80143 v1 REPUBLIC OF MALAWI MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT Malawi Water Sector Investment Plan Volume I 31 May 2012 Malawi Water Sector Investment Plan Volume I ii © 2012 The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work was made possible by the financial contribution of the Water Partnership Program (WPP) - http://water.worldbank.org/water/wpp. This work is a product of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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Any queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights@worldbank.org. iii Table of Contents Acronyms, Abbreviations, and Definitions ix Acknowledgements xi Executive Summary 1 1 Introduction 4 2 Investment Levels 6 2.1 Prioritization of Investments 8 2.1.1 Prioritizing investments on the basis of benefits and costs 9 2.1.2 Additional considerations when deciding which investments to prioritize 12 2.2 Scenario 1—Business as Usual 13 2.3 Scenario 2—Full Coverage for Water by 2025, 87 Percent for Sanitation by 2030 17 2.4 Scenario 3—Full coverage for water by 2030, and more than Forty Percent for Sanitation by 2030 26 2.5 Summary of the Investment Plans 31 3 Projects and Programs 32 3.1 Urban Water 32 3.1.1 Bulk supply project for Blantyre 32 3.1.2 Bulk Supply Project for Lilongwe 38 3.1.3 Bulk Supply Projects for Mzuzu 41 3.1.4 Bulk Supply Project for Mzimba 43 3.1.5 Urban Water Supply 44 3.2 Urban Sanitation 45 3.3 Rural Water 45 3.4 Rural Sanitation 47 3.5 Schools 47 4 Funding Plan 49 4.1 Urban Infrastructure can be Financed by Water Boards 52 4.2 Rural Infrastructure and Sanitation can be Funded by Government with Support from Donors 57 iv 5 Institutional Changes Needed to Deliver the Investment Plan 62 5.1 Water Boards 63 5.2 District Councils 65 5.3 Water User Associations 68 5.4 Ministry Responsible for Water Supply and Sanitation 68 6 Action Plan 70 6.1 SWAp Activities 70 6.2 Water Board Reforms 72 6.3 Reform of Ministry Responsible for Water Supply and Sanitation 72 6.4 District Councils 73 7 Conclusion 75 Appendices Appendix A . Benefit Cost Analysis of the Water Sector 76 Appendix B Electricity Costs 83 Appendix C . Blantyre Costs of Not Building New Water Source 85 Appendix D WSS Sub-sector Definitions and Data 94 Appendix E Will Prepaid Water Meters Work in Urban Areas in Malawi? 96 Appendix F Workshops Held in Malawi 104 Appendix G Projects in the Sector 113 Tables Table 3.1: Costs of Not Supply Blantyre Compare to Cost of Supplying 34 Table 3.2: Sogreah Evaluation of Options 35 Table 3.3: Cost of Mombezi-Makuwa Compared to the Cost of Walkers Ferry 37 Table 4.1: Targets for Water Boards Compared to Regional Peers 53 Table 6.1: Plan for Implementing the Water Sector Investment Plan and priority SWAp activities 71 Table B.1: Economic Cost of Retail Supply of Electricity 83 v Table C.1: Tanker Truck Costs 86 Table C.2: Productivity Differential between City and Country 87 Table E.1: Prepaid Meters offered by Manufacturers 97 Table E.2: Investing in Prepaid Meters for Residential Connections 101 Table F.1: List of Participants at NWDP Task Force 104 Table F.2: List of Participants at Joint Sector Review 107 Table G.1: Complete List of Funded Urban Water Supply Projects 113 Table G.2: Funded Rural Water Supply Projects 122 Table G.3: Funded Urban and Rural Sanitation Projects 126 Table G.4: Funded Projects for Schools 126 Table G.5: Unfunded Urban Water Supply Projects 127 Table G.6: Unfunded Rural Water Supply Projects with Complete Information 134 Table G.7: Unfunded Projects with Complete Information for Urban and Rural Sanitation 138 Figures Figure 2.1: Benefits and Costs of Spending in Different Sub-Sectors 9 Figure 2.2: Cumulative investment and net benefit per investment ratio 12 Figure 2.3: Investment Expenditure Projected Forward at Current Levels 13 Figure 2.4: Water Access Projections for Current Investment Levels 15 Figure 2.5: Sanitation Access Projections for Current Investment Levels 16 Figure 2.6: Investment Required to Meet Water Access Target for 2025 and Sanitation Targets for 2030 19 Figure 2.7: Water Access Projections to Reach Access to Improved Water by 2025 21 Figure 2.8: Sanitation Access Projections to Reach Access Targets by 2030 22 Figure 2.9: Improvements with Recommended Investment Levels 25 Figure 2.10: Investment Levels for Scenario 3—Full Coverage for Water by 2030, and more than 40 percent for Sanitation by 2030 27 vi Figure 2.11: Water Access Projections in Scenario 3—Full Coverage for Water by 2030, and More Than 40 Percent for Sanitation by 2030 28 Figure 2.12: Sanitation Access Projections for Scenario 3—Full Coverage for Water by 2030, and more than 40 percent for Sanitation by 2030 29 Figure 3.1: Blantyre’s Water Needs and Current Capacity 33 Figure 3.2: Shire River Hydrological Risk 38 Figure 3.3: Lilongwe Bulk Water Demand vs. Current Capacity 39 Figure 3.4: Mzuzu Bulk Water Demand vs. Current Capacity 42 Figure 3.5: Mzimba Bulk Water Demand 44 Figure 4.1: Recommended Funding Plan for Scenario 2 which Reaches Full Coverage for Water by 2025, and 87% Coverage for Sanitation by 2030 50 Figure 4.2: Recommended Funding Plan for Scenario 3 which Reaches Reach Full Coverage for Water by 2030, and over 40 percent Coverage for Sanitation by 2030 51 Figure 4.3: Projected Improvements in Water Board Performance 55 Figure 4.4: Water Board’s Operating Cash Flow Potential vs. Debt Service for Scenario 2 which reaches full Coverage to Water by 2025 56 Figure 4.5: Funding Required on a Per Capita Basis for Scenario 2 which Reaches Full Coverage by 2025 and 87 percent Access to Sanitation by 2030 59 Figure 4.6: Funding Required on a Per Capita Basis for Scenario 3 which Reaches Full Coverage by 2030 and more than 40 percent Access to Sanitation by 2030 60 Figure 5.1: Proposed Amalgamation of Water Boards 63 Figure A.1: Benefits of Extending Access to Improved Water in Urban and Rural areas 78 Figure A.2: Cost of Extending Access to Water in Urban and Rural Areas 79 Figure A.3: Benefits from Access to Improved Sanitation 80 Figure A.4: Investments Required to Extend Access to Improved Sanitation 81 vii Boxes Box 2.1: Malawi’s Progress Towards MDGs 7 Box 2.2: Advantages of coordinating investments in improved water and sanitation 10 Box 2.3: Reaching All Post 2016 Targets is Unaffordable 18 Box 2.4: Assumption for Investment and Access Scenarios 23 Box 2.5: The Implication of using Different Estimates of Sanitation Access 30 Box 3.1: Rural Water Supply Technologies 46 Box 3.2: Sanitation Infrastructure 48 Box 4.1: Would Prepaid Meters Work in Urban Areas in Malawi? 54 Box 5.1: Reform of Water Utilities—–the Ugandan experience 65 viii Acronyms, Abbreviations, and Definitions AfDB African Development Bank AWM Agricultural Water Management BWB Blantyre Water Board CRWB Central Region Water Board Development Bilateral or multilateral entities that provide external funding and Partners support to the WSSI sector EIB European Investment Bank EU European Union FAO Food and Agriculture Organization FY Financial Year GBI Green Belt Initiative Government Government of Malawi IBRD International Bank for Reconstruction and Development IFAD International Fund for Agricultural Development IHS Integrated Household Survey IRD Integrated Rural Development IRLAD Irrigation, Rural Livelihoods, and Agriculture Development Project JICA Japan International Cooperation Agency LWB Lilongwe Water Board MBS Malawi Bureau of Standards MDGs Millennium Development Goals MDHS Malawi Demographic and Health Survey MGDS I Malawi Growth and Development Strategy (2006-2011) MGDS II Malawi Growth and Development Strategy (2011-2016) Ministry of Finance Ministry of Finance and Development Planning MK Malawi Kwacha MoAIWD Ministry of Agriculture, Irrigation, and Water Development MoIWD Ministry of Irrigation and Water Development NGO Non-Governmental Organization NIF National Irrigation Fund NRW Non-Revenue Water NRWB Northern Region Water Board ix NWDP National Water Development Programme NWDP I First National Water Development Project (1996-2003) NWDP II Second National Water Development Project (2007-2015) O&M Operation and Maintenance PER Public Expenditure Review PSIP Public Sector Investment Programme Rural Areas in which inhabitants are not supplied water services by one of the five Water Boards SHIP Smallholder Irrigation Project SPR Sector Performance Report SRWB Southern Region Water Board SWAp Sector Wide Approach UNICEF United Nations Children’s Fund Urban Areas in which inhabitants are supplied water services by one of the five Water Boards Water Boards Blantyre Water Board, Central Region Water Board, Lilongwe Water Board, Northern Region Water Board, and Southern Region Water Board WASH Water, Sanitation, and Hygiene WFP World Food Programme WHO World Health Organization WMS Welfare Monitoring Survey WRIS Water Resources Investment Strategy WSIP Water Sector Investment Plan WSS Water Supply and Sanitation WSSI Water Supply, Sanitation, and Irrigation WUA Water User Association x Acknowledgements This work was made possible by the financial contribution of the Water Partnership Program (WPP) - http://water.worldbank.org/water/wpp. The Water Partnership Program (WPP) is a multi-donor trust fund established in 2009 and administered by the World Bank’s Water Unit in the Sustainable Development Network. The WPP aims to strengthen the World Bank’s efforts in reducing poverty through improved water resources management and water service delivery.) This Report was created through a collaborative process. This included a number of workshops in Lilongwe and a workshop in Liwonde. Participants at these workshops made comments that greatly contributed to the final version of the report. Inputs were received from staff in the Ministry of Agriculture, Irrigation and Water Development, staff from the Water Boards, representatives of the donor community, and NGOs. Castalia Advisors assisted with the preparation of this report. Castalia is an international consulting firm specializing in the development and financing of infrastructure. Castalia has offices in Washington, DC (United States), Paris (France), Sydney (Australia) and Wellington (New Zealand) and has undertaken assignments in over 60 countries. Our multi-disciplinary staff brings together skills in economics, finance, law, policy, and project management. Castalia specializes in developing strong institutional frameworks for the provision of infrastructure, including investment appraisal, design, implementation and support for effective PPP arrangements. For over a quarter of a century we have remained true to our commitment to building strong institutions that combine the strengths of the public and private sectors to deliver basic services to people who need them. For more information see http://www.castalia-advisors.com. xi Executive Summary Key points Malawi needs to invest more than US$140 million annually in water supply and sanitation, on average, between 2015 and 2030. This is more than four times the amount invested each year in the period 2006 to 2011. The recommended rate of investment will:  Secure safe water supplies for the cities  Provide access to improved water supply to 98 percent of the population by 2025  Increase access to improved sanitation to close to 90 percent of the population by 2030—more than twenty times the population that has access to improved sanitation currently, and  Fix the backlog of schools that currently lack adequate sanitation and hygiene facilities. Funding for urban water investment—including bulk supply—can be provided by Water Boards, provided that (a) they bring performance up to the level of other well-performing African water utilities and (b) on-lending is available through Development Bank Concessional Finance terms to the Ministry who in turn lend to the Water Boards. Sanitation and rural water investment can be funded by the Government and donors with contributions which—on a per capita per year basis—are comparable to those in 2006-11. Institutional changes will be needed to:  Bring Water Boards up to the required levels of performance  Build capacity in District Councils to plan and implement projects, and  Reconfigure the ministry responsible for Water Supply and Sanitation into a policy, funding, coordination, and supervisory body. Urban bulk supply Bulk supply projects for Blantyre, Lilongwe, Mzuzu, and Mzimba projects should go should go ahead. These schemes all have economic rates of return ahead of well over 10 percent. Without them, Malawi’s rapidly growing cities will become infested with water-borne diseases, and the productive potential of city-living will be lost (see Section 3.1). Walkers Ferry is Walkers Ferry and Mombezi-Makuwa are the two leading options likely to be more to provide bulk water supply to Blantyre. On currently available cost effective than cost estimates, the discounted capital and operating costs of Mombezi-Makuwa Walkers Ferry and Mombezi-Makuwa are similar. However, these estimates do not include the substantial environmental and social costs of the Mombezi dam. These costs have not yet been 1 estimated, but once they are, it is likely that Mombezi-Makuwa will be more costly than Walkers Ferry. Concerns have been expressed about the security of supply provided by Walkers Ferry due to the risk of the Shire River running dry. However, recent research has shown that this risk is negligible. Universal access to In addition to the bulk supply projects, other urban water improved water can investment should total more than US$640 million over the period be achieved by 2025 2016 to 2030. Rural water investment should total around US$400 million. This level of expenditure is enough to provide full coverage across the nation—though practical difficulties in ramping up funding and institutional capacity suggest this goal can only be achieved by 2025. These investments make sense given the very high net benefits per dollar of investment (US$14 in rural water and US$10 in urban water) as well as the fact that urban water can be funded by the Water Boards through tariffs. Schools should be Analysis suggests very high returns to improved sanitation and provided with hygiene in schools, not just in improved health, but also in adequate facilities improved educational outcomes. US$30 million should be spent on for sanitation and providing adequate facilities for sanitation and hygiene to schools hygiene that currently lack them. Thereafter, the Ministry of Education, Science and Technology should ensure that adequate facilities for sanitation and hygiene are included in all schools built in the future. A large increase in More than US$400 million should be spent on rural and urban expenditure on sanitation between 2016 and 2030. This is enough to increase sanitation should access to improved sanitation from 10 percent in 2010, to close to occur 90 percent by 2030. Progress toward universal sanitation is slower because investment in this area is being ramped up from its current low levels. If Government and donors to the sector can increase funding above the levels suggested in the plan, greater levels of expenditure in sanitation would be highly desirable. Water Boards need Our analysis suggests urban water investment, including the bulk to become largely supply projects, can be financed by the Water Boards themselves. self-financing To do this, they will have to reduce NRW to 20 percent by 2030, improve collection rates to 95 percent by 2030, and increase tariffs by just one percent per year in real terms. Comparison with other well-performing utilities such as those in Niger, Gabon, Senegal, and Uganda suggests this is eminently doable. These performance improvements will enable Water Boards to service debt, advanced on Development Bank Concessional Finance terms, to proceed with urban water investment. Donors and Investments in rural water and for sanitation would be the Government will responsibility of the Government and donors. Over the period need to scale up 2016 to 2030, the real per capita annual contributions required from financing too these bodies to the sector, are comparable to those in the period 2006 to 2011. This suggests that this level of funding should be 2 feasible and fiscally responsible. Institutional reform More challenging than the sums of money involved, are the and capacity institutional changes needed to ensure that the money is well spent, building will be and that loans can be repaid. In light of the importance of needed institutions in the successful implementation of the Investment Plan, US$100 million has been allocated to capacity building from 2016-2030. Three significant changes to institutions are needed:  Water Boards need to find credible institutional models that allow them to quickly replicate the financial performance of other high-performing African water utilities  District Councils need to further develop the ability to plan and implement rural water and sanitation schemes  The ministry responsible for the water sector needs to become a unified sector policy, coordination, planning, and financing body that can ensure that implementing agencies—Water Boards and District Councils—select the right projects, and implement them in the right way. 3 1 Introduction This report provides an Investment Plan, and associated Funding Plan, for the water and sanitation sector in Malawi, from now until 2030. The aim is to maximize the benefits to the country of expanding access to improved water and sanitation services, while being financeable. The report is prepared for the Government of Malawi under a consultancy contract managed by the World Bank and funded by the Water Partnership Program. This report is the first volume of a two volume study on a Water Sector Investment Plan for Malawi. This report reflects the comments received from a number of stakeholders including comments received at the workshops in Lilongwe and Liwonde (Refer to Appendix F for more details). The second volume provides a Public Expenditure Review of the sector, an introduction to Monitoring and Evaluation, summarizes work in Water Resources Management and presents a term of reference for the preparation of an irrigation investment and financing plan. This report starts by illustrating three investment scenarios in aggregate for the sector (Section 2). These scenarios illustrate the investment needed and outcomes from three different investment plans. The report recommends that the sector select an investment plan that will lead to universal access to water by 2025 and 87 percent access to sanitation by 2030. This investment plan will require a substantial increase in funds and investment. This increase will generate huge benefits for Malawi relative to the investment made. However, the increase in funds needed may not be achievable. In this case, a second investment plan is suggested in which universal access to water is reached by 2030 and more than 40 percent of the population gain access to sanitation by 2030, including access to improved sanitation for 95 percent of the urban population. This report does not recommend continuing to invest at current levels. This would lead to the proportion of the population with access to water and sanitation falling, with ruinous effects on the health and productivity of Malawians. An investment plan to reach universal access to water and close to 80 percent access to sanitation in 2020 is rejected as infeasible as it would require a massive ramp up in expenditure, especially on sanitation. Key urban bulk supply projects that have been proposed are discussed in Section 3, and examples are given of smaller projects for both urban and rural water supply and sanitation that could be considered for inclusion in the investment plan. Clearly with the large spending levels and long timeframes, many of the projects that need financing have not even been identified yet, let alone studied or designed. This section indicates the “project gap�—that is, investments that we know will be needed, but for which projects have yet to be developed— and indicates how this gap can be closed. Regardless of the cost-benefit analysis, or the merits of potential individual projects, many stakeholders may worry that the sheer sums of money required will not be available for Malawi. In response to this concern, Section 4 offers a Funding Plan. It demonstrates that Water Boards have the capacity to finance the entire urban water investment, if they can increase their performance levels to those of other well-performing African water utilities, and if Development Bank Concessional Finance terms on loans continue to be available. The remaining expenditure in sanitation and rural water can be managed by Government donors and NGOs if they step up their contributions on a per capita basis. Achieving universal access to water by 2025 and 87 percent access to sanitation in 2030 would require Government, donors, and NGOs to increase their per capita contribution by 40 percent. To achieve the scaled back targets of universal access to water by 2030 and more than 40 4 percent access to sanitation in 2030 would require their contribution to increase by a modest 15 percent over the period. These bold plans depend on institutions in Malawi for their success. It would be remiss, therefore, to close without considering the institutional prerequisites for success which are addressed in Section 5. It argues that in rural water, decentralization should take place, with District Councils supported to prepare district investment plans, which Central Government could fund. Water Boards will need to choose the reform path that will let them perform at the level of other well-performing African water utilities. The Ministry’s role must also evolve to one that allocates public capital, coordinates between districts, promotes institutional reform, and monitors and evaluates to learn lessons from experience. Section 6 provides an Action Plan that outlines a number of steps that can be taken to implement the Water Sector Investment Plan. This includes organizing a donor conference and preparing and implementing institutional reform plans for the ministry responsible for the water sector, the Water Boards; and the District Councils. 5 2 Investment Levels Malawi stands to gain substantially if it can increase access to improved water and sanitation. As Section 2.1 discusses, increased access to improved water and sanitation saves lives, reduces illness, and frees up time to be spent on work, studies, and childcare. Such increases in access are only possible with increased investment. Investments already made (or committed) for the five-year period from 2011 to 2015, average around US$42 million per annum. This is 45 percent more than was spent in the previous five years. The current level of investment will allow Malawi to reach the MDG target for access to improved water by 2015 (see Box 2.1). The MDG target for sanitation access will, however, be missed. Looking ahead though, further increases in investment are needed. This section presents three scenarios: 1. Scenario 1, Business as usual—continuing current levels of expenditure are shown to lead to stagnating access levels. This scenario cannot be recommended—Malawi needs to continue to increase access 2. Scenario 2, Full coverage for water by 2025, and 87 percent for sanitation by 2030—this scenario is highly cost-benefit justified. However, this investment plan entails expenditure of more than US$700 million in the 2016-2020 period, more than US$600 million in the 2021-2025 period, and more than US$700 million in the 2026-2030 period. It is possible that such a scale up in funding and investment is out of reach 3. Scenario 3, Full coverage for water by 2030, and more than 40 percent for sanitation by 2030—this is the minimum level Malawi should aim for. In this scenario Malawi achieves universal access to water by 2030 and 95 percent access to improved sanitation in urban areas by 2030. Access to improved sanitation in rural areas falls behind the Governments targets in this scenario. Investment levels are lower than in the previous scenario by US$200 million over the period. Nevertheless, they are still ambitious, running at more than US$700 from 2016- 2020, US$400 million from the 2021-2025 period, and more than US$700 from 2026-2030. These scenarios are discussed below in Section 2.2 to Section 2.4. First though, Section 2.1 sets out cost benefit analysis under-pinning the case for significantly increasing investment in water and sanitation in Malawi. This analysis also guides government choices on how to prioritize investment when not all targets can be reached with the funding available. 6 Box 2.1: Malawi’s Progress Towards MDGs The Millennium Development Goal calls for countries to "Halve, by 2015, the proportion of people without sustainable access to safe drinking water and basic sanitation".1 Malawi is likely to exceed this goal for access to improved water, reaching close to 80 percent access to improved water by 2015, exceeding the MDG goal of 70 percent. However, Malawi is not likely to achieve the MDG for access to basic sanitation, more typically called improved sanitation. Access to basic or improved sanitation is only forecast to reach 12 percent in 2015 (versus 9 percent in 2010). This is far below the MDG objective of 71 percent by 2015. To achieve the MDG goal for 2015 would require raising and spending US$200 million on urban and rural sanitation from 2012 to 2015. This is close to the entire amount spent in the Water and Sanitation sector over the 2011-2015 period and thus does not appear realistic. Achieving the MDGs is more difficult due to changes in the estimates of access to improved (basic) sanitation. This change has reduced the rate of access reported for Malawi. For instance, the 2012 JMP2 reports that more than 50 percent of the population has access to improved sanitation in 2010. A far lower figure of 9 percent was reported in the Demographic and Household Survey (DHS) for 2010. The lower figure reported by the DHS largely arises because the DHS only considered latrines with concrete slabs to be improved. This is likely to under-estimate the number of improved latrines considerably because latrines don’t need to have a concrete slab to be improved, they just need an impermeable layer separating excreta from people using and cleaning the latrine. Nevertheless, even on the JMP figure it does not appear that Malawi will achieve the MDG target of 71 percent by 2015. Based on the projects planned for the sector, and JMP estimates of access, it is expected that less than 50 percent of the population will have access to improved sanitation by 2015. To be conservative, the figures from the DHS (2010) are used as the baseline for the investment expenditure numbers in this report. Box 2.5 on page 30 describes how the investments needed would differ if figures from the JMP for 2010 are used rather than the access estimates from the DHS. 1 WHO and UNICEF, “WHO / UNICEF Joint Monitoring Programme (JMP) for Water Supply and 7 2.1 Prioritization of Investments Investment in water and sanitation generates substantial gains for Malawi. As Figure 2.1 shows, for every dollar invested in the Malawi water and sanitation sector, net benefits of between US$14 and US$4 are generated (depending on the sub-sector). This result is in-line with the World Health Organization’s (WHO) finding that investments in “water supply and sanitation … bring economic benefits; US$1 invested would give an economic return of between US$3 and US$34�.3 The high returns from investing in the water and sanitation sector suggest that the Malawi should aim to achieve universal access to improved water and sanitation, and that it is highly desirable to do so sooner rather than later. While achieving universal access for improved water and sanitation is desirable it will be difficult to achieve because Malawi’s public sector has limited financial resources. Generally these limited resources mean that the Government will need to decide between making investments in the water sector versus other sectors such as education. Within the water sector the Government will need to decide between investments in different sub-sectors; water supply or sanitation, investments in rural or urban areas and between investing in schools and households. In making these decisions the net benefit to investment ratios reported in Figure 2.1 can be used as a starting point. However, the Government should also consider the investment cost borne by households as well as the public sector’s capacity to invest in the particular sub-sector. When the Government’s budget for the water sector is constrained it should consider prioritizing those investments where households bear a portion of the cost of the investment. It should also consider its ability to invest effectively in a sector when deciding how much investment to make. This section begins by describing the benefits from investing in the different sub-sectors. It then reviews a number of other considerations which should be taken into account when deciding how to allocate spending between sub-sectors. Sanitation�http://www.wssinfo.org/definitions-methods/introduction. 2 Joint Monitoring Program, 2012 "Progress on Drinking Water and Sanitation" UNICEF and the World Health Organization 3 WHO, 2004 “Costs and benefits of water and sanitation improvements at the global level � http://www.who.int/water_sanitation_health/wsh0404summary/en. 8 Figure 2.1: Benefits and Costs of Spending in Different Sub-Sectors Source: Castalia Calculations, as described in Appendix A. 2.1.1 Prioritizing investments on the basis of benefits and costs Figure 2.1 describes the benefits from investing in the sector. As described in more detail in Appendix A these largely arise from improvements in productivity and health:  Productivity—access to improved water frees up time that households would have spent collecting water. Households without access spend a substantial amount of time collecting water, a task that often falls on women and girls. A particular benefit from access to improved sanitation and hygiene facilities in schools is that girls are more likely to stay in school when they reach puberty if they have appropriate access to improved latrines  Health—access to improved water and sanitation reduces disease and saves lives. The WHO suggests that improving access to improved water, sanitation and hygiene would save 20,000 lives per year and eliminate 25 million episodes of illness.4 Aside from the reduction in pain and suffering, improvements in health frees up time for students to learn and adults to work. As an example, students infected with intestinal worms transmitted due to poor access to sanitation and hygiene, are 23 percent more likely to drop out of school, and earn 40 percent less 4 WHO, 2010 “Estimated deaths attributable to water, sanitation and hygiene ('000), by disease and WHO Member State, 2004� http://www.who.int/quantifying_ehimpacts/publications/wshdeaths2004_annex.pdf. 9 as adults.5 Box 2.2 describes the important health benefits from achieving community wide access to improved water and sanitation. Box 2.2: Advantages of coordinating investments in improved water and sanitation There are significant benefits to health that arise when communities as a whole achieve access to improved water and sanitation and this is combined with appropriate hygiene behaviors. Achieving community wide access reduces the prevalence of fecal matter in the environment and reduces infectious diseases, both of which improve health outcomes for everyone in the community, even those who already had access to improved water and sanitation. Broadly, this suggests that it is useful to coordinate investments in improved water and sanitation. Indeed, an important motivation for trying to ensure that communities achieve Open Defecation Free (ODF) status is that advantage of achieving community wide access to some sanitation. The benefits of combining access to improved water, sanitation and hygiene behavior suggests that future initiatives should, in a similar vein to the ODF initiative, consider trying to ensure community wide access to improved water and sanitation and that this is combined with the adoption of improved hygiene behavior. The feasibility and impact of providing villages with community wide access to improved water, sanitation and hygiene is unproven. Therefore: the Government should establish whether this approach works and can be effectively implemented before planning large scale investments around this approach. A method to establish whether this approach works would be to introduce a trial program that aimed to provide “hygienic villages� with access to improved water, sanitation and hygiene. If this trial program was successful, this would provide a rationale for coordinating the provision of water, sanitation and hygiene on a community wide basis in future investment plans. When considering investments over the longer term, in particular the 18 years of this investment plan, the net benefit to investment ratios described in Figure 2.1 provide a useful starting point for deciding which sectors to prioritize over others. Those sectors with a higher net benefit to investment ratio should be given priority over those with a lower one. Broadly, this suggests that investments in schools should be prioritized, followed by investments in rural water, then investments in urban water and sanitation6 and, finally, investments in rural sanitation. The reasons for the rankings shown in Figure 2.1 are:  Improved access to sanitation and hygiene in schools have a high net benefit to investment ratio due to the substantial benefit of improving students’ attendance at schools and their ability to concentrate while there. This allows students to complete school more quickly and improve their income once they 5 The study was conducted in Tanzania, Sarah Baird, Joan Hamory Hicks, Michael Kremer, and Edward Miguel, 2011 "Worms at Work: Long-run Impacts of Child Health Gains" http://www.povertyactionlab.org/publication/worms- work-long-run-impacts-child-health-gains. 