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LICENCE ANALYIS CHECKLIST AND EVALUATION FORM WATER ACT 2016

Name and Address of Water Service Provider:

Nyahururu Water and Sanitation Company Limited

P.O. BOX 952-20300

NYAHURURU

NOWSP APPLICATION CONDITION Minimum RequirementsANALYSIS/ASSESSMENT  BY WASREB 
1.Preliminary details
                i.          Date received by WASREBDate of receiptSome sections of the application form have not be filled
              ii.           Application fee receivedProof of payment*Application fee paid
             iii.           Certificate of Company RegistrationCopy of certificate*Company registration No. C97364
             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 provide georeferenced map with accompanying shape files. List of sub-locations in SA to be included.

To provide status of implementation of mapping output (area around Mairo inya)

              v.       Copy of letter to county on application· Copy of letter*

· Share application with the county

Copy of Letter from Laikipia County dated 9th May 2018
             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 aligned with the Water Act 2016, Companies Act 2015.
ii. Details of board members meet the governance standards ; competence in academic and professional criteria and stakeholder representation ; genderInformation sheet on BoDProvided
iii. Key  executive staff meet competence criteria of LN 137 of 2012 (Level 1, 2 & 3)Profile of key staffTo align with LN 137 0f 2012.

The utility to progressively engage personnel with requisite competencies (most personnel at diploma level for skill)

iv. Approved Staff Establishment  in line with Wasreb StandardsApproved Staff Establishment

 

To provide staff establishment versus in-post
 Human Resource Management
         i.    Approved Human resource policy  manual  in line with WASREB StandardsApproved updated Human resource policy  Manual as per modelTo align Human Resource Policy with the existing guidelines
       ii.   Performance management  system· PMS in place

· Evidence of appraisal (implementation)

PMS in place

To provide evidence of appraisal implementation

     iii.     HIV PolicyHIV PolicyThe company to in addition implement HIV  and AIDS mainstreaming activities in line with NACC guidelines
     iv.    Collective Bargaining Agreement  in line with WASREB Standards· Valid CBA

· In line with approved tariff

The company to confirm if there is a CBA in place
       v.   Contracts of employment  for  Management Staff with clear terms and conditions of service· Sample Copy of signed contracts for  Management StaffTo provide sample signed 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 sample signed contracts for unionisable staff
    vii.  Approved Organization Structure in Line with WASREB StandardsApproved Organization StructureTo 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.

·         Commercial function to be established and filled with the requisite competencies

 

  viii.  Code of Conduct and Ethics for employeesSample Copy of signed code of Conduct and Ethics for employeesTo provide signed copies of code ethics
      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

To confirm the actuarial liabilities under the National water pension scheme and sensitize members  to transfer to another scheme

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 Valid abstraction permits for the two water sources.

 

 

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)To provide valid effluent discharge permits from NEMA. The provided permit expired on January 25th 2015.
vi. Asset Register – assets owned by WSPCopy of asset registerTo be provided in form of a comprehensive list 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 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 with Net Book Values after depreciation for each asset
ix. Asset maintenance scheduleCopy of asset maintenance scheduleTo provide a comprehensive list of assets by names, quantities and specific components for maintenance purposes with differentiated specific timeline schedules.
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 deed of handover/transfer documents of all assets.
xii. Details of planned institutional and infrastructural improvementsReview planning documents (strategic plan, master plan, business plan) to determine adequacy/link to performance targetsInadequately provided
xiii. Financing PlanA plan to support activities in (xii) aboveProvided in the business plan. However, it is due to end in 2019.
Information on Commercial Management
i. Copy of Customer contractCheck against model customer contractTo be aligned  to the model customer contract
ii. Customer complaint handling procedureCheck against CEGTo be developed and/or aligned to the Customer Engagement Guideline

 

iii. Customer Service CharterCheck against minimum service standardsUtility to include the principles of service delivery in a table with clear timelines in accordance with sector standards
iv. Procurement PolicyApproved procurement policy/or evidence of following PPAD Act 2015To provide duly approved procurement policy
v. Evidence of Stakeholder ConferenceEvidence of Stakeholder Conference invitation, list of participants, minutes within the last 2 financial yearsTo provide signed Minutes
vi. Tax compliance certificate/statusCheck validity, validate with iTaxTo provide status.
vii. Most recent  two years Auditor General Reports· Audit certificate for the 2 years

· Signed audit reports

To provide audited accounts for 2015/16 and 2016/17
viii. Website Information on annual reportCheck website for annual reportTo upload annual reports
ix. Evidence of Bi- annual Customer Satisfaction SurveyReport within the last 2 yearsTo provide evidence
x. Adoption of Maji VoiceCheck against Maji Voice list and adoption status (reports)To adopt and implement MajiVoice in the 2018/19 FY as a license condition
xi. Compliance to WASREB’s website requirementsCheck website against WASREB standardsTo align website to Wasreb Standards.
Information on financial management
i. Proposed / Valid Regular TariffCheck validity on websiteTo provide a proposed Regular Tariff Application  before issuance of the license
ii. Maintenance Costs / O+MCheck against tariff, audited accounts and WARIS dataAudited accounts not provided

