LICENCE ANALYSIS CHECKLIST AND EVALUATION FORM WATER ACT 2016

Name and Address of Water Service Provider:

Mavoko Water and Sewerage Company Limited

P.O. BOX 582-00204

ATHI RIVER

NOWSP APPLICATION CONDITION Minimum RequirementsANALYSIS/ASSESSMENT  BY WASREB 
1.Preliminary details
           i.     Date received by WASREBDate of receipt·   Supporting documents inadequate in most of the areas
          ii.    Certificate of Company RegistrationCopy of certificate*·  Copy of Certificate of Incorporation no CPR/2009/3299
         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 shape files map of service area.
        iv.        Copy of letter to county on application

·        Copy of letter*

·        Share application with the county

·  To provide a copy of letter to County on application.
         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*

· Memo and articles to be amended to conform to the Water Act 2016 and Companies Act 2015

· Whereas the memo indicate the company has 5000 shares, only two subscribers are indicated to hold four shares. This should be reviewed and corrected to have the office of the county secretary, CEC member water and CEC member finance hold the 5000 shares in trust for the county government of Machakos

ii. Details of board members meet the governance standards; competence in academic and professional criteria and stakeholder representation; genderInformation sheet on BoD·         The WSP to comply with the advisory given by WASREB and the Attorney General.
iii. Key executive staff meet competence criteria of LN 137 of 2012 (Level 1, 2 & 3)Profile of key staff

Some of the key staff do not meet the competence criteria such as the finance manager is not yet a CPA K whereas the accountant has the technical competence as required.

· The utility to streamline above by separating the finance and commercial functions.

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 model·         HR policy manual revised 2012 in place
     ii.        Performance management system

·        PMS in place

·        Evidence of appraisal (implementation)

·         To submit samples of appraisal implementation
    iii.        HIV PolicyHIV Policy· To in addition implement the NACC HIV and AIDS guidelines
   iv.        Collective Bargaining Agreement in line with WASREB Standards

·        Valid CBA

·        In line with approved tariff

·  CBA with Kenya County Govt Workers Union from January 2015 to December 2016 has expired.

·    Any new negotiated CBAs should be aligned with the tariff provisions.

    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 contracts samples 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 contracts samples for unionisable staff
  vii.        Approved Organization Structure in Line with WASREB StandardsApproved Organization Structure·         Need to separate finance and commercial function in the organization structure. Also provide for asset planning function in the structure as NRW unit already provided.
 viii.        Code of Conduct and Ethics for employeesSample Copy of signed code of Conduct and Ethics for employees·         To provide signed code of conduct and ethics 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.

·         Provident fund in place @7.5% employee contribution and 22.5% employer contribution. Need to ensure compliance with the pension scheme rules on employer contribution rate.

·         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

Listed sources as:

1.    Nairobi Bulk

2.    Old Mavoko Treatment works (which is the source?)

3.    Boreholes (How many? List by name).

 

For the permits in process of being formalized, provide evidence.

For the boreholes, provide details for each.

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

What was submitted was 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

·         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

Utility does not report on Water and effluent quality monthly and annually despite recommendations to do so from previous two inspections.

 

·         To provide annual Water quality report 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)· Not provided as the WSP says the facility is under EPZA, However, they should have a copy of the permit.
vi. Asset Register – assets owned by WSPCopy of asset register· To be provided in form of a 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 register·  To clearly indicate if they received any assets from the municipality and list them if any as above.
viii. Asset Register –assets from Water Service BoardCopy of asset registerTo be provided
ix. Asset maintenance scheduleCopy of asset maintenance schedule

Provided asset maintenance plans for Water assets as well as Sewer assets. The Sewer assets maintenance plan was detailed and should be used to prepare a detailed maintenance schedule with clear timelines over the year for specific assets.

 

Maintenance schedule to be provided exclusively for each of the assets from office equipment, machinery, waterworks and transmission/distribution networks and appurtenances as appropriate.

 

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 be provided
xii. Details of planned institutional and infrastructural improvementsReview planning documents (strategic plan, master plan, business plan) to determine adequacy/link to performance targets

Strategic plan is provided and has link to performance targets.