6 It is worth noting that the net benefit to investment ratio of investments in urban water and urban sanitation are very similar at US$10 and US9 per dollar invested. 10 leave. The benefits of this are likely to outweigh the relatively low cost per student of providing access to improved sanitation and appropriate facilities for hygiene  Improved sanitation leads to substantial health benefits. The investment cost of providing improved sanitation is relatively low and includes publicly funded sanitation marketing campaigns and the costs of constructing latrines which are borne by households  Improved water supply leads to similar health benefits of access to improved sanitation. In addition, access to improved water supply will save households substantial amounts of time fetching water. The value of this time saved outweighs the higher cost of providing access to improved water. As a result, in urban areas increasing access to water has a slightly higher net benefit to investment ratio than increasing access to improved sanitation and in rural areas access to water has a far higher net benefit to investment ratio than access to sanitation. Over the shorter term, in particular the period of the budget cycle, the money allocated to increasing water and sanitation is likely to be largely fixed. When the Government’s budget constrains the amount of investment made it is appropriate for the Government to consider whether it is able to leverage its spending in the sector. As an example, investments in sanitation are largely borne by households themselves. For every three dollars of investment needed, the public sector spends US$1 on sanitation marketing and households spend US$2 constructing new latrines. As a result, for every dollar invested in sanitation by the public sector a further two dollars of investment is made by households themselves. This enables the public sector to leverage its spending in the area. There is also potential for the public sector to leverage its spending in this way in the urban water sub-sector. As discussed in Section 4 the investments needed in urban water supply can, and should, be entirely financed off the tariffs paid by Water Boards’ customers. However, it is important to note that currently the public sector is largely bearing the cost of investments in urban water supply. Figure 2.2 provides a way to summarize the findings and what they mean for investment in water and sanitation in Malawi. The width of the blocks shows how much investment is needed on a cumulative basis to achieve full access by 2030. The height of the blocks show the average net benefit to investment ratio generated by projects in each sub-sector. Thus, the areas inside the blocks show the total net benefit to Malawi generated by investments in each sub-sector. The coloring of the blocks describes where funding for the investments is expected to come from. The white areas of the blocks show funding from the public sector. As can be seen in Figure 2.2 the public sector is expected to fund the vast majority of investment in water supply in rural areas and investments in schools. The grey blocks show the investment in sanitation that is provided by households rather than the public sector. As discussed in more detail in Section 4 this plan recommends that all investments in urban water are financed by the Water Boards off the tariffs they charge consumers. This is shown by the urban water block’s white and grey square coloring. 11 Figure 2.2: Cumulative investment and net benefit per investment ratio Source: Castalia calculations, as described in Appendix A. 2.1.2 Additional considerations when deciding which investments to prioritize In addition to the considerations described above, when deciding which sub-sectors to invest in the public sector also needs to consider  The cost effectiveness of particular types of investments. Figure 2.1 describes the average net benefits to investment ratios in each of the sub-sectors. However, it is likely that some types of investments, such as sanitation marketing projects in particular rural districts are far cheaper than the average. If this turns out to be the case it may be worthwhile prioritizing such investments. In contrast, it may become clear that types of projects are far more expensive than average, say reaching certain rural communities with access to improved water. In this case, it would be worthwhile spending the funds on other projects with higher social and economic returns.  Ability to invest effectively in the sector is critical. It is clearly important that investments are made in a sustainable manner. As discussed in Section 5 there are indications that investments in rural water supply have not been as sustainable as would be optimal. As discussed in Box 2.3 the public sector is unlikely to have the capacity to effectively spend the (very large) amount of money that is arguably needed for improved sanitation in the 2015 to 2020 period. The allocation of investment expenditure to particular sub-sectors needs to take into account a number of considerations. This should include the net-benefit to investment ratio as well as the portion of investment borne by households, the cost effectiveness of investments and the capacity of the public sector to invest effectively in the sub-sector. 12 2.2 Scenario 1—Business as Usual Investment in water and sanitation in Malawi is expected to total around US$210 million over the five year period from 2011 to 2015. As Figure 2.3 illustrates, this is 45 percent higher than the investment in the previous five-year period. Expenditure is largely on urban water (81 percent currently). The business as usual scenario looks at what would happen if investment were continued at this level in the future, as shown in Figure 2.4 and Figure 2.5. Figure 2.3: Investment Expenditure Projected Forward at Current Levels 13 Data Table 2.3: Current Investment Levels Projected Forward (US$ millions) 2006- 2011- 2016- 2021- 2011- 2010 2015 2020 2025 2026-2030 2030 School Sanitation and Hygiene - 3 3 3 3 13 Rural Sanitation 12 4 4 4 4 15 Urban Sanitation 1 1 1 1 1 3 Rural Water Supply 95 32 32 32 32 127 Urban Water Supply 36 171 171 171 171 684 Mega Projects - - - - - - Total US$ (millions) 144 210 210 210 210 841 Sources: 2006-10: Volume II of the Water Sector Investment Plan 2011-15: Funding committed already from Government of Malawi, donors and International Finance Institutions as described in Appendix F 2016 onward: Expenditure projected to remain constant at levels for the current period Despite the recent 45 percent increase, investment at these levels are still too low to make any real progress toward achieving full access to water and sanitation by 2025. 7 Whatever is spent in the sector will go towards keeping up with population growth. 7 The World Bank’s 2010 “AMCOW Country Status Overview for Malawi� mentions that the Malawi Growth and Development Strategy has a target of full coverage by 2025. This target has been mentioned in meetings and workshops held by Castalia with Ministry officials. 14 As Figure 2.4 illustrates, if investment continues at current levels until 2030, water access will increase in absolute terms. However, because of population growth, access as a percent of the population in urban areas is likely to decline from close to 90 percent in 2015 to 70 percent by 2030, and across the nation as a whole from about 70 percent to around 60 percent. Figure 2.4: Water Access Projections for Current Investment Levels 15 Data Table 2.4: Water Access Projections for Current Investment Levels 2010 2015 2020 2025 2030 Targets for Access - Water Total 70% n/a 98% 98% Urban 95% n/a 98% 98% Rural 67% n/a 98% 98% Achieved Access -Water Total 80% 77% 72% 67% 61% Urban 92% 95% 88% 80% 70% Rural 77% 73% 68% 63% 58% Source: Castalia calculations. Figure 2.5 illustrates how keeping levels of sanitation investment would lead to a small increase in the number of people with access to sanitation in absolute terms. But as a percentage of the population, access to improved sanitation remains at less than 10 percent. Figure 2.5: Sanitation Access Projections for Current Investment Levels 16 Data Table 2.5: Sanitation Access Projects for Current Investment Levels 2010 2015 2020 2025 2030 Targets for Access - Sanitation Total 68% 77% 83% 87% Urban 85% 90% 95% 98% Rural 65% 75% 80% 85% Achieved Access - Sanitation Total 8% 12% 12% 11% 11% Urban 19% 15% 13% 12% 10% Rural 6% 12% 11% 11% 11% 2.3 Scenario 2—Full Coverage for Water by 2025, 87 Percent for Sanitation by 2030 This section outlines the investment expenditure needed to reach the Government’s targets for universal access to water by 2025 and reach its targets for access to sanitation by 2030; where the Government’s objective for sanitation is that in:  Urban areas 95 percent of the population will have access to improved sanitation by 2030, and  Rural areas 85 percent of the population will have access to sanitation. This Scenario includes allocations to fund the bulk water supply schemes needed for Blantyre, Lilongwe, Mzuzu, and Mzimba. This scenario also includes the elimination of the backlog of schools without facilities to adequate facilities for sanitation and hygiene. The net- benefit to Malawi of achieving these targets will be huge. This plan is achievable if the government is able to dramatically ramp up fund raising and investment expenditure. More than US$700 million would be needed in the 2016-2020 period and over US$600 million would be needed in the 2021-2025 period. While ambitious, this plan does not fully achieve the government’s sanitation targets for 2020 and 2025. Hitting the sanitation targets, in addition to the 2025 target of full coverage for water, requires unfeasible levels of investment from 2016 to 2020, as Box 2.3 explains. 17 Box 2.3: Reaching All Post 2016 Targets is Unaffordable As shown in the table at the bottom of the box, almost a billion dollars of expenditure will be needed between 2016 and 2020 to reach the Government targets for improved sanitation as well as improved water. The Government’s targets for access to water and sanitation are set out below: 2010 2015 2020 2025 2030 Targets for Access – Water Total 69% n/a 98% 98% Urban 95% n/a 98% 98% Rural 67% n/a 98% 98% Targets for Access - Sanitation Total 68% 77% 83% 87% Urban 85% 90% 95% 98% Rural 65% 75% 80% 85% This expenditure is needed to pay for the large bulk supply projects needed over this period to reach the Government’s 2020 sanitation targets and to continue spending on improving access to water to reach the target of universal access by 2025. In addition to the nearly $1 billion dollars in total investment, the table shows that urban sanitation expenditure would have to jump from $1 million now to $127 million in the next five year period, while rural sanitation expenditure would need to jump from $4 million to $161 million. It does not seem feasible to increase both funding and capacity at this rate. 2006- 2011- 2016- 2021- 2026- 2011- 2010 2015 2020 2025 2030 2030 School Sanitation and Hygiene - 13 18 0 - 31 Capacity Building - - 47 26 30 103 Rural Sanitation 12 4 161 46 55 266 Urban Sanitation 1 1 127 36 39 203 Rural Water Supply 95 32 98 195 107 432 Urban Water Supply 36 174 144 242 260 821 Mega Projects - 42 387 6 131 567 Total US$ (millions) 144 265 983 552 621 2,422 For these reasons, the most aggressive scenario presented in the report aims to meet the water target for 2025, but only aims to meet the sanitation target by 2030. 18 Figure 2.6: Investment Required to Meet Water Access Target for 2025 and Sanitation Targets for 2030 Data Table 2.6: Investment Required to Meet Water Access Target for 2025 and Sanitation Targets for 2030 (US$ millions) 2006-2010 2011-2015 2016-2020 2021-2025 2026-2030 2011-2030 School Sanitation and Hygiene - 3 28 0 - 31 Capacity Building - - 36 30 37 103 Rural Sanitation 12 4 30 60 173 267 Urban Sanitation 1 1 40 90 72 203 Rural Water Supply 95 32 88 203 108 431 Urban Water Supply 36 171 144 242 260 817 Mega Projects - 42 387 6 131 567 Total US$ (millions) 144 252 753 632 781 2,419 Note: The assumptions used for creating these expenditure estimates—and all the other expenditure and access levels in this report—are summarized in Box 2.4: Assumptions for Investment and Access Scenarios on page 23. 19 The spending in Figure 2.6 is allocated to a number of components. These are:  School Sanitation and Hygiene—to the allocated investment will eliminate the backlog of schools that don’t have adequate facilities for sanitation and hygiene  Capacity Building—these funds will improve the capacity of institutions so that investments can be made more effectively and sustainably (the key institutions in which these funds will be invested are described in Section 5 on page 62)  Urban and rural sanitation—these funds are allocated to increasing access to sanitation. The funds include costs associated with marketing campaigns, subsidies for households building latrines and public latrines located in public spaces such as markets  Mega-projects—these funds are allocated to the major bulk water supply projects needed for Lilongwe, Blantyre, Mzuzu and Mzimba (these projects are described in detail in Section 3.1)  Urban and rural water supply—these funds are allocated to extending access to water. In urban areas the investments are in distribution and smaller transmission and bulk supply projects. The calculations for the numbers in the Investment Plans are described in Box 2.4. Figure 2.7 shows the increase in access to improved water in terms of the investment plan. Universal access to improved water is reached by 2025 and is sustained till 2030 (the end of the plan period). As can be seen in Figure 2.7, most of the increase in investment needed is in response to the large increase in population over the period. The population in the Water Board supply areas will grow to 5 million people by 2030. We expect that on the very fringes of cities (in peri- urban areas) 3 percent of the urban population will receive water access from boreholes and protected wells. This reflects a fall from the 10 to 20 percent of the urban population that received access from these sources in 2008.8 The unpredictable growth of peri-urban areas means that we expect that 2 percent of the population will continue to be un-served. Outside the Water Board Areas the population grows to 20 million from less than 10 million in 2010. 8 According to the 2008 Census. 20 Figure 2.7: Water Access Projections to Reach Access to Improved Water by 2025 Data Table 2.7: Water Access Projections to Reach Access to Improved Water by 2025 2010 2015 2020 2025 2030 Targets for Access - Water Total 69% n/a 98% 98% Urban 95% n/a 98% 98% Rural 67% n/a 98% 98% Achieved Access -Water Total 80% 77% 81% 98% 98% Urban 92% 95% 93% 98% 98% Rural 77% 73% 78% 98% 98% Figure 2.8 shows the increase in access to sanitation over time, reaching the government target of 87 percent access by 2030. As shown in Figure 2.6 there is higher expenditure on increasing access to improved water than on extending access to sanitation during the 2016- 2025 periods. Delaying spending on sanitation initially is also warranted by the need to build up capacity in the sanitation sector in light of historically low levels of expenditure. Nevertheless, as can be seen in Figure 2.6, expenditure on access to improved sanitation in 21 rural and urban areas will increase rapidly compared to historical levels, till relatively high levels of expenditure are made in 2026-2030. Figure 2.8: Sanitation Access Projections to Reach Access Targets by 2030 Data Table 2.8: Sanitation Access Projections to reach Access Targets by 2030 2010 2015 2020 2025 2030 Targets for Access - Sanitation Total 68% 77% 83% 87% Urban 85% 90% 95% 98% Rural 65% 75% 80% 85% Achieved Access - Sanitation Total 8% 12% 25% 47% 87% Urban 19% 15% 37% 78% 98% Rural 6% 12% 22% 40% 85% Source: Castalia calculations 22 Box 2.4: Assumption for Investment and Access Scenarios The cost of meeting targets is calculated by estimating the population (or schools) that need to be served to meet the targets and multiplying that by the average cost of providing access per person and per school to calculate the total cost of reaching the target. Population Population figures are the same as in Appendix D and come from the Census, Water Board Strategy Documents, and the Sogreah Feasibility Reports for Lilongwe and Blantyre. The number of primary schools comes from the 2008 School WASH Report. Base levels The access to improved water and sanitation in urban and rural areas for 2010 was taken from the Demographic and Health Survey for 2010. Targets Access targets for 2015 are from the Sector Performance Review9 and refer to the access needed to reach the MDGs. The target for full access to improved water by 2025 is the Government Target. There are no targets for 2020 for access to improved water. The targets for access to sanitation are the Ministry responsible for Water and Sanitation targets for the sector. Costs The costs per person provided with access for:  Rural Water is US$37 and comes from the AMCOW Country Status Overview for Malawi (this figure is 10 percent lower than estimates for the cost of providing access using gravity fed schemes). In addition to spending on extending access, a proportion of investment is allocated to the rehabilitation of existing water supply assets. Every year 6 percent of boreholes are assumed to need rehabilitation with each borehole costing US$13 per capita to rehabilitate10  Urban Water is US$209 per person for extending the distribution network (this figure comes from the Sogreah Lilongwe feasibility report). In addition, the costs of the bulk water projects are from the Sogreah feasibility reports for bulk water supply for Blantyre, Lilongwe, Mzuzu, and Mzimba. The cost of these bulk water supply projects is taken from the time when construction commences onwards.11 The cost of bulk supply in towns is US$122 and is the average cost of bulk supply per person from the Salima Lakeshore and Nkhotakota projects (as described in the World Bank Project Appraisal Document for NWDP II AF). The percentage of infrastructure that needs to be rehabilitated is estimated to be 2 percent of the capital base  Rural Sanitation the cost is US$16 per person and comes from the cost of the marketing sanitation component of the WASH program and figures from UNICEF on the extension in access achieved from this spending. These cost estimates are conservative and should be able to also cover the provision of subsidies to households and the building of public latrines. The cost of building the latrine for both urban and rural sanitation programs is borne by the household, and so is not included in the estimated cost to the Government of extending 9 2010 Malawi Irrigation, Water, and Sanitation Sector Performance Report (SPR), Ministry responsible for Water Supply and Sanitation, May 2011, page 11. 10 This is the figure used in the Uganda Strategic Sector Investment Plan for the Water and Sanitation Sector in Uganda. 11 It is assumed that the cost of pre-construction engineering studies is covered by NWDP II AF. 23 access in urban or rural areas. As described in the Appendix the cost benefit analysis incorporates the costs of toilets as well as the cost of marketing  Urban Sanitation, the cost is US$43 per person for an urban sanitation marketing campaign and comes from the NWDP II AF Project Appraisal Document. The cost is based on the expenditure on sanitation marketing required to extend access in Lilongwe and Blantyre.12 These per capita costs numbers are conservative and so should be sufficient to also fund the provision of subsidies to households and public latrines. The focus of this spending will be on access to improved latrines. The rationale for this focus on onsite solutions is that they are more cost effective. In time piped sewer systems for densely populated areas will need to be introduced. The main risk with this approach is polluting the ground water, but we are prioritizing universal access to piped water services in the densely populated parts of the cities. These should give constantly pressurized pipes which means that polluted ground water will not enter the water supply system. It is worth noting that cities as large as Jakarta13 and Manila14 (both with more than 9 million citizens) largely rely on onsite solutions with less than 10 percent of the population relying on piped sewage. Figure 2.9 shows a plan to eliminate the sanitation and hygiene backlog in schools. By 2020, all schools that currently have more than 60 students per latrine will be provided with additional latrines, so that this ratio is preserved. Schools that lack the infrastructure needed for adequate hygiene will have that provided. The plan does not allocate further funding to extending access to adequate facilities for sanitation and hygiene in schools—after the backlog is cleared—because it is assumed that new school buildings will be provided with appropriate facilitates out of the construction budget of the Ministry of Education, Science, and Technology. 12 NWDP II AF, Sanitation Marketing Campaign in Lilongwe and Blantyre. 13 World Bank, “Jakarta Case Study Overview Climate Change, Disaster Risk and the Urban Poor: Cities building resilience for a changing world� http://siteresources.worldbank.org/INTURBANDEVELOPMENT/Resources/336387- 1306291319853/CS_Jakarta.pdf. 14 Junio M Ragragio, “The case of Metro Manila, Philippines� http://www.ucl.ac.uk/dpu- projects/Global_Report/pdfs/Manila.pdf. 24 Figure 2.9: Improvements with Recommended Investment Levels Data table 2.9: Schools without Adequate Facilities with Recommended Investment Levels Primary Schools 2008 2020 Backlog of schools without sufficient facilitates for adequate sanitation and hygiene 4,142 0 Source: Malawi School WASH 2008: A Status Report on Water, Sanitation and Hygiene in Primary Schools, Ministry of Education, Science & Technology, 2009. The expenditure levels described in Figure 2.6 will be challenging to raise and spend over the time frames needed. A less ambitious approach would be to improve access in a more gradual fashion that does not stretch fund raising and implementation capacity to quite the same extent. These considerations are the basis of the Investment Plan presented in the next section. 25 2.4 Scenario 3—Full coverage for water by 2030, and more than Forty Percent for Sanitation by 2030 In light of the high levels of investment needed in Scenario 2, this scenario scales back investments in line with the prioritization described in Section 2.1. The targets reached in this third scenario are:  Schools—the backlog of schools without adequate sanitation and hygiene facilities is eliminated by 2020 (in line with Scenario 2)  Water—universal access to water is achieved in 2030 rather than 2025. Expenditures are allocated to build the urban bulk supply schemes on the same timeline as in Scenario 2  Sanitation—the Government targets for sanitation in urban areas are achieved by 2030. Funds are allocated to achieve access to improved sanitation in rural areas of 33 percent in 2030, a fivefold increase over access levels in 2010 of 6 percent. Figure 2.9 shows the investments in Scenario 3 (that is full coverage for water by 2030, and more than forty percent for sanitation by 2030). Expenditure of more than US$700 million is needed in the 2016-2020 period, largely due to the expenditure on the mega projects during this period. During the 2021-2025 period, under US$500 million is needed. Expenditure then increases to more than US$700 million during 2026-2030 as large spending occurs, once again, on the mega projects. 26 Figure 2.10: Investment Levels for Scenario 3—Full Coverage for Water by 2030, and more than 40 percent for Sanitation by 2030 Data table 2.10: Expenditure required for Scenario 3—Full Coverage for Water by 2030, and more than 40 percent for Sanitation by 2030 2006- 2011- 2016- 2021- 2026- 2010 2015 2020 2025 2030 2011-2030 School Sanitation and Hygiene - 3 28 0 - 31 Capacity Building - - 35 22 36 94 Rural Sanitation 12 4 25 38 23 90 Urban Sanitation 1 1 37 57 99 195 Rural Water Supply 95 32 96 147 161 435 Urban Water Supply 36 171 130 199 316 815 Mega Projects - 42 387 6 131 567 Total US$ (millions) 144 252 738 470 766 2,227 The figures for 2006-2010 are based on actual expenditure. For the period 2011-2015 the figures are based on expected expenditure based on planned projects and expenditure that is expected to be needed on the bulk water supply projects. The figures for 2016-2030 are for planned expenditure. As shown in Figure 2.11 universal access to improved water is achieved by 2030. 27 Figure 2.11: Water Access Projections in Scenario 3—Full Coverage for Water by 2030, and More Than 40 Percent for Sanitation by 2030 Data table 2.11: Water Access Projections for Scenario 3—Full Coverage for Water by 2030, and more than 40 percent for sanitation by 2030 2010 2015 2020 2025 2030 Targets for Access - Water Total 69% n/a 98% 98% Urban 95% n/a 98% 98% Rural 67% n/a 98% 98% Achieved Access -Water Total 80% 77% 82% 91% 98% Urban 92% 95% 91% 92% 98% Rural 77% 73% 80% 90% 98% Source: Castalia calculations. Figure 2.12 illustrates the increase in access to sanitation in urban and rural areas. A further 10 million people will get access to improved sanitation over the period, amounting to access to improved sanitation increasing more than five times. However, given the low level of access currently—less than 10 percent nationally according to DHS (2010)—and rapid population growth, this equates to growth in access levels that don’t achieve the targets for 2025. This aspiration is not achieved because funding has instead been re-allocated to 28 reaching the targets for improved water, and increasing access to sanitation and hygiene at schools Figure 2.12: Sanitation Access Projections for Scenario 3—Full Coverage for Water by 2030, and more than 40 percent for Sanitation by 2030 Data table 2.12: Sanitation Access Projections for Scenario 3—Full Coverage for Water by 2030, and more than 40 percent for Sanitation by 2030 2010 2015 2020 2025 2030 Targets for Access - Sanitation Total 68% 77% 83% 87% Urban 85% 90% 95% 98% Rural 65% 75% 80% 85% Achieved Access - Sanitation Total 8% 12% 23% 36% 45% Urban 19% 15% 36% 60% 95% Rural 6% 12% 20% 30% 33% Source: Castalia calculations. 29 Box 2.5: The Implication of using Different Estimates of Sanitation Access The investment plan is based on the DHS’s estimate of the proportion of the population in Malawi that has access to improved sanitation. An alternative estimate comes from the Joint Monitoring Program (JMP).15 If the figures from the JMP are used, the investment expenditure needed on sanitation falls by around 30 percent. However, because sanitation only makes up a small proportion of the total investment in the water sector, the level of expenditure needed in the WSIP as a whole falls by around five percent. Differences between the JMP and DHS estimates of access to improved sanitation According the JMP the proportion of the population with access to improved sanitation is far higher than the DHS’s estimate. The DHS estimates that less than 10 percent of the rural population has access to improved sanitation and less than 20 percent of the urban population. In contrast, the JMP estimates that around 50 percent of the urban and rural population has access to improved sanitation. Implications of using the JMP estimates of access for the Investment Plan If the JMP figures are used for the investment plan, less expenditure is needed to reach the same levels of access. To reach the sanitation targets reached in terms of Scenario 3 “Full Coverage for Water by 2030, and more than 40 percent for Sanitation by 2030� US$176 million is needed as opposed to around US$280 if the DHS definitions are used. The investment needed from 2011 to 2030 to achieve the sanitation targets reached in Scenario 2 “Full Coverage for Water by 2025, 87 Percent for Sanitation by 2030� is around US$360 million if the JMP estimate for access is used rather than the US$450 million if the DHS estimate of access is used. The table below shows the investment expenditure needed on sanitation to reach the targets for Scenario 2. As can be seen, substantial investments in urban and rural sanitation are still needed over each investment period.16 Higher levels of investment would be warranted if funding can be found given the high net benefit to investment ratio of investments in sanitation. Proposed investment expenditure per funding period in US$ millions 2006- 2011- 2016- 2021- 2026- 2011- 2010 2015 2020 2025 2030 2030 Rural Sanitation 12 4 20 40 123 187 Urban Sanitation 1 1 30 50 90 171 The implication of using the JMP estimate for access to sanitation rather than the DHS estimate is relatively small for spending overall. For Scenario 2 expenditure falls from around US$2.4 billion to US$2.2 billion and for Scenario 3 expenditure falls from around US$2.2 billion to around US$2.1 billion. For both scenarios, changing the estimate from DHS to JMP leads to a reduction in expenditure of around 5 percent. This suggests that, if the JMP estimates are used, the funding plan (as described in Section 4) would be broadly similar. 15 Joint Monitoring Program, 2012 "Progress on Drinking Water and Sanitation" UNICEF and the World Health Organization 16 The investment needed to reach the level of access achieved in terms of Scenario 3 is not shown because the investment plan would not be meaningful with the JMP figures. The level of access of access achieved in rural areas in Scenario 3 by 2030 33 percent. This is just above the level achieved if the JMP estimates of access are used and no investment occurs in rural sanitation over the next twenty years. Thus, if a investment expenditure plan was presented to reach the access levels reached in terms of Scenario 3 no investment would be allocated to rural sanitation over the next twenty years. Something which is not justified in light of the very high net benefit to investment ratio of investments in the sector. 30 2.5 Summary of the Investment Plans This section has outlined a number of scenarios for investment in the Malawi Water and Sanitation Sector. This report suggests that the Ministry responsible for Water and Sanitation should implement Scenario 2, if possible, and fall back to Scenario 3 if the funds and capacity required for Scenario 2 are not forthcoming:  Scenario 2—Achieve full coverage for water by 2025 and 87 percent access to sanitation by 2030. The benefits to Malawi from reaching these targets would be huge. To achieve these targets would require large amounts of fund raising and investment expenditure over the period. If these amounts of funding and investment cannot be achieved a scaled back version of this investment plan should be considered  Scenario 3—Achieve full coverage for water by 2030 and more than 40 percent access to sanitation by 2030. This scenario delays reaching universal access to water till 2030 and 95 percent access to sanitation in urban areas is reached by 2030 but access to sanitation in rural areas significantly lags the Government’s targets. This section rejected two alternative investment plans, the first because it is not desirable, the second because it is not feasible:  Scenario 1—Business as Usual. Keep investing at current levels. However, these levels of investment in water supply are too low to keep up with the country’s rapidly growing population and so access to water as a percentage of the population falls to 60 percent in 2030 from 80 percent in 2010. Continuing to spend at current levels on extending access to sanitation will leave the country with access to sanitation at just over 10 percent in 2030. Given the large net benefit of making the investments to Malawi described in Section 2.1 and allowing access to fall or stagnate in this way is clearly not desirable and should not be seriously considered  Hitting all the Targets. This is not feasible from a funding or capacity standpoint. While the access to water targets could be reached, combining these with the access to sanitation targets for 2020 and 2025 is not feasible. The ramp up in expenditure is too aggressive. In particular, to hit the access to sanitation targets by 2020 requires expenditure on sanitation to increase from a few million dollars in the 2011-2015 period, to hundreds of millions of dollars in the 2016- 2020 period. 