IDB’s Water and Sanitation Initiative:Financing opportunities for water and sanitation in the Caribbean

Matthias KrauseWater and Sanitation Senior SpecialistInter-America Development Bank

1. THE INTER-AMERICAN DEVELOPMENT

BANK

2. WATER AND SANITATION IN LAC

3. IDB’S W&S INITIATIVE:

FINANCIAL & NON-FINANCIAL PRODUCTS

INDEX

WATER AND SANITATION INITIATIVE

THE INTER-AMERICAN DEVELOPMENT BANK

(IDB)

• TYPE OF ORGANIZATION: Multilateral

• MISSION: support efforts by LAC countries to reduce poverty and

inequality

• HISTORY: Established in 1959. Largest source of development financing

in LAC

• MEMBERSHIP: 48 countries represented by a Board of Executive

Directors

• APPROVED LENDING-GRANTS IN 2009: $15.5 billion (6% W&S)

• EMPLOYEES: About 2,000

• OFFICES: Headquarters in Washington, DC, with country offices in 26

borrowing countries, plus a regional office in Asia and in Europe

• CLIENTS: Central governments, provinces, municipalit., private firms

and NGOs

WHAT IS THE IDB?

WATER AND SANITATION INITIATIVE

WATER AND SANITATION SECTOR IN LAC

• MDGS FOR 2015:

Extend access to water to 36,8 M people

Extend access to sanitation to 68,6 M people

Required investments: US$17 billion (not including WWT)

Water: US$5.5 B

Sanitation: US$ 11.5 B

• UNIVERSAL ACCESS 2020:

Extend access to water to 112,2 M people

Extend access to sanitation to 193,5 M people

Required invest.: US$ 49.1 B

Water: US$16.7 B

Sanitation: US$32.4 B (including WWT: US$50 B)

ACCESS & INVESTMENT NEEDS

• MORE THAN 219 MILLION RECEIVE INTERMITTENT SERVICE

• LESS THAN 50% CONNECTED TO A SEWERAGE SYSTEM

• 10% IN SITU DISPOSAL (39 MILLION)

• LESS THAN 15% OF WASTEWATER IN URBAN AREAS RECEIVES

SOME TYPE OF TREATMENT

• 15 DEATH ZONES IN THE REGION

• 100 CHILDREN UNDER 5 DIE EVERY DAY

DUE TO WATER/SANITATION RELATED

DESEASES (38,000 PER YEAR)

OTHER SECTOR INDICATORS

• GUARANTEE QUANTITY & QUALITY OF WATER

RESOURCES

• ATTRACT MORE INVESTMENT

• REDUCE TECHNOLOGY COSTS

• STRENGTHEN INSTITUTIONS RESPONSIBLE FOR:

PLANNING

REGULATION

CONTROL

• IMPROVE WATER OPERATORS’ EFFICIENCY

SECTOR CHALLENGES

CHALLENGES FOR THE CARIBBEAN REGION

• Declining amount of fresh water

• Discontinuity of water service

• Low coverage of sewerage networks and/or waste water

treatment

• High non revenue water (45-50%)

• High inefficiency on energy consumption (30% of

operational budget)

• Water tariffs do not cover production costs

• Inefficiencies in the management of WS utilities/ weak

corporate governance of utilities

WATER AND SANITATION INITIATIVE

W&S INITIATIVE: FINANCIAL & NON-FINANCIAL

PRODUCTS

GOAL AND PROGRAMS• GOAL

Launched in 2007 to achieve universal access to sustainable, reliable, and good quality W&S services

• FOUR PROGRAMS 100 CITIES 3,000 RURAL COMMUNITIES WATER DEFENDERS EFFICIENT AND TRANSPARENT UTILITIES

• SOVEREIGN & NON-SOVEREIGN GUARANTEED LOANS Investment Loans Performance Driven Loans Policy Based Loans

• INVESTMENT GRANTS & TECHNICAL ASSISTANCE Spanish LAC Water and Sanitation Fund

AquaFund

Energy Efficiency in Water Companies (SECCI)

• WATER OPERATORS PARTNERSHIP (WOP)

Corporate Governance

Non-revenue water, …

SUPPORT MODALITIES

LOAN APPROVALS (2000-2010 in US$ million)

Water Initiative: approvals for US$ 1 billion per year

More than US$ 4.6 billion approved since 2007 (60 operations)

PRE-INITIATIVE (2000-2006) POS-INITIATIVE (2007…)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

$206 $197 $96

$175 $99

$340 $375

$979(13) $960(11)

$1,840(17)

$885(19)

$1,418(15)

TCs APPROVALS (2000-2010 in US$ thousands)

