LICENCE ANALYSIS CHECKLIST AND EVALUATION FORM WATER ACT 2016

Name and Address of Water Service Provider:

Tetu Aberdare Water and Sanitation Company Limited

P.O. BOX 475-10100

NYERI

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 C124262
         iii. Geo- Referenced Map of Service Area accompanied by “Shape Files”

·     PDF illustration

·     List of sub-locations*

·    Shape files*Mandatory for mapped WSPs (66)

· Not provided. To provide shape files map of service area.
        iv.        Copy of letter to county on application·  Copy of letter of application with the county·         Letter dated 11/11/2018.
         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*

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

 

TETUWASCO is a company limited by guarantee enlisting various stakeholder institutions as members of the company alongside the county government of Nyeri.

 

MOA shall be amended to specifically provide that:

 

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

 

· The utility and county to explore conversation of company from company limited by guarantee to company limited by shares.

 

· 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

 

· 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 size shall be seven (7) members inclusive of two institutional directors from the county and five (5) stakeholder directors competitively recruited following the corporate governance sector.

 

· 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.

 

· Appointment of Managing director under the amended memo is subject to approval by the county. This should be amended accordingly to have the board undertake the appointments competitively.

 

· 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 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· Staff meet competence criteria except technical function with diploma in water engineering
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·         To include the HR policy revision date
     ii.        Performance management system

·        PMS in place

·        Evidence of appraisal (implementation)

·         To provide samples of appraisal implementation report
    iii.        HIV PolicyHIV Policy· To develop detailed HIV Policy in line with NACC guidelines
   iv.        Collective Bargaining Agreement in line with WASREB Standards

·        Valid CBA

·       In line with approved tariff

·         To provide the details of the CBA
    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 of other staff
  vii.        Approved Organization Structure in Line with WASREB StandardsApproved Organization Structure· To include NRW and asset development and planning functions in the structure
 viii.        Code of Conduct and Ethics for employeesSample Copy of signed code of Conduct and Ethics for employees· To provide signed sample code 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 pension scheme under the Water Sector Institutions Pension Scheme. To disclose if the company is compliant with the scheme rules
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

Three sources of water;

1.    Aguthi on Gura River

2.    Tetu Thegenge on Zaina River

3.    Titie on Titie Stream

 

WSP to provide valid abstraction permits for the three 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

Incomplete submission

 

· To provide adequate scheme summary 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

·         Not Applicable and therefore OK
iv. Compliance with WQEMG –last report

· Latest report for the month preceding the application

· Check against previously submitted reports

·        Determine compliance

WSP does not provide wastewater services yes but provides water services.

·  To provide annual Water Quality report for the FY 2017/18 as per Schedule 13 of WASREB Guidelines on Water Quality and Effluent Monitoring.

v. Copy of effluent discharge permitValid effluent discharge permit(s)·         Not Applicable and therefore OK
vi. Asset Register – assets owned by WSPCopy of asset register

Provided a summary of list of assets with and (without) purchase dates but without values plus a list of varied assets registers at various dates for land, water schemes, vehicles, furniture and computers only.

 

· To be provided in form of a comprehensive list containing the totality of assets utilized by the utility, with current Net Book Values after depreciation for each asset. These assets to include even the pipeline infrastructures and appurtenances.

vii. Asset Register- assets from Local AuthorityCopy of asset register· To indicate if any assets were received from the local authority
viii. Asset Register –assets from Water Service BoardCopy of asset registerTo be provided distinctively as a list from WSB but not combined with those of WSP
ix. Asset maintenance scheduleCopy of asset maintenance scheduleTo 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 onwards with differentiated specific timelines. Ensure to include specific components requiring maintenance.
x. Approved Water Safety PlanYes/NoDevelop an approved Water Safety Plan and implement 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 targets

· There is attempt to link strategies to targets

· To provide BoD approved Strategic Plan & Business Plan and they be revised to project to the term of the licence period

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

·         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 a matrix on all services offered, the associated costs and timelines

·         To include how to submit complaints

iv. Procurement PolicyApproved procurement policy/or evidence of following PPAD Act 2015·         Procurement policy okay
v. Evidence of Stakeholder ConferenceEvidence of Stakeholder Conference invitation, list of participants, minutes within the last 2 financial years·         WSP to 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 was qualified on financial balance for property and equipment, and non-revenue water in the 2015/16 report

· Non-revenue water was also flagged out in the Auditor General’s report for 2016/17, however, it was not a qualified opinion

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 biannual.

·         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 ensure website is in line with WASREB Website Transparency Guidelines

·  Upload annual reports, Customer downloadable forms, Payment details for services, Tariff details, how to send complaints

Information on financial management
i. Proposed / Valid Regular TariffCheck validity on website·         To commence the application process.
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·         Sector benchmark is below 150%
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 times
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·         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 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 be provided as per the application for water supply assets clearly indicated as such and other details for each asset adequately included.
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

·         Not applicable hence OK
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 indication at all

 

·         The WSP to confirm if any SSSPs are in existence and disclose formal arrangements of service provision existing, if any

· Mapping exercise noted There were no SSSPs operating within TEAWASCO’s SA, however, there were 2 that operate outside the SA but within close proximity to the WSP’s supply network. These are the Zaina Zamua Water Project and the Kinaini Water Project both located to the North of the SA

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. To maintain at above 90% throughout the license period.

·   WSP to provide the status of implementation of the outputs of the mapping exercise.

          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 has no sewerage system
         v.         Effluent Quality %100%·         WSP has no sewerage system
b.    Economic Efficiency  
           i.        Personnel Expenditure as % of O+M costs %Compliance to sector benchmarks· To harmonise the figures and review the projections while targeting below 40% by the end of the license period.
          ii.        O+M Costs coverage %Progression to full cost recovery· To progress to at least 130% by the end of the period.
         iii.        Revenue Collection Efficiency %Compliance to sector benchmarks· To maintain at above 90% throughout the period. In addition, 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 trend to ambitious (20% Y5)

· WSP to document strategies to realise this target

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

·    Target below 30% by Y5

          ii.        Metering(operational) ratio, %100%·  To attain the figure of 100% by Y1 considering the low number of active connections.
         iii.        Staff Productivity, NoProgression to acceptable sector benchmarks· To target below 8 by the end of 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 WSP to provide figures as of 30th September 2018 and propose a payment plan for the outstanding amounts.

Date of Evaluation   20th November, 2018

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