31 3 Projects and Programs The previous section sets out expenditure levels and access targets for each sub-sector in water and sanitation. This section mentions projects and programs that could be financed. Urban water is considered first, then urban sanitation, rural water, rural sanitation, and finally schools. Capacity building is also a component of the investment plan, and was estimated at five percent of total investment spend in each plan period. The areas where these funds are intended to be spent are discussed in Section 5. Throughout this section, the scenarios, and associated investment plans, will be referred to as Scenario 2 (achieve full access to water by 2025, and 87 percent access to sanitation by 2030), and Scenario 3 (achieve full access to water by 2030 and 40 percent access to sanitation by 2030). 3.1 Urban Water Urban water investments refer to all those investments needed to provide access to safe and reliable water within the service area of a Water Board. This section first recommends the way forward on bulk supply projects, which are considered under the mega project category in the investment plan. Options are analyzed for Blantyre, Lilongwe, Mzuzu and Mzimba. The recommendation is to proceed with major bulk supply projects for each of these cities and town. Then smaller urban water supply projects, considered under the “urban water supply� category in the investment plan, are described. 3.1.1 Bulk supply project for Blantyre Blantyre has already run out of water to serve its growing population. Analysis shows that a significant new bulk supply scheme for Blantyre is economically justified. Blantyre needs a new bulk water supply As shown in the projected supply-demand balance below (Figure 3.1), if Blantyre does not invest in a new water source, water shortages will re-emerge by 2019. The current water shortages are being alleviated by the success that the Blantyre Water Board is having in reducing non-revenue water, assisted by Vitens, the advisors contracted to the Board. This situation will further be improved by the rehabilitation of the current Walkers Ferry supply. These developments are shown in Figure 3.1 as the shrinking of the light-blue ‘Volume NRW’ component of total raw water demand, and the upward movement in the red line that represents the maximum raw water that the current systems are capable of supplying. Continuing population growth will push up demand for water in the Blantrye Water Board area. Even assuming continued success in getting non-revenue water down to just 25 percent by 2020, demand for water will outstrip supply by 2019. This is can be seen in the figure as the point where the bars representing bulk water demand start to rise above the red line showing total supply available from existing sources. Given the lead times on a building a dam, uncertainty about rates of demand growth and non-revenue water reduction, and the high costs of failure to supply reliable water, it is worth proceeding with development of new bulk supply now. 32 Figure 3.1: Blantyre’s Water Needs and Current Capacity 250 Combined Production 200 Capacity Thousand cubic meters/day Total Raw Water 150 Capacity of Current 100 Losses in Production System 50 Volume NRW 0 Customer Demand 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Source: All figures from Sogreah “Blantyre New Water Source: Feasibility Study Report� July 2010, except progress on NRW reduction from Vitens (personal communication). The Sogreah Feasibility Study reviewed a number of options for supplying water to Blantyre. It recommended the construction of a dam at Mombezi with an intake at Makuwa. However, this option has an Economic Internal Rate of Return (EIRR) of only 4.8 percent 17. The option with the lowest costs of supply—and the highest EIRR—is augmenting supply from the Shire River at Walkers Ferry. This option, however, is reported to have an EIRR of 6.4 percent18. Traditionally, development agencies such as the World Bank only fund projects with an EIRR over 10 percent.19 Given the many demands for capital in a developing country, this cut-off makes sense. But it seems hard to believe that it would be right to leave Blantyre without new water sources. Costs of not supplying Blantyre with Water It goes against common sense to suggest that water supply to Blantyre should not be increased. Considering the rate of migration to Blantyre, and the population currently without improved water services, it is likely that if supply is not increased, by 2035 almost a 17 “ Blantyre New Water Source: Feasibility Study Report�, Sogreah, Table 88. 18 Blantyre New Water Source: Feasibility Study Report�, Sogreah, Table 88. 19 Pedro Belli et al., Handbook on Economic Analysis of Investment Operations, ed. Operational Core Services Network Learning and Leadership Center, page 195, accessed March 5, 2012, http://siteresources.worldbank.org/INTCDD/Resources/HandbookEA.pdf. 33 million people will be living in the city without access to safe water. How could this be the economically justified result? The answer of course is that it is not economically justified to leave Blantyre without water. Sogreah’s analysis made the basic error of valuing water at the tariff. Where the tariff is set by Government without reference to either the costs of supply or consumer willingness to pay, it is a far from reliable guide to the real economic value of water. The costs of not supplying Blantyre with water were calculated based on three scenarios. In the first scenario, the health and inconvenience cost to each person not supplied with water is assumed to be US$147 per person per year (See Appendix A for the calculations). This is probably an underestimate, given the disease levels that would develop in a city of 2 million people where half the population lacks access to a reliable, improved water source. The health and time costs of not supplying water have a present value to US$500 million20. Of course, it could also be argued that lack of water in Blantyre—and the disease-ridden conditions that would ensue—would lead to a slowing in migration to the city. This is likely to be true. The cost of a reduction in urbanization is great, so this result would also be bad for the country. City-dwellers are more productive than people in the countryside. So for each person who decides not to move to Blantyre—or to move away—because of poor water supplies, national income would be expected to reduce by US$216 per annum. If the population in Blantyre stagnated because of lack of water, the present value of cost to the country would be around US$473 million. Finally, people might decide to move to Blantyre and find private solutions to the water supply problem. One market solution to the needs of the growing city would be trucking water, probably from the Shire River. The present cost of supplying the entire growth in population through tanker trucks is around US$961 million. Not surprisingly, this is about six times higher than the cost of supplying the city with Walkers Ferry or Mombezi-Makuwa schemes. Table 3.1 below presents the costs of not providing water to Blantyre, under the three possible scenarios described above. Table 3.1: Costs of Not Supply Blantyre Compare to Cost of Supplying Scenario NPV in US$ million 1 Not Providing Water 500 2 No Population Growth 473 3 Tanker Trucks from the Shire River 961 Note: Calculations are done over the period to 2060 (to be consistent with Sogr eah’s economic analysis) and using a 10 percent discount rate. Calculations and sources are explained in the text. In short, the benefit of a bulk supply project for Blantyre can be thought of as the avoided cost of not supplying the city. The real cost of not building a scheme would be some mix of disease and suffering as people move to the city and try to live without a piped water supply, 20 Calculations are done over the period to 2060 (to be consistent with Sogreah’s economic analysis) and using a 10 percent discount rate, for all the present values in this section. 34 some loss of productivity from people not moving to the city, and the costs of private supply for some who move to the city and find a way to make private arrangements for water supply. The cost of not supplying the city could reasonably be expected to exceed US$500 million. Bulk Supply Options for Blantyre Sogreah analyzed a total of 16 options in the Feasibility Study for a new raw water source for Blanytre. It rejected nine of these on environmental grounds, leaving seven for further analysis. These seven were then evaluated and ranked on the basis of their EIRR, as well as other factors: environmental, security of supply, and their usefulness for multiple purposes. These options are presented in Table 3.2 below, in line with costs and rankings presented in Sogreah’s Feasibility Study. Table 3.2: Sogreah Evaluation of Options Shire River Intakes Dam Options 160 140 140 133 133 133 120 112 106 USD Millions 100 87 80 60 40 20 0 - Walkers Matope Mombezi- Mombezi Mombezi- Mombezi Mombezi Ferry Magomero- Magomero Makuwa Mulanje Lirangwe Lirangwe Capital Cost 87 106 112 133 133 133 140 (USD Millions) Operating High High Low Low Low Low Low Cost Sogreah 3 6 3 3 1 2 7 Ranking Scored Source: Feasibility Study for Blantyre’s New Raw Water Source. Pg 247 and 249. Cost numbers and ranking by Sogreah Consultants. 35 The options that Sogreah reviewed include two intakes on the Shire, and five Dam options:  Shire River Intakes: two projects would create intakes on the Shire at Matope or Walkers Ferry. These projects have lower capital cost-but higher operating costs than the dams’ operating costs because of the energy costs of pumping water from the Shire.  Dams: The five dam options all have a similar capital cost to Mombezi-Makuwa. All of these options propose to build a dam at Mombezi. These dams would have lower operating costs than the river intakes, but higher capital costs. Sogreah recommended the Mombezi-Makuwa option. Mombezi-Makuwa is Sogreah’s Recommended Option, but Walkers Ferry is more Cost-effective The Mombezi-Makuwa dam would cost around US$214 million21, to be incurred in two phases.22 The recommendation to proceed with Mombezi-Makuwa has been controversial because the Sogreah Report states that the economic internal rate of return is higher for Walkers Ferry than Mombezi-Makuwa. This is largely because the higher electricity costs of Walkers Ferry are more than offset by its lower capital costs. On this basis Walkers Ferry is the better option because it is cheaper. Using Sogreah’s costs, and a discount rate of 10 percent, the present value of costs of Walker Ferry is US$23 million less than the present value of the costs of Mombezi-Makuwa. Sogreah’s analysis has a number of shortcomings which mean that it under estimates the cost of Walker’s Ferry. Nevertheless, after correcting for the mistakes Sogreah made, Walker’s Ferry remains the more cost effective option. An important shortcoming of Sogreah’s feasibility study is that it fails to take into account the true cost of electricity. Sogreah uses the tariff rate of US$0.03 per kWh. This figure would be fine for a financial evaluation, but is not correct, and also too low, for an economic analysis. Calculations appropriate to an economic analysis described in Appendix B suggest that the real cost of power in the country is closer to US$0.17 per kWh23. At this cost of power, Walkers Ferry has a similar present value of costs to Mombezi-Makuwa as Table 3.3 shows. However, as discussed below the picture shown in Table 3.3 is incomplete. 21 The capital cost of US$214 million is larger than the capital cost of US$97 reported Table 3.3 because the capital cost in Table 3.3 is the Net Present Value of the capital cost and so future expenditure is discounted. Capital costs for this bulk supply scheme include construction works for a dam, a water intake, water treatment plant, pipelines, reservoirs, electric lines, and pumping stations. Additional capital costs have been allocated towards resettlement, engineering, and possible physical contingencies. 22 It is hard to be as precise as we would like about the cost of the project as there are some discrepancies between the capital costs reported in Table 73 of Sogreah’s “Blantyre New Water Source: Feasibility Study Report�, and those given in Appendix H3 for the Economic Analysis. Because we needed the costs broken down by year, we used the numbers in Appendix H3. 23 The economic cost of power supply in Malawi was recalculated, assuming that a 300MW coal fired plant is built as the next capacity increment according to Malawi Power System Project Studies: Final Feasibility Study Report, August 19, 2010 prepared for Millennium Challenge Corporation. The all-in cost of power from such a plant would be around US$0.08 per kWh. Systems losses at the target rate of 17.5 percent add another US$0.01 to this. International benchmarks suggest that cost-reflective transmission and distribution charges would also be around US$0.08 per kWh. The final figure is US$0.17 per kWh. 36 Table 3.3: Cost of Mombezi-Makuwa Compared to the Cost of Walkers Ferry24 NPV 2012-2060 US$m at 10% Mombezi – Makuwa Walkers Ferry Capex 97 70 Operating and maintenance expenses 8 7 (excluding electricity) Electricity (at tariff) 5 10 Subtotal 110 87 Electricity at US$0.17 per kWh 24 47 (increment to economic cost) Total 134 134 Mombezi-Makuwa has a number of additional environmental and social costs that have not been quantified and so are not incorporated in Table 3.3. A dam at Mombezi would flood established communities, submerging a school, a graveyard and a mosque, requiring large- scale resettlement.25 In addition, a dam at Mombezi would place pressure on Lake Chilwa and the Ramsar Wetland site which has been internationally recognized as important for migratory birds and fishing.26 Once these additional social and environmental costs have been incorporated into the costing of Mombezi, building a dam at Mombezi is likely to have a higher present value of economic costs than Walkers Ferry. Security of Supply Considerations for Blantyre Concerns have been raised that Walkers Ferry will not offer sufficient security of supply for Blantyre. However, the most recent analysis suggests that this risk may be less than feared, and no higher than the equivalent risk for Mombezi-Makuwa. The concern that the Shire River may run dry is based on the Water Resources Investment Strategy prepared for the Government of Malawi by Atkins.27 Based on historical records of the flow out of Lake Malawi, the Water Resource Investment Strategy predicted a relatively high risk of the Shire running dry of around 20 percent over any given period (that is, the information suggested that over a 50 year period, there would be a total of almost 10 years without outflow from Lake Malawi into the Shire). However, a more thorough analysis carried out by Norplan suggests that the Water Resources Investment Strategy over- estimated the risk of the Shire running dry. Taking into account the Kamuzu Barrage, and planned upgrades to the barrage that increase the amount of water stored in Lake Malawi the probability of low to zero flow is negligible as shown in Figure 3.2.28 Further, Blantyre's total 24 Refer to Appendices C and D for detailed calculations of electricity costs and Shire River risk. 25 Safeguards Aide Memoire which evaluated social and environmental risks of the Mombezi dam and other issues. 26 Ibid. 27 Government of Malawi Ministry of Irrigation and Water Development “Water Resources Investment Strategy Component 2, Final Report� August 2011. 28 This figure is the result of initial modeling by Norplan as their study has not yet been finalized. 37 water demand is only about 1 percent of the Shire's mean annual flow and so there might be enough raw water for Blantyre even if the Shire were to run almost completely dry. It is important to recognize the risk that the dam built on the Mombezi may go through periods when there is too little water to provide Blantyre with all that is needed. This appears plausible because it has been reported that the Mombezi river “frequently dries up during low flood seasons�.29 Figure 3.2: Shire River Hydrological Risk Current available analysis shows Walkers Ferry is the most cost effective option On the available evidence Walkers Ferry is the most cost effective source to provide raw water to Blantyre. While Walkers Ferry has higher electricity costs it does not lead to the substantial environmental and social costs of a dam at Mombezi. 3.1.2 Bulk Supply Project for Lilongwe Lilongwe needs to move ahead with adding new bulk water supply capacity. With current capacity, the supply shortfall is predicted to be 20,000 cubic meters per day by 2015. Sogreah’s recommendation to proceed with the Diamphwe Lower Dam (with an 18m depth and an irrigation component—Option 3) appears sound. The recommended scheme will entail total capital expenditure of US$250 million between now and 2030. The first phase of construction—which we estimate would start in 2015 and take four years—will cost around US$190 million. Most of the remaining expenditure would go on a second construction phase sometime between 2026 and 2030. Capital costs for this 29 “Dam engineering memorandum� 30 September 2011. 38 option include civil works and equipment30, as well as the supply, laying, and installation of transmission pipelines. Like capital costs for Blantyre, other costs were allocated for resettlement, physical contingencies, and engineering costs. Because this bulk supply scheme will also provide water for fisheries and irrigation (not just drinking water), some of the capital costs are for acquiring land for compensation irrigation, development of fisheries, and irrigation schemes. Sogreah also provides capital cost estimates for network expansion and connections, in the distribution system31. However, these costs are not reflected in the required investment for bulk water supply. They have been accounted for in the proposed investment plan under urban water supply, but were excluded here to make all bulk water investment requirements comparable. Sogreah estimates the EIRR of the scheme at 12 percent—several errors appear to have been made in the economic evaluation, but correcting these would mostly increase, rather than decrease the estimate of the EIRR. Demand will quickly exceed supply in Lilongwe Demand for water in the Lilongwe supply area is forecast to reach 88,000 cubic meters per day by 2015. Even with projected reductions in NRW, bulk water supply of 123,000 cubic meters per day will be needed to meet demand as Figure 3.3 below illustrates. By 2025, the bulk water deficit is predicted to grow to 94,000 cubic meters per day if nothing is done. Figure 3.3: Lilongwe Bulk Water Demand vs. Current Capacity 350 Combined Production 300 Capacity Thousand cubic meters/day 250 Total Raw Water Required 200 Fisheries Capacity of Current Supply 150 Irrigation Losses in Production System 100 Volume NRW 50 Customer Demand - 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Source: Sogreah Lilongwe Feasibility report numbers were used for all components of this graph, except for NRW reduction. Demand projections are based on the medium growth scenario. Expected decreases in NRW reflect expected outcomes of Private Service Contract with Vitens; this was gathered from a personal communication with the Project Manager for the Contract in Lilongwe. 30 These include construction of dam, water treatment plant, tanks, pumping stations, road and earthworks, SCADA systems, power plant, and electric lines. 31 The estimated present value cost (at 10 percent discount rate) of a complementary distribution system is about $59 million. 39 The Diamphwe Lower Dam is the right option Sogreah recommends the Diamphwe Lower Dam (with an 18m depth and irrigation and fisheries component—Option 3).32 Sogreah recommended this option after a review of three site options, and thee design variants for the recommended site. Of the feasible options, the recommended option has the highest EIRR, at 12 percent.33 The analysis seems to have been generally sound. Unlike the Blantyre analysis, the levels of NRW assumed seem to be reasonable. The EIRR of the recommended option is 12 percent, which is above the normal hurdle rates for investment approval. There are some flaws in the economic analysis related to the value of water, and electricity costs and values. These are unlikely to affect the conclusions, but are described below for completeness. The Sogreah analysis seems to understate the economic value of the water supplied by the scheme. The analysis estimates the value of water supplied to customers with individual connections at the tariff paid, plus the additional cost of getting water under a counterfactual “without project� scenario in which only kiosk supply is available to new users. 34 By making continued supply from kiosks at current prices the non-project counterfactual, the analysis seems to assume that water to supply an additional 800,000 inhabitants35 through kiosks would be available even if bulk supply is not augmented. Since current supply is not enough to meet projected 2015 demand, this assumption does not seem reasonable. It seems more likely that the true counterfactual would be that many people would not get water at all. If that is the case, then Sogreah’s analysis seriously understates the true economic benefits of the scheme. As with the Blantyre economic analysis, Sogreah seems to underestimate the economic value of electricity consumed in supplying water. In considering the economic cost of power consumed, the report assumes a figure of less than US$0.06 per kWh. Castalia analysis suggests that the true economic value of electricity in Malawi is closer to US$0.17 per kWh (See Appendix B). However, this understatement of costs is probably trivial in comparison to the understatement of benefits, so the conclusion that the scheme is economically justified would still stand. In choosing between options, Sogreah recommended against adding a hydropower component to the recommended option. The report considered the current shortage of power in Malawi, and the reliance on diesel generators, and assigned a value per kWh of power produced in excess of US$0.3936. This is probably too high. Our analysis suggests that that value of power generated will, over the medium-term, be around US$0.08 per kWh. It certainly is inconsistent to assume, as Sogreah has done, that power consumed is worth less than US$0.06 per kWh but power generated is worth more than US$0.39 per kWh. 32 Feasibility Studies and Preliminary Design for Lilongwe New Water Source, Updated Feasibility Study Report, July 2010, N° 1.32.0145 R10, Sogreah [Sogreah Lilongwe Feasibility Study]. 33 Sogreah Lilongwe Feasibility Study, Table 148, p.253. 34 Sogreah Feasibility Study pg. 250. 35 Population projections from Sogreah Report section 2.3.2. 36 Sogreah Report pg. 251. 40 However, using a lower value for power generated would reinforce Sogreah’s conclusion that adding a hydropower component is not economically justified, so correcting the error would not change the recommendation. Government and Lilongwe Water Board should proceed with the Diamphwe Lower Dam In conclusion, there can be little doubt that Lilongwe needs a significant boost to its bulk water supply, to keep pace with growing demand, and close the existing supply deficit. The Diamphwe Lower Dam is the economically justified way to do this. This project should proceed. Its estimated cost is US$250 million between now and 2030. 3.1.3 Bulk Supply Projects for Mzuzu Like Lilongwe and Blantyre, Mzuzu is running out of water. The town’s population exceeds 150,000 already, and is projected to grow rapidly. Supply is already inadequate to meet demand. By 2015 a shortfall of 8,000 cubic meters per day is projected, even assuming that non-revenue water can be reduced to 25 percent (from the current level of around 30 percent). Construction of a dam on the Lambilambi River is the best option to serve this growing demand, and is cost-benefit justified. Total capital cost of the Lambilambi Dam project would be US$70 million, which should be incurred between 2014 and 2017. Cost provisions are for construction of dam, transmission pipelines, water treatment plant and tank, and electric lines. Further, capital cost estimates include construction of service road and earthworks, land compensations, engineering, and physical contingencies. Once built, the scheme should be adequate to meet demand in Mzuzu until about 2030. At that point, an additional dam could be built. Sogreah has identified a number of possible second phases, but it is not necessary at this point to make a decision on which would be best. Mzuzu is running out of water According to Sogreah’s analysis, demand for water in Mzuzu is alread y 14,000 cubic meters per day, even though only around 70 percent of the people in the area are served with piped water. The current water supply capacity of 16,000 cubic meters per day has already been exceeded, as Figure 3.4 shows. Reductions in non-revenue water levels are feasible, but will not be adequate to restore the balance of supply and demand for water. 41 Figure 3.4: Mzuzu Bulk Water Demand vs. Current Capacity 70 Combined Production Capacity Total Raw 60 Water Required Thousand cubic meters/day 50 40 Capacity of Current Supply 30 Losses in Production 20 System Volume NRW 10 Customer Demand - 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Source: Sogreah Mzuzu & Mzimba Feasibility report numbers were used for this graph. The Lambilambi Dam is cost benefit justified Sogreah recommends that the Lambilambi Dam be developed to meet this growing demand, followed by development of the Luzangazi Dam to meet additional demand after 2029. However, the Sogreah Mzuzu-Mzimba Feasibility Study indicates that the EIRR for this project is 4.3 percent. All the other schemes considered have an EIRR of this level or less according to Sogreah’s calculations37—except for the option of a dam on the Lichelemu River which, if hydro-generation is incorporated, is estimated to have an EIRR of 10.9 percent. As was the case with Blantyre, it seems implausible that it would be cost-benefit justified to leave so many people without a safe reliable water supply. Castalia redid the calculations, using the Sogreah population and demand forecasts, and the costs of the Lambilambi Dam (excluding phase 2 capital costs)38. As with the other projects, electricity costs were set at US$0.17 per kWh in line with estimates of the economic costs of supply (see Section 3.1.1). The benefits of the project were assumed to be US$147 per person supplied with improved water (see Appendix A). The results of this improved economic analysis show an EIRR of around 20 percent for the Lambilambi Dam. This confirms the rational view that a growing town needs a water supply adequate to the needs of its population. 37 Sogreah Mzuzu-Mzimba Feasibility Study, Table 89, page 190. 38 Refer to Appendix A for the cost-benefit analysis. 42 The Lambilambi Dam is better than other options The next question is whether the Lambilambi Dam is better than the other options. At first sight, one might think that the dam and hydropower generation Lichelemu River might be better, given that Sogreah estimated it to have twice the EIRR of the Lambilambi Dam. However, once a more realistic estimate of the value of power generation is used (US$0.08 per kWh), the EIRR turns out to be 17 percent—viable but less than that of the recommended Lambilambi Dam. The other close contender is building a dam on the Lusangazi. This has a slightly higher water yield, and slightly lower capital cost, than the Lambilambi scheme. However, Sogreah reports that “The potential site on Lusangazi River would have major and serious negative impacts on nearby settlements and human activities, including loss of farm land, separation of communities and disruption of footpaths.� Sogreah Mzuzu Mzimba Feasability Study p.IX. On the assumption that these disadvantages outweigh any slight cost advantage, it seems safe to proceed with the Lambilambi Dam in order to provide increased water supply to Mzuzu. This is recommended for inclusion in the investment plan. An additional water supply will be needed around 2029, but it does not make sense to decide on that now. Planning for that should start around 2020. By that time, better information on population growth, as well as any changes in hydrology patterns, will allow better decisions to be made. 3.1.4 Bulk Supply Project for Mzimba Mzimba is a town of around 20,000 people, with rapid population growth and inadequate water supply. The Sogreah Feasibility study evaluated options for Mzimba based on technical, economic, financial, and social and environmental parameters. The report concludes that the only option for supply of water to meet Mzimba’s needs is a dam on the Mzimba River.39 A dam sized only for water supply is estimated to have an EIRR of just 1.8 percent. However, a larger dam irrigating 240 hectares of land, in addition to providing water supply is estimated to have an EIRR of 16.6 percent.40 The third dam option has the highest EIRR, at 56%, and would provide drinking water supply while irrigating 1,500 hectares. But, investment requirements and time to carry out needed studies that would fully support this third option are too high and would take too long. So, Sogreah recommends the dam option that provides drinking water supply and irrigates 240 hectares because it has a sensible EIRR, a lower investment requirement and could be completed in less time than the 1,500 hectares option. Though technical, economic, financial, social and environmental studies were carried out for these three dam alternatives, more analysis is required to fully justify a dam option with an irrigation component, as Sogreah mentions in the conclusion of the Feasibility study. Specific studies that still need to be carried out include a map identifying lands for 39 Sogreah Mzuzu-Mzimba Feasibility Study p.201. 40 Sogreah Mzuzu-Mzimba Feasibility Study p.188. 43 developing irrigated agriculture, as well as an actual feasibility study of irrigated agriculture. 41 The exact size of the dam could be adjusted according to the results of further feasibility studies. In fact, the preliminary designs for the proposed dam option, will supposedly take into account a future storage increase, and so could provide flexibility to the initial dam size that is built.42 Assuming the irrigation values have been calculated correctly, it would make sense—for now—to include this scheme in the Investment Plan. The recommended option has a cost of about US$39 million. Similar to the bulk supply options for Blantyre, Lilongwe, and Mzuzu, capital costs for Mzimba include dam construction, transmission pipelines, service road and earthworks, water treatment plant and tank, electric lines, land compensation, physical contingencies, and engineering. As is the case for Lilongwe, the Mzimba bulk supply scheme will also provide water for irrigation; so a part of capital costs is for irrigation systems. Figure 3.5: Mzimba Bulk Water Demand 25 Combined Production Irrigation Capacity 20 Thousand cubic meters/day Losses in Production System 15 Volume NRW Customer Demand 10 5 Capacity of Current Supply - 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Source: Sogreah Mzuzu & Mzimba Feasibility report numbers were used for this graph. 3.1.5 Urban Water Supply As discussed above, we recommend that the major bulk water supply projects for Blantyre, Lilongwe, Mzuzu, and Mzimba are funded. From 2011-2020 these projects require around $550 million in funding. In addition to the mega projects more than forty urban water projects, with a combined capital cost of around US$120 million, have already been selected for funding and should— like all projects that are already funded—stay in the Investment Plan. 41 Sogreah Mzuzu-Mzimba Feasibility Study p. 201. 42 Sogreah Mzuzu-Mzimba Feasibility Study p. 201. 