US$ 46 million approved since 2007 (99 opertions)

PRE-INITIATIVE (2000-2006) POS-INITIATIVE (2007…)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$2,236(9)

$174(2) $846 (8)

$2,717 (12) $2,931 (7)

$5,381(22) $5,461(18) $4,304 (11)

$11,313(23)

$13,797(28)

$16,943 (37)

$10,000(23)

PIPELINE SUMMARY CARIBBEAN

INE/WSA 2010/2011 PIPELINE: US$ 218 M (Guyana, Suriname, Bahamas, Barbados, Jamaica and Trinidad & Tobago)

PROJECTS IN EXECUTION: US$88.5 M (Barbados, Guyana and Jamaica)

PREPARATION EXECUTIONGU: Georgetown Sanitation Improvement Program / US$9.5 M BA: Water and Sanitation Systems Upgrade / US$50 M

SU: Water Supply Infrastructure Rehabilitation / US$12M GU: Georgetown Solid Waste Manag. / US$ 13.5 M

BH: WSC Support Program / US$30 M JA: Kingston Metro Water Supply Rehabilitation / US$ 25 M

GU: Linden Water Supply Rehabilitation Program / US$ 12 M

TT: Wastewater Infrastructure Rehabilitat. Program / US$26 M

JA: Water Rehabilitation / US$ 128.5 M

PROJECT CHARACTERISTICS

• All operations include institutional component to address: organizational efficiency, financial sustainability improvement, and non revenue water and asset management

• Majority of operations with energy efficiency component

• The Global Environment Facility (GEF) in partnership with the IDB and UNEP are seeking to use GEF resources to help mobilize greater investments in wastewater management facilities in the Wider Caribbean Region (CREW): US$ 18.0 for 2010 for projects in Jamaica and Guyana.

• Water Operators Partnership (WOP) which supports the exchange of information and practices among water operators

• Knowledge products in waste water and solid waste

Corporate Governance Toolkit

• Support an assisted self-assessment of the practices applied by the WSE in the area of CG

• Assess the practices applied by comparing them with four levels of development (from “basic” to “state-of-the-art”)

• Give an orientation to develop action plans in order to improve practices

Context for CG

Legal/ Regulatory/ Policy Framework

Ownership/ Contract. Arrangement

Corporate Governance

Management

• That the WSEs may pursue their purpose (provide good quality services to all at affordable rates) thanks to their sound business model and financial health

• That WSEs may not drain scarce public resources

• That the CG structure of WSEs protects them against the main risks– Loss of value of the capital invested– Abuse from well-connected interest groups

• That the State develops ownership policy for WSEs – Differentation between ownership policy and social

policy– Differentiation between the political and the business-

like. WSE’s should generate value, be efficacious,

sustainable, and efficient.

Benefits from strengthening CG in state-owned WS Enterprises

Thank you!

MATTHIASK@iadb.org

SPANISH WATER AND SANITATION FUND

• NON-REIMBURSABLE RESOURCES FOR INVESTMENT PROJECTS: US$561 M for 2008-11

• BENEFICIARY COUNTRIES: IDB borrowing member countries (except English Caribb.)

• PRIORITY INVESTMENT AREAS Rural

Periurban

• 19 PROJECTS (US$561 M) IN 13 COUNTRIES 14 projects approved by IDB Board

5 projects under preparation

• MULTI-DONOR FUND FOR WATER AND SANITATION

SECTOR

• NON-REIMBURSABLE RESOURCES

Technical assistance

Project preparation

Pilot investment projects

• SUPPORTS SG & NSG LENDING

• US$50 MILLION IDB OC FUNDS

28TCs approved (US$16 million)

Third-party co-financing: almost US$8 million

US$10 million programmed for 2011

AQUAFUND

• MULTI-DONOR FUND FOR WATER AND SANITATION

SECTOR

• NON-REIMBURSABLE RESOURCES

Technical assistance

Project preparation

Community Projects / Pilot investment Projects

• SUPPORTS SG & NSG LENDING

• US$50 MILLION IDB OC FUNDS

28TCs approved (US$16 million)

Third-party co-financing: almost US$8 million

US$10 million programmed for 2010

AQUAFUND

• PROJECTS EXECUTED BY NGO OR CIVIL SOCIETY

ORGANIZATIONS

Avina Foundation, CARE, Catholic Relief Services, Millennium

Water Alliance, TEC Monterrey, The Nature Conservancy, Water for

People, Waste pickers cooperatives

• THE BANK MATCHES EVERY DOLLAR

• DONORS OF THE AQUAFUND. IDB is the largest AquaFund donor

followed by the Swiss Government, PepsiCo Foundation and the

Austrian Government.

