Water and Sanitation in AfricaWater and Sanitation in AfricaExperience of A Private OperatorExperience of A Private Operator
Water and Sanitation in AfricaWater and Sanitation in AfricaExperience of A Private OperatorExperience of A Private Operator
Alain Mathys
OECD – WATER AND SANITATION IN AFRICAParis, December 2006
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Suez Environment MissionSuez Environment MissionSuez Environment MissionSuez Environment Mission
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Suez Environment ProfileSuez Environment ProfileSuez Environment ProfileSuez Environment Profile
SERVICE OFFERINGIn the Water Sector:
Studies, master plans, urban development plans, modeling of underwater resources, project management.
Engineering, design and construction of water treatment plantsOperation and delegated management of services: collection,
treatment and distribution of drinking water, network maintenance, collection and treatment of wastewater for municipal and industrial customers, process water, sludge recovery.
In the Waste Management Sector:Collection, recovery, treatment and disposalUrban cleaningDecontamination and rehabilitation of industrial sites.Sludge recovery
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Private Participation in WaterPrivate Participation in WaterPrivate Participation in WaterPrivate Participation in Water
0
10
20
30
40
50
60
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
NU
MB
ER
OF C
ON
TR
ACTS A
WAR
DED
Suez Environment
Veolia
Thames / RWE
SAUR
Severn Trent
IWL-UU
Anglian
Biwater
Hyder
Azurix
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Some SE International ContractsSome SE International ContractsSome SE International ContractsSome SE International Contracts
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Macao
Mexico
Buenos Aires
Manille
Casablanca
La Paz
Djakarta
Amman
Santiago du Chili
Manaus
Johannesburg
Cancun
Chongquing
Tripoli (Liban)
Tanggu
Alger
Ongoing contracts
Concluded contracts
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Suez Environment and the Water for All Suez Environment and the Water for All ProgramProgramSuez Environment and the Water for All Suez Environment and the Water for All ProgramProgram
In developing countries Suez Environment provides water to 35 million people and sanitation services to 30 million, of which 8 million live below the poverty line
Water for All is Suez’ program aimed to provide, within the frameworks of its contracts, water and sanitation services to growing urban low income communities
These projects were implemented through partnerships involving local communities, NGOs, governments and donors
In these partnerships, Suez ensures efficient project development and sustainable operation and maintenance, providing quality water at an affordable price
In 2004 our Water for All Program was awarded a “World Business Award for the contribution to the Millennium Development Goals” by ICC and UNDP
Over the past twelve years, SUEZ Environment has worked in partnership with local authorities to bring drinking water to nearly 10 million people in the emerging countries, including 8 million people via private connections and 1.8 million via public standpipes. During that same period 4.5 million people have been connected to a sanitation networks.
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Our Intervention PrinciplesOur Intervention PrinciplesOur Intervention PrinciplesOur Intervention Principles
Understand the local reality (urban characteristics, land tenure, availability of resources and services, community concerns, priorities, demand and willingness-to-pay, …)
Involve local authorities and organization in the planning process
Offer level of services and customer management procedures responding to community demand
Reduce costs (infrastructure and services) and prices (social tariff, subsidies)
Develop alliances with donors and development agencies
Create added-value for poor customers
Integrate service to low-income areas in the global economy of the contract
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Low-Income MarketsLow-Income MarketsDevelopment Impact and Expected ProfitabilityDevelopment Impact and Expected ProfitabilityLow-Income MarketsLow-Income MarketsDevelopment Impact and Expected ProfitabilityDevelopment Impact and Expected Profitability
WaterElectricityHousing
Credit
Telecom
TobaccoAlcohol
Low Moderate High
Low
Moderate
High
Expected profitability of serving low-income segment
Develo
pm
en
t im
pact
on
com
mu
nit
y's
econ
om
y
Source: The McKinsey Quarterly 2006/4
Suez Environment in South AfricaSuez Environment in South AfricaExamples of successful cooperation through well-designedExamples of successful cooperation through well-designed
Public-Private PartnershipsPublic-Private Partnerships
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Reform of Johannesburg Urban ServicesReform of Johannesburg Urban ServicesReform of Johannesburg Urban ServicesReform of Johannesburg Urban Services
IGoli 2002: an institutional, fiscal and financial reformTransform water, sanitation and electricity departments into independent utilitiesReforms in the water sector to be supported by an experienced private operatorSignificant challenges of the water sector
73 informal settlements (550,000 inhabitants) Planned low-income settlement (850,000 inhab. i.e. Soweto): full service
that is not paid for
International tender launched in 2000 by Greater Johannesburg Metropolitan Council Won by Suez Environment. Winning characteristics:
Participation of Black Empowerment Enterprises (27% shares) Comprehensive strategy for low-income settlements