44 Scenarios 2 and 3 suggest that around $815 million is needed, which suggests that substantial funding still needs to be allocated to urban water projects.43 A number of other urban water projects have been identified by Water Boards, but have not yet secured funding. Examples of the types of urban water projects that could be funded are provided below. The Northern Regional Water Board has proposed water supply systems for Usisya, Mpamba, and Kande. The estimated cost is $12 million. The project is expected to have around 18,000 beneficiaries. A project proposed by Central Regional Water Board is for rehabilitation and expansion of Kasungu water supply. It involves the construction of distribution pipelines and installation of a storage tank, and 19 community water points. An estimated 12,700 people in low income areas around the town would benefit; the project would cost $400,000. A Southern Regional Water Board project that has a funding gap is the construction of the Zomba water supply scheme. The total estimated cost of the project is $8.3 million, but it has only received $7.8 million. The project aims to expand supply to low income areas. Funds provided are to be used for rehabilitating and replacing asbestos cement and galvanized iron pipes, as well as construction of a reservoir to improve capacity. If the funding gap results in the inability to properly and successfully complete the project, remaining funds could be provided to finish the project. Projects that have yet to receive funding are worth an aggregate amount of about $8 million. The complete list of unfunded rural water supply projects can be found in Table G.6 in Appendix G.2. 3.2 Urban Sanitation The Investment Plan allocates around US$200 million under Scenario 2 and Scenario 3 for projects that increase access to improved sanitation in urban areas. Currently, there is only one funded urban sanitation project. Its total cost is less than $1 million (refer to Appendix G). This is a sanitation project is for continuing sanitation marketing campaigns in peri- urban areas of Lilongwe and Blantyre. The campaigns aim to increase adoption of latrine options, hand washing, use of safe drinking water, and clean latrines. About 4,650 households (or 21,400 people) will benefit from this project. Two unfunded projects, worth a total of $23 million, are to develop sewerage systems for two towns in the service area of Northern Regional Water Board. In addition, to these Box 3.2 discusses an array of options for sanitation technologies that could be considered for inclusion in the investment plan. 3.3 Rural Water Scenario 2 and Scenario 3 of the Investment Plan recommends that more than $430 million be spent on rural water supply projects from 2011 to 2030. There are 14 rural water projects that have been funded in rural areas with a total cost of more than US$25 million (refer to Appendix G for funded rural water projects). This means around $400 million worth of projects have yet to be identified under scenario 2, or Scenario 3. 43 The expenditure on urban water is $817 million in Scenario 2 because infrastructure is built earlier and so there is expenditure on rehabilitation. Expenditure for Scenario 3 is $815 million because investments occur later and so less rehabilitation is planned for. 45 A number of projects, worth a total of about $8 million, have been prepared by the Ministry responsible for Water Supply and Sanitation but not yet funded. Examples of projects that have not yet received funding but could be included in the Investment Plan, are rehabilitations for piped water supply schemes in three rural districts44, as well as Mwasambo-Nhotakota and Ntchisi, Champila South-Mzimba, and Chitekwa in Chitipa. As discussed in more detail in Section 5, further spending on rural water should be allocated to District Councils which would develop projects in line with their District Sector Investment Plans. Box 3.1 below discusses some options for rural water supply technologies that District Councils could consider in developing investment projects in rural water supply. Box 3.1: Rural Water Supply Technologies In rural areas, the communities access improved water from a range of technologies including boreholes, gravity fed piped water schemes, and rain water harvesting. Over the last 20 years, large scale investments in boreholes have dramatically increased access to improved water in rural areas of Malawi. However, there are indications that the country cannot continue to rely on boreholes to extend access. The Water Resource Investment Strategy notes a “worrying trend of the installation of substantial numbers of boreholes ….. The concern here is that the cumulative abstraction of this number of boreholes may theoretically be greater than the assessed storage of the aquifer and far in excess of the potential recharge. This situation can only lead to a large scale reduction in borehole pumping yields in the short to medium term and in the medium to long term the ultimate failure of many boreholes, especially during major droughts�.45 These concerns have led the Government to shift its focus towards investing in surface water systems. Rural technology options In addition to focusing on surface water, the Government has also focused on providing access using piped water schemes. These systems provide greater convenience for users. Accessing water from boreholes with hand pumps requires community members to go fetch water from the borehole itself, while piped water schemes supply water closer to people’s homes. As a result, boreholes with hand pumps require community members to spend more time hauling water. The need to haul the water also reduces the amount of water they can carry home and use. Challenges of increasing access using piped water systems While piped water systems have significant benefits for users, they are more difficult for the community to operate and maintain and can be more expensive. Piped water systems are larger and more sophisticated than boreholes. Additionally, it is harder to organize the community to maintain and operate the systems because they serve more people across a wider area. Further, piped water systems can be more expensive. The cheapest piped water systems, gravity fed schemes, cost around US$42 per capita.46 This is around 10 percent more expensive than boreholes with hand pumps which cost around US$37 per capita. However, gravity fed schemes can only be used in certain parts of the country. In areas where gravity fed schemes are not viable pumps will need to be used which will increase the cost. For instance, a system that uses a borehole, has a pump and provides piped access costs around US$70 per capita.47 This is 90 percent more expensive than a borehole with a hand pump. 44 Specific districts are not specified in source of information. 45 Page 62 of Annex V – Ground Water of Volume 1 of the Water Resource Investment Strategy. 46 This figure is from the Project Appraisal Document for the second National Water Development Program and is adjusted for inflation. 47 This figure is from the Project Appraisal Document for the Additional Financing for the second National Water Development Program. 46 The shift towards providing piped water and the need to reduce the reliance on ground water has the potential to increase the cost of the investments needed to provide access. The investment plan assumes that boreholes with hand pumps are used to supply communities with water. The resulting expenditure needed is around US$400 million over the 2016-2030 period (as shown in Figure 2.6). In contrast, if 50 percent of access is provided using gravity fed schemes and 50 percent using boreholes with pumps the investment needed to reach the Government’s target of universal access will be around US$600 million, an increase of US$200 million. District councils should decide on suitable technologies As mentioned in Section 5, District Councils will be expected to generate projects for rural investment in the future. Considering this sample of technologies to choose from, District Councils will want to continue to develop district plans that fund the types of water systems that would be most appropriate for rural areas in their districts. Factors such as the availability of groundwater versus surface water, and the costs of each technology compared to the additional benefits could help guide investment decisions. For example, a gravity scheme may be more costly but it also provides the benefit of delivering water closer to homes and so reducing time spent collecting water. Could small dams be an option to improve surface water reliability? Does the potential for rainwater harvesting exist in areas with scarce water resources, and how much storage would be needed to get households through the long dry season? Lastly, institutions should be designed to provide sustainable operations and maintenance. This may include strengthening of Water User Associations, or contracting out the scheme to an individual, firm or Water Board. Such institutions could help collect fees from users, and ensure systems are maintained. 3.4 Rural Sanitation Under Scenario 2, the investment plan dedicates $267 million for rural sanitation to achieve 87 percent access to sanitation in rural areas by 2030, while Scenario 3 sets aside $90 million to achieve 40 percent access by 2030. The WASH program is the only rural sanitation program that has been funded so far, WASH is worth more than US$3 million (refer to Appendix G) , and has a large sanitation marketing component that educates citizens about the benefits of sanitation facilities, as well as proper hygiene methods. Another US$9 million worth of projects have been identified but not yet funded. Under Scenario 2, in line with the recommended spend for rural sanitation, at least $255 million worth of projects need to be developed in order to meet the target of 87 percent coverage by 2030. To fill the project gap under Scenario 3, projects worth a minimum of $78 million need to be developed to achieve 40 percent coverage. As discussed previously, money for rural sanitation projects should be allocated to District Councils who would implement projects in line with their investment plans. 3.5 Schools The recommended spend for a school is $31 million. There are two funded schools programs, the school sanitation program in Dedza and the schools component of the WASH. Together, they have funding of under US$2 million. These are listed in Appendix G. 47 The schools sanitation program in Dedza involves construction of improved latrines, urinal blocks, and hand washing facilities. Funds will also cover construction supervision as well as an effort to promote proper hygiene practices. There remains a need for the Malawi Government to develop additional projects to eliminate the remaining number of schools that don’t have adequate facilities for sanitation and hygiene. Box 3.2: Sanitation Infrastructure The government aims to increase sanitation access through a number of sanitation technologies. These include improved traditional pit latrines, ventilated improved pit (VIP) latrines, ecological sanitation facilities, and pour flush toilets. Latrines options Improved pit latrines, as defined by the Joint Monitoring Programme (JMP), are latrines that successfully separate human waste from human contact. A basic latrine is the most basic form of an improved latrine. It has an impermeable layer, often a concrete slab and the excreta is blocked from entering the ground water. In Malawi it is quite common for two or more households to share a single “private� latrine. JMP currently does not consider this as an improved sanitation option because of concerns that shared latrines would not be hygienic. However, this conclusion is tentative. For instance, it may well be that a latrine shared by two households is, on average, as hygienic as a latrine used by a single household. Communal latrine blocks are used for reducing open defecation in public places such as markets. Increased access to communal latrines is an important objective of the Government. Achieving Sanitation Targets As is the case for rural water supply, District Councils should consider which improved sanitation options are best suited to help achieve sanitation targets. Again, the costs of each option could be compared to the benefit it provides to rural areas. It is important to take into account the ability of households to afford materials for on-site solutions, and maintain the facility. One way to reduce cash costs for households is by using local materials and techniques for building the latrine. The experience in Malawi is that different institutions have installed very different quality latrines leading to overly costly latrines being built, many of which are not appropriate to Malawian conditions. To increase standardization in the sector the Government has developed a “Low Cost Latrine Technologies Catalogue� which provides the guidelines for household sanitation. The Catalogue includes information on standard dimensions and Bills Of Quantities to facilitate costing. An important approach to increasing access to improved sanitation is marketing and education campaigns. In addition, some countries have provided households with subsidies to install latrines; an example is Burkina Faso. Source: Joint Monitoring Programme website and Ministry of Agriculture, Irrigation, and Water Development. 48 4 Funding Plan The financing needs for both recommended Scenarios, with associated Investment Plans, are over US$2 billion between now and 2030. For both Scenarios the average annual investment required is more than a hundred million dollars each year. This is over four times the average annual investment in the sector between 2006 and 2010. How can this money be found? The good news is that both recommended Scenarios can be financed provided two conditions are met: The first condition is that the Water Boards improve their operating, commercial, and financial performance to levels of other well-performing utilities in Africa, and are able to borrow on Development Bank Concessional Finance terms.48 If these conditions hold, Water Boards will be able to able to finance the entire urban infrastructure investment planned—including the bulk supply projects—on their own balance sheets. The second condition is that other funders of the sector—in particular the government, donors providing grants, NGOs and development financing institutions lending to Government— step up the levels of funding, on a per capita basis. To reach full coverage for water by 2025, and 87 percent for sanitation by 2030 (Scenario 2) these funders will need to provide 40 percent more on a per capita basis than they did over the 2006-2010 period. The alternative Scenario of reaching full coverage for water by 2030 and over 40 percent access to sanitation by 2030 (Scenario 3) requires that funders increase their funding by 15 percent (on a per capita basis) over what they provide over the 2006-2010 period. If these conditions can be met, the Funding Plan for the Scenario 2 Investment Plan is shown in Figure 4.1. The Funding Plan Scenario 3 is shown in Figure 4.2 on page 55. 48 The terms of this loan are based on the terms of the NWDP II loan provided by IDA. The loan required payments of one percent every six months five years after the closing date and then payments of two percent every six months 15 years after the closing date. Interest is assumed to be paid on the withdrawn amount immediately upon withdrawal of the money. 49 Figure 4.1: Recommended Funding Plan for Scenario 2 which Reaches Full Coverage for Water by 2025, and 87% Coverage for Sanitation by 2030 Data Table 4.1: Recommended Funding Plan for Scenario 2 which Reaches Full Coverage for Water by 2025, and 87 percent Coverage for Sanitation by 2030 (US$ millions) Total 2006 - 2011- 2016- 2021- 2026- (2011- 2010 2015 2020 2025 2030 2030) Total Funding 144 252 753 632 781 2,419 Government of Malawi 72 91 44 27 27 794 NGOs n/a n/a 72 44 44 942 Development Finance Institutions - Loans to Government of Malawi 74 991 24 72 72 714 Development Finance Institutions -Loans to Water Boards - 47 727 741 219 91792 Water Boards - contribution from free cash flows - - 4 94 74 22 Water Boards - contribution during 2006- 2010 period 72 - Donors - Grants 24 27 991 912 912 722 Source: Castalia calculations. 50 Figure 4.2: Recommended Funding Plan for Scenario 3 which Reaches Reach Full Coverage for Water by 2030, and over 40 percent Coverage for Sanitation by 2030 Data Table 4.2: Recommended Funding Plan for Scenario 3 which Reaches Full Coverage for Water by 2030, and over 40 percent Coverge for Sanitation by 2030 (US$ millions) Total 2006 - 2011- 2016- 2021- 2026- (2011- 2010 2015 2020 2025 2030 2030) Total Funding 144 252 738 470 766 2,227 Government of Malawi 72 91 44 79 19 921 NGOs n/a n/a 72 72 27 27 Development Finance Institutions - Loans to Government of Malawi 74 991 24 21 41 727 Development Finance Institutions -Loans to Water Boards - 47 792 747 442 91799 Water Boards - contribution from free cash flows - - 4 92 91 21 Water Boards - contribution during 2006-2010 period 72 - Donors - Grants 24 27 991 927 919 422 Source: Castalia Calculations. 51 4.1 Urban Infrastructure can be Financed by Water Boards If the Water Boards could progressively improve their performance on non-revenue water and collection rates to the levels achieved by other well-performing African utilities, while increasing tariffs by just one percent per year in real terms, they would be able to fund the entire urban water infrastructure requirements for reaching full coverage by 2025 or 2030, assuming Development Bank Concessional Finance lending terms continue to be available. Malawi’s Water Boards are currently not financially viable. Collectively, the free cash from operations they generate is negative. Put simply, they are losing money. Key reasons for this poor financial performance are that collection rates are low, and non-revenue water levels are relatively high. If these two things could be fixed, Water Boards would start to make an operating cash surplus on every liter of water they sell. At that point, growth starts to become self-financing. Investments in new bulk supply and new connections start to generate increased operating cash as a result of increased sales. Castalia analysis shows that if tariffs were to increase in real terms by just one percent per annum, and if Development Bank Concessional Finance terms continue to be available, the free cash generated will be enough to finance the entire urban water investment plan, including the bulk supply projects. The biggest requirement is simply to match the performance of other African water utilities on non-revenue water and collections rates. Table 4.1 shows how Water Boards in Malawi compare to other well-performing African water utilities on the key indicators of non-revenue water, collections rates, and tariffs. To provide context, GDP per capita for each country is also reported. 52 Table 4.1: Targets for Water Boards Compared to Regional Peers Target for Niger Gabon Senegal Uganda Malawi's Water (SEEN) (SEEG) (SDE) (NWSC) Boards for 2030 Targets and peer group indicators NRW 18% 20% 17% 33% 20% Collection rate 92% N/A 99% 100% 95% Tariff $0.47 $0.35 N/A $0.90 $0.86 Incomes for peer group countries and Malawi GDP per capita (PPP), 2010 $728 $15,183 $1,933 $1,272 $872 Source: National Water and Sewage Corporation, Annual Report 2009-2010 for figures on NWSC, figures for SEEN, SEEG and SDE from the Water Operators Partnerships-Africa Utility Performance Assessment Final Report June 2009, and GDP per capita figures from the World Development Indicators 2010. There is no fundamental reason why Water Boards in Malawi should not be able to achieve the operational, commercial, and financial performance reached by utilities in Uganda, Gabon, Niger, and Senegal. If Malawi’s water utilities could achieve 20 percent non-revenue water on average by 2030, they would still have worse NRW levels than in Niger, a poorer country. Reducing NRW to 20 percent at Malawi's Water Boards will largely result from organizational changes in the Water Boards. Skills and knowledge of the staff needs to be improved and the whole organization (from management down) needs to focus on activities related to reducing NRW. These organizational changes will not be simple and will take strong local leadership and time to make it sustainable. Upfront investments are also required and these can be substantial. It is estimated that at minimum, a few million dollars will be needed for the sector as a whole to reduce NRW to 20 percent. However, in the context of a need to invest more than a billion dollars over the next 17 years the investment required to reduce NRW is relatively insignificant. If the Water Boards could increase collections to 95 percent, they would be below the levels achieved in Senegal and Uganda already. Box 4.1 describes the potential for prepaid meters to improve the Water Boards’ performance. A one percent real tariff increase per annum would push the tariff up to US$0.86 per cubic meters in 2030—lower than the average tariff in Uganda now. 53 Box 4.1: Would Prepaid Meters Work in Urban Areas in Malawi? As discussed in greater detail in Appendix E, prepaid water meters can dramatically increase collections, improve water demand management, and decrease the costs of manual meter readings and billing. Prepaid meters have been implemented in water utilities in Uganda, South Africa, and Kenya. The experience from these countries suggests that prepaid water meters are most successful for (a) connections with greater water demand, (b) systems with improved quality of service, and (c) areas with poor payments and community operated connections. Higher return on investment for connections with greater water demand A prepaid meter for a kiosk costs at least US$300 and for a household it costs upwards of US$150. This investment is largely paid for by improved collections from customers paying upfront for the water they consume. The return from prepaid water meters is greater for customers such as kiosks and households with higher levels of water consumption (more than 100 liters per capita per day). The return on investment from installing a prepaid meter at a kiosk is 258 percent and may be in the order of 20 percent for households consuming around 100 liters per day. For households that consume closer to the estimated average in urban Malawi (about 66 liters per capita per day), the increase in collections is lower, and has a lower return on investment. For instance, for a Malawi household that consumes the average 66 liters per capita per day, the return on investment is 12 percent. It follows that returns increase in relation to decreasing price of prepaid meters, the amount of water demanded and the proportion of uncollected bills. As discussed in Appendix E, the cost of prepaid meters varies greatly, and the financial viability of the investment should be determined on a case by case basis. Improved quality service To successfully implement prepaid water meters Water Boards should ensure that customers using this technology actually receive the service they paid for. Water Boards need to check that the meters are working properly. At times, particularly in systems with intermittent supply, air enters the system and the meter registers the air as water being consumed (this happens with conventional meters too). Water Boards may consider investing first in improving continuity of service. African water utilities use them in areas with poor payments and community operated connections This technology was used in Uganda and Kenya for informal settlements where access to water, and quality of service, was poor. In these communities one person would charge—rates even higher than the tariff—for using the kiosk connection, and collections were rarely handed over to the utility. So, customers with a lower ability to pay were charged higher costs for low quality water service, and the utility would not even receive collections for providing the service. When prepaid meters were introduced, access to water increased at more affordable prices, and the water utilities received close to 100 percent of collections because users had to pay upfront. Should Water Boards invest in prepaid meters? Additional costs from implementing new management systems, and replacing infrastructure, may apply when installing these meters. Water Boards should take into account the conditions needed for the technology to succeed in reducing costs and increasing financial returns. Investments in improving water supply systems may be needed before investing in prepaid meters, to maximize their chances of success. A suitable system is needed for selling prepaid cards or selling credits through mobile phones. Lastly, prepaid meters have resulted in radically improved collections where installed; but it is important to consider the price consumers pay for their water. For example, customers with lower ability to pay could be offered a water allowance, or a subsidized cost of water, to prevent them from turning to unimproved sources or illegally connecting to the system. Even where it makes financial sense to invest in prepaid meters, external conditions should be factored in to ensure the success of this technology. Source: Refer to Appendix E for sources, technology background, case studies, explanation of costs, and a financial analysis. 54 Of course, such improvements take time and institutional change. Figure 4.3 indicates the rate of improvement we project to be feasible in Malawi. Figure 4.3: Projected Improvements in Water Board Performance Data Table 4.3: Projected Improvements in Water Board Performance 2010 2011-2016 2016-2020 2021-2025 2026-2030 Non-Revenue Water 39% 36% 29% 26% 20% Collection Rate 82% 90% 90% 95% 95% Average tariff in US$ $0.70 $0.74 $0.78 $0.82 $0.86 …which would generate significant free cash from operations. If Water Boards were able to improve as suggested in Figure 4.3, they would quickly start to generate substantial amounts of cash. Figure 4.4 shows the total free cash from operations that Water Boards could generate if they hit the performance targets, and increased sales of water at the rate that would be made possible by the Investment Plan that achieves full coverage for water by 2025. The operating cash flow is shown as the dashed blue line. 55 Figure 4.4: Water Board’s Operating Cash Flow Potential vs. Debt Service for Scenario 2 which reaches full Coverage to Water by 2025 Figure 4.4 also shows the total debt service payments that would be required if all the urban water infrastructure in the Investment Plan were to be financed on Development Bank Concessional Finance terms. Annual debt service payments are shown as the red line. They were calculated on the assumptions that the Water Boards are able to borrow at an interest rate of 0.75 percent, and are able to pay off the loan over 35 years after the closing date with a five-year grace period after the closing date.49 As the graph makes clear, cash from operations exceeds the debt service in every year of the plan up to 2041 for the Investment Plan to achieve full coverage for water by 2025. The same result holds for the Investment Plan to achieve full coverage for water by 2030. The difference between reaching full coverage by 2025 and 2030 is that when full coverage is reached in 2030 the Water Boards’ operating cash flow covers the debt burden slightly more comfortably because investments on distribution in urban areas are delayed. 49 The terms of this loan are based on the terms of the NWDP II loan provided by IDA. The loan required payments of one percent every six months five years after the closing date and then payments of two percent every six months fifteen years after the closing date. Interest is assumed to be paid on the withdrawn amount immediately upon withdrawal of the money. 56 Although the graph suggests that starting in 2041 Water Boards might be unable to service the loans, this is simply because modeling of Water Board performance stopped from 2030 onward. In reality, the free cash generated between 2030 and 2041 would be ample to allow the Water Boards to service their debts throughout the period, so long as it was invested in revenue-producing assets (such as additional urban water infrastructure), and tariffs and operating performance were sustained. Thus, taken on aggregate, the Water Boards have the potential to finance the investments needed in the urban water sector. This requires substantial improvements in the financial performance of all of the Water Boards. Nevertheless, even if these improvements happen some Water Boards are likely to need subsidies to fund the investments they need to make. The Water Boards are that most likely to need transfers are those whose financial performance is poor compared to the other Water Boards, and so need a greater improvement in performance, and those who have relatively large investment needs, and so need to invest more on a comparative basis than the other Water Boards. The Water Board that is most likely to need transfers is BWB. Compared to the other Water Boards BWB is generating relatively little operating income and it needs to make substantial investments (BWB needs to make investments of US$262 per capita50 as compared to US$205 on average for the other Water Boards). As a result it needs to substantially improve its financial performance while also financing relatively large investments. Like BWB, CRWB and SRWB have a relatively poor financial poor performance. However, their investment needs are relatively small compared to the other Water Boards. Therefore, as they improve their financial performance they should be able to pay dividends which can be used to subsidize the other Water Boards’ investments. NRWB and LWB both need to improve their financial performance. However, their starting financial position is stronger than the other Water Boards which suggests they will be able to finance the investments they need to make. The Government can support BWB, and the other Water Boards unable to finance the investments from their own income, by transferring funds between the Water Boards. Those Water Boards generating surplus cash flows could pay these to the Government as dividends. The government could use these dividends to subsidize those Water Boards that are in deficit. A number of countries use similar mechanisms to cross-subsidize Water Boards operating in different areas. For instance, Jordan and Panama have national water utilities that cross subsidize areas that are not financially sustainable with the free cash flows from those that are. 4.2 Rural Infrastructure and Sanitation can be Funded by Government with Support from Donors Government and donors should concentrate on the non-revenue generating parts of the Investment Plan—rural water, and both urban and rural sanitation—once urban water investment can be financed using Water Board cash flows. The Funding Plan shown in Figure 4.1 and Figure 4.2 showed the funding in total dollar-terms needed by the Investment Plan in these areas. 50 This is the amount of investment on distribution from 2016 to 2030 added to the investments on bulk supply from 2011- 2030 divided by the forecasted population that BWB (or the other Water Boards) will serve in 2030. 57 Total funding from Government, donors, and development finance institutions lending to Government needs to increase. By 2026-2030, these entities need to be contributing at a level more than two times higher in real terms than they were in 2006-2010. The Funding Plan for both Investment Plans assumes that their shares remain in the same proportion to each other as they were in 2006-2010, so that all increase in real terms by the same amount over the period. While this increase seems large, the reality is that the per capita funding from these agencies to the sector will be comparable to the funding levels over the 2006-2010 period:  The funding needed on per capita basis for the Scenario 2 Investment Plan (to reach full coverage for water by 2025 and 87 percent access to sanitation by 2030) is shown in Figure 4.1. Funding for this investment plan needs to increase by more than 40 percent on a per capita basis  The funding needed for the Scenario 3 Investment Plan to reach full coverage for water by 2030 and more than 40 percent access to sanitation by 2030 is shown in Figure 4.2. This scaled back investment plan needs funding on a per capita basis to increase by around 15 percent. Looking at funding on a per capita basis makes sense, since government tax revenues should rise in-line with population growth, so it is per capita numbers that matter for considerations of fiscal sustainability. Donors providing grants are, we assume, willing to match either population increases or government funding increases also. In light of this, the 40 percent increase in funding on a per capita basis needed for the investment plan to reach full coverage for water by 2025 does appear possible, but would require an assertive push to raise funds at a faster rate than they would tend to increase otherwise. The Scenario 3 Investment Plan to achieve full coverage by 2030 and more than 40 percent access to sanitation by 2030 would also require an increase but a more modest increase of 15 percent which would be easier to achieve. Thus, with Water Boards shouldering the burden of urban water infrastructure, Government and donors should be able to increase their funding to sanitation and rural water providing funds that on a per capita basis are comparable to those provided over the 2006-2010 period. . 