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LICENCE ANALYIS CHECKLIST AND EVALUATION FORM WATER ACT 2016

Name and Address of Water Service Provider:

Othaya-Mukurweini Water Services Company Limited

P.O. BOX 482-10106

Othaya

NOWSP APPLICATION CONDITION Minimum RequirementsANALYSIS/ASSESSMENT  BY WASREB 
1.Preliminary details
                i.            Date received by WASREBDate of receiptApplication form satisfactorily filled
              ii.            Application fee receivedProof of payment*Application fee paid
             iii.         Certificate of Company RegistrationCopy of certificate*Certificate registration No. CPR/2009/3820
             iv.       Geo- Referenced Map of Service Area accompanied by “Shape Files”· PDF illustration

· List of sub-locations*

· Shape files*Mandatory for mapped WSPs (66)

To view service Area map

Click Here

              v. 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
             vi.  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*To be amended to incorporate the County Government of Nyeri as instructed by Wasreb circular no. 1 of 2018
ii. Details of board members meet the governance standards ; competence in academic and professional criteria and stakeholder representation ; genderInformation sheet on BoD To provide qualification credentials for Board of Directors which should also be preserved in WSP records.

WSP to comply with gender requirements on board membership.

 

iii. Key  executive staff meet competence criteria of LN 137 of 2012 (Level 1, 2 & 3)Profile of key staffThe company to plan competitive recruitment of the Managing Director to succeed the retiring Managing Director
iv. Approved Staff Establishment  in line with Wasreb StandardsApproved Staff Establishment

 

To provide staff establishment Vs in-post
 Human Resource Management
         i.  Approved Human resource policy  manual  in line with WASREB StandardsApproved updated Human resource policy  Manual as per modelProvided

To remove BoD rates from Human Resource Policy

       ii.     Performance management  system· PMS in place

· Evidence of appraisal (implementation)

To provide evidence of appraisal report
     iii.            HIV PolicyHIV PolicyProvided
     iv.     Collective Bargaining Agreement  in line with WASREB Standards· Valid CBA

· In line with approved tariff

The CBA expired in February 2018 .The next CBA to be negotiated with existing guidelines
       v.  Contracts of employment  for  Management Staff with clear terms and conditions of service· Sample Copy of signed contracts for  Management StaffTo provide signed samples 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 samples of contracts for unionisable staff
    vii.        Approved Organization Structure in Line with WASREB StandardsApproved Organization StructureThe utility to address the following:

· Establish a Non-Revenue management function in the structure at level 3

· Establish an asset planning and development function in the structure at level 3

· The two functions (NRW Management function and asset planning and development function) to be filled with requisite skills.

 

  viii.     Code of Conduct and Ethics for employeesSample Copy of signed code of Conduct and Ethics for employeesProvided
      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.

Provided
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

The utility provided Water Resources User Association no objection forms for Gikira, Thuti, Mumwe, Changachicha, and Chinga dam detailing comments by WRUA on their application for Water permits. However these do not constitute a valid water abstraction permit from WRA.

 

The utility to provide valid abstraction permits for all 7 sources outlined in the license application form.

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

To provide scheme summaries for all schemes (refer to minimum requirements outlined)
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 provide scheme summaries for all schemes (refer to minimum requirements outlined)
iv. Compliance with WQEMG –last report· Latest report for the month preceding the application

· Check against previously submitted reports

· Determine compliance

To provide 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)Provided effluent discharge permit Ref No. NEMA/WQ/EDA/2195 which expired on 30th November 2016.

