Malawi Peri-Urban Sanitation Project – Experience with a PSP Approach June 2011
Objective of the project • Safe drinking water to 723, 000 additional people • and basic sanitation to 468, 000 people in low income areas of the cities of Blantyre and Lilongwe in a sustainable form by 2012. It will further result in a 24 -hour water supply for 408, 000 people in Blantyre. Building competent and sustainable Water Utilities
Two major problems • Extending services to Low income areas • Weak, non-performing Utilities (Water Boards) Who is able to do what best? – NGOs with experience for LIAs – Capacity Building, Financial sustainability through PSSC
Contractual Relations Implementation EU ACP WF Contribution agreement Ministry of Finance Loan/ grant agreement EIB On-lending agreements Partnership BWB Implementation agreement Water For People LWB Performance Contracts Private Service Contractor agreement Water. Aid
Procurement of Service Contractor • • • Building Ownership with stakeholders Stakeholder workshop facilitated by BPD (EUR 30 k) EIB financed Transaction Advisory Services (Fichtner Consulting, EUR 400 k) Alliance Approach for Procurement Open tender for Expression of Interest (EOI) Bidders Conference in Malawi with broad international attendance 8 bids received, 2 companies shortlisted Signature of Project Development Contract prior to bid preparation Both bidders spent close to 15 man-month on bid proposal Loosing bidder was compensated (EUR 50 k) Signature in August 2009
Extending Services in Low Income Areas (LIA’s) - some facts • LIA = Informal/unplanned settlement areas – Limited land tenure – Affordability • Water supply via: kiosks – Poor payment record – vandalism • Sanitation: pit latrines
Replicating successful models: Water. Aid • Water. Aid (in partnership with LWB) demonstrated a succesful local kiosk management model: – “The Water User Association” built on a strong social/community fabric • WUA’s: – manage up to 100 kiosks – Single customer interface for Water Board – WUA’s: charge slightly increased fees to: • Pay kiosk operators & WUA administrators • Recover prior debts • Kiosk design with “superstructure” against vandals/theft • Success has sensitised Water. Boards who now have • special LIA unit to deal with WUA’s. Sanitation marketing
Procuring an NGO for Blantyre ? • Only identified 3 potential NGO’s; • NGO’s need local grass-root presence; • Do they bid competitively (Water. Aid not); • Open to consultants? • Level playing field ?
Open tender carried out • 9 expressions of interest from int’l & local: – NGO’s – Consultants – JV’s • 4 pre-qualified bidders • 4 bids • W 4 P won, on price.
Key Lessons PSSC • It takes time, experience and perseverance • Don’t come with pre-conceived solutions, manuals or • • • toolkits Buy-in by Water Boards not guaranteed PSSC perceived as service provider (consultant) not as partner of the WBs that shares the same goal (service/ performance improvement Tax issues, the « human factor » Erratic (political) environment Moving targets (KPIs) compared to a static contract Incentives such as performance bonus may not work as intended
Key Lessons Water For People • NGOs can be integrated in various ways to work • • • with the Bank NGO’s can play an important role in reaching the MDG’s; We walked a thin line to procure competitively and proved it can be done, but market is thin; No complaints received from bidders other than tight timing
Thanks
Stakeholders, Budget • • • • Applied: Lilongwe Water Board • 15. 4 mill EUR = 48. 4% EU grant Blantyre Water Board • 15. 9 mill EUR = 50. 0% EIB loan Water. Aid • 0. 5 mill EUR = 1. 6% Water Privatisation Commission Boards NWDP II • 31. 8 mill EUR ≈ 42 mill $ total Joint PIU European Union Approved: EIB • 30. 8 mill EUR eligible cost World Bank • 14. 9 mill EUR EU contribution NGOs, CBAs Water Users Low Income Area Users Ministry of Finance
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