1. Alternative Development of Water and Sewerage Projects - EG …. Alternative... · 2020. 3....

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An Alternative Approach to the Development of to the Development of Water Supply and Sewerage Projects in Jamaica Jamaica Everton G. Hunter September 21 2011 Jamaica Institution of Engineers September 21 2011

Transcript of 1. Alternative Development of Water and Sewerage Projects - EG …. Alternative... · 2020. 3....

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An Alternative Approach to the Development ofto the Development of Water Supply and Sewerage Projects in JamaicaJamaica

Everton G. Hunter

September 21 2011Jamaica Institution of Engineers

September 21 2011

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OutlineOutlineNWC – The Early YearsNWC E l tiNWC - EvolutionThe Water Sector PolicyNWC Supporting Tourism DevelopmentDevelopment and Implementation of I f t t P j t i th T diti lInfrastructure Projects in the Traditional WayAlt ti P j t D l tAlternative Project Development ApproachGoing ForwardGoing Forward

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NWC TheNWC – The Early YearsEarly Years

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NWC established in 1980NWC established in 1980Merger of the Corporate Area Water Commission & Rural based National Water AuthorityRural based National Water Authority

All Parish Council Facilities transferred to NWC in mid 1980in mid 1980Some of smaller former Parish Council Facilities returned to the respective parish councils (e.g. p p ( gentombed springs in remote areas) in 1991

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• NWC has developed over the yearsp y– Extending water supply services to areas of

the country (major capital towns)– Slow transformation from a “Department of

Government” to a more business type operationoperation

• Organization restructuring in search of best fit– In 1980 staff level was over 5,000– Limited use of technology & specialized equipment

• Slow response to customer queries and addressing technical problems (broken main, defective pumping equipment, etc)

– Had faced many challenges in the process

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Financing of operations was done through water gcharges and government grants– Tariff adjustments were

infrequent and inadequate and was the prerogative ofand was the prerogative of the portfolio Minister

– Maintenance suffered, resulting in poor state of water supply & sewerage infrastructureinfrastructure

• NWC depended on the government to obtain gfinancing from multi-lateral/bi-lateral agencies

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NWCNWC –EvolutionEvolution

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75%

Piped Water Supply - Jamaica

70%

75%Despite the challenges, piped water supply coverage

65%

70%

age

has increased

60%Cov

er

55%

C

50%1980 1990 2000 2009

Year

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Sewerage CoverageM j

24%26% Major sewerage

projects in 1990s-NegrilMontego Bay

20%22%

age

-Montego Bay-Ocho Rios

16%18%

Cove

ra

12%14%

C

10%1980 1990 2000 2010

Year

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The WaterThe Water SectorSector PolicyPolicy

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NEED FOR NWC REFORM• Situation in late 1990s necessitated NWC taking• Situation in late 1990s necessitated NWC taking

actions to address the inadequacies in service delivery & financial viability that existed then– There was no articulation of the role of NWC in the

water sector• NWC was all things to everyone in the water sector g y

– Worker unrest– Public distrust and some people saw the utility as

iuncaring– NWC was often in the newspaper headlines for

negative things.g g– There were many protests due to inadequate service

• GOJ prepared the WATER SECTOR POLICY– Became Effective in 2002

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NWC now operates within the context of the Government of Jamaica’s

WATER SECTOR POLICYWATER SECTOR POLICY

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• all Jamaicans to have access to potable water by 2015��� �����������

• major towns to have central sewerage by 2030

• the provision of water & sewerage services is to be• the provision of water & sewerage services is to be• focused to have the maximum impact on national • growth & developmentg p• NWC’s role in the water sector was defined

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Development andDevelopment and Implementation of Infrastructure Projects in the Traditional WayTraditional Way

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• The development of the earlier water supply and sewerage projects have beensupply and sewerage projects have been undertaken in traditional ways and though the use of standard project management p j gtools– Preliminary Design