To provide valid effluent discharge permits from NEMA

vi. Asset Register – assets owned by WSPCopy of asset registerTo be provided in form of a comprehensive list of current assets with Net Book Values after depreciation for each asset.
vii. Asset Register- assets from Local AuthorityCopy of asset registerTo be provided in form of a comprehensive list of current assets with Net Book Values after depreciation for each asset.
viii. Asset Register –assets from Water Service BoardCopy of asset registerTo be provided in form of a comprehensive list of current assets with Net Book Values after depreciation for each asset.
ix. Asset maintenance scheduleCopy of asset maintenance scheduleTo be provided exclusively for each the assets from office equipment, machinery, waterworks and transmission/distribution networks and appurtenances as appropriate.
x. Approved Water Safety PlanYes/NoTo be provided as it was to be implemented as per the existing Strategic Plan
xi. Signed deed of handover  of all assets including new ones during the previous SPA periodCopy signed deed of handover  of all assetsTo provide signed deed of handover for all assets.
xii. Details of planned institutional and infrastructural improvementsReview planning documents (strategic plan, master plan, business plan) to determine adequacy/link to performance targetsProvided
xiii. Financing PlanA plan to support activities in (xii) aboveProvided
Information on Commercial Management
i. Copy of Customer contractCheck against model customer contractTo develop and provide a customer contract aligned to the model customer contract by WASREB.
ii. Customer complaint handling procedureCheck against CEGTo provide a customer complaint handling procedure aligned to WASREB Customer Engagement Guideline.
iii. Customer Service CharterCheck against minimum service standardsTo be aligned to the WASREB guidelines.
iv. Procurement PolicyApproved procurement policy/or evidence of following PPAD Act 2015To provide an approved and signed procurement policy
v. Evidence of Stakeholder ConferenceEvidence of Stakeholder Conference invitation, list of participants, minutes within the last 2 financial yearsProvided
vi. Tax compliance certificate/statusCheck validity, validate with iTaxTo provide tax compliance certificate/status
vii. Most recent  two years Auditor General Reports· Audit certificate for the 2 years

· Signed audit reports

To provide the audited accounts for 2016/2017
viii. Website Information on annual reportCheck website for annual reportTo upload the latest annual report on their website
ix. Evidence of Bi- annual Customer Satisfaction SurveyReport within the last 2 yearsTo provide a plan to carry out a customer satisfaction survey within the license period.
x. Adoption of Maji VoiceCheck against Maji Voice list and adoption status (reports)Utility to increase uptake of system usage and re-structure the Customer Service Division to have qualified personnel and a budget allocation.
xi. Compliance to WASREB’s website requirementsCheck website against WASREB standardsAnnual reports, service application forms, tariff and a link to MajiVoice not uploaded on Website.

 

Information on financial management
i. Proposed / Valid Regular TariffCheck validity on websiteTo provide a justified tariff proposal.
ii. Maintenance Costs / O&MCheck against tariff, audited accounts and WARIS data2015/16: 16%

Acceptable range is 8% – 15%

iii. Employee Costs / O&M2015/16: 43%

2016/17: 51%

Acceptable Sector Benchmark, <30%.

iv. O+M Coverage2015/16: 102%

2016/17: 105%

Full cost recovery, >150%

v. Quick Ratio (Acid Test ratio)2015/16: 2.83

Acceptable limit,  >=1

vi. Debtor days2015/16: 569

Acceptable limit, <=90 days

vii. Collection Efficiency2015/16: 88%

2016/17: 102% (WARIS)

Acceptable Sector Benchmark, >85%

viii. Debt Service Coverage RatioN/A, No debt

Acceptable limit, >=1.25:1

To confirm basis of the ratio

ix. Performance GuaranteeYes/NoTo be determined
x. Approved Strategic PlanBoD Approved Strategic PlanProvided
xi. Specifications of the current billing systemCheck against WASREB standardsTo carry out and submit a self –assessment of the current billing system.
xii. Operational business plan· BoD approved Operational business plan

· Check against WASREB standards

The Business Plan period is 5 years versus the conventional 1 year with annual adjustments to align to the dynamic operating environment.
xiii. Approved Disaster Management PlanBoD Approved Disaster Management PlanTo provide an approved 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

In the application form, the utility listed a number of projects by CDF, ADB, County Government of Nyeri, TWSB as well as some projects financed by internally generated funds. However, there are no handover / completion certificates attached.

 

To provide the comprehensive list with exhaustive details, including the value of water assets/projects with attached certificates of handover/completion, or explanation as to why they are missing.

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

In the application form, the utility listed 4No. Sewer projects constructed under ADB project.

 

To provide the comprehensive list with details of wastewater assets/projects with accompanying certificates of handover, or explanation as to why they are missing.