58 Figure 4.5: Funding Required on a Per Capita Basis for Scenario 2 which Reaches Full Coverage by 2025 and 87 percent Access to Sanitation by 2030 59 Data table 4.5: Funding Required on a Per Capita Basis for Scenario 2 which Reaches Full Coverage by 2025 and 87 percent Access to Sanitation by 2030 Average 2006- 2011- 2016- 2021- 2026- (2016- 2010 2015 2020 2025 2030 2030) Funding per capita per year Total per capita per year $2.20 $3.10 $7.88 $5.65 $5.99 $4.88 Government of Malawi $0.41 $0.24 $0.46 $0.67 $0.58 $0.43 NGOs $0.24 $0.35 $0.30 $0.23 Development Finance Institutions - Loans to Government of Malawi $0.31 $1.43 $0.35 $0.51 $0.44 $0.32 Development Finance Institutions -Loans to Water Boards $0.00 $0.52 $5.56 $2.22 $3.00 $2.70 Water Boards - contribution from free cash flows $0.00 $0.00 $0.04 $0.12 $0.15 $0.08 Water Boards - contribution during 2006- 2010 period $0.42 Donors – Grants $1.07 $0.92 $1.22 $1.77 $1.52 $1.13 Population Total Population in Malawi (millions) 13 16 19 22 26 21 Figure 4.6: Funding Required on a Per Capita Basis for Scenario 3 which Reaches Full Coverage by 2030 and more than 40 percent Access to Sanitation by 2030 60 Data table 4.6: Funding Required on a Per Capita Basis for Scenario 3 which Reaches Full Coverage by 2030 and more than 40 percent Access to Sanitation by 2030 Average 2006- 2011- 2016- 2021- 2026- (2016- 2010 2015 2020 2025 2030 2030) Funding per capita per year Total per capita per year $2.20 $3.10 $7.72 $4.21 $5.87 $4.45 Government of Malawi $0.41 $0.24 $0.46 $0.46 $0.47 $0.35 $ NGOs $ 0.24 $ 0.24 $0.25 0.18 Development Finance Institutions - Loans to Government of Malawi $0.31 $1.43 $0.35 $0.35 $0.35 $0.26 Development Finance Institutions -Loans to Water Boards $0.00 $0.52 $5.41 $1.83 $3.42 $2.67 Water Boards - contribution from free cash flows $0.00 $0.00 $0.04 $0.12 $0.14 $0.08 Water Boards - contribution during 2006-2010 period $0.42 Donors – Grants $1.07 $0.92 $1.22 $1.21 $1.23 $0.91 Population Total Population in Malawi (millions) 13 16 19 22 26 21 61 5 Institutional Changes Needed to Deliver the Investment Plan The previous sections have shown that an ambitious water and sanitation Investment Plan is feasible and financeable; delivering it will nevertheless be challenging. Institutional changes will be needed to convince donors and development finance agencies to back Malawi with bigger grants and loans. The ability to plan, prioritize, and execute significant capital projects and programs will need to be upgraded. Sustainability of service delivery—both technical and financial—will need to increase if the vast expenditures are to be translated into real benefits to people for years to come. In light of the importance of these institutional changes the recommended Investment Plans allocate five percent of expenditure to capacity building to support and sustain the institutional changes needed. Government policy is that water supply and sanitation responsibilities should be devolved to autonomous agencies below the level of national Government. In Water Board Service Areas, Water Boards are intended to be capable, autonomous suppliers of water and sanitation services. They are intended to manage the operation and expansion of the urban infrastructure, and to be financially self-sufficient.51 In the areas not served by Water Boards, water supply and sanitation is the responsibility of District Councils. While many District Councils have not in practice shouldered this responsibility in the past, the Government fully intends that they should do so in the future.52 Implementing the decentralization policy, while rising to the challenges of financing and executing the Investment Plan, will require institutional change in three key areas:  Water Boards will need to reach the operational, commercial, and performance levels of other well performing African utilities. Their abilities to plan and execute very large capital works will also need to be further developed  District Councils will need to develop the skills needed to identify necessary projects and apply for funding. Procurement, financial management, and operation and maintenance of the resulting infrastructure will also need to be improved, in ways which are consistent with the policy of decentralization  Water User Associations (WUAs) will need to operate effectively, which requires extensive capacity building  The Ministry responsible for Water Supply and Sanitation (the Ministry) will need to develop a unified capacity in appraising funding applications, and overseeing financial management and delivery by Water Boards and District Councils. It will also need to strengthen its monitoring and evaluation capacities. Each of these three key areas of reform is elaborated on below. 51 The Water Policy provides that Water Utilities should: “9.3.1 Operate and manage waterworks for the delivery, distribution and management of potable water supply�; and “9.3.5 Implement investment programmes, tariffs and compensations related to the development and management of water supply and water borne sanitation facilities and services;� among other things. 52 The Water Policy provides that Local Governments should “9.4.1 Plan and co-ordinate the implementation of water and sanitation programmes at local assembly level�, among other things. 62 5.1 Water Boards For the Investment Plan to work, Water Boards need to be able to do three main things:  Reduce non-revenue water supply to target levels, so that the new bulk water supply serves the projected population growth, and does not leak away  Improve operating financial performance. This will follow in part from reduced non-revenue water supply, but more importantly from more complete collection of bills, and gradual real tariff increases  Manage the execution of large and complex capital projects. At the same time, Government policy is to turn the current five Water Boards into four, as illustrated in Figure 5.1. This amalgamation will increase institutional demands on the system, but may also provide a window to make other changes which can achieve the three objectives above. Figure 5.1: Proposed Amalgamation of Water Boards A comprehensive plan of institutional change in the Water Boards is needed to achieve the desired objectives.53 Many options are possible, and Malawi will have to design one which 53 This would be consistent with the Water Policy, which stipulates “6.1.2.8 Strengthening and supporting Water Ut ilities through establishment of effective institutional and governance arrangements, and major infrastructure developments�. 63 suits its particular needs and circumstances. Inspiration can be drawn, however, from success elsewhere. Options which may be considered include:  Building on the successes of the advisory contracts with Vitens, which have already helped Blantrye and Lilongwe Water Boards to reduce non-revenue water rapidly and at low cost  Provide managers with strong performance incentives, Box 5.1describes Uganda’s experience  Introduce benchmarking between the Water Boards, for instance by upgrading the Water Supply Services Association of Malawi (WASAM), including the establishment of a secretariat to facilitate the collection of data. Benchmarking has been successfully implemented in a number of countries including the Netherlands, Colombia and Uganda (as described in Box 5.1 for Uganda)  Outsourcing NRW reduction, and billing and collection, to specialist firms under performance-based contracts  Contracting a specialist private firm for utility operations, and building a strong public sector asset holding and financing company to manage the Investment Plan, as Senegal has done  Contracting a specialist water company to take on responsibility for the provision of services and the delivery of new infrastructure, as has been done in Gabon and Niger. It is too early to say which option is right for Malawi. But it is not too early to ask the questions. A useful approach for coming up with the right way forward for Malawi’s water sector is for representatives of Malawi’s Water and Sanitation Sector to engage with experiences elsewhere. This can be done by going on study tours, hiring advisors, or a combination of these. The engagement with the experiences elsewhere and applying the lessons to Malawi should lead to a credible plan to strengthen Water Board performance that will raise the finance for the urban component of the Investment Plan. 64 Box 5.1: Reform of Water Utilities—–the Ugandan experience From 1998 to 2008 Uganda’s water utility, the National Water and Sewage Corporation (NWSC), was successfully turned around. The NWSC went from being a poorly performing publicly owned utility into one of the best performing water utilities in Africa. The NWSC was able to reduce NRW from 51 percent to 36 percent and increase the number of water connections from 50 thousand to 200 thousand. It did this while reducing the number of employees from 1,850 to 1,42354 and going from losing money to positive net income. A number of reforms were integral to this success. These include performance payments, effective Monitoring and Evaluation systems and Benchmarking. Performance payments: the NWSC provided the managers in charge of its regional branches strong incentives to improve performance. At first, this was done through Area Performance Contracts (APCs) with managers of its regional branches. “APCs were basically one-year performance agreements with local management teams, with bonuses and penalties (of up to 25 percent of basic salary) based on targets. Local managers were given more authority to make operational decisions and also made accountable for outcomes.�55 The second generation of the scheme was called Internally Delegated Area Management Contracts (IDAMC). In these schemes the regional branches were transformed into quasi-private, ring-fenced, business units. The NWSC entered into private law contracts with them. The remuneration received by the partnerships running the regional branches was based on the divisions’ operating cash flows. In turn the operating cash flows depended on the performance of five key indicators: cash operating margin, non-revenue water, working ratio, bill collection, and the percentage of inactive connections. Effective Monitoring and Evaluation: for payments to be linked to performance the NWSC had to implement effective Monitoring and Evaluation (M&E) to measure the performance of the regional branches. They also implemented a system of random audits to ensure that the regional branches were not inaccurately reporting results. Benchmarking: the NWSC implemented a system of benchmarking to measure the performance of the regional divisions against each other. The lessons that could be learnt from the high performers were shared through quarterly workshops attended by representatives from the regional branches. Source: William Muhairwe, 2009 “Making public enterprises work, from despair to promise: a turnaround account� IWA Publishing, London United Kingdom. 5.2 District Councils Government policy is to devolve responsibility for local service provision—including water and sanitation—to District Councils56. This creates a difficult challenge, as many District Councils currently lack capacity in this area. Capacity to plan, implement and maintain projects will need to be built at District level. The Ministry will need to continue to fund the infrastructure, and to supervise performance of the Councils. The way forward probably contains three parts, as suggested below. 54 Page 227, William Muhairwe, 2009 “Making public enterprises work, from despair to promise: a turnaround account� IWA Publishing, London United Kingdom. 55 Philippe Marin, William Muhairwe, Silver Mugisha, and Josses Mugabi, 2002 “Internal delegation contracts for water in Uganda, An innovative approach to establishing a successful public utility� GridLines, Note Number 55 – June 2010. 56 National Decentralization Policy, in particular clauses 6(a) concerning development of infrastructure and district plans, clause 2(d) concerning environmental sanitation, 3(c) concerning sewage removal and disposal, and 15, which deals with water services. The Water Policy states at clause 9.4.1 that local governments should plan and co-ordinate the implementation of water and sanitation programmes at local assembly level; and clause 6.2.1.7 which aims “To ensure smooth transfer of all devolved functions of the rural water supply and sanitation services;�. 65 Strengthening District Councils Important progress has been made in the District Councils ability to prepare plans for the water sector. Over the last few years 14 District Councils have prepared district investment plans. The Ministry should build on this success. The capacity to plan needs to be deepened, so that in time plans can be more comprehensive, identify particular projects, and demonstrate the technical and economic feasibility of the proposed projects. It also needs to be widened, so that all Districts gain an adequate level of capacity. Capacity will need to be added to procure the execution of projects, to manage the funds that will pay for those projects, and to supervise the contractors. Thought will need to be given to whether it is best for these responsibilities to be fully developed at the District Level, or whether some of these responsibilities should be “delegated upward� by Councils to the Ministry, or to a regional entity that could perform these functions for a number of Districts. District Councils will need to boost the skills in discovering what services communities most want, and how communities can best be involved in making those services sustainable, either by operating them, or by paying for a third party to operate them. This is critical. There are indications that investments have not been sustainable in the water sector. For instance, 10 years after construction, around 30 percent of boreholes and around 35 percent of gravity fed schemes are no longer operational.57 Allocating funding and supervising performance District Councils do not have a revenue base sufficient to allow them to fund the rural components of the Investment Plan. They don’t have the resources to make the investments needed nor the funds to contribute to the Operations and Maintenance of these facilities. Even when District Councils have staff allocated to the water sector too little money is allocated to recurrent funding. As a result staff do not have access to the vehicles and equipment they need to effectively ensure the sustainability of investments.58 For the foreseeable future, the Government and donors will provide the bulk of the funding. The Government will therefore need criteria on which to allocate the funding. In doing this it should consider the factors enumerated in clause 10(4) of the Decentralization Policy, which include population size, level of development (using agreed poverty indicators), responsiveness and equalization. Guiding principles for funding allocation, consistent with these concepts, could be:  The number of people lacking access to improved water and sanitation in the district  The need for Districts to have sensible plans for how to spend the money allocated 57 Based on analysis by Engineers without Borders based on cross-sectional data collected between 2002-2005 for over 40,000 water points in Malawi. 58 Analysis prepared for the Water, Environment and Sanitation (WES) Network and Water Aid by Dr Hannock Kumwenda “Quick Budget Scan: The Water Supply and Sanitation Sector in the 2011/12 National Budget� shows that in the water sector relatively little is allocated to the recurrent budget. In the Water Sector recurrent funding is much lower than funding for staffing. This is in contrast with other service-oriented ministries within the GoM where recurrent funding is typically larger than funding for staffing. 66  The past performance of the District in following good practices in procurement, financial managements, maintenance and operations, so as to ensure value for money in project delivery, and sustainable provision of the service. Strengthening coordination between key stakeholders Increased investment through the District Councils will require improved coordination between the Ministry, District Councils, donors, and NGOs. The absence of coordination between these actors has lead investments to be made in Districts without the Districts knowledge. Similarly, investment levels by donors in Districts are set without consultation with the District Councils. This leads to investments that are not aligned with the District Councils’ own priorities and in some cases, lead to investments in areas that don’t need additional water supply infrastructure. 67 5.3 Water User Associations It is important for the success of the Investment Plan that investments in rural water supply are sustainable. Otherwise, the rural water supply schemes built with the investments will fail as the scheme is not effectively operated and maintained. To ensure that investments are sustainable Malawi has adopted a community-managed approach to maintaining and operating rural water supply systems. This approach has been successful at operating and maintaining rural water supply systems in a number of developing countries.59 This approach has had success in Malawi with the Ministry responsible for Water and Sanitation successfully facilitating the successful implementation of community management in a number of districts in Malawi. Community management is implemented in Malawi through the appointment of Water User Associations (WUA). The WUAs collect payment from users, organize routine operation and maintenance of the water system and appoint a contractor for the more substantial maintenance of the system. In order for WUAs to do this effectively, they need capacity building. The type of assistance they need includes training on how to set up and register the WUA structure, training on the management of the WUA’s finances, and assistance with the appointment of contractors. Ensuring that WUAs receive support in these areas will be crucial to ensuring the sustainability of rural water supply systems. An important use of the funds allocated to capacity building, will be ensuring that WUAs receive the capacity building they need. 5.4 Ministry Responsible for Water Supply and Sanitation In the water supply and sanitation sector, the MoAIWD needs to evolve away from project execution, toward a focus on:  Policy development  Sector and cross-jurisdictional planning and coordination  Efficient allocation of capital between Districts and Water Boards  Supervision of District Councils and Water Boards. The need to move in this direction comes from government policies in several areas. The policy on decentralization requires that rural water projects and services be the responsibility of District Councils. Water Boards should be responsible for services and project delivery in urban areas. At the same time, the decision to end the use of special Project Implementation Units will require the mainstreaming of the project and funding management. The Water Policy at Clause 9.1 sets out the Ministry’s role as focused on policy, regulation, and multi - purpose infrastructure. The MoAIWD has developed a strong Project Management Unit (PMU) that has managed the NWDP. An unintended side-effect of the strength and importance of the PMU may have been to defer the building of capacity in other areas. Donors have worked with the 59 Dale Whittington, Jennifer Davis, Linda Prokopy, Kristin Komives, Richard Thorsten, Heather Lukacs, Alexander Bakalian, Wendy Wakeman, 2008 "How well is the demand-driven, community management model for rural water supply systems doing? Evidence from Bolivia, Peru, and Ghana" January 2008 BWPI Working Paper. 68 relatively strong Ministry PMU, rather than build capacity in the relatively weak District Councils. The importance of the PMU in delivering funding, and the completion of vital projects, has made it a key point of contact for Water Boards, District Councils, donors, and development finance institutions. The challenge now is to preserve the competence, relationships and knowledge the PMU has built up, while mainstreaming it into operation of the Ministry proper. A way forward may lie in re-engineering the PMU and the Planning Unit into a unified ‘Financing and Supervision’ group. This group’s functions could include:  Owning and refreshing the Investment Plan for the sector (of which this report provides the first version)  Managing relationships with donors and development finance institutions to maximize the international funding available to the sector, and the concessionality of the financing terms  Developing criteria for the allocation of public capital among Water Boards and District Councils  Receiving and approving funding applications from Water Boards and District Councils  Setting standards and monitoring the performance of Water Boards and District Councils60  Intervening to strengthen performance where necessary  Promoting inter-jurisdictional planning, especially in bulk supply and in rolling out programs and best practice in rural water and sanitation across District boundaries  Reviewing the boundaries of Water Boards, to ensure that areas that are best served through commercially-oriented utilities using piped supply are put under Water Board jurisdiction. At the same time, in-line with the Water Policy61 the Ministry responsible for water needs to set policies for the sector, and also to regulate tariffs. In the context of funding the Investment Plan this will include leading the development of policies to bring Water Boards up to the levels of other well performing African water utilities, and also creating a regime in which the recommended one percent per annum real tariff increases are sanctioned. 60 Consistent with the Water Policy, which mandates as a specific strategy “6.2.2.12 Developing and disseminating standards and guidelines for rural water supply and sanitation in liaison with Local Government�. 61 National Water Policy (2005). 69 6 Action Plan This section outlines a number of next steps the Ministry could take to implement the Water Sector Investment Plan (WSIP). These steps are summarized in Table 6.1 over the page. 6.1 SWAp Activities The WSIP will need financing from a range of donors, as well as Government. This would best be organized under a Sector Wide Approach (SWAp) to funding the water sector. Under a SWAp, the Government and donors would agree to a common investment program, implemented through common structures. Malawi is already moving toward SWAp. The completion of the WSIP provides a catalyst to get there more quickly, as there is now a clear, sector-wide document around which funding can be organized. Given the urgency of gaining donor commitments to help finance the WSIP, we recommend convening a donor conference as the very first step. At this conference, commitments will be raised to get funding for the WSIP—both for physical infrastructure, and for the technical assistance for the institutional changes. The suggested steps in organizing such a conference are: 1. Planning and organization of conference. The Ministry may wish to engage a consultant to assist with this [two months] 2. Conference presentation of the WSIP. The Ministry would outline areas where funding is needed, highlight the developmental returns on that investment, emphasize the government’s own commitment and achievements to date, and seek donor support for each of the elements in the investment plan [one month] 3. Follow up with the donors to formalize commitments and agree the steps needed to go from commitment to disbursement, and to ensure donor cooperation within a SWAp framework [three months] Thereafter, the other key elements of the SWAp would be finalized, building on work already underway, as follows. 4. Develop the M&E System to create a common M&E system across the sector. This project has already been started and is supported by the AfDB and the Government. The project aims to cover all activities in the water and sanitation sector and be operational in most of Malawi’s 28 districts [10 months] 70 Table 6.1: Plan for Implementing the Water Sector Investment Plan and priority SWAp activities Year 2012 2013 2014 2015 2016 Month 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 SWAp Related Activities Planning and organization Conference presentation of the WSIP Follow up Develop M&E System Developing Funding Mechanism for SWAp Water Board Reforms Study tours of high performing water utilities internationally Development of reform models for water boards Implement the reform model Reform of Ministry Responsible for Water Supply and Sanitation Develop an institutional strategy Define responsibilities Conduct a gap analysis Develop a reform plan Implement the reform plan Develop procedures and manuals Send staff to training Recruit staff District Councils Develop a strategy for supporting WUAs Develop a Sector Devolution Plan for increasing resources managed by District Councils Development of an institutional model for district councils in water and sanitation Implement institutional model Procurement and fiduciary procedures Developing procedures and manuals Building capacity at the District Councils Develop plans and submit to the Ministry 71 5. Development of the Funding Mechanism for SWAp to support a common approach to funding across the sector. Funds for technical assistance to design the system have been allocated but the project has not yet begun [10 months] 6.2 Water Board Reforms The success of the Water Sector Investment Plan depends on the Water Boards reaching the standards of other well-performing utilities. Such performance improvements will require institutional changes. The Ministry needs to work with the Boards to develop institutional reform options suitable for conditions in Malawi. Government then needs to decide on the preferred model, which the Ministry and the Boards will then need to implement. Concrete steps for doing this include: 1. Study tours of high performing water utilities internationally—representatives of the sector should visit high-performing water utilities in Africa and other developing countries. These may include utilities in Uganda, Niger, Gabon and Senegal [three months] 2. Development of Reform Models for Water Boards—The Ministry should draw on international and Malawian experience to develop reform options for the Water Boards, evaluate their pros and cons, and make a recommendation to Government. Cabinet should be invited to decide on the appropriate model to pursue [four months] 3. Implement the Reform model—the Water Boards need to develop business plans. Other changes, such as creating improved incentives and training for managers, or engaging with specialist international water operating firms, may also be needed. The Ministry will also need to work to establish accountability mechanisms for the Water Boards, such as charters specifying the expected performance, and monitoring systems to benchmark the performance of the Boards against each other and international good practice [three years] In each of these steps, the Ministry may need to engage consultants to assist. Donor support to engage these consultants therefore needs to be mobilized early. 6.3 Reform of Ministry Responsible for Water Supply and Sanitation The Ministry needs to refocus its role on policy and coordination, the institutional development of Water Boards and District Councils, mobilizing and allocating funding, and monitoring of the sector against agreed procedures and targets. To achieve this refocusing, the Ministry needs to develop and then implement an institutional reform strategy. This reform strategy could be created as a part of, or in conjunction with, the planned Water and Strategic Plan. The reform program would include the following steps. 1. Develop an institutional strategy—this would involve the following steps: 1.1. Define responsibilities—the Ministry needs to define its responsibilities in terms of its new approach to the sector. What exactly does the Ministry need to do, and what will be done by others [one month] 1.2. Conduct a Gap analysis—to evaluate the gap between the staff, structures and processes that the Ministry currently has and those it needs to discharge its new responsibilities [two months] 72 1.3. Develop a reform plan—this would describe how the Ministry would move from the Ministry’s current staff, structures and processes to those it needs to effectively implement its re-defined responsibilities [three months] 2. Implement the reform plan—this would require the Ministry to: 2.1. Develop procedures and manuals—to implement the new structures and processes [three months] 2.2. Send staff to training—to improve the capacity of the Ministry current staff complement [12 months] 2.3. Recruit staff—where the Ministry’s current staff complement is not sufficient [24 months] Again, the Ministry may need to engage consultants to assist, and should start now to mobilize donor support for this. 6.4 District Councils District Councils need to develop the ability to identify and implement investment projects. Developing this ability could be done through the following steps. 1. Develop a strategy for supporting Water User Associations (WUAs). This project would develop a plan to establish an approach for WUAs to have the resources and capacity needed to effectively operate and maintain rural water schemes [eight months] 2. Develop a Sector Devolution Plan for increasing resources managed by District Councils to provide the District Councils with the resources they need to effectively develop and implement projects and provide support to rural water schemes [eight months] 3. Development of an Institutional Model for District Councils in Water and Sanitation—this would include defining more precisely the roles and responsibilities of the District Councils vis a vis the Ministry and other bodies. This role should include the development of district level plans, the identification of particular projects within those plans, and getting the projects built and operated. Points to be defined include whether and how District Councils will be assisted by the Ministry or another body in performing these roles, as well as the extent to which operations and maintenance should be done by Water Use Associations, or by District Councils themselves [six months] 4. Implement institutional model—this would include: 4.1. Procurement and fiduciary procedures—these need to be developed to ensure that funding from the Government is used efficiently and transparently for its intended ends. These safeguards would be checked by the Ministry to ensure that they comply with the requirement of donors funding the rural program [four months] 4.2. Developing procedures and manuals—The processes for developing plans and implementing projects, along with requirements for good practice in consultation, procurement and financial management, need to be codified, and written down in clear manuals that the District Councils would use to perform their roles and discharge their responsibilities [three months] 73 4.3. Building capacity at the District Councils—training, and perhaps additional staff, will be needed. On hand assistance from NGOs or consultants may be needed as District Councils discharge their water sector responsibilities for the first time [36 months] 5. Develop plans and submit to the Ministry—the District Councils should develop plans for water and sanitation improvement, and submit them to the Ministry, which would assist the District Councils to access funding to implement these plans [36 months] As with the other areas, donors should be engaged early, so that they may provide technical assistance to these reform initiatives. 74 7 Conclusion This report has presented an Investment Program for the Water Supply and Sanitation sector in Malawi. In doing this the report has discussed four main issues: (a) planned investment expenditure in the sector (the Investment Plan); (b) it has proposed projects for funding (the Project Plan); (c) it has described where the funding should come for the envisaged investment expenditures (the Funding Plan), and; (d) the report has described a number of institutional aspects that should be considered:  Investment Plan—It is proposed that more than US$2 billion is spent in the sector. These proposed investment expenditures would eliminate the backlog in schools with access to improved sanitation and water, it would achieve full access to improved water by 2030 and generate large scale increases in access to improved sanitation in urban and rural areas  Project Plan—A number of projects in the sector require funding to go ahead. This includes the mega projects and a number of projects to increase the supply of water and sanitation to households and ensure that schools have adequate facilities for sanitation and hygiene  Funding Plan—The Funding Plan describes how the Investment Plan would be funded. The plan would be funded from donors, lending by International Finance Institutions and the Government of Malawi. It is shown that with improvements in the efficiency of their operations the Water Boards would be able to finance the envisaged investment expenditures in urban areas, including the investments needed in the mega projects in bulk water  Institutional considerations—A number of institutional changes that are needed for the Investment Plan are described. They are to bring Urban Water Boards up to the required levels of performance, build capacity in District Councils to plan and implement projects and reconfigure the Ministry responsible for Water Supply and Sanitation into a funding, coordination and supervision body. 75 Appendix A. Benefit Cost Analysis of the Water Sector This section describes the tremendous social value that is created by investing in improved sanitation and water supply in Malawi. Public expenditure extending access to water and sanitation in schools and households generates benefits that are three to twenty times the cost. These findings for Malawi reinforce findings on regional levels from the WHO and WSP. The WHO states that “US$1 invested would give an economic return of between US$3 and US$34.