Acceptable range is 8% – 15%

iii. Employee Costs / O+M2015/16; 43%

2016/17; 42%

Acceptable Sector Benchmark, <30%.

iv. O+M Coverage2015/16; 103%

2016/17; 105%

Full cost recovery, >150%

v. Quick Ratio (Acid Test ratio)Audited Accounts not provided

Acceptable limit,  >=1

vi. Debtor daysAudited Accounts not provided

Acceptable limit, <=90 days

vii. Collection Efficiency2015/16; 88%

2016/17;88%

Acceptable Sector Benchmark, >85%

viii. Debt Service Coverage RatioAudited Accounts not provided

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 conduct a self-assessment
xii. Operational business plan· BoD approved Operational business plan

· Check against WASREB standards

The Business Plan period is 5 years versus the required 1 year with annual adjustments.
xiii. Approved Disaster Management PlanBoD Approved Disaster Management PlanTo 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

Provided a list outlining a water treatment plant, pipelines, pump sets and storage tanks but it is unclear who developed these assets and when.

To provide Completion/Hand over 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

Provided a list outlining a maturation pond, sewer line network, sewerage office block and sludge drying bed but it is unclear who developed these assets and when.

To provide Completion/Hand over 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

There are no SSSPs operating in the utility’s service area. This was corroborated by the mapping report which confirms that at the time of mapping, SSSPs previously existing had been taken up by the WSP.
9.Performance improvements in license period   
a.       Quality of Service  
                i.            Water coverage %Check against 2022 targets and link to NWSSFigure provided is 90% against WARIS 72%. To harmonise the figures and increase by at least three percentage points annually.
              ii.            Drinking Water Quality %100%Currently at 93%

To attain 100% from Y1 onwards

             iii.            Hours of SupplyProgression to acceptable sector benchmarksCurrently at 20 hours/day

Acceptable Sector Benchmark, at least 16 hours per day.

             iv.            Sewerage coverage %Check against 2022 targets and link to NWSSUsing the figure of 46%, growth should develop as indicated: 46%(Y0), 48% (Y1), 50% (Y2), 52% (Y3), 54% (Y4), 56% (Y5)
              v.             Effluent Quality %100%To attain 100% from Y1 onwards
b.       Economic Efficiency  
                i.            Personnel Expenditure as % of O&M costs, %Compliance to sector benchmarksFigure provided increases from 41% (Y0) to 45% (Y1).  To reduce as per the proposal below 41%(Y0), 40% (Y1), 38% (Y2), 37% (Y3), 36% (Y4), 35% (Y5)
              ii.            O+M Costs coverage,  %Progression to full cost recoveryUsing the figure of 105%, growth should develop as indicated: 105%(Y0), 110% (Y1),115% (Y2), 120% (Y3), 125% (Y4), 130% (Y5)
             iii.            Revenue Collection Efficiency %Compliance to sector benchmarksFigure provided is 90% against WARIS figure of 88%. To harmonise the figures and reach at least 95% at the end of License period. Utility to separate between current collections and arrears.
c.       Operational Sustainability  
                i.            Non Revenue Water  %Progression to acceptable sector benchmarksWARIS 40%. Using the figure of 39% to reduce to 27% as indicated: 39 % (Y0), 36% (Y1), 33% (Y2), 31% (Y3), 29% (Y4), 27% (Y5). Clear measures in this regard to be clearly documented.
              ii.            Metering(operational) ratio %100%Using the figure of 94%, the WSP should move to 100% in Y1.
             iii.            Staff ProductivityProgression to acceptable sector benchmarksFigure provided is 9 against WARIS 6. To harmonise the figures and reduce to below 5 by end of License period.
             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 22%

Acceptable performance 50%

vi. Pro-poor AssessmentThe score for 2016/17 is 80%

Acceptable performance 75%

Other Issues
                i.            Evidence of Public ConsultationEvidence of Public Consultation invitation, list of participants, minutes for the license applicationTo be undertaken
              ii.            License Fee   to be paidYes/NoTo be paid on issuance of the license
             iii.            Arrears of Regulatory LevyReconciled amountArrears of Kshs. 673,227.72 as at 30th June 2018 to be cleared before issuance of License
             iv.            Arrears of Licensee Remuneration to WSBsReconciled amount Arrears to be cleared before issuance of License.

 

Date of Evaluation    23rd 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 70% which makes it commercially viable. The utility is weak in weak in the area of personnel expenditures and Non-revenue water. 

 

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