LICENCE ANALYSIS CHECKLIST AND EVALUATION FORM WATER ACT 2016

Name and Address of Water Service Provider:

Kisumu Water and Sewerage Company Limited

P.O. BOX 3210-00100

KISUMU

NOWSP APPLICATION CONDITION Minimum RequirementsANALYSIS/ASSESSMENT  BY WASREB 
1.Preliminary details
           i.        Date received by WASREBDate of receipt

· Supporting documentation provided in soft copy

·    Application form not duly completed.

          ii.        Certificate of Company RegistrationCopy of certificate*·  Copy of Certificate of Incorporation no C96281 provided.
         iii. Geo- Referenced Map of Service Area accompanied by “Shape Files”

·  PDF illustration

·  List of sub-locations*

·  Shape files*Mandatory for mapped WSPs (66)

· To provide status of implementation of mapping output. Refer to the minutes of 23rd Feb 2018
        iv.        Copy of letter to county on application

·        Copy of letter*

·        Share application with the county

· Copy of letter dated 3rd August 2018 provided.
         v.         Period of License (Agreed per category)

To be defined

To be illustrated in Financial Years, recommended 5 years

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

MOA should be aligned to the Water Act 2016, Companies Act 2015.

 

MOA should be amended to specifically provide that:

· CEC member for water affairs is a shareholder, this being a core mandate in his/her department at the 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 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 nine (9) non-executive directors inclusive of the two institutional directors from the county.

· 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.

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

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

 

ii. Details of board members meet the governance standards; competence in academic and professional criteria and stakeholder representation; genderInformation sheet on BoDCompany to provide CR 7 detailing particulars of directors.
iii. Key executive staff meet competence criteria of LN 137 of 2012 (Level 1, 2 & 3)Profile of key staff

·  The staff meets competence criteria.

· The utility to include Legal function as part of the key staff.

iv. Approved Staff Establishment in line with WASREB Standards

Approved Staff Establishment

 

To provide the current staff establishment versus in-post staff component.
 Human Resource Management
      i. Approved Human resource policy manual  in line with WASREB StandardsApproved updated Human resource policy Manual as per modelComprehensive HR Policy, 2016 edition provided
     ii.        Performance management system

·        PMS in place

·     Evidence of appraisal (implementation)

Provide evidence of appraisal implementation i.e. samples of appraisal reports for the Core Management Team, Supervisors and unionisable staff which should contain clearly defined job descriptions and performance targets.
    iii.        HIV PolicyHIV PolicyEmbedded in the HR Policy. In addition to implement the NACC HIV and AIDS mainstreaming activities
   iv.        Collective Bargaining Agreement  in line with Wasreb Standards

·        Valid CBA

·       In line with approved tariff

CBA with Kenya Union of Water and Sewerage Employees (KUWASE) valid- period from 1st July 2018 to 30th June 2020

Subsequent CBA negotiations to be aligned with the tariff duration and be based on the standards on the personnel expenditures in the approved tariff.

    v.        Contracts of employment  for  Management Staff with clear terms and conditions of service· Sample Copy of signed contracts for  Management StaffProvide signed sample copies of contracts of employment 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

Provide signed sample copies of contracts of employment for unionisable staff.
  vii.        Approved Organization Structure in Line with WASREB StandardsApproved Organization Structure

·        Establish a Legal function which shall be headed by a person with law degree and an advocate of the high court of Kenya.

·        Establish an Asset Planning and Development Function at minimum level three (3).

 viii.        Code of Conduct and Ethics for employeesSample Copy of signed code of Conduct and Ethics for employeesTo provide Signed samples provided for Core Management Team, Supervisors and unionisable staff.
    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 pension scheme @12.5% employee of basic pay & 15% employer of basic. gratuity is at 31% of employee basic salary

 

The company to ensure compliance with pension contribution rates in line with the treasury circular No. 18/2010 as communicated vide WASREB letter REF: WASREB/LIC/534/VOL.XVIII (83) dated 18th September 2018

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

Provided two permits for Lake Victoria and Kibos river sources, both of which expired on 13th September 2018:

·  WRMA/12/KSM/1 HB/33/S for Lake Victoria.

·  WRMA/12/KSM/1 HA/32/S for Kibos River

To confirm number of abstraction points for Lake Victoria source as well as provide status of renewal of these permits. To provide evidence of application for the renewal.

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 technical report for 3rd quarter 2017/18 but not the scheme summary as expected.

 

·  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 a technical report for 3rd quarter 2017/18 but not the scheme summary as expected.

·   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

Submitted a technical report for 3rd quarter 2017/18 but not the report as expected.

 

·  To provide annual Water and effluent quality reports for the FY 2017/18 as per Wasreb guidelines on Water Quality and Effluent monitoring.

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

Permit application made on 27th March 2018 Ref: NEMA/2018/H/802/WQ/021/WOL

 

·  To provide information on progress of this application.

vi. Asset Register – assets owned by WSPCopy of asset register

Provided a summary of assets as prepared by Gitonga Aritho Associates on behalf of the Municipal Council of Kisumu. However, it is not indicated when this was done or the value of the assets and this does not constitute an asset register with current assets.

 

· To be provided in form of a comprehensive list containing the totality of assets utilized by the utility, with current Net Book Values after depreciation for each asset.

· To provide status of the ownership of assets formerly under Gulf and NYANAS water companies.

vii. Asset Register- assets from Local AuthorityCopy of asset register·         To provide
viii. Asset Register –assets from Water Service BoardCopy of asset register·         To  provide
ix. Asset maintenance scheduleCopy of asset maintenance schedule

Provided asset maintenance schedule had the following deficiencies:

 

· Different colour codes are utilized for the various assets, however there is no legend to indicate what these codes mean in terms of maintenance activities.