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

Utility provided the following 6No. SSSPs which came up under the guise of being irrigation projects later becoming water providers:

·         Karungu Water Project

·         Kiangechu Water Project

·         Kiamugunoini Water Project

·         Kabura Water Project

·         Mugutha Water Project

·         Wanjungi Water Project

 

The mapping exercise identified 10 No. SSSPs, including two whose service areas were captured in the mapping outputs. These were Gura Ugachiku irrigation

Project and the Wakiondu Water Project.

 

9.Performance improvements in license period   
a.       Quality of Service  
                i.            Water coverage %Check against 2022 targets and link to NWSSTo harmonise the two figures and rework the proposals since the projections provided are too ambitious. Using the figure of 75% target to grow by 2 percentage points annually to 85% by the end of the license.
              ii.            Drinking Water Quality %100%To attain 100% from Y1 onwards
             iii.            Hours of SupplyProgression to acceptable sector benchmarksTo balance quality of service with growth in coverage while ensuring that the performance is within the sector Benchmark of 16 hours per day.
             iv.            Sewerage coverage %Check against 2022 targets and link to NWSSTo revise the trend develop as per the proposed trend.  0%(Y0), 0% (Y1), 2% (Y2), 4% (Y3), 7% (Y4), 10% (Y5)
              v.             Effluent Quality %100%To comply 100% from year 1 onwards
b.       Economic Efficiency  
                i.            Personnel Expenditure as % of O&M costs %Compliance to sector benchmarksTo rework the figures in line with the approved establishment while targeting to be below 35% at the end of the license period.
              ii.            O&M Costs coverage %Progression to full cost recoveryTo progress to 130% within the tariff period as per the proposal below: 101% (Y0), 107% (Y1), 113% (Y2), 119% (Y3), 125% (Y4), 130% (Y5).
             iii.            Revenue Collection Efficiency %Compliance to sector benchmarksFigure provided is 96% against WARIS figure of 102%. To harmonise the two figures and separate between collections for the current period and arrears.

To attain the target of 95% by the end of the license period.

c.       Operational Sustainability  
                i.            Non Revenue Water  %Progression to acceptable sector benchmarksUsing the figure of 62%, to reduce as indicated below: 62% (Y0), 56% (Y1), 51% (Y2), 47% (Y3), 44% (Y4), 42% (Y5). Clear measures in this regard to be clearly documented.
              ii.            Metering(operational) ratio %100%To harmonise the figures and progress to 100% by year 1 while ensuring all meters are functional.
             iii.            Staff ProductivityProgression to acceptable sector benchmarksUsing the figure of 8 to reduce to 5 at the end of the 5th year as indicated below:

8(Y0), 7 (Y1), 6 (Y2), 6 (Y3), 5 (Y4), 5 (Y5). This considers the proposed increase in customer base in the Strategic Plan

             iv.          Environmental ( source) protectionCheck CSR reports, SP, Go green, renewable energyWSP to document efforts towards source protection.
v. Governance IndicatorScore for last assessmentThe score for 2015/16 is 58%

Acceptable performance 50%

vi. Pro-poor AssessmentNot assessed
Other Issues
                i.            Evidence of Public ConsultationEvidence of Public Consultation invitation, list of participants, minutes for the license application To be undertaken
              ii.            License Fee   to be paidYes/No To be paid after issuance of License
             iii.            Arrears of Regulatory LevyReconciled amount No arrears as at 30th June 2018.
             iv.  Arrears of Licensee Remuneration to WSBsReconciled amount Arrears to be cleared before issuance of License.

 

Date of Evaluation   24th July 2018

Management Recommendation on License application and conditions in License based on commercial viability criteria below

 

 

Performance rangeRemarks
≥70Commercially Viable
50 ‐ 69Not Commercially Viable. However, entity has to be nurtured to viability. There must therefore be clear projections to support this.
<50Not Commercially Viable in the short term but with improvements may be nurtured to commercial viability.

 

Attaining the targets above and assuming that the details of planned institutional and infrastructural improvements are fully realized would take the company to a figure of 60% which would require additional nurturing to commercial viability. The utility is weak in the area of personnel expenditures and Non-revenue water. 

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