� This section begins by describing the health benefits from access to improved Water, Sanitation, and Hygiene (WSH). The discussion then reviews the benefits and costs of extending access to improved water supply to households, improved sanitation to households and facilities needed for adequate sanitation and hygiene in schools. A.1 Benefits of Improved Health from Access to Water, Sanitation, and Hygiene Poor access to improved Water, Sanitation and Hygiene (WSH) leads to a range of waterborne diseases. These WSH related illnesses are a serious problem in Malawi. The WHO attributes more than 20,000 deaths per year to poor access to WSH and 25 million episodes of illness.62 The effects of WSH related illness are felt throughout the population, harming the growth of children, keeping students from school and adults from work:  Children are particularly vulnerable. Deaths from WSH related illnesses are concentrated in the very young, 90 percent of those who die from diarrheal diseases are below the age of 5.63 In addition, diarrheal disease leads to malnutrition which harms children’s growth. In 2010, more than 30 percent of children in Malawi from the age of 6 to 23 months had suffered from diarrhea in the two weeks preceding the survey, with more than three percent having blood in their stool.64 This diarrhea leads to malnutrition which leads to growth retardation, including stunting and wasting. This is a serious problem in Malawi, where 48 to 53 percent of children under the age of five are stunted.65  Students’ learning is harmed. In total, across Malawi, children of school age experience more than a million episodes of illness from diarrhea per year, many of which lead to time away from school. It has been shown that students infected with intestinal worms, transmitted due to poor access to WSH, are 23 percent more likely to drop out of school, and once they are of working age, children who 62 WHO, 2010 “Estimated deaths attributable to water, sanitation and hygiene ('000), by disease and WHO Member State, 2004� http://www.who.int/quantifying_ehimpacts/publications/wshdeaths2004_annex.pdf. 63 These figures are from a model developed by the WHO and calibrated to Malawi for this project. The model is similar to the work by Prüss, A., Kay, D., Fewtrell, L., and Bartram, J. Estimating the global burden of disease from water, sanitation, and hygiene at the global level. Environmental Health Perspectives, 2002. 110(5): p. 537-542. 64 NSO, 2010 “Malawi Demographic and Health Survey 2010� September 2011, http://www.nso.malawi.net/images/stories/data_on_line/demography/MDHS2010/MDHS2010%20report.pdf. 65 Ariana Weisz, Gus Meuli, Chrissie Thakwalakwa, Indi Trehan1, Kenneth Maleta and Mark Manary, 2011 “The duration of diarrhea and fever is associated with growth faltering in rural Malawian children aged 6-18 months� Nutrition Journal 2011. 76 have experienced intestinal worms have earnings 40 percent lower than those who did not66  Adults are taken away from work and childcare by illnesses caused by WSH related illnesses. In Malawi adults experience more than three million episodes of illness. Many of these are relatively mild, lasting less than a day, but more than 10 percent of episodes are serious enough to last more than five days. A substantial percentage of these serious episodes require admittance to hospital. The days of work lost in Malawi to these illnesses, are equivalent to the work done annually by more than 10,000 people. The cost of treating those with WSH related illnesses is relatively high, for those who receive treatment. According to WHO estimates it costs the public sector more than a dollar for each outpatient treated, and for serious cases that require inpatient treatment, the cost is more than five dollars.67 Treating those with WSH related illnesses is estimated to cost the government healthcare system just less than US$3 million per year.68 This does not include the likely substantial out of pocket expenditures by those suffering from these illnesses and the time spent by those looking after the ill. A.2 Household Access to Improved Water The benefits from extending access to improved water supplies include the health benefits described above as well as less time spent fetching, collecting, and carrying water. A quarter of households in urban areas, and close to a half of households in rural areas, spent more than 30 minutes a day collecting water. This is a task that largely falls on women and girls who are responsible for collecting water in 80 percent of households. 69 This has important implications for women’s ability to work and girls’ ability to attend school.70 In light of the significant time spent collecting water in Malawi, the Water Resource Investment Strategy suggests that households save two hours a day collecting water when they gain access to an improved water source71. In effect, this means that each household that receives access to an improved water source frees up three months of every year for one member of the household to spend looking after children or working. Figure A.1: shows the benefits per person of receiving access to improved water in urban and rural areas. The benefits of access to improved water arise from saving lives, reducing 66 The study was conducted in Tanzania, Sarah Baird, Joan Hamory Hicks, Michael Kremer, and Edward Miguel, 2011 "Worms at Work: Long-run Impacts of Child Health Gains" http://www.povertyactionlab.org/publication/worms- work-long-run-impacts-child-health-gains. 67 These results are from results of a economic model disseminated by WHO which has been calibrated for Malawi for this project, the model is called “WHO-CHOICE unit cost estimates of the costs of healthcare delivery.� 68 The number of patients visiting clinics and hospitals for diarrhea comes from the Malawi Governemnt, 1998, "Malawi National Health Accounts (NHA), A Broader Perspective of the Malawian Health Sector, Sources of Finance in the Health Sector, 1998/9 Financial Year" http://www.who.int/nha/country/Malawi_NHA_1998_99.pdf. 69 NSO, 2010 “Malawi Demographic and Health Survey 2010� September 2011, http://www.nso.malawi.net/images/stories/data_on_line/demography/MDHS2010/MDHS2010%20report.pdf. 70 Celine Nauges and Jon Strand, 2011 “Water hauling and girls' school attendance: some new evidence from Ghana� May 26, 2011. 71 Page 47 Government of Malawi, 2011 “Water Resource Investment Strategy, Component 2� . 77 time off work from illness; time saved collecting water and savings to the public health system from less need for healthcare services. The benefits of access to water shown in Figure A.1: are substantially higher in urban areas. The reason for this is that workers in urban areas are more productive, and so a higher value is assigned to them when they can’t work due to illness, time spent collecting water, or from a shorter working life. Figure A.1: Benefits of Extending Access to Improved Water in Urban and Rural areas Source: Castalia calculations The investment required to extend access to water for urban and rural areas is shown in Figure A.2: This shows the cost of extending access to water using a standpipe in urban areas72 and a borehole in rural areas.73 Figure A.2: demonstrates that the investment required for providing access to water in urban areas is far higher than in rural areas. The investment shown for urban areas includes substantial investments (on a per person served basis) required to provide bulk water. As a result, the cost of investment in Figure A.2: adds 72 Urban areas are supplied from standpipes. The cost of bulk supply is added to the original figure (from the AMCOW Country Status Overview for Malawi) by allocating a portion of the cost of the proposed dam for Blantyre to kiosks. Consumers using kiosks use far less water per day than other customers and so, in line with this, they are assigned a relatively small proportion of the bulk water costs. 73 Rural customers are assumed to be supplied with water from a borehole. A cost of 5 percent of the investment is added to take into account the capacity building that is needed for urban water projects. This is in line with assumptions underlying the Ugandan Water Sector Investment Program. 78 more than US$200 to the costs described in the AMCOW report on Malawi. In addition to the investment costs, there are also ongoing O&M costs of providing water. These are incorporated in the calculations described in Figure A.2 but are relatively small in comparison to the benefits and investments required.74 Figure A.2: Cost of Extending Access to Water in Urban and Rural Areas Source: World Bank and Sogreah.75 A.3 Household Access to Improved Sanitation Improved access to sanitation has similar health benefits to improved access to water. The Global Water Supply and Sanitation Assessment states that “improved sanitation facilities interrupt 74 The O&M costs for rural projects are estimated to be three percent of the investment cost per year. O&M costs for urban water were based on the Water Boards average operating cost per meter cubed of water supplied. The total demand was based on the demand for consumer per day used in the Sogreah reports for low income consumers (those who use kiosks). 75 The figures for the investment cost for a standpipe per capita is US$120 and comes from World Bank, “Water supply and sanitation in Malawi: turning finance into services for 2015 and beyond, An AMCOW Country Status Overview�. It is reported that these figures ultimately came from the Ministry responsible for Water Supply and Sanitation. The cost of bulk supply is calculated from Sogreah, 2010 “Consultancy Services for Feasibility Studies and Preliminary Design for Blantyre’s New Raw Water Source and other purposes, Feasibility Study Report� and similar studies for Lilongwe, Mzuzu, and Mzimba (all by Sogreah). In line with the AMCOW study infrastructure in urban areas is assumed to last 40 years and infrastructure in rural areas lasts 10 years. 79 the transmission of faecal [matter] ….Epidemiological evidence suggests that sanitation is at least as effective in preventing disease as improved water supply.�76 Access to a toilet facility (be it traditional, basic or improved) means that people don’t have to go into the bush to find a suitable location to defecate. This saves time and is more private and dignified than using the bush. In some countries there are substantial savings from extending access to sanitation because many people defecate in the open. However, in Malawi these benefits are relatively small because relatively few Malawians (less than 10 percent) defecate in the open. A number of benefits of access to improved sanitation are shown in Figure A.3: . The benefits of improved access to sanitation overwhelmingly arise from the health benefits (which are identical to the health benefits for water). The benefits from reduced time spent looking for a toilet is relatively small because almost all Malawians already have access to a latrine.77 There are other benefits from improved access to sanitation which are more difficult to quantify. These include the improvement in dignity from not defecating in the open. Figure A.3: Benefits from Access to Improved Sanitation Source: Castalia calculations 76 WHO/UNICEF, 2000 “Global Water Supply and Sanitation Assessment 2000 Report:� http://www.who.int/water_sanitation_health/monitoring/jmp2000.pdf. 77 According to the 2010 Welfare Monitoring Survey. 80 Figure A.4 shows the cost of extending access to sanitation. These costs include the cost of sanitation marketing (typically borne by the public sector) and the cost to the household (typically borne by the household). Extending access to sanitation requires major behavioral changes which requires difficult to implement sanitation marketing programs. While difficult, such a program has been effectively implemented in a very large scale in Malawi. The WASH program—which used various social marketing interventions to motivate villages in rural areas to build improved toilets and achieve Open Defecation Free (ODF) status—has persuaded more than 200,000 households to build latrines, thereby benefiting around one million people. This has required less than US$8 million in funding. UNICEF’s experience demonstrates that increasing access to improved sanitation can be done cost effectively and at scale in Malawi.78 In addition to the marketing costs, extending access to sanitation also requires households to spend time, and sometimes money, to build their latrines. The combination of the cost of the sanitation program and the costs borne by the household mean that the cost of extending access to sanitation is comparable to the cost of extending access to water. The O&M costs of extending access to improved sanitation are relatively small compared to the cost of the initial investment and the benefits amounting to around 6 percent of the initial investment cost per year.79 Figure A.4: Investments Required to Extend Access to Improved Sanitation Source: World Bank and UNICEF.80 78 Based on interviews and data provided by UNICEF. 79 This is the figure used in the Uganda Strategic Sector Investment Plan for the Water and Sanitation Sector in Uganda. 80 The cost of a toilet in urban areas was US$90 based on the cost of a VIP toilet. The cost of a toilet in rural areas was US$48 based on the cost of a simple pit latrine. Although a simple pit latrine is not improved, our understanding, based on interviews with UNICEF, is that the cost in rural areas of an improved toilet is comparable to that of a simple pit 81 A.4 WASH in Schools School age children are particularly susceptible to diseases that can be attributed to poor access to improved water and sanitation and school children are vulnerable to ill effects from contracting these diseases. Transmission of these diseases is facilitated in the school environment, with many children in close contact for extended periods. Illness means that children cannot attend school, or can’t concentrate when at school, which harms their studies. Student who fell ill with WSH related illness (intestinal worms) were 23 percent more likely to drop out of school. Access to toilets is particularly important for teenage girls. In Malawi it has been suggested that the provision of improved sanitation facilities for girls improves the gender balance in education. As discussed in the 2008 School WASH, appropriate facilities for menstrual hygiene leads girls to attend school on days that they have their period instead of staying home, or even dropping out altogether when they reach puberty. It should also be noted that providing separate and adequate improved sanitary facilities for male and female staff in schools that are separate from those of pupils helps to attract and retain teachers in schools. Teaching children good sanitation and hygiene behaviors at school can make them “agents of change� in their families and wider community, and serve them well into their adult lives.81 The nature of the benefits from improved access to water and sanitation on a school level makes it difficult to quantify them. Nevertheless, they are likely to be substantially higher than for households’ access to water and sanitation. The close concentration of children who are prone to transfer disease, combined with the need for a healthy environment for children to learn, all suggest that improving access to water and sanitation in schools has a very high benefit that is higher than the benefits calculated for households. While the benefits of extending access to water, sanitation, and hygiene in schools is likely to be substantial, the costs of doing so is likely to be relatively small. School WASH estimated that it would cost US$30 million to extend access to WASH to Malawi’s primary schools that don’t have access. latrine. Both sets of figures come from World Bank, “Water supply and sanitation in Malawi: turning finance into services for 2015 and beyond, An AMCOW Country Status Overview.� The cost of sanitation marketing in rural areas is based on figures provided by UNICEF on expenditure on sanitation and resulting increased number of latrines. It is assumed that 50 percent of the resulting latrines were improved based on interviews with UNICEF. The cost of sanitation marketing programs in urban areas is based on the Sanitation Marketing programs in the NWDP II AF. In line with World Bank AMCOW study infrastructure in urban areas is assumed to last 40 years and infrastructure in rural areas is assumed to last 10 years. 81 Malawi School WASH 2008: A Status Report on Water, Sanitation and Hygiene in Primary Schools, Ministry of Education, Science & Technology, 2009. 82 Appendix B Electricity Costs The actual cost of supplying electricity is not always reflected in the price consumers pay. For example, ESCOM charges medium voltage customers, like Blantyre Water Board, $0.03 per kWh, however, the economic cost of supplying customers is actually $0.17 per kWh. Table B.1 below, shows how we calculated economic cost of retail supply. Table B.1: Economic Cost of Retail Supply of Electricity Item Units Calculation Value Source A Unit Capital $/kW 2,080 PAD on ESKOM Investment Cost Project March 2010 paragraph 195, page 57 B Interest during Index 1.1 construction (IDC) C Unit Capital $/kW AxB 2,340 Cost Including IDC D Capital Cost % p.a. 17.8 Castalia calculated using an assumed Recovery pre- tax Real WACC of 12%, pre-tax Nominal WACC of 20.62%, Corporate Tax rate in Malawi of 30%, and a project life period of 20 years E Availability % 95 Benchmark from international power developers Castalia works with F Capital Costs $ cents/kWh CxDxE 4.99 G Fixed O&M $ cents/kWh 0.42 Benchmark from international Costs power developers Castalia works with H Variable O&M $ cents/kWh 0.50 Benchmark from international Costs power developers Castalia works with I Fuel costs $ cents/kWh 1.85 Benchmark from international power developers Castalia works with J Value of Power $/kWh (F+G+H+ 0.08 Generation I)/100 K Transmission $ cents/kWh 2.39 Benchmarks from systems Castalia works with that have cost recovery tariffs 83 Item Units Calculation Value Source L Distribution $ cents/kWh 5.37 Benchmarks from systems Castalia works with that have cost recovery tariffs M T & D Costs $ /kWh K+L 0.08 N System Loss % 17.5 http://www.mcc.gov/documents/r Percentage eports/qsr-2010002031405- malawi.pdf O System Loss $/kWh JxN 0.01 Costs P Economic Cost $/kWh J + M +O 0.17 of Retail Supply A cost of power generation of $0.08 per kWh was calculated under the assumption that the next capacity increment ESCOM is considering is a 300 MW coal fired power plant which could be expected to have an “all in� generation cost of $0.08.82 Value of power generation is calculated by adding capital costs, fixed operation and maintenances costs, variable operation and maintenance costs, and fuel costs. For transmission and distribution costs, we referred to the Manila Electric Company (Meralco) Rate Schedule, where the cost of transmission is about $0.02 per kWh, and the cost of distribution of about $0.05 per kWh.83 This adds up to a transmission and distribution cost of $0.08 per kWh. We use Meralco because it is one of the few electricity utilities in a developing country that has a fully disaggregated, cost-reflecting tariff schedule. Note that given the higher power density in Malawi, per kWh transmission and distribution costs are likely to be higher in Malawi than in Manila. Lastly, we calculated the cost of system loss per kWh by multiplying the cost of power generation at $0.08 per kWh and the percent of system loss target at 17.5 percent84. As a result, the system loss cost is $0.01 per kWh. The economic cost of retail supply of power is $0.17 per kWh and is calculated by adding the value of power generation ($0.08), transmission and distribution costs ($0.08), and system loss costs ($0.01). The economic cost of power supply at retail is more than five times higher than the tariff. So, we increased the annual energy costs Sogreah presented by multiplying it by this factor. 82 ICF International and CORE International, Inc, Malawi Power System Project Studies-Final Feasibility Study Report, ed. Millenium Challenge Corporation, page #s, accessed February 29, 2012, http://www.mca- m.gov.mw/documents/MCC_Malawi_FINAL_Feasibility_Study_Report.pdf. 83 Meralco, "Schedule of Rates," Manila Electric Company, accessed March 1, 2012, last modified February 2012, http://www.meralco.com.ph/pdf/rates/2012/ February/summary_schedule_rates_February2012.pdf. 84 MCC. “Malawi Compact,� Millenium Challenge Corporation, accessed March 15, 2012. http://www.mcc.gov/documents/reports/qsr-2010002031405-malawi.pdf. Note, system losses are currently above this target. 84 Appendix C. Blantyre Costs of Not Building New Water Source This section outlines the costs of not building a new water source and the data sheets used in these calculations. C.1 Costs of Not Building New Water Source for Blantyre To capture the true economic opportunity cost of not building a new water source, we assumed that one of three scenarios could occur:  Not providing the additional population in Blantyre with water, period  Use tanker trucks to bring water from Shire River to Blantyre, as people make private arrangements to serve a growing population in an environment of water scarcity  Fewer people move to Blantyre, and so Malawi does not benefit from the additional productivity that urban living provides. Each scenario assumes a 10 percent discount rate over the period 2012-2060. C.1.1 Costs of Not Providing Access to Water The benefit of providing urban access to improved water supply is $146.87 per capita per year. Appendix A of the Water Sector Investment Plan explains how we calculated the benefit of access to urban water supply. The per capita, per year, benefit of $146.87 was then multiplied by the population served by the new water source in each year. Our NPV calculations are from 2012 to 2060. However, because the assumption is that Mombezi-Makuwa would begin operating in 2019, we considered that benefits would also begin in 2019. So, the population served by the new source in any given year, is calculated:  Additional Population Served by New Source = (Population in Service Area x Urban Access Target) – Population Served by Current System. As a result, the benefit for each year is calculated:  Benefit of Providing Access to Water = $146.87 x Additional population Served by New Source. Lastly, NPV costs were calculated for years 2012 through 2060, at a 10 percent discount rate. As a result, in the case that population continues to grow, costs due to disease and time wasted amount to $500 million. 85 C.1.2 Costs of Supplying Water with Tanker Trucks The main costs that determine the cost of supplying water to Blantyre by using tanker trucks are the pump price of diesel ($1.54 per liter)85 and the rental cost of a 15 cubic meter tanker truck ($239 per day).86 Table C.1 below shows the assumptions used to calculate the full cost of a tanker working bring water to Blantyre for a day, and the amount of water it could supply in a day. Table C.1: Tanker Truck Costs Item Units Calculations Value Source A Pump Price of Diesel $/l 1.54 ZIPAR Presentation B Rental Cost of 15 cu. $/day 239 Blowfish Wetting m Truck Services C Truck Diesel l/km 3 Blowfish Wetting Consumption Services D Distance from km 40 Sogreah Blantyre Blantyre to Shire River Feasibility Study E Estimated roundtrip Hours 2 load and unload time F Number of trips made Number of 24 hours/ E 12 to Shire River trips/day G Fuel Cost per $/ trip AxCxDx2 370 Roundtrip to Shire River H Cost per Tanker per $/truck B + (F x G) 4,674 I Quantity of Water one cu. m/truck F x (15 cu. m/truck) 180 tanker can deliver in one day The water shortage per year that would result from not building a new supply project is calculated, and then the number of truck-days that would be required to fill this gap in each year is calculated. The number of truck-days required is then multiplied by the cost per truck-day to give the cost per year. These annual costs are then discounted back to find the present value of meeting the water shortage with trucks. Of course, this is not a realistic 85 Alan Whitworth ZIPAR, "Is Indeni the best option for Zambia's Fuel Supply?" How to Cut Zambian Fuel Costs, accessed February 29, 2012, last modified July 2010. http://www.google.com/ url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CCMQFjAA&url=http%3A%2F%2 Fwww.eaz.o rg.zm%2Fdownloads%2Ffile%2F201102250836170.EAZ%2520Fuel%2520Presentation- 1.ppt&ei =w3xnT4_aDOuamQWpqYS6CA&usg=AFQjCNGTkMVpw4oEWDuLwzL9BW6N2aC6Q&sig2=4fhxZEN 8T4RoG OOxEYV5oA. 86 Personal communication with Blowfish Wetting Services in South Africa on February 29, 2012. They indicated the cost of a 15 cubic meter truck was about ZAR 1,800 per day, with a driver. This converts to approximately $239 per day. 86 scenario, but it does show the high cost to citizens of making alternative arrangements if a bulk water supply scheme is not provided. C.1.3 Costs of Productivity Losses Due to No Population Growth If Blantyre does not get a new bulk supply scheme, it will suffer from extreme water shortages. Lower inward migration to the city will reduce population growth. This will have a cost to Malawi of lost productivity, as city-dwellers tend to be more productive than those in the countryside. Ideally, an income per capita figure would be used to calculate the productivity differential between city and country. However, the best estimate found was per capita expenditure. So, this figure was used as a proxy to capture productivity of a person living in urban area versus productivity of a person living in a rural part of the country. The table below shows the calculation of the per person productivity gap between city and countryside--$216 per person per year. Table C.2: Productivity Differential between City and Country Item Units Calculation Value Source A Expenditure per capita in $/capita/year 514 Integrated Blantyre City Household Survey 2005 B Expenditure per capita in $/capita/year 298 Integrated Rural Blantyre Household Survey 2005 C Expenditure per capita $/capita/year A -B 216 difference between urban and rural Source: Values in lines A and B come from the Integrated Household Survey 2005, published by the National Statistics Office of Malawi. In the scenario, it is assumed that if a new water supply is not built, the population in Blantyre would remain capped at current levels. In each year, the gap between projected and “capped� population is calculated. The number of people not present in Blantyre as a result of not having water is then multiplied by the annual per capita productivity differential to give the annual economic loss. This is then discounted to give a present value of the economic loss. The numbers presented above were converted to USD and adjusted for inflation. So, these numbers are in 2011 prices. Based on the productivity foregone ($216 per capita per year), the net present value cost of this scenario is $473 million. 87 C.2 Cost-Benefit Analysis for Blantyre’s New Water Source Cost-Benefit Analysis for Blantyre New Water Source (Medium Growth Scenario) A New Water Source Operating? 0 = No, 1 = Yes 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 Unit Calculation NPV 2012- 2060 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 B Population in Service Area No. of People 825,045 847,465 873,486 901,106 929,958 959,995 991,149 1,023,335 1,056,444 1,089,771 1,122,981 1,155,711 1,187,591 1,218,246 1,249,335 1,282,335 C People Served No. of People 641,859 699,756 723,811 749,329 776,015 803,840 832,755 862,696 893,574 924,808 956,116 987,191 1,017,718 1,047,372 1,077,945 1,109,498 D % Coverage % of People B/C 78% 83% 83% 83% 83% 84% 84% 84% 85% 85% 85% 85% 86% 86% 86% 87% E Targets for Urban Access to % of People 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% Improved Water F Population Served by New Water No. of People (B x E ) - C 241,565 262,864 287,584 313,823 341,232 369,767 399,364 429,940 461,394 493,054 524,604 555,697 585,983 615,106 644,640 675,990 Source G Customer Demand (total average cu. m/day 57,221 60,965 63,166 65,473 67,872 70,390 73,047 75,814 78,697 81,644 84,648 87,687 90,744 93,785 96,900 100,145 net demand) H NRW cu. m/day 24,523 24,561 24,279 24,285 24,507 24,908 25,459 26,126 26,890 27,721 28,606 29,529 30,479 31,262 32,300 33,382 I Total Clear Water Required cu. m/day G+H 81,744 85,526 87,445 89,758 92,379 95,298 98,506 101,940 105,587 109,365 113,254 117,216 121,223 125,047 129,200 133,527 J Capacity of Current Supply - cu. m/day 95,000 108,000 108,000 108,000 108,000 108,000 108,000 108,000 108,000 108,000 108,000 108,000 108,000 108,000 108,000 108,000 Average Production K Reserve margin - Average cu. m/day I -J (13,256) (22,474) (20,555) (18,242) (15,621) (12,702) (9,494) (6,060) (2,413) 1,365 5,254 9,216 13,223 17,047 21,200 25,527 Production L NRW Deficit cu. m/day K x %NRW (3,977) (6,454) (5,707) (4,936) (4,144) (3,320) (2,454) (1,553) (614) 346 1,327 2,322 3,325 4,262 5,300 6,382 M Customer Demand Deficit cu. m/day K-L (9,279) (16,020) (14,848) (13,307) (11,477) (9,382) (7,040) (4,507) (1,798) 1,019 3,927 6,895 9,898 12,785 15,900 19,145 Scenario 1 - Cost of NOT Providing water N Benefits per person from providing $/c/yr (2010 147 147 147 147 147 147 147 147 147 147 147 147 147 147 147 147 access to water prices) O Cost of not providing water $/annum A xF xN $499,935,320 - - - - - - - 63,147,115 67,766,829 72,416,960 77,050,767 81,617,599 86,065,830 90,343,136 94,680,998 99,285,503 Scenario 2 - Increased cost of supplying water P Cost per tanker truck per day $/day 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 Q Quantitiy of water one tanker truck cu. m/truck/day 180 180 180 180 180 180 180 180 180 180 180 180 180 180 180 180 can deliver per day R Customer Demand Deficit (total cu. m/day (9,279.00) (16,020) (14,848) (13,307) (11,477) (9,382) (7,040) (4,507) (1,798) 1,019 3,927 6,895 9,898 12,785 15,900 19,145 S net average of Number demand) trucks needed to meet No. of R/Q (52) (89) (82) (74) (64) (52) (39) (25) (10) 6 22 38 55 71 88 106 T customer Cost demand water of Supplying deficitto all of trucks/day $/ year A x P x S x 365 $960,848,492 - - - - - - - (42,718,703) (17,043,684) 9,660,884 37,220,203 65,345,116 93,814,534 121,174,099 150,697,550 181,453,119 Blantyre Scenario 3 - No population growth U Expenditure per capita in Blantyre $/annum 514 514 514 514 514 514 514 514 514 514 514 514 514 514 514 514 V Expenditure per capita in Rural $/annum 298 298 298 298 298 298 298 298 298 298 298 298 298 298 298 298 Areas W Expenditure per capita difference $/annum 216 216 216 216 216 216 216 216 216 216 216 216 216 216 216 216 between urban and rural X Value of productivity foregone from $/annum A x (F2012 - Fn) x W $472,799,301 - - - - - - - 40,726,783 47,527,041 54,372,073 61,193,075 67,915,490 74,463,323 80,759,553 87,144,923 93,922,793 no population growth Scenario 4 - Cost of a Drought Y Cost per tanker truck per day $/day 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 during drought Z Quantitiy of water one tanker truck cu. m/truck/day 90 90 90 90 90 90 90 90 90 90 90 90 90 90 90 90 can deliver per day AA Number of trucks needed to meet No. of trucks R/Z (103) (178) (165) (148) (128) (104) (78) (50) (20) 11 44 77 110 142 177 213 customer demand deficit AB Cost of Supplying Water to $/day Y x AA (699,061) (1,206,886) (1,118,634) (1,002,507) (864,660) (706,850) (530,392) (339,565) (135,478) 76,793 295,858 519,419 745,719 963,196 1,197,874 1,442,346 Blantyre per drought day AC No. of Day without water when a No. of days 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 drought occurs AD Daily probabilty of drought % 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% AE Cost of Supplying Water During a $/drought A x AB x AC x AD $55,754,868 - - - - - - - (2,478,825) (988,989) 560,589 2,159,766 3,791,762 5,443,748 7,031,333 8,744,482 10,529,126 Drought period Note: In this scenario, the water source begins to operate in 2019. 