 

xiii. Financing PlanA plan to support activities in (xii) above· There was no business plan availed and there is no indication in the strategic plan and no information presented in the application form as to where the funds will be sourced from.
Information on Commercial Management
i. Copy of Customer contractCheck against model customer contract

· WSP to align customer contract to the model customer contract by WASREB.

· To provide a basis for some of the contentious clauses in the contract i.e clause 7, 8 and 14.

 

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

·  To include how to submit complaints

· To align applicable charges to the gazetted tariff in addition to the recommendations given in the PIR.

iv. Procurement PolicyApproved procurement policy/or evidence of following PPAD Act 2015· WSP to provide an approved and signed procurement policy aligned to the PPAD Act of 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 the full Auditor General’s report for 2016/17
viii. Website Information on annual reportCheck website for annual report·  WSP to upload the  annual reports on the 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 CIS and update regularly

x. Adoption of MajiVoiceCheck against MajiVoice 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

· Annual reports not uploaded

· To continue improving and enhancing the website to be customer oriented as per WASREB’s website transparency guidelines

Information on financial management
i. Proposed / Valid Regular TariffCheck validity on website·   Applied tariff expired in June 2017. Utility shall make an undertaking to commence the tariff application process before issuance of the license.
ii. Maintenance Costs / O+MCheck against tariff, audited accounts and WARIS data·    Sector benchmark is 8-15%
iii. Employee Costs / O+M·    Sector benchmark is below 30%
iv. O+M Coverage·    The tariff had projected 140% in 2017/18
v. Quick Ratio (Acid Test ratio)·   Acceptable limit is >=1
vi. Debtor days·   Acceptable is <=90 days
vii. Collection Efficiency·   Acceptable is >85% and the WSP should separate current and arrears.
viii. Debt Service Coverage Ratio

Acceptable Minimum is 1.2

 

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. 2,000,000.

 

x. Approved Strategic PlanBoD Approved Strategic Plan·  To provide an 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

·   To align to WASREB’s minimum billing requirements.

xii. Operational business plan

·        BoD approved Operational business plan

·        Check against WASREB standards

· To provide an approved business plan
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 water supply project details including the developer/financier, time, and technical details like pipe length, sizes, reservoir capacities and the value of the projects.

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 waste water/sanitation project details including the developer/financier, time, and technical details like, sizes, capacity and the value of the projects.

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 information given in the application form. However, service area mapping output highlighted the following SSSPs

1.    EPZA,

2.    Onyango Oloo,

3.    General Karangi,

4.    Sawada Villas,

5.    Council Mbiti,

6.    Superior Homes (Green Park),

7.    Everest Park,

8.    Summer Boulevard,

9.    Pine city,

10.  Muthama Heights,

11.  Five-star Gardens,

12.  Hill Crest park,

13.  Great wall

 

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.

In addition, the WSP to undertake an audit of all private boreholes/ SSSPs in the service area.

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

·  To develop as proposed and reach 86% by the 5th year.

·  To provide a basis of the projections above.

          ii.        Drinking Water Quality %100%·         To attain 100% from Y1 onwards
         iii.        Hours of SupplyProgression to acceptable sector benchmarks

·         To progress to at least 12 hours by Y5

·  The acceptable Sector Benchmark is at least 16 hours per day.

        iv.        Sewerage coverage %Check against 2022 targets and link to NWSS·  To develop as proposed and reach 17% by the 5th year.
         v.         Effluent Quality %100%·         To attain 100% from Y1 onwards
b.    Economic Efficiency  
           i.        Personnel Expenditure as % of O+M costs %Compliance to sector benchmarks

·  The proposal to achieve <30% may be too ambitious.

·  Utility to provide measures taken to achieve above.

          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·  To maintain an efficiency of at least 95% but ensure there is a separation of collections between old debts and current billing.
c.    Operational Sustainability  
           i.        Non-Revenue Water, %Progression to acceptable sector benchmarks

·   To develop as proposed and reach 31% by the end of the 5th year.

·   To justify the drop.

          ii.        Metering(operational) ratio, %100%·  To progress to 100% while ensuring that all meters are functional.
         iii.        Staff Productivity, NoProgression to acceptable sector benchmarks·  To develop as proposed and target 5 at the end of the 5th year.
        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   13th November, 2018

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