Finance Sought (Multi lateral/Bi lateral)– Finance Sought (Multi-lateral/Bi-lateral)– Detailed Design

• Tendering & selection of Design consultants• Design work• Design work

– Construction• Tendering & selection of contractor• Implementation of the works• Implementation of the works

– Delays resulting from issues in the procurement process (multi-layered approval process), terms of the financing (level of inflexibility to respond to changes infinancing (level of inflexibility to respond to changes in situation

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KMA Water Supply and Rehab Project– Conceived in early 1990s– JBIC loan finalized in 2000– Design Engineers selected in 2002 & design work

commenced shortly after– Contractor selected and commenced work in

2006• Tender • Evaluation

A l P (NWC B d NCC C bi t)• Approval Process (NWC Board, NCC, Cabinet)– First stage of work completed in 2010.

ELAPSE TIME (f L A l) : 10 YEARSELAPSE TIME (from Loan Approval) : 10 YEARS

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Port Antonio WS Sewerage & Drainage– Conceived in the mid 1990s

• Port Antonio Study conducted by consultants engaged by UDC (water supply, sewerage, drainage and solid waste)

– NWC approached EIB for financing in 2000 and to do water supply & sewerage

EIB required that drainage component be included (since• EIB required that drainage component be included (since excavation in the road for sewers was to be done), but was to be financed by GOJ

C lt t l t d i 2005– Consultant selected in 2005• Detailed design for Stage 1 completed in 2007• Contractor Selected in mid 2009• Commencement of work has been delayed

– No “fiscal space” available; no disbursement request can be made to EIB

ELAPSE TIME TO DATE (from Loan Approval) : : 10 YEARS

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Kingston Water and Sanitation ProjectNWC approached IDB in 1998– NWC approached IDB in 1998

– Preliminary Engineering completed in 2003IDB– IDB Board approval in 2004

– Loan signed in 2006• IDB was concerned about certain NWC related

taxation contributed to the delayE i i C lt t E d i l t 2008– Engineering Consultant Engaged in late 2008

• Pre-Qualification• Approval of pre-qualified consultantsApproval of pre-qualified consultants• Tendering• Evaluation• Approval Process

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Kingston Water and Sanitation Project (cont’d)Kingston Water and Sanitation Project (cont d)– Some US$15M diverted in 2008 to assist Food Safety

Programme– New Loan being negotiated with IDB– Designs for some aspect of the Project

D li St t PS W k b t t• Darling Street PS – Work about to commence• Mona and Hope – Work about to commence• Tenders for others to be invited shortly

ELAPSE TIME TO DATE (from Loan Approval) : 7 YEARSYEARS

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ALTERNATIVEALTERNATIVE PROJECT DEVELOPMENT APPROACH

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Alternative Project Development Approach

• DEVELOPING AND IMPLEMENTING PROJECTS USING THE TRADITIONAL APPROACH – WITH FUNDING ASSISTANCE FROM INTERNATIONAL

LONG LEAD TIME

FUNDING ASSISTANCE FROM INTERNATIONAL AGENCIES - IS DIFFICULT

FORTUNATELY SOME PROJECTS REPRESENT AN OPPORTUNITY FOR RELATIVELY FAST COMMERCIAL RETURNS

SO THEY ALSO OFFER AN OPPORTUNITY FOR AN ALTERNATIVE •IMPLEMENTATION & FINANCING APPROACH

• IMPACT CHARGES - CONNECTION FEES

• EARLY (and LARGE) REVENUE STREAM

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A���������� �������

D���������� A����������������� A�������

�A�DA�An innovative approach to Project Development and Implementation has

Integrated Project Management Team

p pbeen developed

Integrated Project Management Team Established

NWCIndependent ConsultantConstruction Company

BUILT ON MUTUAL RESPECT AND TRUST

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�����A� ���C�D��� ��������A� ��� � ��� ���

A�DA

1. NWC DEFINES PRIORITY OBJECTIVES

2. NATIONAL CONTRACTS COMMISSION (NCC) APPRAISED

3. INDEPENDENT CONSULTANT APPOINTED

4. CONSTRUCTION COMPANY SELECTED

5. PROJECT TEAM, USING COLLECTIVE EXPERIENCE, DEFINESPROJECT IN DETAIL – TO OPTIMIZE NWC INVESTMENT

6a. CONSULTANT’S COST ESTIMATE6b. CONSTRUCTION COMPANY’S PROPOSAL FOR COST & FINANCING

PROJECT IN DETAIL TO OPTIMIZE NWC INVESTMENT

7. NEGOTIATIONS 8. “VALUE-FOR-MONEY” SUBMISSION TO NCC FOR APPROVAL9 CABINET APPROVAL

10. IMPLEMENTATION9. CABINET APPROVAL

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NWC’S APDA EXPERIENCE- The US$39 M GREAT RIVER PROJECTThe US$39 M GREAT RIVER PROJECT

• 5 ����

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NWC’S A�DA ��������C� �

�����������A� ����� �����C� A����� 2000 – ������ ��� ����C� ����������

���A� � ��� � �5���� ��������� ����� ����A�C�D ���D� �5���� ��������� ����� �

20��� 500�� Ø ����������A�C� 2001 ���D� C�����C�D

A����� 2001 ���D� C�������D

�����B�� 2002 ��D����D��� C������A��

A�������DDECEMBER 2002 SOGEA – SATOM’S ������A�

� �� �� �� ���� � ������ ������D�C��B�� 2002 �� ���� 2002 � ������A������

���A�C� �AC�A����

� A�����A�JULY 2002 – C����AC�� �����D

DECEMBER 2002 – ���A�C�A� C������

MARCH 2003 – ��D�� �� C�����C�

�C��B�� 2004 – �����C� C�������D �� B�D����C��B�� 2004 �����C� C������� �� B� ���

ELAPSED TIME – 4 ��A��

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���A�C������ ���A� �����

�����C�

A��A���D B� C����AC����A��A���D B� C����AC����

FRENCH BUYER CREDIT 9 Million EURO - 7 years - 3.6%

46% of PROJECT COST

COMMERCIAL LOAN 6 Million EURO - 4 years - 7.5%

y

3 Million US$ - 4 years - 7 5%

A��A���D B� ��C�

3 Million US$ - 4 years - 7.5%

C�����C�A� ��A� 3�8

������� ���� � 8 ����� � 9�25�

54% of PROJECT COST

17 2 Milli US$ 5 9 25%������� ���� � 8 ����� � 9�25�17.2 Million US$ - 5 years - 9.25%

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• Scope of INITIAL 2 YEAR CONTRACT:

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�����C�p

• CAPITAL WORKS:• Refurbishment of (17 year old) 6 migd Treatment Plant

19 2 k 500 Ø T k T i i M i• 19.2 kms 500mm Ø Trunk Transmission Main• 2 # Service Reservoirs – each 2.75 Ml• 10kms Distribution Mains

• NETWORK IMPROVEMENT OVER WESTERN PARISHES:

R d ti d C t l f N R W t• 47 Production sites, 130 Reservoirs, 1611kms distribution mains

• Reduction and Control of Non-Revenue-Water• Increase in Billable Consumption

• through comprehensive approach including system audit, t k d li d t ti d i f l knetwork modeling, detection and repair of leakage, pressure

control, customer surveys, metering with training of NWC personnel

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����� �� �� ���� ��� ������ �������B�� 2003 ��D����D��� C������A��

A�������DDECEMBER 2003 SOGEA – SATOM’S ������A�

D�C��B�� 2003 �� �A� 2004 � ������A������

���A�C� �AC�A����

� A�����A�JUNE 2004 – C����AC�� �����D

MAY 2005 – ��D�� �� C�����C�

DECEMBER 2006 CA���A� ����� C��������

���� 2007 – �����A� ������� �����������

C�������� C���������

DECEMBER 2006 – CA���A� ����� C��������

C���������

ELAPSED TIME – 3�6 ��A��

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���A�C��� ��� ������A�C��� ��� ���

�����C�

A��A���D B� C����AC����A��A���D B� C����AC����

FRENCH BUYER CREDIT 6 Million EURO - 8 years - 4.56%

50% of PROJECT COST

COMMERCIAL LOAN 6 Million EURO - 3 years - 7.5%

ySPANISH BUYER CREDIT 3.5 Million EURO - 8 years - 4.21%

A��A���D B� ��C�

4.8 Million US$ - 3 years - 9.5%

C�����C�A� ��A� 20

������� ��� � 7�5 ����� � 8�5�

50% of PROJECT COST

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����������� ���� 10 �����

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SOAPBERRY SEWERAGE

• Development of Sewerage sector not as attractive as water

• Special arrangements to implement & operateimplement & operate

• Soapberry Sewerage– New WW TP for KSANew WW TP for KSA– Pending for over 30 years– Will reduce environmental

impactp• Special Purpose Company

(SPC) established• BOOT arrangement with the• BOOT arrangement with the

SPC

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PROJECT AGREEMENTS

E it H ldEquity Holders

UDC, NHT, NWC, Private Developer

Loan Agreement(s)

LENDER(S)AgreementEquity Participation

NWC

Sewerage Treatment Agreement

UDC

Loan Agreement(s)

PROJECT COMPANYNWC

Project Management Agreement

UDC

Construction Agreement O&M Agreement

PRIVATE DEVELOPER PRIVATE DEVELOPER

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• Decision to proceed with arrangement ec s o o p oceed a a ge emade in 2004

• Design completed by mid 2005Design completed by mid 2005• Construction Completed in late 2008

H b i ti f l t 2• Has been in operation for almost 2 years• Project Cost : US$50M

– Loan of US38M from NCB

ELAPSE TIME TO DATE : 4 YEARS

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Jamaica Water SuppIy Improvement Project

In 2006 NWC received an unsolicited proposal to address the water supply shortfall in KSA – The

p j

address the water supply shortfall in KSA – The Kingston Improvement Project

The proposal was considered and the Alternative Project Development Approach applied

Independent Consultant appointed in 2007

Over time the project evolved into the Jamaica Water Supply Improvement Project (JWSIP) to include projects in rural areas

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JWSIP The Project has Two Broad Components:

• CATEGORY A• CATEGORY A– Rehab of Constant Spring & Seaview WTP – New wells (Halls Green) – 1 mgd

Replacement of asbestos cement Rio Cobre Pipeline (Bog Walk– Replacement of asbestos cement Rio Cobre Pipeline (Bog Walk to Dam Head)

– Consumer Metering – 70,000 meters

• CATEGORY B– New 15 mgd WTP– Replacement of asbestos cement Rio Cobre Pipeline (Dam Head– Replacement of asbestos cement Rio Cobre Pipeline (Dam Head

to Ferry)– Network improvements (F/Hills & Stony Hill)– Connecting Pipeline to F/HillsConnecting Pipeline to F/Hills– Rural WS Projects

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Category A of JWSIP commenced in MarchCategory A of JWSIP commenced in March 2010 and is scheduled to be completed before end 2012

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JWSIP Project Benefits include

– Addressing the water supply shortfall in the KMA

• New sources• New sources • reduction of water loss

– Improve Reliabilityp y• Rehab of two major WTP• Network improvement

– Improvement in the efficiency of the operations

ELAPSE TIME : 2006 TO 2012ELAPSE TIME : 2006 TO 2012

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LESSONSLESSONSLEARNT

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M f j d l dMenu of project development and implementation strategiesTh h tli d i il bl fThe approach outlined is available for utilities to consider

Time criticalTime critical Compare loss revenue due to delays in project implementation using the p j p gtratiditional approach versus the additional cost (interest cost) pursuing the one presented herepresented here