LICENCE ANALYSIS CHECKLIST AND EVALUATION FORM WATER ACT 2016

Name and Address of Water Service Provider:

Tavevo Water and Sewerage Company Limited

P.O. BOX 6-80300

VOI

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

·     Application form not well done. Responses done in red colour.

·         Supporting documents inadequate

          ii.        Certificate of Company RegistrationCopy of certificate*· Copy of Certificate of incorporation (serial No. C124025) dated 7th April 2006 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 shape files of service area.
        iv.        Copy of letter to county on application

·        Copy of letter*

·        Share application with the county

·  Copy of letter of submission for the license, forwarded to the county.
         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*

1.    Draft memo and articles not compliant with model MOA.

 

2.    Memo and articles should be aligned to the Water Act 2016, Companies Act 2015.

 

3.    MOA should be amended to specifically provide that:

·         Company is owned by county government (issue shares to the county secretary, CEC member for water affairs and CEC member for finance.

Whereas the memo indicates share capital of Kshs. 100, 000 the same does not enlist subscribers.

Clause 5 of Articles to be reviewed to read that shares shall be held by the officers stated above in trust for the county government.

Clause 6 of the Articles should be expunged accordingly.

· The company shall be an agent of Taita Taveta 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 57 of Memorandum and articles of Association be reviewed 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. Governor cannot be a member of the board, ONLY CEC members for water and finance or their nominees from the county shall be institutional directors.

·   Managing directors shall sit on the board but shall have no voting rights.

·         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.

·  Clause 44 of the articles is referencing the repealed Companies Act. This should be reviewed in accordance with the companies Act 2015.

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

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

·         Review article 70 to add that appointment of managing director shall be done in line with the requirements of Legal Notice No. 137 of 2018.

 

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 detailing particulars of directors.

 

Company to clarify the size of current board. Nine directors are listed in the application minus the Chairperson mentioned in the Audited Accounts.

 

Gender balance met.

Board to ensure compliance with the license conditions, Corporate Governance Conditions and 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 staff meets the competence criteria save for the Human Resource with a certificate level.
iv. Approved Staff Establishment in line with WASREB Standards

Approved Staff Establishment

 

·   To provide Approved 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 model

·    The company has a comprehensive policy dated September 2018

.

     ii.        Performance management system

·        PMS in place

·        Evidence of appraisal (implementation)

·         To provide samples of appraisal implementation reports
    iii.        HIV PolicyHIV Policy·         To provide the HIV policy
   iv.        Collective Bargaining Agreement in line with Wasreb Standards

·        Valid CBA

·       In line with approved tariff

·         To indicate the CBA status
    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 sample 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 sample contracts for unionisable and other staff
  vii.        Approved Organization Structure in Line with WASREB StandardsApproved Organization Structure·   To include NRW and Asset planning functions under technical department
 viii.        Code of Conduct and Ethics for employeesSample Copy of signed code of Conduct and Ethics for employees·   To provide sample signed codes of conduct 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.

·   The company operates a provident fund contributing 7.5% employee and 22.5% employer.

· 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

To provide abstraction permits for the following sources:

1.    Mwasinenyi Borehole

2.    Ngiriwunyi River

3.    Wundanyi river,

4.    Wesu springs,

5.    Kishenyi dam

6.    Lutheran Borehole

7.    Lessesia Borehole

8.    Eldoro Boreholes

9.    Njoro Kubwa Springs

 

To provide copies of abstraction permits along with the bulk supply agreements for the Mzima pipeline/Mzima I pipeline source(s)

 

 

 

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

Indicated that the waste water system is not under their control.

·         To indicate the status/evidence of transfer of the current waste water system from the county government to the utility.

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 on a monthly and annual basis as per schedule 13 of the WASREB guidelines on Water Quality and Effluent monitoring.