·         Different types of assets with different maintenance requirements are prescribed the same treatment in terms of having the same intervals of maintenance. Not correct

· Details of the transmission and distribution infrastructure and appurtenances maintenance are missing. These need to be included also.

· Details of assets such as office equipment, motor vehicles, motorcycles are missing. Are these not assets?

 

x. Approved Water Safety PlanYes/No· To develop a Water Safety Plan and implement it as a licence condition in accordance with guidelines to be issued by WASREB.
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
xii. Details of planned institutional and infrastructural improvementsReview planning documents (strategic plan, master plan, business plan) to determine adequacy/link to performance targets

·   Provided. However, the budgets in SP have been lumped for the five-year period and have not been broken down into annuals for the detailed implementation matrix.

· Breakdown the lumped figures into annuals for the detailed implementation matrix.

xiii. Financing PlanA plan to support activities in (xii) above·  For proper tracking, the budget should be broken into annuals
Information on Commercial Management
i. Copy of Customer contractCheck against model customer contract

·  Customer contract to be aligned to the model customer contract by WASREB to include:

  • Customer complaints procedures
  • Elaborate service standards
ii. Customer complaint handling procedureCheck against CEG·         WSP to develop a customer service policy.
iii. Customer Service CharterCheck against minimum service standards

·  To enhance the Service Charter to include a matrix on all services offered, the associated costs and timelines. Refer to the Wasreb template.

· To include how to submit complaints.

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 yearsTo provide properly written and signed minutes.
vi. Tax compliance certificate/statusCheck validity, validate with iTax

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

·         Show compliance to other statutory deductions as per Auditor General’s Report 2015/16, 2016/17nfinancial statements shows accruals of statutory deductions.

vii. Most recent  two years Auditor General Reports

·        Audit certificate for the 2 years

·        Signed audit reports

· WSP to provide the audited accounts for 2016/2017

·         2015/16 FS Qualified on internal management challenges (late submission of statutory deduction, cash and cash equivalents, loss of metres)

viii. Website Information on annual reportCheck website for annual report·  WSP to upload the annual reports up to 2016/17 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 biennially.

·         To conduct a Customer Identification Survey which will be continually updated.

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

·  Utility to adopt MajiVoice within the first year of the license period.

 

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

·   Annual reports not uploaded

·   To continue improving and enhancing the website to be customer oriented.

 

Information on financial management
i. Proposed / Valid Regular TariffCheck validity on websiteWSP to commence tariff application process by January 2019.
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 CoverageThe tariff had projected 140% in 2017/18
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 ensure there is a separation of collections between old debts and current billing.
viii. Debt Service Coverage Ratio

Acceptable Minimum is 1.2

Outstanding loan of AfD yet to be repaid.

ix. Performance GuaranteeYes/NoTo 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. 5,000,000.
x. Approved Strategic PlanBoD Approved Strategic PlanWSP to breakdown the lumped figures into annuals for the detailed implementation matrix.
xi. Specifications of the current billing systemCheck against WASREB standards

·  WSP to carry out and submit a self –assessment of the current billing system

·   To align to WASREB’s minimum billing requirements.

xii. Operational business plan

·  BoD approved Operational business plan

·  Check against WASREB standards

·    To provide evidence of approval by the board.
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

The utility provided attachment 8.3 8.4 Projects status report detailing some ongoing projects yet to be finalized. This also contained some listed water and sewer projects with no information on status of projects i.e. whether they are ongoing or completed and no completion or hand over certificates attached.

 

·  To be provided as per the application for water supply assets clearly indicated as such and other details for each asset adequately included.

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

The utility provided attachment 8.3 8.4 Projects status report detailing some ongoing projects yet to be finalized. This also contained some listed water and sewer projects with no information on status of projects i.e. whether they are ongoing or completed and no completion or hand over certificates attached.

 

·  To be provided as per the application for Waste water assets clearly indicated as such and other details for each asset adequately included.

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

In the application, the WSP has marked this section “N/A”

SA mapping report was done as one of the pilots and did not capture any information on SSSPs

 

The WSP to confirm if any SSSPs are in existence and 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 harmonize the figures and ensure that the growth is at least 2 percentage points annually.
          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· To harmonise the two figures. Using the WARIS figure of 48%, coverage to develop as indicated: 48%(Y0), 51% (Y1), 52% (Y2), 53% (Y3), 54% (Y4), 55% (Y5)
         v.         Effluent Quality %100%

· To submit the Effluent monitoring report for 2017/18.

· To maintain 100% throughout the license period.

 

b.    Economic Efficiency  
           i.        Personnel Expenditure as % of O+M costs %Compliance to sector benchmarks· To harmonize the two figures and ensure the figure is below 30% at the end of the license period.
          ii.        O+M Costs coverage %Progression to full cost recovery· To progress to 130% at the end of the period.
         iii.        Revenue Collection Efficiency %Compliance to sector benchmarks

· Acceptable is >85% and the WSP should separate current and arrears.

 

c.    Operational Sustainability  
           i.        Non-Revenue Water, %Progression to acceptable sector benchmarks· To work towards the sector benchmark.
          ii.        Metering(operational) ratio, %100%

· To progress to 100% but ensure all meters are functional.

· To provide billing summaries indicating accounts billed on actual meter reading and those estimated for June 2018.

         iii.        Staff Productivity, NoProgression to acceptable sector benchmarks

· To attain a number of 4 by the end of the 5th year.

· To approved an approved staff establishment.

        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 application To 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 WSP to provide figures as of 30th September 2018 and propose a payment plan for the outstanding amounts.

 Date of Evaluation   12th November, 2018 

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