Malawi Peri-Urban Sanitation Malawi Peri-Urban Sanitation Project – Experience with a Project – Experience with a

PSP ApproachPSP Approach

June 2011June 2011

Objective of the projectObjective of the project• Safe drinking water to 723,000 additional Safe drinking water to 723,000 additional

people and basic sanitation to 468,000 people and basic sanitation to 468,000 people in low income areas of the cities of people in low income areas of the cities of Blantyre and Lilongwe in a sustainable Blantyre and Lilongwe in a sustainable form by 2012. It will further result in a 24-form by 2012. It will further result in a 24-hour water supply for 408,000 people in hour water supply for 408,000 people in Blantyre.Blantyre.

• Building competent and sustainable Water Building competent and sustainable Water UtilitiesUtilities

Two major problemsTwo major problems• Extending services to Low income Extending services to Low income

areasareas• Weak, non-performing Utilities (Water Weak, non-performing Utilities (Water

Boards)Boards)

Who is able to do what best?Who is able to do what best?– NGOs with experience for LIAsNGOs with experience for LIAs– Capacity Building, Financial sustainability Capacity Building, Financial sustainability

through PSSCthrough PSSC

Contractual Relations - Contractual Relations - ImplementationImplementation

LWB

EIBMinistry of Finance

BWB

EU ACP WFContribution agreement

WaterAid

Loan/ grant agreement

On-lending agreements

Partnership

agreement

Water For People

Private Service Contractor

Performance ContractsImplementation

agreement

Procurement of Service Procurement of Service ContractorContractor• Building Ownership with stakeholdersBuilding Ownership with stakeholders• Stakeholder workshop facilitated by BPD (EUR 30k)Stakeholder workshop facilitated by BPD (EUR 30k)• EIB financed Transaction Advisory Services (Fichtner Consulting, EIB financed Transaction Advisory Services (Fichtner Consulting,

EUR 400k)EUR 400k)• Alliance Approach for ProcurementAlliance Approach for Procurement• Open tender for Expression of Interest (EOI)Open tender for Expression of Interest (EOI)• Bidders Conference in Malawi with broad international Bidders Conference in Malawi with broad international

attendanceattendance• 8 bids received, 2 companies shortlisted8 bids received, 2 companies shortlisted• Signature of Project Development Contract prior to bid Signature of Project Development Contract prior to bid

preparationpreparation• Both bidders spent close to 15 man-month on bid proposalBoth bidders spent close to 15 man-month on bid proposal• Loosing bidder was compensated (EUR 50k)Loosing bidder was compensated (EUR 50k)• Signature in August 2009Signature in August 2009

Extending Services in Low Extending Services in Low Income Areas (LIA’s) - some Income Areas (LIA’s) - some factsfacts• LIA = Informal/unplanned settlement LIA = Informal/unplanned settlement

areasareas– Limited land tenureLimited land tenure– AffordabilityAffordability

• Water supply via: kiosksWater supply via: kiosks– Poor payment recordPoor payment record– vandalismvandalism

• Sanitation: pit latrinesSanitation: pit latrines

Replicating successful models: Replicating successful models: WaterAidWaterAid• WaterAid (in partnership with LWB) demonstrated a WaterAid (in partnership with LWB) demonstrated a

succesful local kiosk management model:succesful local kiosk management model:– ““The Water User Association” built on a strong The Water User Association” built on a strong

social/community fabricsocial/community fabric• WUA’s:WUA’s:

– manage up to 100 kiosksmanage up to 100 kiosks– Single customer interface for Water BoardSingle customer interface for Water Board– WUA’s: charge slightly increased fees to:WUA’s: charge slightly increased fees to:

• Pay kiosk operators & WUA administratorsPay kiosk operators & WUA administrators• Recover prior debtsRecover prior debts

• Kiosk design with “superstructure” against Kiosk design with “superstructure” against vandals/theftvandals/theft

• Success has sensitised WaterBoards who now have Success has sensitised WaterBoards who now have special LIA unit to deal with WUA’s.special LIA unit to deal with WUA’s.

• Sanitation marketingSanitation marketing

Procuring an NGO for Procuring an NGO for Blantyre ?Blantyre ?

• Only identified 3 potential NGO’s;Only identified 3 potential NGO’s;

• NGO’s need local grass-root NGO’s need local grass-root presence;presence;

• Do they bid competitively (WaterAid Do they bid competitively (WaterAid not);not);

• Open to consultants?Open to consultants?

• Level playing field ?Level playing field ?

Open tender carried outOpen tender carried out

• 9 expressions of interest from int’l & 9 expressions of interest from int’l & local:local:– NGO’sNGO’s– ConsultantsConsultants– JV’sJV’s

• 4 pre-qualified bidders4 pre-qualified bidders

• 4 bids4 bids

• W4P won, on price.W4P won, on price.

Key Lessons PSSCKey Lessons PSSC

• It takes time, experience and perseveranceIt takes time, experience and perseverance• Don’t come with pre-conceived solutions, manuals Don’t come with pre-conceived solutions, manuals

or toolkitsor toolkits• Buy-in by Water Boards not guaranteedBuy-in by Water Boards not guaranteed• PSSC perceived as service provider (consultant) PSSC perceived as service provider (consultant)

not as partner of the WBs that shares the same not as partner of the WBs that shares the same goal (service/ performance improvementgoal (service/ performance improvement

• Tax issues, the « human factor »Tax issues, the « human factor »• Erratic (political) environmentErratic (political) environment• Moving targets (KPIs) compared to a static contractMoving targets (KPIs) compared to a static contract• Incentives such as performance bonus may not Incentives such as performance bonus may not

work as intendedwork as intended

Key Lessons Water For Key Lessons Water For PeoplePeople• NGOs can be integrated in various ways to NGOs can be integrated in various ways to

work with the Bankwork with the Bank

• NGO’s can play an important role in NGO’s can play an important role in reaching the MDG’s;reaching the MDG’s;

• We walked a thin line to procure We walked a thin line to procure competitively and proved it can be done, competitively and proved it can be done, but market is thin;but market is thin;

• No complaints received from bidders other No complaints received from bidders other than tight timingthan tight timing

ThanksThanks

Stakeholders, BudgetStakeholders, Budget

• Lilongwe Water BoardLilongwe Water Board• Blantyre Water BoardBlantyre Water Board• WaterAidWaterAid• Privatisation Privatisation

CommissionCommission• NWDP IINWDP II• Joint PIU Joint PIU • European UnionEuropean Union• EIBEIB• World BankWorld Bank• NGOs, CBAsNGOs, CBAs• Water UsersWater Users• Low Income Area Low Income Area

UsersUsers• Ministry of FinanceMinistry of Finance

Applied:Applied:• 15.4 mill EUR = 48.4% EU grant15.4 mill EUR = 48.4% EU grant• 15.9 mill EUR = 50.0% EIB loan15.9 mill EUR = 50.0% EIB loan• 0.5 mill EUR = 1.6% Water Boards0.5 mill EUR = 1.6% Water Boards• 31.8 mill EUR ≈ 42 mill $ total31.8 mill EUR ≈ 42 mill $ total

Approved:Approved:• 30.8 mill EUR eligible cost30.8 mill EUR eligible cost• 14.9 mill EUR EU contribution14.9 mill EUR EU contribution