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The Management ContractThe Management ContractThe Management ContractThe Management Contract
Build a Sustainable Water and Sanitation Utility
Improve Revenue ManagementDevelop Human ResourcesImprove Customer ServicesImprove Operation EfficiencyImprove Asset Management
5-year contractRemuneration based on performance
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SE Main Achievements (1)SE Main Achievements (1)SE Main Achievements (1)SE Main Achievements (1)
Customer ServicesCreation of a Customer Care Center
+ 90% of calls answered in less than 30 seconds 80% of water network repairs and sewers blockages completed within 48
hours
Drinking Water Quality 500 monthly water samples (less than 150 previously) Bacteriological compliance higher than 99%
Meter reading increased from 50% to 94%
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SE Main Achievements (2)SE Main Achievements (2)SE Main Achievements (2)SE Main Achievements (2)
Asset ManagementInventory and assessment of existing infrastructureAsset Management SoftwareImprovement of asset maintenance trough
Internal capacity building Implementation of preventive maintenance program
Decrease of UFW from 42% to 35%
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Improvement of Financial SituationImprovement of Financial SituationImprovement of Financial SituationImprovement of Financial Situation
Revenue increase: (196 M euros to 287 M euros)
Reduction of loss:(47 M euros to 9 M euros)
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Achievements linked toAchievements linked toSustainable DevelopmentSustainable DevelopmentAchievements linked toAchievements linked toSustainable DevelopmentSustainable Development
Reduction of Power Consumption
Effluent compliance
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Improvements in Low-Income AreasImprovements in Low-Income AreasImprovements in Low-Income AreasImprovements in Low-Income Areas
Operation Gcin'amanzi – Conserve Water (Soweto)
35,000 properties so far (out of 170'000) benefited of free in-house plumbing repairs, old debt write-off and prepayment meters
Subsidized tariff and free 6 m3/month
70% water resources saving (from av. 60 to 15 m3/month)
1,200 people from the community employed
25% total construction value stays within the community
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Increased Coverage – Informal Increased Coverage – Informal SettlementsSettlementsIncreased Coverage – Informal Increased Coverage – Informal SettlementsSettlements
Comprehensive assessment of water and sanitation in informal settlement and service standards
14,000 VIP latrines built
Hundreds of standpipes implemented
Community education and training
Housing relocation and improvement Program under the responsibility of Housing Dept. did not deliver promises => limited results
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The BoTTThe BoTTThe BoTTThe BoTT1994 : 14 million South Africans without access to safe drinking water, mainly in rural areas and former homelands
The challenge : Supply sustainable water services to disadvantaged rural communities (25 litres per capita per day within 200m from home)
How ? -> BoTT Build (stakeholders, needs, feasibility, design &
construction)
operate (short term full operational responsibility)
Train (Institutional & social, operations & consumers)
Transfer (once sustainable)
2004 : 9m people having access to potable water, Suez Environment having contributed through BoTT for 2.3 M in Eastern Cape and Limpopo Provinces
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The BoTT: CharacteristicsThe BoTT: CharacteristicsThe BoTT: CharacteristicsThe BoTT: Characteristics
Nature of contract : PPP with establishment costs and capex fully funded by Client (DWAF) Final Client : MunicipalitiesFunding : EU + SA Government grants (100%)Duration: 1997 – 2004Black Economy Empowerment
40 % of equity 40 % of procurement
Tender in 4 provincesOne-stop shop: Implementation by consortia formed of
Consultant engineers Contractors Operators NGOs Emerging companies
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The BoTT: Reasons for SuccessThe BoTT: Reasons for SuccessThe BoTT: Reasons for SuccessThe BoTT: Reasons for Success
Ambitious National Government Policy (DWAF)
Grant funding & Donors constant follow-up (EU)
Flexible program management & spending capacity of private sector, providing “one-stop” service solutions
“Tri-sectoral” cooperation (Private sector; National & Local Government; NGOs)
Active involvement Local Government & Communities over full project life cycle
Social engineering, communities buy-in and local job creation
Presence in consortium of emerging BEE companies, NGOs and consultants
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Some LessonsSome LessonsSome LessonsSome Lessons
GovernanceStrong commitments of National and Local Governments
FinancingGrant funding (for capital expenditures and connections)
Tariff reforms (O&M cost recovery, targeted subsidies for the poor)
ImplementationPPP focused on development impact and creating win-win situations
Effective implementation mechanisms (OBA, added-value for local companies/communities
Adaptation to local conditions and based on community demand and participation
Solutions must be pragmatic and avoid ideological traps
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Trust and PartnershipTrust and PartnershipTrust and PartnershipTrust and PartnershipGovernments•Vision•Legal Stability
ESA, Donors•Funding•Monitoring
Operator•Expertise•Capex management
Communities•Demand, participation•Cost recovery
WaterFor All