88 Cost-Benefit Analysis for Blantyre New Water Source (Medium Growth Scenario) A New Water Source Operating? 0 = No, 1 = Yes 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Unit Calculation NPV 2012- 2060 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 B Population in Service Area No. of People 1,315,887 1,350,498 1,386,210 1,422,759 1,460,138 1,498,338 1,537,357 1,577,207 1,618,214 1,660,288 1,703,455 1,747,745 1,793,187 1,839,810 1,887,645 1,936,723 1,987,078 2,038,742 C People Served No. of People 1,142,077 1,175,719 1,206,522 1,238,038 1,270,256 1,303,170 1,336,774 1,371,082 1,371,082 1,371,082 1,371,082 1,371,082 1,371,082 1,371,082 1,371,082 1,371,082 1,371,082 1,371,082 D % Coverage % of People B/C 87% 87% 87% 87% 87% 87% 87% 87% E Targets for Urban Access to % of People 95% 95% 95% 95% 95% 95% 95% 95% Improved Water F Population Served by New Water No. of People (B x E ) - C 707,865 740,745 774,672 809,393 844,903 881,193 918,261 956,119 956,119 956,119 956,119 956,119 956,119 956,119 956,119 956,119 956,119 956,119 Source G Customer Demand (total average cu. m/day 103,524 107,046 110,826 114,717 118,682 122,793 127,077 131,504 131,504 131,504 131,504 131,504 131,504 131,504 131,504 131,504 131,504 131,504 net demand) H NRW cu. m/day 34,508 35,682 36,942 38,239 39,561 40,931 42,359 43,835 I Total Clear Water Required cu. m/day G+H 138,032 142,728 147,768 152,956 158,243 163,724 169,436 175,339 175,339 175,339 175,339 175,339 175,339 175,339 175,339 175,339 175,339 175,339 J Capacity of Current Supply - cu. m/day 108,000 108,000 108,000 108,000 108,000 108,000 108,000 108,000 Average Production K Reserve margin - Average cu. m/day I -J 30,032 34,728 39,768 44,956 50,243 55,724 61,436 67,339 Production L NRW Deficit cu. m/day K x %NRW 7,508 8,682 9,942 11,239 12,561 13,931 15,359 16,835 M Customer Demand Deficit cu. m/day K-L 22,524 26,046 29,826 33,717 37,682 41,793 46,077 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 Scenario 1 - Cost of NOT Providing water N Benefits per person from providing $/c/yr (2010 147 147 147 147 147 147 147 147 147 147 147 147 147 147 147 147 147 147 access to water prices) O Cost of not providing water $/annum A xF xN $499,935,320 103,967,029 108,796,318 113,779,229 118,878,928 124,094,437 129,424,500 134,868,839 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 Scenario 2 - Increased cost of supplying water P Cost per tanker truck per day $/day 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 Q Quantitiy of water one tanker truck cu. m/truck/day 180 180 180 180 180 180 180 180 180 180 180 180 180 180 180 180 180 180 can deliver per day R Customer Demand Deficit (total cu. m/day 22,524 26,046 29,826 33,717 37,682 41,793 46,077 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 S net average of Number demand) trucks needed to meet No. of R/Q 125 145 166 187 209 232 256 281 281 281 281 281 281 281 281 281 281 281 T customer Cost demand water of Supplying deficitto all of trucks/day $/ year A x P x S x 365 $960,848,492 213,478,718 246,859,647 282,685,857 319,564,107 357,143,716 396,107,089 436,710,127 478,668,495 478,668,495 478,668,495 478,668,495 478,668,495 478,668,495 478,668,495 478,668,495 478,668,495 478,668,495 478,668,495 Blantyre Scenario 3 - No population growth U Expenditure per capita in Blantyre $/annum 514 514 514 514 514 514 514 514 514 514 514 514 514 514 514 514 514 514 V Expenditure per capita in Rural $/annum 298 298 298 298 298 298 298 298 298 298 298 298 298 298 298 298 298 298 Areas W Expenditure per capita difference $/annum 216 216 216 216 216 216 216 216 216 216 216 216 216 216 216 216 216 216 between urban and rural X Value of productivity foregone from $/annum A x (F2012 - Fn) x W $472,799,301 100,814,038 107,922,792 115,257,679 122,764,478 130,441,751 138,287,649 146,301,762 154,486,553 154,486,553 154,486,553 154,486,553 154,486,553 154,486,553 154,486,553 154,486,553 154,486,553 154,486,553 154,486,553 no population growth Scenario 4 - Cost of a Drought Y Cost per tanker truck per day $/day 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 during drought Z Quantitiy of water one tanker truck cu. m/truck/day 90 90 90 90 90 90 90 90 90 90 90 90 90 90 90 90 90 90 can deliver per day AA Number of trucks needed to meet No. of trucks R/Z 250 289 331 375 419 464 512 561 561 561 561 561 561 561 561 561 561 561 customer demand deficit AB Cost of Supplying Water to $/day Y x AA 1,696,913 1,962,254 2,247,031 2,540,171 2,838,887 3,148,601 3,471,349 3,804,870 3,804,870 3,804,870 3,804,870 3,804,870 3,804,870 3,804,870 3,804,870 3,804,870 3,804,870 3,804,870 Blantyre per drought day AC No. of Day without water when a No. of days 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 drought occurs AD Daily probabilty of drought % 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% AE Cost of Supplying Water During a $/drought A x AB x AC x AD $55,754,868 12,387,466 14,324,451 16,403,328 18,543,251 20,723,872 22,984,788 25,340,848 27,775,554 27,775,554 27,775,554 27,775,554 27,775,554 27,775,554 27,775,554 27,775,554 27,775,554 27,775,554 27,775,554 Drought period Note: In this scenario, the water source begins to operate in 2019. 89 Cost-Benefit Analysis for Blantyre New Water Source (Medium Growth Scenario) A New Water Source Operating? 0 = No, 1 = Yes 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Unit Calculation NPV 2012- 2060 2046 2047 2048 2049 2050 2051 2052 2053 2054 2055 2056 2057 2058 2059 2060 B Population in Service Area No. of People 2,091,749 2,146,135 2,201,934 2,259,185 2,317,924 2,378,190 2,440,022 2,503,463 2,568,553 2,635,335 2,703,854 2,774,154 2,846,282 2,920,286 2,996,213 C People Served No. of People 1,371,082 1,371,082 1,371,082 1,371,082 1,371,082 1,371,082 1,371,082 1,371,082 1,371,082 1,371,082 1,371,082 1,371,082 1,371,082 1,371,082 1,371,082 D % Coverage % of People B/C E Targets for Urban Access to % of People Improved Water F Population Served by New Water No. of People (B x E ) - C 956,119 956,119 956,119 956,119 956,119 956,119 956,119 956,119 956,119 956,119 956,119 956,119 956,119 956,119 956,119 Source G Customer Demand (total average cu. m/day 131,504 131,504 131,504 131,504 131,504 131,504 131,504 131,504 131,504 131,504 131,504 131,504 131,504 131,504 131,504 net demand) H NRW cu. m/day I Total Clear Water Required cu. m/day G+H 175,339 175,339 175,339 175,339 175,339 175,339 175,339 175,339 175,339 175,339 175,339 175,339 175,339 175,339 175,339 J Capacity of Current Supply - cu. m/day Average Production K Reserve margin - Average cu. m/day I -J Production L NRW Deficit cu. m/day K x %NRW M Customer Demand Deficit cu. m/day K-L 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 Scenario 1 - Cost of NOT Providing water N Benefits per person from providing $/c/yr (2010 147 147 147 147 147 147 147 147 147 147 147 147 147 147 147 access to water prices) O Cost of not providing water $/annum A xF xN $499,935,320 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 Scenario 2 - Increased cost of supplying water P Cost per tanker truck per day $/day 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 4,674 Q Quantitiy of water one tanker truck cu. m/truck/day 180 180 180 180 180 180 180 180 180 180 180 180 180 180 180 can deliver per day R Customer Demand Deficit (total cu. m/day 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 50,504 S net average of Number demand) trucks needed to meet No. of R/Q 281 281 281 281 281 281 281 281 281 281 281 281 281 281 281 T customer Cost demand water of Supplying deficit trucks/day $/ year A x P x S x 365 $960,848,492 478,668,495 478,668,495 478,668,495 478,668,495 478,668,495 478,668,495 478,668,495 478,668,495 478,668,495 478,668,495 478,668,495 478,668,495 478,668,495 478,668,495 478,668,495 Scenario 3 - No population growth U Expenditure per capita in Blantyre $/annum 514 514 514 514 514 514 514 514 514 514 514 514 514 514 514 V Expenditure per capita in Rural $/annum 298 298 298 298 298 298 298 298 298 298 298 298 298 298 298 Areas W Expenditure per capita difference $/annum 216 216 216 216 216 216 216 216 216 216 216 216 216 216 216 between urban and rural X Value of productivity foregone from $/annum A x (F2012 - Fn) x W $472,799,301 154,486,553 154,486,553 154,486,553 154,486,553 154,486,553 154,486,553 154,486,553 154,486,553 154,486,553 154,486,553 154,486,553 154,486,553 154,486,553 154,486,553 154,486,553 no population growth Scenario 4 - Cost of a Drought Y Cost per tanker truck per day $/day 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 6,780 during drought Z Quantitiy of water one tanker truck cu. m/truck/day 90 90 90 90 90 90 90 90 90 90 90 90 90 90 90 can deliver per day AA Number of trucks needed to meet No. of trucks R/Z 561 561 561 561 561 561 561 561 561 561 561 561 561 561 561 customer demand deficit AB Cost of Supplying Water to $/day Y x AA 3,804,870 3,804,870 3,804,870 3,804,870 3,804,870 3,804,870 3,804,870 3,804,870 3,804,870 3,804,870 3,804,870 3,804,870 3,804,870 3,804,870 3,804,870 Blantyre per drought day AC No. of Day without water when a No. of days 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 drought occurs AD Daily probabilty of drought % 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% AE Cost of Supplying Water During a $/drought A x AB x AC x AD $55,754,868 27,775,554 27,775,554 27,775,554 27,775,554 27,775,554 27,775,554 27,775,554 27,775,554 27,775,554 27,775,554 27,775,554 27,775,554 27,775,554 27,775,554 27,775,554 Drought period Note: In this scenario, the water source begins to operate in 2019. 90 Annual Capital and Operating Costs for Mombezi-Makuwa and Walkers Ferry Blantyre New Water Source Costs Units Calculation NPV 2012- 2060 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Medium Growth Scenario Cost of New Water Source - Mombezi +Makuwa Capex (DWS Component) A Dams $ - - - 19,320,000 19,320,000 19,320,000 - - - - - - - - - - B Resettlement $ - - - - 1,400,000 1,400,000 - - - - - - - - - - C WTP $ - - - - - 5,170,000 5,170,000 - - - - - - - - - D Pipelines +reservoirs+electric lines $ - - - - - 16,640,000 16,640,000 - - - - - - - - - E Pumping Stations $ - - - - - 3,070,000 3,070,000 - - - - - - - - - F Physical Contingencies $ - - - 2,320,000 2,320,000 5,300,000 2,990,000 - - - - - - - - - G Engineering $ - - 1,930,000 1,930,000 1,930,000 1,930,000 1,930,000 - - - - - - - - 1,950,000 H Sum of Total Capex A+B+C+D+E+F+G $97,120,271 - - 1,930,000 23,570,000 24,970,000 52,830,000 29,800,000 - - - - - - - - 1,950,000 OpEx (DWS Component) - excluding energy costs I Chemicals $ - - - - - - - 46,000 53,000 59,000 66,000 73,000 80,000 87,000 93,000 100,000 J Annual Maintenance $ - - - - - - - 1,067,000 1,067,000 1,067,000 1,067,000 1,067,000 1,067,000 1,067,000 1,067,000 1,067,000 K Personnel $ - - - - - - - 98,000 98,000 98,000 98,000 98,000 98,000 98,000 98,000 98,000 Sum of Total Opex- excluding L energy cost I+J+K $7,753,587 - - - - - - - 1,211,000 1,218,000 1,224,000 1,231,000 1,238,000 1,245,000 1,252,000 1,258,000 1,265,000 Energy M Energy cost at tariff ($0.03/kWh) $ $5,238,422 - - - - - - - 436,000 496,000 557,000 622,000 686,000 751,000 815,000 878,000 939,000 Energy Cost at economic cost N ($0.17/kWh) $ M x (0.17/.0.03) $29,468,708 - - - - - - - 2,452,715 2,790,245 3,133,400 3,499,057 3,859,088 4,224,745 4,584,777 4,939,183 5,282,338 NPV (at 10% discount rate) Capex + Opex ( excluding energy N cost) $ H+L $104,873,858 - - 1,930,000 23,570,000 24,970,000 52,830,000 29,800,000 1,211,000 1,218,000 1,224,000 1,231,000 1,238,000 1,245,000 1,252,000 1,258,000 3,215,000 Capex + Opex (including energy O cost at tariff) $ H+L+M $110,112,281 - - 1,930,000 23,570,000 24,970,000 52,830,000 29,800,000 1,647,000 1,714,000 1,781,000 1,853,000 1,924,000 1,996,000 2,067,000 2,136,000 4,154,000 Capex + Opex (including energy P cost at economic cost) $ H+L+N $134,342,566 - - 1,930,000 23,570,000 24,970,000 52,830,000 29,800,000 3,663,715 4,008,245 4,357,400 4,730,057 5,097,088 5,469,745 5,836,777 6,197,183 8,497,338 Economic Internal Rate of Return Q Benefit of Supplying Water $ $499,935,320 - - - - - - - 63,147,115 67,766,829 72,416,960 77,050,767 81,617,599 86,065,830 90,343,136 94,680,998 99,285,503 R EIRR (with energy cost at tariff) % Q-O 35% - - ($1,930,000) ($23,570,000) ($24,970,000) ($52,830,000) ($29,800,000) 61,500,115 66,052,829 70,635,960 75,197,767 79,693,599 84,069,830 88,276,136 92,544,998 95,131,503 EIRR (with energy cost at S economic cost) % Q -P 34% - - ($1,930,000) ($23,570,000) ($24,970,000) ($52,830,000) ($29,800,000) 59,483,400 63,758,584 68,059,561 72,320,710 76,520,510 80,596,084 84,506,359 88,483,815 90,788,165 Cost of New Water Source - Walkers Ferry Capex (DWS Component) T Dams $ - - - - 2,220,000 - - - - 50,000 - - - - 50,000 - U Resettlement $ - - - - - - - - - - - - - - - - V WTP $ - - - - 6,320,000 6,320,000 - - - - - - - - - 1,010,000 W Pipelines +reservoirs+electric lines $ - - - 15,560,000 15,560,000 15,560,000 - - - - - - - - - 11,340,000 X Pumping Stations $ - - - - 5,110,000 5,110,000 - - - - - - - - - 2,150,000 Y Physical Contingencies $ - - - 1,870,000 3,510,000 3,240,000 - - - - - - - - - 1,360,000 Z Engineering $ - - 1,610,000 1,610,000 1,610,000 1,610,000 - - - - - - - - 1,240,000 1,240,000 AA Sum of Total Capex $ T+U+V+W+X+Y+Z $70,423,661 - - 1,610,000 19,040,000 34,330,000 31,840,000 - - - 50,000 - - - - 1,290,000 17,100,000 OpEx (DWS Component) - excluding energy costs AB Chemicals $ - - - - - - 72,000 82,000 94,000 105,000 118,000 130,000 142,000 154,000 166,000 178,000 AC Annual Maintenance $ - - - - - - 693,000 693,000 693,000 693,000 693,000 693,000 693,000 693,000 693,000 693,000 AD Personnel $ - - - - - - 158,000 158,000 158,000 158,000 158,000 158,000 158,000 158,000 158,000 158,000 Sum of Total Opex - exluding AE energy costs $ AB+AC+AD $6,853,027 - - - - - - 923,000 933,000 945,000 956,000 969,000 981,000 993,000 1,005,000 1,017,000 1,029,000 Energy AF Energy cost at tariff ($0.03/kWh) $ $10,217,178 - - - - - - 826,000 939,000 1,056,000 1,177,000 1,300,000 1,423,000 1,544,000 1,664,000 1,779,000 1,868,000 Energy Cost at economic cost AG ($0.17/kWh) $ AF x (0.17/.0.03) $57,476,665 - - - - - - 4,646,657 5,282,338 5,940,521 6,621,205 7,313,141 8,005,077 8,685,761 9,360,820 10,007,752 10,508,421 NPV (at 10% discount rate) Capex +Opex excluding energy AH cost) $ AA+ AD $77,276,689 - - 1,610,000 19,040,000 34,330,000 31,840,000 923,000 933,000 945,000 1,006,000 969,000 981,000 993,000 1,005,000 2,307,000 18,129,000 Capex +Opex (including energy AI cost at tariff) $ AA + AD + AE $87,493,867 - - 1,610,000 19,040,000 34,330,000 31,840,000 1,749,000 1,872,000 2,001,000 2,183,000 2,269,000 2,404,000 2,537,000 2,669,000 4,086,000 19,997,000 Capex +Opex (including energy AJ cost at economic cost) $ AA + AD + AF $134,753,354 - - 1,610,000 19,040,000 34,330,000 31,840,000 5,569,657 6,215,337.97 6,885,521 7,627,205 8,282,141 8,986,077 9,678,761 10,365,820 12,314,752 28,637,421 Economic Internal Rate of Return AK Benefit of Supplying Water $ $530,035,218 - - - - - - 58,656,188 63,147,115 67,766,829 72,416,960 77,050,767 81,617,599 86,065,830 90,343,136 94,680,998 99,285,503 AL EIRR (with energy cost at tariff) % AK - AI 50% - - ($1,610,000) ($19,040,000) ($34,330,000) ($31,840,000) 56,907,188 61,275,115 65,765,829 70,233,960 74,781,767 79,213,599 83,528,830 87,674,136 90,594,998 79,288,503 EIRR (with energy cost at AM economic cost) % AK- AJ 47% - - ($1,610,000) ($19,040,000) ($34,330,000) ($31,840,000) 53,086,530 56,931,777 60,881,308 64,789,755 68,768,626 72,631,522 76,387,068 79,977,315 82,366,246 70,648,082 Note: Mombezi - Makuwa begins operating in 2019. Walkers Ferry in 2018. Benefit of water supply begins the first year of operation. Walkers Ferry benefits begin a year before Mombezi-Makuwa 91 Blantyre New Water Source Costs Units Calculation NPV 2012- 2060 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 Medium Growth Scenario Cost of New Water Source - Mombezi +Makuwa Capex (DWS Component) A Dams $ - 100,000 - - - - - - - - - - - - - - - - B Resettlement $ - - - - - - - - - - - - - - - - - - C WTP $ 6,000,000 5,170,000 - - - 3,310,000 - - - - - - - - - - - - D Pipelines +reservoirs+electric lines $ 21,650,000 21,650,000 - - - - - - - - 6,000,000 830,000 - - - - 3,310,000 - E Pumping Stations $ 7,040,000 5,750,000 - - - 2,390,000 - - - - - - - - - - - - F Physical Contingencies $ 3,910,000 3,920,000 - - - - - - - - 7,040,000 2,410,000 - - - - 4,480,000 - G Engineering $ 1,950,000 1,950,000 - - - - - - - - - - - - - - - - H Sum of Total Capex A+B+C+D+E+F+G $97,120,271 40,550,000 38,540,000 - - - 5,700,000 - - - - 13,040,000 3,240,000 - - - - 7,790,000 - OpEx (DWS Component) - excluding energy costs I Chemicals $ 107,000 113,000 121,000 128,000 141,000 155,000 168,000 183,000 198,000 213,000 213,000 213,000 213,000 213,000 213,000 213,000 213,000 213,000 J Annual Maintenance $ 1,067,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 K Personnel $ 98,000 174,000 174,000 174,000 174,000 174,000 174,000 174,000 174,000 174,000 174,000 174,000 174,000 174,000 174,000 174,000 174,000 174,000 Sum of Total Opex- excluding L energy cost I+J+K $7,753,587 1,272,000 1,984,000 1,992,000 1,999,000 2,012,000 2,026,000 2,039,000 2,054,000 2,069,000 2,084,000 2,084,000 2,084,000 2,084,000 2,084,000 2,084,000 2,084,000 2,084,000 2,084,000 Energy M Energy cost at tariff ($0.03/kWh) $ $5,238,422 1,002,000 1,068,000 1,137,000 1,209,000 1,336,000 1,466,000 1,599,000 1,736,000 1,880,000 2,028,000 2,028,000 2,028,000 2,028,000 2,028,000 2,028,000 2,028,000 2,028,000 2,028,000 Energy Cost at economic cost N ($0.17/kWh) $ M x (0.17/.0.03) $29,468,708 5,636,744 6,008,027 6,396,186 6,801,221 7,515,659 8,246,973 8,995,163 9,765,856 10,575,927 11,408,500 11,408,500 11,408,500 11,408,500 11,408,500 11,408,500 11,408,500 11,408,500 11,408,500 NPV (at 10% discount rate) Capex + Opex ( excluding energy N cost) $ H+L $104,873,858 41,822,000 40,524,000 1,992,000 1,999,000 2,012,000 7,726,000 2,039,000 2,054,000 2,069,000 2,084,000 15,124,000 5,324,000 2,084,000 2,084,000 2,084,000 2,084,000 9,874,000 2,084,000 Capex + Opex (including energy O cost at tariff) $ H+L+M $110,112,281 42,824,000 41,592,000 3,129,000 3,208,000 3,348,000 9,192,000 3,638,000 3,790,000 3,949,000 4,112,000 17,152,000 7,352,000 4,112,000 4,112,000 4,112,000 4,112,000 11,902,000 4,112,000 Capex + Opex (including energy P cost at economic cost) $ H+L+N $134,342,566 47,458,744 46,532,027 8,388,186 8,800,221 9,527,659 15,972,973 11,034,163 11,819,856 12,644,927 13,492,500 26,532,500 16,732,500 13,492,500 13,492,500 13,492,500 13,492,500 21,282,500 13,492,500 Economic Internal Rate of Return Q Benefit of Supplying Water $ $499,935,320 103,967,029 108,796,318 113,779,229 118,878,928 124,094,437 129,424,500 134,868,839 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 R EIRR (with energy cost at tariff) % Q-O 35% 61,143,029 67,204,318 110,650,229 115,670,928 120,746,437 120,232,500 131,230,839 136,639,128 136,480,128 136,317,128 123,277,128 133,077,128 136,317,128 136,317,128 136,317,128 136,317,128 128,527,128 136,317,128 EIRR (with energy cost at S economic cost) % Q -P 34% 56,508,285 62,264,291 105,391,044 110,078,707 114,566,778 113,451,527 123,834,676 128,609,272 127,784,201 126,936,628 113,896,628 123,696,628 126,936,628 126,936,628 126,936,628 126,936,628 119,146,628 126,936,628 Cost of New Water Source - Walkers Ferry Capex (DWS Component) T Dams $ - - - 50,000 - - - - 50,000 - - - - 50,000 - - - - U Resettlement $ - - - - - - - - - - - - - - - - - - V WTP $ 6,320,000 6,320,000 - - 4,050,000 - - - - 1,010,000 - 1,010,000 - - - - 4,050,000 - W Pipelines +reservoirs+electric lines $ 11,340,000 11,340,000 - - - - - - - - - - - - - - - - X Pumping Stations $ 4,240,000 4,240,000 - - 3,990,000 - - - - 2,150,000 - 1,780,000 - - - - 3,310,000 - Y Physical Contingencies $ 2,630,000 2,630,000 - - - - - - - - - - - - - - - - Z Engineering $ 1,240,000 1,240,000 - - - - - - - - - - - - - - - - AA Sum of Total Capex $ T+U+V+W+X+Y+Z $70,423,661 25,770,000 25,770,000 - 50,000 8,040,000 - - - 50,000 3,160,000 - 2,790,000 - 50,000 - - 7,360,000 - OpEx (DWS Component) - excluding energy costs AB Chemicals $ 189,000 202,000 214,000 228,000 251,000 275,000 299,000 325,000 351,000 379,000 379,000 379,000 379,000 379,000 379,000 379,000 379,000 379,000 AC Annual Maintenance $ 693,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 AD Personnel $ 158,000 158,000 195,000 195,000 195,000 195,000 195,000 195,000 195,000 195,000 195,000 195,000 195,000 195,000 195,000 195,000 195,000 195,000 Sum of Total Opex - exluding AE energy costs $ AB+AC+AD $6,853,027 1,040,000 1,607,000 1,656,000 1,670,000 1,693,000 1,717,000 1,741,000 1,767,000 1,793,000 1,821,000 1,821,000 1,821,000 1,821,000 1,821,000 1,821,000 1,821,000 1,821,000 1,821,000 Energy AF Energy cost at tariff ($0.03/kWh) $ $10,217,178 1,961,000 2,058,000 2,159,000 2,338,000 2,522,000 2,709,000 2,903,000 3,106,000 3,315,000 3,315,000 3,315,000 3,315,000 3,315,000 3,315,000 3,315,000 3,315,000 3,315,000 3,315,000 Energy Cost at economic cost AG ($0.17/kWh) $ AF x (0.17/.0.03) $57,476,665 11,031,592 11,577,265 12,145,439 13,152,403 14,187,493 15,239,461 16,330,806 17,472,781 18,648,509 18,648,509 18,648,509 18,648,509 18,648,509 18,648,509 18,648,509 18,648,509 18,648,509 18,648,509 NPV (at 10% discount rate) Capex +Opex excluding energy AH cost) $ AA+ AD $77,276,689 26,810,000 27,377,000 1,656,000 1,720,000 9,733,000 1,717,000 1,741,000 1,767,000 1,843,000 4,981,000 1,821,000 4,611,000 1,821,000 1,871,000 1,821,000 1,821,000 9,181,000 1,821,000 Capex +Opex (including energy AI cost at tariff) $ AA + AD + AE $87,493,867 28,771,000 29,435,000 3,815,000 4,058,000 12,255,000 4,426,000 4,644,000 4,873,000 5,158,000 8,296,000 5,136,000 7,926,000 5,136,000 5,186,000 5,136,000 5,136,000 12,496,000 5,136,000 Capex +Opex (including energy AJ cost at economic cost) $ AA + AD + AF $134,753,354 37,841,592 38,954,265 13,801,439 14,872,403 23,920,493 16,956,461 18,071,806 19,239,781 20,491,509 23,629,509 20,469,509 23,259,509 20,469,509 20,519,509 20,469,509 20,469,509 27,829,509 20,469,509 Economic Internal Rate of Return AK Benefit of Supplying Water $ $530,035,218 103,967,029 108,796,318 113,779,229 118,878,928 124,094,437 129,424,500 134,868,839 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 AL EIRR (with energy cost at tariff) % AK - AI 50% 75,196,029 79,361,318 109,964,229 114,820,928 111,839,437 124,998,500 130,224,839 135,556,128 135,271,128 132,133,128 135,293,128 132,503,128 135,293,128 135,243,128 135,293,128 135,293,128 127,933,128 135,293,128 EIRR (with energy cost at AM economic cost) % AK- AJ 47% 66,125,437 69,842,053 99,977,790 104,006,525 100,173,943 112,468,040 116,797,033 121,189,346 119,937,618 116,799,618 119,959,618 117,169,618 119,959,618 119,909,618 119,959,618 119,959,618 112,599,618 119,959,618 Note: Mombezi - Makuwa begins operating in 2019. Walkers Ferry in 2018. Benefit of water supply begins the first year of operation. Walkers Ferry benefits begin a year before Mombezi-Makuwa 92 Blantyre New Water Source Costs Units Calculation NPV 2012- 2060 2046 2047 2048 2049 2050 2051 2052 2053 2054 2055 2056 2057 2058 2059 2060 Medium Growth Scenario Cost of New Water Source - Mombezi +Makuwa Capex (DWS Component) A Dams $ - - - - - - - - - - - - - - - B Resettlement $ - - - - - - - - - - - - - - - C WTP $ - - - - - - - - - - - - 6,000,000 4,140,000 - D Pipelines +reservoirs+electric lines $ - - 6,000,000 4,140,000 - - - - - - 16,640,000 16,640,000 - - - E Pumping Stations $ - - - - - - - - - - - - 7,040,000 6,900,000 - F Physical Contingencies $ - - 7,040,000 4,810,000 - - - - - - - - - - - G Engineering $ - - - - - - - - - - - - - - - H Sum of Total Capex A+B+C+D+E+F+G $97,120,271 - - 13,040,000 8,950,000 - - - - - - 16,640,000 16,640,000 13,040,000 11,040,000 - OpEx (DWS Component) - excluding energy costs I Chemicals $ 213,000 213,000 213,000 213,000 213,000 213,000 213,000 213,000 213,000 213,000 213,000 213,000 213,000 213,000 213,000 J Annual Maintenance $ 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 1,697,000 K Personnel $ 174,000 174,000 174,000 174,000 174,000 174,000 174,000 174,000 174,000 174,000 174,000 174,000 174,000 174,000 174,000 Sum of Total Opex- excluding L energy cost I+J+K $7,753,587 2,084,000 2,084,000 2,084,000 2,084,000 2,084,000 2,084,000 2,084,000 2,084,000 2,084,000 2,084,000 2,084,000 2,084,000 2,084,000 2,084,000 2,084,000 Energy M Energy cost at tariff ($0.03/kWh) $ $5,238,422 2,028,000 2,028,000 2,028,000 2,028,000 2,028,000 2,028,000 2,028,000 2,028,000 2,028,000 2,028,000 2,028,000 2,028,000 2,028,000 2,028,000 2,028,000 Energy Cost at economic cost N ($0.17/kWh) $ M x (0.17/.0.03) $29,468,708 11,408,500 11,408,500 11,408,500 11,408,500 11,408,500 11,408,500 11,408,500 11,408,500 11,408,500 11,408,500 11,408,500 11,408,500 11,408,500 11,408,500 11,408,500 NPV (at 10% discount rate) Capex + Opex ( excluding energy N cost) $ H+L $104,873,858 2,084,000 2,084,000 15,124,000 11,034,000 2,084,000 2,084,000 2,084,000 2,084,000 2,084,000 2,084,000 18,724,000 18,724,000 15,124,000 13,124,000 2,084,000 Capex + Opex (including energy O cost at tariff) $ H+L+M $110,112,281 4,112,000 4,112,000 17,152,000 13,062,000 4,112,000 4,112,000 4,112,000 4,112,000 4,112,000 4,112,000 20,752,000 20,752,000 17,152,000 15,152,000 4,112,000 Capex + Opex (including energy P cost at economic cost) $ H+L+N $134,342,566 13,492,500 13,492,500 26,532,500 22,442,500 13,492,500 13,492,500 13,492,500 13,492,500 13,492,500 13,492,500 30,132,500 30,132,500 26,532,500 24,532,500 13,492,500 Economic Internal Rate of Return Q Benefit of Supplying Water $ $499,935,320 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 R EIRR (with energy cost at tariff) % Q-O 35% 136,317,128 136,317,128 123,277,128 127,367,128 136,317,128 136,317,128 136,317,128 136,317,128 136,317,128 136,317,128 119,677,128 119,677,128 123,277,128 125,277,128 136,317,128 EIRR (with energy cost at S economic cost) % Q -P 34% 126,936,628 126,936,628 113,896,628 117,986,628 126,936,628 126,936,628 126,936,628 126,936,628 126,936,628 126,936,628 110,296,628 110,296,628 113,896,628 115,896,628 126,936,628 Cost of New Water Source - Walkers Ferry Capex (DWS Component) T Dams $ 50,000 - - - - 50,000 - - - - 50,000 - - - - U Resettlement $ - - - - - - - - - - - - - - - V WTP $ - 1,010,000 4,050,000 1,010,000 - - - - - - - 1,010,000 - 1,010,000 4,050,000 W Pipelines +reservoirs+electric lines $ - - - - - - - - 15,560,000 15,560,000 15,560,000 - - - - X Pumping Stations $ - 2,150,000 3,990,000 1,780,000 - - - - - - - 2,150,000 - 1,780,000 3,310,000 Y Physical Contingencies $ - - - - - - - - - - - - - - - Z Engineering $ - - - - - - - - - - - - - - - AA Sum of Total Capex $ T+U+V+W+X+Y+Z $70,423,661 50,000 3,160,000 8,040,000 2,790,000 - 50,000 - - 15,560,000 15,560,000 15,610,000 3,160,000 - 2,790,000 7,360,000 OpEx (DWS Component) - excluding energy costs AB Chemicals $ 379,000 379,000 379,000 379,000 379,000 379,000 379,000 379,000 379,000 379,000 379,000 379,000 379,000 379,000 379,000 AC Annual Maintenance $ 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 1,247,000 AD Personnel $ 195,000 195,000 195,000 195,000 195,000 195,000 195,000 195,000 195,000 195,000 195,000 195,000 195,000 195,000 195,000 Sum of Total Opex - exluding AE energy costs $ AB+AC+AD $6,853,027 1,821,000 1,821,000 1,821,000 1,821,000 1,821,000 1,821,000 1,821,000 1,821,000 1,821,000 1,821,000 1,821,000 1,821,000 1,821,000 1,821,000 1,821,000 Energy AF Energy cost at tariff ($0.03/kWh) $ $10,217,178 3,315,000 3,315,000 3,315,000 3,315,000 3,315,000 3,315,000 3,315,000 3,315,000 3,315,000 3,315,000 3,315,000 3,315,000 3,315,000 3,315,000 3,315,000 Energy Cost at economic cost AG ($0.17/kWh) $ AF x (0.17/.0.03) $57,476,665 18,648,509 18,648,509 18,648,509 18,648,509 18,648,509 18,648,509 18,648,509 18,648,509 18,648,509 18,648,509 18,648,509 18,648,509 18,648,509 18,648,509 18,648,509 NPV (at 10% discount rate) Capex +Opex excluding energy AH cost) $ AA+ AD $77,276,689 1,871,000 4,981,000 9,861,000 4,611,000 1,821,000 1,871,000 1,821,000 1,821,000 17,381,000 17,381,000 17,431,000 4,981,000 1,821,000 4,611,000 9,181,000 Capex +Opex (including energy AI cost at tariff) $ AA + AD + AE $87,493,867 5,186,000 8,296,000 13,176,000 7,926,000 5,136,000 5,186,000 5,136,000 5,136,000 20,696,000 20,696,000 20,746,000 8,296,000 5,136,000 7,926,000 12,496,000 Capex +Opex (including energy AJ cost at economic cost) $ AA + AD + AF $134,753,354 20,519,509 23,629,509 28,509,509 23,259,509 20,469,509 20,519,509 20,469,509 20,469,509 36,029,509 36,029,509 36,079,509 23,629,509 20,469,509 23,259,509 27,829,509 Economic Internal Rate of Return AK Benefit of Supplying Water $ $530,035,218 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 140,429,128 AL EIRR (with energy cost at tariff) % AK - AI 50% 135,243,128 132,133,128 127,253,128 132,503,128 135,293,128 135,243,128 135,293,128 135,293,128 119,733,128 119,733,128 119,683,128 132,133,128 135,293,128 132,503,128 127,933,128 EIRR (with energy cost at AM economic cost) % AK- AJ 47% 119,909,618 116,799,618 111,919,618 117,169,618 119,959,618 119,909,618 119,959,618 119,959,618 104,399,618 104,399,618 104,349,618 116,799,618 119,959,618 117,169,618 112,599,618 Note: Mombezi - Makuwa begins operating in 2019. Walkers Ferry in 2018. Benefit of water supply begins the first year of operation. Walkers Ferry benefits begin a year before Mombezi-Makuwa 93 Appendix D WSS Sub-sector Definitions and Data Definition Population estimate Coverage estimates Urban Urban areas are those within the Water Boards’ Service In urban areas—areas in the Water Boards The population served with improved water in urban areas from Water Water Areas. Access to water includes piped water provided by Service Areas—the population is estimated to be Boards is estimated to be 1.6 million. A further 12 percent of the the Water Boards as well as estimates of access provided by 2.4 million in 2008.87 This figure comes from population are estimated to receive water from boreholes and protected boreholes and protected wells. Sogreah’s Feasibility Report for Lilongwe88 and wells, a percentage that falls to three percent by 2030 as Water Boards Blantyre89 and by the Water Boards for SRWB, networks are predicted to expand. The Water Boards’ coverage is CRWB and NRWB. The population projections estimated from figures in the Sogreah Feasibility studies for Lilongwe come from the Sogreah Feasibility studies for and Blantyre, figures from the NRWB and SRWB for coverage in their Lilongwe and Blantyre. For the Mzuzu and areas and the Census is used for CRWB. Urban Urban areas are those within the Water Boards’ Service Zomba the population projections were derived The population with access to improved sanitation in urban areas—the Sanitation Areas. The definition of improved sanitation is that used in from the Census.90 Estimates for the growth-rate population in Water Board Service Areas—is taken from the 2010 the Malawi Demographic and Health Survey 2010. At its in towns was estimated from the historical growth Demographic and Household Survey. most basic this is access to improved latrine with an rates of towns served by CRWB and SRWB. impermeable floor that is not shared with other households. It also includes flush toilets and others. Rural Rural areas are those outside the Water Boards Service The population in rural areas—areas outside of The population with access to improved water in rural areas is taken Water Areas. Access to water is from improved water sources.91 the Water Board Service Areas—is estimated to from the 2008 Census. be 10.5 million. This estimate is calculated by Rural Rural areas are those outside the Water Boards Service deducting the population in urban areas from the The population with access to improved sanitation in rural areasthe Sanitation Areas. The definition of the improved sanitation is that total population. The population growth is population outside of Water Board Service Areas—is taken from the used in the Malawi Demographic and Health Survey 2010 93 projected in line with projections for rural 2010 Demographic and Household Survey. that is access to improved latrine with an impermeable floor districts from the 2008 Census.92 that is not shared with other households. 87 2008 is the date of the most recent census and so the latest date for which figures on population are known. 88 Feasibility Studies and Preliminary Design for Lilongwe New Water Source, Updated Feasibility Study Report, July 2010, N° 1.32.0145 R10. 89 Blantyre New Water Source: Feasibility Study Report�, Sogreah. 90 2008 Population and Housing Census Results, National Statistical Office of Malawi, Government of Malawi. 91 An improved water source is defined as one that comes from a range of water sources including boreholes, protected wells and the Water Boards. The definition comes from WHO/UNICEF Joint Monitoring Programme for Water Supply and Sanitation in Malawi (updated March 2010). 