenance Costs / O+MCheck against tariff, audited accounts and WARIS dataSector benchmark is 8-15%
iii. Employee Costs / O+MSector benchmark is below 30%
iv. O+M Coverage

Sector benchmark 100-150%.

WSP to explain the non-attainment of the tariff projections.

v. Quick Ratio (Acid Test ratio)Acceptable limit is >=1
vi. Debtor daysAcceptable is <=90 days
vii. Collection EfficiencyAcceptable is >85% and the WSP should separate current and arrears.
viii. Debt Service Coverage Ration/a
ix. Performance GuaranteeYes/No

To have a performance guarantee from a reputable financial institution or deposited with the WASREB. This is to be posted with the WASREB before license is issued. Approved rate for your category of WSP is Kshs. 500,000.

 

x. Approved Strategic PlanBoD Approved Strategic Plan·         To submit approved Strategic Plan
xi. Specifications of the current billing systemCheck against WASREB standards· WSP to carry out and submit a self –assessment of the current billing system as per the WASREB minimum billing requirements.
xii. Operational business plan

·        BoD approved Operational business plan

· Check against WASREB standards

·         To provide
xiii. Approved Disaster Management PlanBoD Approved Disaster Management Plan·  To provide a disaster management plan.
Asset Handover
i. New water supply asset handed over during last 10 years by source

·        List of assets/projects

·        Hand over certificate(s) for water supply asset(s) handed over

· To provide updated water supply project details including the developer, financier, time, and technical details like pipe length, sizes, reservoir capacities and the value of the projects with attached certificates of handover/completion.
ii. New waste water assets handed over last 10 years by source

·        List of assets/projects

·   Hand over certificate(s) for waste water asset(s) handed over

· To provide updated wastewater project details including the developer, financier, time, and technical details like pipe length, sizes, reservoir capacities and the value of the projects with attached certificates of handover/completion.
Projected improvement of services in license period
i. Small scale providers in service area –situation described and projected

·        List of SSPs in the SA

·        Link to Main WSP

·        Report of SA mapping exercise

No response in the application form.

During the Service Area mapping exercise by WASREB, It was observed that there are a significant number of SSSPs serving within the service area of the utility.

These include:

1.    Oindo Water Supply,

2.    ICIPE,

3.    Kanyadhiang,

4.    Rangwe,

5.    Kanyaluo,

6.    Kochel,

7.    Kosele,

8.    Sindo and

9.    Mawege Water supply

The WSP to provide a comprehensive list of all SSSPs operating in their service area as well as:

·         Type of source

·         Production

·         Billing volumes

·         Revenue

·         No of connections

·         Population served

·         Any arrangements they may be having with some of them.

9.Performance improvements in license period   
a.    Quality of Service  
           i.        Water coverage %Check against 2022 targets and link to NWSS

·   To harmonise the figures. A growth rate of 10 percentage points annually is too ambitious.

·  WSP to provide the status of the various initiatives in the strategic plan.

·   Explain the jump from 16%(2016/17) to 43% in 2017/18

          ii.        Drinking Water Quality %100%·         To attain 100% from Y1 onwards
         iii.        Hours of SupplyProgression to acceptable sector benchmarks·         Growth in coverage to consider maintenance of minimum hours of service. The acceptable Sector Benchmark is at least 16 hours per day.
        iv.        Sewerage coverage %Check against 2022 targets and link to NWSS

·         The target in the SP is to safely treat 700m3 per day of waste water which is equivalent to 7% of the water used. WSP to target at least 2 percentage points growth annually.

·         To harmonise the two figures.

         v.         Effluent Quality %100%· The projections indicate a decline to 30% by Y5. To progress to 100% by Y1 onward.
b.    Economic Efficiency  
           i.        Personnel Expenditure as % of O+M costs %Compliance to sector benchmarks·  No projections provided. To maintain at below 30% during the license period.
          ii.        O+M Costs coverage %Progression to full cost recovery·  To progress to at least 110% by the end of the period. This shall ensure the WSP can guarantee the same quality of service.
         iii.        Revenue Collection Efficiency %Compliance to sector benchmarks

·         To explain the huge drop in 2017/18

·  To progress to at least 85% by Y1 and maintain this level throughout the license period. In addition ensure there is separation of collections between old debts and current billing.

c.    Operational Sustainability  
           i.        Non-Revenue Water, %Progression to acceptable sector benchmarks

·  Proposed trend to ambitious

·  WSP to document strategies to realise this target

·    To adopt and implement the NRW management standards developed by the regulator.

·    Target below 45% by Y5

          ii.        Metering(operational) ratio, %100%

·   To explain the drop from 73% (PIR) in 2016/17

·   To attain the figure of 100% by Y1 considering the low number of active connections.

         iii.        Staff Productivity, NoProgression to acceptable sector benchmarks·         To target below 12 by the end of the license period.
        iv.        Environmental (source) protectionCheck CSR reports, SP, Go green, renewable energy·         WSP to document efforts towards source protection.
v. Governance IndicatorScore for last assessmentAcceptable performance 50%.
vi. Pro-poor AssessmentAcceptable performance 75%.
Other Issues
           i.        Evidence of Public ConsultationEvidence of Public Consultation invitation, list of participants, minutes for the license applicationTo be carried out before issuance of the license
          ii.        License Fee   to be paidYes/No 0.01% of Annual turnover based on the latest audited accounts.  To be paid on issuance of the license
         iii.        Arrears of Licensee Remuneration to WSBsReconciled amount

 

Date of Evaluation   16th November, 2018

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