• OTHER PARTNERS THAT HAVE LEVERAGED AQUAFUND

FUNDING ON A PROJECT BASIS

Femsa Foundation, Kellogg Foundation, The Coca Cola

Foundation, Nordic Development Fund

COMMUNITY PROJECTS

COMMUNITY PROJECTS

NGO PROJECTS

Water Resources Management

(WRM)

Solid Waste Management

(SWM)

WATER FUNDSPROGRAM

Partner: TNCCountries: CO/EC/PE/BR/MXTotal : 15.35 MIDB: 0.35MGEF : 5 MFEMSA Found.: 5 MTNC: 5 M

Social Inclusion of Informal Recyclers

Program

Partners: AVINA/FOMINCountries: CO/BRIDB: 6M (0.5 AQF)External Donors: 6 M

Water Supply and Sanitation

(WASH)

WATER FOR SCHOOLS(SWASH)

Partners: MWACountries: NI/ES/GUTotal : 2M IDB: 1 M Coca Cola: 1 M

Beneficiaries: 23 K students

DEMAND DRIVEN SUSTAINABLE RURAL WSS

Social marketing campaigns , circuit rider programs.

Partners: TBD Countries: CO,

HO or DR

MICROCREDIT PROGRAM

Partners: Water.org Countries: PeruTotal : 3M PepsiCo Foundation (AQF): 1.5 M MIF: 1.5

Beneficiaries: 54 K people

• ADVANTAGES OF PARTNERING WITH THE IDB

Bank’s presence in every country in the region

Knowledge of its water sector specialists (engineers, economists,

social specialists and hydrologists) in HQ and 26 country offices

Extensive portfolio of water and sanitation projects (largest

donor, 83% of multilateral sector funding in the region)

Facilitates project identification and preparation, supervision of

project execution and impact evaluation

Ensures more coordinated and more upstream mechanisms of aid

delivery

COMMUNITY PROJECTS

• PARTNERSHIP WITH SECCI TO REDUCE ENERGY CONSUMPTION

IN WATER OPERATORS THROUGH: Energy Audits & Energy Efficiency Plans

Water recovery and water recycling

New operation & maintenance practices

Equipment modernization

Methane use for electricity production at waste-water treatment plants

• CURRENT EXPERIENCES:

CO: EA & EE plans for 14 operators

Caribbean: EA & EE plans for 7 operators

Other EA & EE plans in execution (2 TCs) : 6 operat.: EMPAGUA (GU), COSANPA (BR), COPASA (BR), ANDA (ES), CAASD (DR) &

AySA (AR)

3 operat. in Central America: AYA (CR), SANAA (HO), IDAAN (PN)

ENERGY EFFICIENCY

• COLLABORATION BETWEEN IDB + UN-HABITAT + IWA +

AIDIS

• PROMOTES COOPERATION BETWEEN WATER OPERATORS

15 COOPERATIONS (examples) EPM (CO) & ENACAL (NI) → information systems

SABESP (BR) & SEDAPAL (PE) → e-procurement

AGUAS ANDINAS (CH) & SEDAPAR (PE) → management efficiency

DIGAP (CH), EMAC (EC) & COSMOL (BO) → solid waste

SADM (ME) & EMAAPQ (EC) → reduction of water consumption

SABESP (BR) & AyA (CR) → framework agreement

WATER OPERATORS PARTNERSHIP

• MORE THAN US$ 4.9 BILLION FOR SECTOR FINANCING

• MORE THAN US$39 MILLION FOR TECHNICAL ASSISTANCE

• 146 CITIES (TARGET 100)

• 2600 RURAL COMMUNITIES (TARGET 3,000)

• 31 MICRO WATER-SHEDS (TARGET 20)

• 90 WATER OPERATORS

PROGRESS SINCE APPROVAL

TYPICAL INFRASTRUCTURE PROJECTS

• WATER NETWORK EXPANSION/REHABILITATION

• SEWERAGE NETWORK EXPANSION/REHABILITATION

• RURAL WATER AND BASIC SANITATION

• WATER & WASTEWATER TREATMENT PLANTS

• DRAINAGE/FLOOD PREVENTION INFRASTRUCTURE

• SOLID WASTE

INVEST. GRANTS APPROVALS(2000-2010 in US$ millions)

More than US$400 million approved since 2007 (13 operations)

PRE-INITIATIVE (2000-2006) POS-INITIATIVE (2007…)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011$0

$50

$100

$150

$200

$250

$300

- - - - - - - - -

$150(3)

$268(10)

$143(6)