LICENCE ANALYIS CHECKLIST AND EVALUATION FORM WATER ACT 2016

Name and Address of Water Service Provider:

Murang’a South Water and Sanitation Company Limited

P.O. BOX 87-01034

KANDARA

NOWSP APPLICATION CONDITION Minimum RequirementsANALYSIS/ASSESSMENT  BY WASREB 
1.Preliminary details
         i. Date received by WASREBDate of receipt· Submitted
       ii. Certificate of Company RegistrationCopy of certificate*Copy of Certificate of Incorporation no C155029

     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

· Letter forwarded by County on 07/07/2018
     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*

MUSWASCO memorandum and articles of association (MOA) shall be amended to conform to the Water Act 2016, Companies Act 2015.

 

Amendments of 9th December 2016 converted the company from company limited by shares to company limited by guarantee, enlisting various stakeholder institutions as members of the company alongside the county government.

 

MOA shall be amended to specifically provide that:

 

· Company is owned by county government (issue shares to the county secretary, CECM for Finance and CECM Water holding in trust for the county government)

 

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

 

· Company 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 in line with Water Act 2016.

 

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

 

· Clause 25 of the amended Memo and articles is compliant with the requirements of directors’ selection. The same to be retained as provided in compliance with sector corporate governance guidelines.

 

· Board members shall sign a code of conduct and enforceable undertaking according to the template issued by WASREB.

 

· Board of Directors shall conduct board of evaluation annually.

 

·         Memo and articles to embed the succession planning requirements in the governance guidelines of retirement of a third of the members at the third year.

 

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

 

· Memo and articles to provide that 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

 

· Company shall conduct recruitment of managing director, management staff and all cadre of staff through competitive process as contemplated by the Constitution and the water sector guidelines.

 

· Managing Director shall a member of the Board with no voting right.

 

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 form duly completed.

 

· Board competitively recruited as per minutes of AGM held on 9th December 2018.

 

· Board of directors to ensure compliance with the license conditions, corporate governance standards, tariff conditions among others.

iii. Key executive staff meet competence criteria of LN 137 of 2012 (Level 1, 2 & 3)Profile of key staff· The key staff meet competence criteria save the internal Auditor without a bachelor’s degree. The company to ensure the function is resourced by appropriate competences in line with Legal Notice 137 of 2012.
iv. Approved Staff Establishment in line with Wasreb Standards

Approved Staff Establishment

 

· To provide approved staff establishment.
 Human Resource Management
   i. Approved Human resource policy manual in line with WASREB StandardsApproved updated Human resource policy Manual as per model· HR policy dated September 2016 provided
  ii. Performance management system

· PMS in place

· Evidence of appraisal (implementation)

· To provide evidence of appraisal implementation reports.
    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

· The Company CBA with Kenya Union of Commercial, Food and Allied Workers for two-year period 1st January 2017 to 31st December 2018 is valid. Future CBA negotiations should be based on the tariff conditions.
    v. Contracts of employment for Management Staff with clear terms and conditions of service· Sample Copy of signed contracts for management Staff· Signed sample contracts Provided in the hard copy booklet.
   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

·  Signed sample contracts Provided in the hardcopy booklet
  vii. Approved Organization Structure in Line with WASREB StandardsApproved Organization Structure

· To include asset development and planning function in the structure.

· To separate the finance and commercial function.

· To include the function of Legal services.

· To elevate the NRW function to grade three.

 viii. Code of Conduct and Ethics for employeesSample Copy of signed code of Conduct and Ethics for employees· Signed sample code provided in the hardcopy booklet.
    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 with a contribution rate of 5% employee and 10% employer
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

To provide abstraction permits for the following sources:

1.    Maragua River

2.    Irati River

3.    Kiriciungu River

4.    Ngararia Borehole

5.    Maria-ini Borehole

6.    Nguthuru Borehole

7.    Sabasaba Borehole

 

To submit valid permits or evidence of application from WRA 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

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

· Utility does not have sewer.
iv. Compliance with WQEMG –last report

· Latest report for the month preceding the application

· Check against previously submitted reports

· Determine compliance

· 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.

 

v. Copy of effluent discharge permitValid effluent discharge permit(s)· Utility does not have sewer.
vi. Asset Register – assets owned by WSPCopy of asset register

A list of assets was provided in hard copy which bears the stamp of Tana water services board and MUSWASCO dated 30th April 2018.  However, this does not qualify as an asset register.

·         To 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 register

List alluded to in (vi) above does not show origin of assets.

· To provide an updated and comprehensive register containing the totality of any assets from the municipality being utilized by the utility, with their respective current Net Book Values after depreciation.

viii. Asset Register –assets from Water Service BoardCopy of asset register

List alluded to in (vi) above does not show origin of assets.

To provide an updated and comprehensive register containing the totality of all assets from Water Service Board utilized by the utility, with their respective current Net Book Values after depreciation.

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

· Application form explains that the company is operating the asset on behalf of Tana Water Services Board and the deed of handover has not been processed and issued.

· 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

Plans adequately provided for both in the Strategic plan and business plan until 2021.

 

Performance targets up to 2021 are aligned to this plan. The targets beyond this period till 2023 require justification.

 

 

xiii. Financing PlanA plan to support activities in (xii) above· Provided in the business plan
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 standards· Well done, minimum service standards adhered to.
iv. Procurement PolicyApproved procurement policy/or evidence of following PPAD Act 2015· WSP to provide 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

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 Bi- annual 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 it

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 develop a website in line with WASREB Website Transparency Guidelines
Information on financial management
i. Proposed / Valid Regular TariffCheck validity on website· To commence the 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· Acceptable benchmark is >=130
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/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. 2,000,000.
x. Approved Strategic PlanBoD Approved Strategic Plan· Strategic Plan current
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

OK
xiii. Approved Disaster Management PlanBoD Approved Disaster Management Plan· To be provided
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

Application form explains that MUSWASCO is operating the asset on behalf of Tana Water Services Board. However, there are other also assets developed through internally generated funds as well as other financiers as mentioned in MUSWASCO business plan 2016/17-2020/21 section 5.3.

· 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 handover/completion certificates.

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 sanitation project details if any, including the developer, financier, time, and technical details like pipe length, sizes, reservoir capacities and the value of the projects with attached handover/completion certificates.
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

WSP provided (4) number SSSPs under their regulation

1.    Magutuini

2.    Marumi

3.    Kirika

4.    Githiri

It was observed at the time of the service area mapping exercise that an additional 20 SSSPs were operating within the service area including one Mitubiri water project under regulation by the WSB.

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. The proposed growth of 22 percentage points in 5 years is too ambitious.

· WSP to clear indicate plans to realise this these targets.

          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· WSP to provide status of the Kenol sewerage considering the target was 2020.
         v.         Effluent Quality %100%· To be informed by (iv) above.
b.    Economic Efficiency  
           i.        Personnel Expenditure as % of O+M costs %Compliance to sector benchmarks·  No projections provided. To reduce to below 45% by the end of the license period.
          ii.        O+M Costs coverage %Progression to full cost recovery· To progress to at least 150% 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 progress to at least 90% by Y1 and maintain this level throughout the license period. In addition, WSP to 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 the target of 42% by Y5

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

· Target below 45% by Y5

          ii.        Metering(operational) ratio, %100%· To attain the figure of 100% by Y1 while ensuring that all the meters are functional
         iii.        Staff Productivity, NoProgression to acceptable sector benchmarks·  To remain below 5 throughout 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   19th November, 2018

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