 

·   To provide annual Water quality report for the FY 2017/18 in the proper format as per the guidelines.

v. Copy of effluent discharge permitValid effluent discharge permit(s)Not provided as the WSP says the facility is under the County Government. However, they should have a copy of the permit
vi. Asset Register – assets owned by WSPCopy of asset registerTo provide a comprehensive asset register containing the totality of all assets being utilized by the utility (including machinery, waterworks and transmission/distribution networks and appurtenances), with their respective current Net Book Values after depreciation.
vii. Asset Register- assets from Local AuthorityCopy of asset registerTo clearly indicate if they received any assets from the municipality and list them if any as (vi) above.
viii. Asset Register –assets from Water Service BoardCopy of asset registerTo clearly indicate if they received any assets from the water service board and list them if any as (vi) above.
ix. Asset maintenance scheduleCopy of asset maintenance schedule

Submitted an asset maintenance report for pump sets and gensets up to September 2018. However, a schedule is what was required. The report is inadequate as it does not cover all the assets.

·    To provide an asset maintenance schedule exclusively for each of the assets from office equipment, machinery (including pump sets and gensets), waterworks and transmission/distribution networks and appurtenances as appropriate for 2017/18.

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·         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 targetsStrategic plan not submitted. The utility indicated they are in the process of formulating a strategic plan
xiii. Financing PlanA plan to support activities in (xii) above·         To be provided
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 to include:

1.    Consumer obligations

2.    WSP obligations

3.    Service Standards

4.    Redress mechanism

5.    WSP to remove employer certificate requirement

6.    The form to include nature of service

 

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 associated cost of services offered
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 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 submit tax compliance certificate

·         To provide 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 2015/16

·         2016/17 qualified on internal managerial issues (failure to follow IPSAS format of preparing financial statements, customer deposits and payroll liabilities)

viii. Website Information on annual reportCheck website for annual report·  WSP to upload annual reports 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 and the customer database shall be updated regularly.

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

·         Annual reports not uploaded only 2016/17 available

·         No customer downloadable forms

·         Payment details are scanty

·  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 websiteWSP to commence tariff application process six months before expiry.
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 111 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 separate current and arrears.
viii. Debt Service Coverage RatioAcceptable 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 give progress on Strategic Plan development
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

·         To be provided
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

1.    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.
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

2.    Indicated that there are none in the application form.
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

Indicated that there were no SSSPs in the application form. However, service area mapping output TAVEVO has 54 community owned Small-Scale Service Providers that operate within the SA. The SSSPs operates independently

with no form of agreement with the WSP.

 

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

·         WSP to provide baseline figure for coverage

·         To increase by at least 2 percentage points annually for the license period.

          ii.        Drinking Water Quality %100%·         To attain 100% from Y1 onward
         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 determine the baseline figure and provide projections for the license period.

·  County Government to hand over the wastewater system to the WSP

         v.         Effluent Quality %100%· To ensure 100% compliance once WSP takes over operations.
b.    Economic Efficiency  
           i.        Personnel Expenditure as % of O+M costs %Compliance to sector benchmarks·  To maintain at ≤30% throughout the license period.
          ii.        O+M Costs coverage %Progression to full cost recovery·  To progress to 110% at the end of the period to guarantee the current level of service.
         iii.        Revenue Collection Efficiency %Compliance to sector benchmarks·   To progress to at least 90% throughout the license period 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

·  Proposed target of 20% by Y5 is not realistic. To rework the projections but target below 45% by Y5.

·    To implement Non Revenue Water Management Standards developed by WASREB.

          ii.        Metering(operational) ratio, %100%·    To progress to 100% by Y1 while ensuring that all meters are functional.
         iii.        Staff Productivity, NoProgression to acceptable sector benchmarks·         To reduce to below 8 by Y5.
        iv.        Environmental (source) protectionCheck CSR reports, SP, Go green, renewable energy·   WSP to document efforts towards source protection.
v. Governance IndicatorScore for last assessment

Acceptable performance 50%.

WSP to improve on the following aspects of the governance assessments

·         Financial Management

·         Human resources

·         Service standards and

·         Information and control systems

vi. Pro-poor Assessment

Acceptable performance 75%.

WSP to address the following areas in pro-poor assessment:

·         Coverage

·         Service levels

·         Strategy and organisation

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 0.1% 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   15th November, 2018

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