92 2008 Population and Housing Census Results, National Statistical Office of Malawi, Government of Malawi. 93 2010 Malawi Demographic and Health Survey. 94 Schools The Schools backlog is for primary schools and uses figures The backlog of schools figure comes from the Number of schools with access to improved water and sufficient (backlog) from the 2008 School WASH Report. 2008 School WASH Report.94 number of latrines comes from the 2008 School WASH Report. 94 “Malawi School WASH 2008, A Status Report on Water, Sanitation and Hygiene in Primary Schools� Ministry of Education, Science & Technology, May 2 009. 95 Appendix E Will Prepaid Water Meters Work in Urban Areas in Malawi? Prepaid water meters manage the volume of water supplied to connections by only providing the amount that customers pay for. This technology, along with an accompanying management system, can help improve data gathering, increase collections where installed, reduce operating costs, and incorporate water demand management. Utilities in countries such as Uganda, South Africa, and Kenya, have introduced these meters with mixed success. Despite the advantages, relevant institutions like Water Boards, the Ministry responsible for Water Supply and Sanitation, and Development Partners, should carefully consider conditions that will affect the success of this technology before they invest in it. Lastly, based on some of the costs presented in this report it seems to make sense to use prepaid meters for communal water points, but a more thorough financial analysis should be conducted to determine if investment for individual residential connections should proceed. E.1 How do Prepaid Water Meters Work? A prepaid water meter controls the volume of water supplied by a connection, according to the amount the customer pays upfront. Meter users can generally purchase credit through a bank, ATM, cell phone banking, or credit card, but this varies depending on the system. After introducing the credit, the meter supplies the customer with water until credit is consumed, which triggers the valve to automatically close. The meter can have features like automatic meter reading (AMR) that measures the amount of water consumed by each connection. Other features can indicate where the system is leaking, signal when the meter has been tampered with (which automatically shuts off water supply), and even be programmed to allow for block tariffs and free water allowances. Table E.1: Prepaid Meters offered by Manufacturers below presents a sample of pre-paid meters offered by manufacturers, along with features and unit costs. Table E.1: Prepaid Meters offered by Manufacturers Manufacturer AMR Tamper Leak Block Billing Unit Comments Detection detection Tariff/Water Savings Cost Allowance (USD) TagMeter –     N/A95 Microprocessor measures flow and controls sensors, transponder Tags Intelligent read the meter, and data results are written on Tag and fed into Meter Management Software. Meter is powered with battery (five year (Namibia) lifespan), or hydropower optional feature. Very accurate (0.05 liter) system for Water Board to create effective water and cash flow management. Prepaid   $295- Sub-meters do not necessarily replace primary meter systems owned Meters – 30896 by the utility/municipality; but can be privately owned, or publicly Prepaid Sub- owned and privately managed. Utility still sends property monthly Meter(South bills, but allows the owner/manager to receive payment from tenants Africa) for the utilities used. Can request to replace primary meter with pre- paid meter as well. Battery life lasts 7 to 10 years. Consumer can see credit limit, meter status, battery statues, and input tokens, on display. Efteq –      $133- Efteq offers the intelligent water metering system: consists of Intelligent 14397 integrated meter and control valve, vending network, meter Meter management system, wireless communication between meters and (South management system, and ensures 100% collection where used. Also Africa) offers paperless post-pay system that lets customers accumulate debt and pay through vending network. Meter configurations include a water management device that controls daily consumption, standard prepayment meter, and post pay mode with settable credit limit (no billing it required). Also has air flow detection and correction. Battery powered (five year life). Source: TagMeter, accessed April 5, 2012, http://www.tagmeternamibia.com/. Prepaid Meters, accessed April 5, 2012, http://www.prepaidmeters.co.za/. Efteq effective technologies, accessed April 5, 2012 http://efteq.com/. 95 According to website, meters and spare parts are offered at a low cost, but costs were not provided on website and manufacturer did not respond. 96 Company offers two models. Cost of meter does not include tax (14percent in South Africa). 97 Basic meter costs (includes features mentioned in the table) is $156 but discount of about 15% is available for orders of 10,000 meters or more; discount brings cost down to $133. Even the most basic prepaid meters in the table above have automatic meter reading and tamper detection components. Additional features are optional, and are likely customized upon ordering meters. Though optional features may add to the unit cost of the meter, the additional benefits of the features may be well worthwhile. We offer a financial analysis in Section E.5, but a more in depth financial analysis could provide each Water Board with an idea of what makes sense for them if they decide to implement prepaid meters. E.2 Potential Benefits Potential benefits of prepaid meters include increased collections, avoided costs of disconnecting consumers that do not pay their bills, and avoided fees on behalf of consumers for reconnecting to the system. This technology also helps improve water demand management98, and decrease operating costs of manual meter readings and billing. Prepaid meters help increase collections where it is used, because consumers only receive the water they pay for. So, if the system is working properly, it should promise a high collections rate where used. Prepayment also avoids the need to disconnect customers for defaulting on payments because they will not receive more water until they pay for it; this in turn will avoid the reconnection cost. Improvement in water demand management is advertised as a benefit of the technology; because consumers pay for water upfront, and realize the cost of water, they are more likely to consider how much water they use. AMR technology that is built into prepaid meters allow utilities to save on costs associated with manual readings, such as personnel for reading meters, transportation costs, and losses from misreading meters. Lastly, a utility can save on the cost of billing customers with prepaid meters—the technology collects revenue upfront so there is no need to incur the cost of billing the customer. The main takeaway of this technology is that people consume what they pay. Water Utilities in Uganda, South Africa, and Kenya have installed prepaid meters in recent years; these cases are further discussed below. E.3 Where have prepaid meters been used in Africa? E.3.1 Uganda – Kampala Urban Poor Project The National Water and Sewerage Corporation (NWSC) in Uganda implemented prepaid water meters at public stand posts (PSPs) in efforts to improve water supply and sanitation services in poor, informal settlements in Kampala. The first project was completed in 2008, and a second followed shortly after. Funds were provided by the German Development Agency KfW, the African Water Facility (AFW), and the African Development Bank (AfDB).99 NWSC was strongly motivated to implement this technology because it discovered that vendors at PSPs would charge rates up to five times higher than the tariff. Additionally, vendors would fail to turn in collections to the utility.100 Failure to turn in arrears led the 98 “Meters were introduced [in Johannesburg] as an innovative water demand management tool to control consumption� http://www.globalwaterintel.com/archive/5/11/market-insight/ready-for-advanced-solutions.html (Warrington, 6). 99 National Water and Sewerage Company. Accessed April 6, 2012. http://www.nwsc.co.ug/affairs01.php. 100 7M Construction Magazine. "Kampala Urban Poor Water Supply and Sanitation Project by NWSC." (September 2010). Accessed April 6, 2012. http://www.7m-magazine.com/development/108-development/201-kampala-urban-poor- water-supply-and-sanitation-project-by-nwsc. 98 utility to disconnect PSPs that had in fact paid for their water. This resulted in poor access in these communities—customers could not afford the water and had limited access to supply. In this case, prepaid meters helped bypass the higher cost of water that the poor were paying, and also ensure that the Utility gained the collections from water actually consumed. In the long run, NWSC expects to reduce operating expenses where prepaid meters have been installed—60 percent of the service charge comes from meter reading, producing and delivering bills, and collection of payments. With prepaid systems, NWSC can reduce these costs by 90 percent.101 Another positive result is that the poor now pay at tariff, and supposedly there is an increased availability of water because PSPs can be accessed at all times not just when the vendor decides to operate it. E.3.2 South Africa Prepaid electricity meters had been working well in South Africa, and it seemed like a good idea to introduce the same technology for water. However, “people don’t really tamper with [electric meters] because they are afraid of getting an electric shock�102 whereas water meters do not pose the same threat and so were being tampered with. Given the technological features that prepaid meters can have, as presented in Table E.1: Prepaid Meters offered by Manufacturers, the problems encountered in South Africa can be avoided in the future. Tamper detection features not only notify the utility that a meter has been manipulated, but also automatically shuts off the water valve so that the connection will not supply water until the Utility reactivates it. Furthermore, the meters can be programmed to allow for block tariffs, free water allowances, change back between pre and post pay, and even have a lifeline flow (which continues to provide a small quantity of water after the credit is exhausted). E.3.3 Kenya The Kisumu Water and Sewerage Company (KIWASCO) in Kenya introduced prepaid water metering in 2010. A pilot project was launched in the Nyalenda slum, which has 50,000 people.103 Because of limited access to water, illegal and unmetered connections were a major problem in this slum. Low quality water coming from these connections was resold to the community at an expensive rate. The overall objectives of the project were to provide water supply service to Nyalenda, and improve quality of service at a more affordable price while reducing water losses that had resulted from un-metered and illegal connections. If the project works, the intention is to expand the project to other slums as well, contributing to NRW reduction, which according to KIWASCO is around 45 percent.104 Clearly, other Water Utilities have been using prepaid meters in attempts to control the water supplied, and also to allow consumers to pay for water at the price the utility charges and not some arbitrary third party supplier. Prepaid meters will likely help reduce NRW by 101 Ibid. 102 Global Water Intelligence. Accessed April 5, 2012. http://www.globalwaterintel.com/archive/4/4/general/emerging- markets-pleased-to-meter.html. 103 http://www.ambafrance-ke.org/IMG/pdf/27_-_Water_and_Sanitation_-_Kisumu-Nyalenda.pdf. Used TagMeter company in Namibia. 104 http://www.kiwasco.co.ke/news&events11.html. KIWASCO reports a large part of NRW is due to illegal and unmetered connections, but the entire NRW amount should not be contributed only to this. 99 decreasing the cost of supplying water, but will also help increase collections where these meters exist, because people will pay for the water upfront. E.4 Risks and Conditions for Success Prepaid meters have been used by various water utilities with the hope of increasing collections, reducing NRW, and essentially gaining better control of operations in areas of with poor management. Though installation of prepaid meters have had mixed results in the past, with careful consideration this technology could be successful in urban areas in Malawi. Some of the failures illustrated in the cases above, could be easily resolved by choosing features like tamper proof detection, which could detect any attempts to manipulate or vandalize meters. Another potentially beneficial feature is the programmed block tariff, free water allowance or lifeline flow; this option would make it possible to segment the market and install prepaid meters across communities with varying disposable income. Though some aspects of this technology increase the chances of success, the Water Boards and communities may have to contribute to make the technology work. For example, though prepaid meters can have a tamper proof feature, this should be complemented with laws that enforce punishment to criminals that attempt to establish illegal connections, or vandalize the property of the water utility. Another task the Water Boards should take responsibility for is ensuring that customers that use prepaid meters will actually receive the service they paid for by checking that meters are functioning well, and that the system does not have air in it. An intermittent water supply system can easily cause air, and even dirt and other foreign particles, to enter the water supply system, and the meter detects the activity as if water is being supplied to that connection when it is not.105 By closely monitoring that meters are functioning properly, and if possible investing in improving continuity of service, Water Boards could ensure that customers are receiving the quality of service they pay for. It is important that logistics related to prepaid meters, but not necessarily inherent in the technology are considered. The obvious complementary service for prepaid meters is the system that sells credit to customers, which they need to use for their prepaid meters. So, it is important to provide or make sure that locations that sell credit are readily accessible to customers. Credit can normally be purchased via a bank, ATMs, cell phone banking, credit cards, and cards bought at local stores. Customers should also have easy access to things needed to use credit service; for example, a bank account is needed for using an ATM, and a cell phone is needed for cell phone banking. Another investment that may be worthwhile is an education campaign to show users how the technology works, and becomes socially accepted. Lastly, investments in this technology should occur where it makes economic sense—such as where demand exists at the scale needed to recover investment —but also where institutions to manage the technology exist, like Utilities for piped systems. The following section includes a brief financial analysis that tests if it makes sense to use this technology in Water Board Service Areas in Malawi. E.5 Indicative Financial Analysis This technology is used for cost-recovery; however, investment costs vary greatly depending on the type of prepaid meter—our research has shown that prepaid meters can cost as little as $10 or more than $300 for individual connections, and from $300 to $500 for kiosk 105 http://www.wsp.org/wsp/sites/wsp.org/files/publications/Continuous_Water_Supply.pdf. 100 connections.106 The best cost estimate to use would be one provided directly by the manufacturer, for meters tailored with the features the Water Board prefers. Investment costs can be passed onto the consumer in the form of registration fees and service costs. When coupled with increased collections and decreased operating costs, investment costs can be quickly recovered. Table E.2 below, shows an example of the investment required to install this technology, as well as the payback period for individual connections and kiosks. Table E.2: Investing in Prepaid Meters for Residential Connections Item Units Calculations Value Source A Price of $ 133107 Efteq South African Prepaid Manufacturer. Referenced in Meter Table E.1 B Household cu. m/day 0.30 Sogreah for per capita consumption consumption per individual connection for Blantyre and NSO for people per household108 C Water tariff $/cu. m 0.88 Sogreah Blantyre Feasibility Study D Water $/year B x C x 365 95 Expenditure per Household E Collection % 82 Northern Regional Water Rate Board, 2010109 F Losses per $/year/connectio (1-E) x D 17 individual n connection G Payback years A/F 8 period H NPV of $ NPV of Meter 10111 Savings for Costs( A) – individual NPV of connections Losses per 106 Some manufacturers found on alibaba.com/showroom/prepaid-water-meter.html, advertise $10-30 per piece, but a minimum of 1,000 pieces must be ordered. A manufacturer in South Africa offers prepaid meters for individual connections at about $308 before tax. Efteq provided a cost of $300 per kiosk meter while a study for NWSC showed $488 per kiosk meter. 107 Personal communication with the manufacturer indicated that the unit cost is $156, but that about a 15% discount can be applied to orders of 10,000 or greater. The discounted value is $133. 108 66 liters per capita per day. 109 The only Water Board that provided collection rates. 101 Item Units Calculations Value Source connections (F)110 I EIRR of % 12 investment for individual connections J Cost of $ 488112 NWSC Pro-poor water Prepaid strategies paper113 Meter for Kiosk K Kiosk cu. m/day 6.25 Sogreah assumption for capita Consumption consumption for Blantyre and District Investment Plan for people per kiosk114 L Annual $/year E x F x 365 2,008 Expenditure per Kiosk M Losses per $/year/connectio (1-E) x J 361 kiosk n connection N Payback years H/K 1 period O NPV of $ NPV of Meter 2,305 Savings for Costs( J) – kiosk NPV of connections Losses per connections (M)115 P EIRR of % 285 investment for kiosk 111 NPV was calculated using a 10% discount rate. 110 Cash flow created by assuming investment of meter in year one($133), and constant losses per connection ($17) for 15 years (useful life of meter). These were discounted at 10%. 112 Cost is for a public water point that assumes will supply 150 people. It is not clear if this cost came from a per capita cost, in the case of Uganda would be $3.25, or if it is a fixed cost and so would mean a lower cost per capita in Malawi— 250 people per kiosk would mean $1.95 per capita. 113 Pro-poor water service strategies in developing countries: Promoting justice in Uganda’s urban project. University of Florida for NWSC. Table 1: Breakdown of unit capital costs. pg.16. http://warrington.ufl.edu/purc/purcdocs/papers/0807_Berg_Propoor_Water_Service.pdf. 114 Assumes 25 liters per capita per day and 250 people per kiosk connection. 115 Cash flow created by assuming investment of meter in year 1($488), and constant losses per connection ($361) for 15 years (useful life of meter). These were discounted at 10%. 102 Item Units Calculations Value Source connections Based on the unit cost of only prepaid meters it seems to make sense to install them at individual and kiosk connections—the rate of return is 12 percent for individual connections and 258 percent for kiosks. The payback period at the household level is relatively long for an average sized household (nine years) with a correspondingly low IRR of only 12 percent. This result is sensitive to the price of the meter (in our analysis the return drops below 10 percent when meter price is above $144). Further, it could make sense to install them in households with high consumption and poor payment history. For example, some estimates expect individual connection consumption to increase to an average of 135 liters per capita per day, in which case the payback period decreases to four years and the IRR increases to 36 percent (assuming all other assumptions stay the same).116 Meter costs will vary depending on the specifications of the meter ordered, but manufacturers provide costing to clients and so Water Utilities could look into this further for more tailored cost estimates. E.6 The Way Forward Apart from the meter costs presented in the financial analysis, additional costs for the management system and infrastructure replacements may apply, and so we recommend that a thorough financial analysis is conducted before investing in this technology. Relevant institutions should also take into account the conditions needed for the technology to succeed in reducing costs and increasing financial returns to the Water Boards, while providing access and improved service to consumers. Even where it makes financial sense to invest in prepaid meters, external conditions should be factored in to ensure that this technology is effective. 116 Feasibility Study for Lilongwe New Water Source pg. 27, Sogreah Consultants. 103 Appendix F Workshops Held in Malawi Over the course of this project, Castalia presented at two workshops in Malawi in March and April 2012. National Water Development Programme Task Force – Final Draft of WSIP On 27 and 28 of March, 2012, Castalia presented a draft of the Water Sector Investment Programme to the National Water Development Programme Task Force in Liwonde. The participants are listed in Table F.1. Participants included senior representatives from the Ministry responsible for Water and Sanitation, regional water officers, representatives from the NWDP PMU and the Water Boards. At the workshop Castalia presented each component of the WSIP in turn. For each component time was aside for discussion. Extensive feedback was provided on each aspect of the WSIP. This feedback contributed to a number of changes in the draft version of the WSIP. This included a revision of the targets that the WSIP achieves and changes to the institutional proposals in the WSIP. Table F.1: List of Participants at NWDP Task Force Name Designation Institution Mr S. Maweru Principal Secretary Ministry of Agriculture, Irrigation and Water Development Mr. D. Chione Director of Administration Ministry of Agriculture, Irrigation and Water Development Mrs. M. Kanjaye Director of Water Resources Ministry of Agriculture, Irrigation and Water Development Mr. M. Mpasa Director of Sanitation Ministry of Agriculture, Irrigation and Water Development Mrs. L. Maganga Director of Finance Ministry of Agriculture, Irrigation and Water Development Mr S. K. Mwanza Technical Expert Ministry of Agriculture, Irrigation and Water Development Ms. E. Mbalame Deputy Director Water Supply Ministry of Agriculture, Services OMME Irrigation and Water Development Mr. P. Kaluwa Chief Hydrologist Ministry of Agriculture, Irrigation and Water Development 104 Name Designation Institution Mr S. Matamula Regional Water Development Ministry of Agriculture, Officer (Central) Irrigation and Water Development Mr. F. Mtambo Regional Water Development Ministry of Agriculture, Officer (North) Irrigation and Water Development Ms Z. Uka Regional Water Development Ministry of Agriculture, Officer (South) Irrigation and Water Development Mr. R. Malata Chief Economist Ministry of Agriculture, Irrigation and Water Development Mr. J. Kumwenda Economist Ministry of Agriculture, Irrigation and Water Development Mr B. Chakachaka Principal Accountant Ministry of Agriculture, Irrigation and Water Development Mr. G. P. Kamwendo Controller Human Resources Ministry of Agriculture, Management and Development Irrigation and Water Development Mr. B. Katandika Chief Human Resources Ministry of Agriculture, Management Officer Irrigation and Water Development Mr. A. Namaona Deputy Director Ministry of Finance Mrs. N. Msowoya Assistant Director Ministry of Finance Prof Z. M. Programme Manager Project Management Unit Kasomekera Mr O.S Nkhoma Project Coordinator –ACGF Project Management Unit Mr. R.M. Champiti Project Coordinator –AfDB Project Management Unit Mr. H. Mhezuwa Project Coordinator –WASH Project Management Unit Mr. C. Maliseche Water Supply and Sanitation Project Management Unit Engineer Mr H. Chipungu Monitoring and Evaluation Project Management Unit Specialist Mr. A. Msendema Procurement Specialist Project Management Unit 105 Name Designation Institution Mr J. Kamvantope Procurement Specialist Project Management Unit Mrs. P. Kutengule Community Participation Specialist Project Management Unit Ms. R. Kachuma Water Resources Management Project Management Unit Specialist Mr. M. Chimaliza Sanitation and Hygiene Specialist Project Management Unit Mr. N. Namaliya Assistant Accountant Project Management Unit Mr.T. Mtegha Chief Executive Officer Northern Regional Water Board Mr. G. Gonani General Manager Lilongwe Water Board Mr M. Chizalema General Manager Eastern Region Water Board Mr P. D. Makonyola Representing Chief Executive Northern Regional Water Officer Board Mr A Chikuni Project Implementation Unit Lilongwe Water Board Manager Mr M. Nyangw’a Project Implementation unit Central Regional Water Manager Board Mr T. Kaitane Project Implementation Unit Blantyre Water Board Manager Mrs. J. Dias Project Implementation Unit Southern Regional Water Manager Board Mr. A. Chikuni Project Implementation Unit Lilongwe Water Board Manager Source: Aggie Fundani and Rhoda Chisuwo, MOAIWD. Joint Sector Review – Final WSIP The final version of the WSIP was presented at the Joint Sector Review held at the Capitol Hotel in Lilongwe on April 25 and 26, 2012. Table F.2: provides a list of people that attended the presentation during the Joint Sector Review. Over 140 participants were present, including representative from the Ministry responsible for Water and Sanitation, Water Boards, District Councils, Non-Government Organizations, and Donors. A number of comments were received which have been incorporated into the WSIP. This included additional discussion on the financial aspects of the WSIP and the development of an Action Plan. 106 Table F.2: List of Participants at Joint Sector Review No Name Designation Institution 1 Franci Mtambo RWDO MOAIWD 2 Benjamin Bisa Banda Principal Statistician NSO 3 Hon. D. Luka MP Parliament 4 R. Kafakoma Facilitator TSP 5 Z. Uka RWDO MOAIWD DWO 6 Edwin O.S. Mchirikizo DWO MOAIWD 7 Tamala Zembeni DWO MOAIWD 8 Aubrey Maoko DWO MOAIWD 9 Peter N. Moyo DWO MOAIWD 10 Humphrey K. Munthali DWO MOAIWD 11 Noxius B. Chiwanda DWO MOAIWD 12 Ephraim Chasiya Mbewe DWO MOAIWD 13 Edgar T. Phiri DWO MOAIWD 14 J.E. Mselela DWO MOAIWD 15 Waki M. Chungwa DWO MOAIWD 16 Boston Tambala DWO MOAIWD 17 Jacob C. Mkandawire DWO MOAIWD 18 Timothy Banda DWO MOAIWD 19 Aaron M. Chaponda DWO MOAIWD 20 ONANCES lUKE. Nyirenda DWO MOAIWD 25 Maevel Tibu DWO MOAIWD 26 Grant Nyali DWO MOAIWD 27 Aron Mapsere DWO MOAIWD Irrigation Officers 28 Bernard Siwombo SENIOR IRRIGATION Salima Irrigation Services WATER MANAGEMENT SPECIALIST 29 Esau Banisi Irrigation Officer Kasungu Irrigation Services 107 No Name Designation Institution 30 Sangwani M. Nkhosa Chief Irrigation Officer Machinga Irrigation Services 31 Anderson Mbozi Chief Irrigation Officer Blantyre Irrigation 32 John Fartin Bvutula Principal Irrigation Karonga Irrigation Officer Services 33 Tinkho Msimuko Mpezeni Chief Irrigation Officer Mzuzu Irrigation Services 34 Boniface Nthakomwa Senior Irrigation Officer Ngabu Irrigation Services 35 Charles Mwalabu Chief Irrigation Officer Lilongwe Irrigation Services Water User Associations 36 S.D.K. Kumwenda Chaiperson BOT Nkhamanga WUA 37 Jonathano D. Kamangira Water Users Association Salima Irrigation Office Specialist 38 Enerst Shadric Chirwa Chaiperson (Ntonda WUA) District Commissioners 39 Lawford T.L. Palani District Commissioner Thyolo District Council 40 Harry Njoka Chipeni Acting District Chitipa District Council Commissioner 42 Daniel M. BANDA Director of Dowa District Assembly Administration 43 Francis Chilimba M&E Officer Karonga District Council 44 Jack Kafoteka Ngulube District Commissioner Mulanje District Council 45 Sphiwe Mauwa District Commissioner Dedza District Council 46 Fred Movete District Commissioner Balaka District Council 47 Felix Mkandawire District Commissioner Chikhwawa District Council 48 G.T. Macheka District Commissioner Mchinji District Council 49 Yamikani Chitete District Commissioner Kasungu District Council Rep 50 Michael Chimbalanga District Commissioner Nkhatabay District Council 51 Moses Owen Chimphepo District Commissioner Mmbelwa District Council 52 Thom G. Zinga Director of Ntcheu District Council Administration 108 No Name Designation Institution 53 A.K. Phiri District Commissioner Salima District Council 54 Davies Chagona EDO Ntchisi District Council 55 Dominic C.C. Mwandira Director of Rumphi District Council Administration Chief 56 Chief Kaomba 57 Inkosi ya mkhosi M'mbelwa Paramount Chief M'mbelwa District Council 58 Inkosi Kwataine Chairperson (MPWAT) Mpira Water Trust Ministry of Agriculture, Irrigation, and Water Development Headquarters/Other Ministries 59 Sandram Maweru Principal Secretary MOAIWD 60 B.N.C. Gondwe Director of Water Supply MOAIWD Duncan Chione Director of MOAIWD 61 Administration 62 M.L. Maganga Director of Finance MOAIWD Geofrey C. Mamba Director Irrigation MOAIWD 63 Services M.B. Kanjaye Director of Water MOAIWD 64 Resources T.S.W. Mkandawire Deputy Director Water MOAIWD 65 Supply Winston Sataya Deputy Director of MOAIWD 66 Irrigation 67 Crosby Mphande Irrigation Engineer IRLAD Project 68 John Kumwenda Chief Civil Engineer MOAIWD 69 M.G. Mpasa Director of Sanitation & h MOAIWD 70 PWR Kaluwa Chief Hydrologist MOAIWD 71 W.P.C. Chipeta CWRDO MOAIWD 72 P.J. Phiri DD/WQ MOAIWD 73 Mac Pherson G.M. Nkhata PHG RO MOAIWD 74 Steve Mwanza Technical Expert MOAIWD 109 No Name Designation Institution 75 Zachary M. Kasomekera Programme Manager NWDP 76 Henri Njoloma (PHD) WRDO MOAIWD 77 R.F. Malata Chief Economist MOAIWD 78 G.P. Kamwendo CHRMD MOAIWD 79 Mike Msonko HRPO MOAIWD 80 C.M. Singo Undersecretary MOAIWD 81 T. Kananji Systems Analyst MOAIWD Mtende Kanyika Systems MOAIWD 82 Anlyst/Programmer 83 Mphatso Kadzitaye Economist MOAIWD 84 Mada S. Njolomole Statistician MOAIWD 85 Toney H. Nyasulu Hg RO MOAIWD 86 Emmanuel Chiundira Hydrologist MOAIWD 87 Gomezgani Ngwira Economist MOAIWD Mike Chilimadzi CBM Coordinator -RWD MOAIWD 88 ( C) 89 Joseph Chisenga IRLAD Project 90 Martha Chizimba Principal Economist Department of Irrigation Oswald K. Mwamsamali Chief Water Resources MOAIWD 91 Officer 92 James Daire Kumwenda Economist MOAIWD 93 Edith KunJE Economist MOAIWD Dr. Golden Msilimba Associates Professor- Mzuzu University 94 Director Sheila Karwenje Lecture in Irrigation Natural Resources 95 Technology College Evance Chaima Lecture in Irrigation Natural Resources 96 Technology College 97 Nelly Sabola Inan/Economist Development Planning Tamara Mughogho Economist Department of 98 Development Planning 99 Astine Owen Luhanga PAO Information 100 Young Samanyika PEHO HEALTH 110 No Name Designation Institution Donors Benson Bumbe Nkhoma Senior Water & Sanitation AFDB/WB 101 Engineer 102 Leula Smith Senior Program Manager Ausaid 103 James Mambulu WASH Advisor DFID + Ausaid Wellington Mitole Programme Manager, WaterAID 104 urban 105 A.C. Kudzala Wash Specialist UNICEF Phaniso Kaluwa Programme Manager, WaterAID 106 Policy and Advocacy Michael Webster SR Water and Sanitation World Bank 107 Specialist 108 Wellington R.G. Mandowa Chairperson Blantyre Water Board Henri Bakuwa Director of Finance & Blantyre Water Board 109 Administration Eng. Marting Chizalema Chief Executive Officer Southern Region Water 110 Board 111 Gabriel M. Gonani General Manager Lilongwe Water BARD Gift D. Sageme Director Technical Central Region Water 112 Services Board Patrick Makonyola Chief Executive Officer Central Region Water 114 Board 115 Degabriel Joseph Leemans Cecile Programme Manager Delegation of the 116 Infrasture European Union 117 John Pinfold Chief WASH UNICEF Elias Chimulambe STC Sanitation & World Bank 118 Hygiene 119 Maxwell Samuel Chiputula Project Manager, Wash Concern Universal 120 Mercy Masoo Country Representative Water AID 121 N. Mwafulirwa Senior Program Officer JICA NGOs 122 R.K. Tembenu Malawi Fresh Water 123 K.W. Chisale Programme Manager Project 111 No Name Designation Institution Foundation for Irrigation Water Resources and Sustainable 124 Dumisani Siwinda Engineer Development (FISD) Foundation for Irrigation Training Program and Sustainable 125 Kondwani C. Nanchungwa Director Development (FISD) Marketing /Program St John Ambulance 126 Rodney Chiwengo Officer Malawi 127 W. Ngalonde Officer Water for People Natural Resources 128 Peter Kabambe Senior Lecture College National Coordinator, 129 Richman Kalua WASH Plan International Monitoring and World Vision 130 Charles Chimombo Evaluation Coordinator International Engineers Without 131 Owen Scott Programme Officer Borders Canada Engineers Without 132 Alyssa Lindysay Program Director Borders Canada 133 Raymond Mwenitete Policy Analyst CISANET 134 Kate Harawa Country Director Water for People 135 Ngabaghila Chatatata National Coordinator WES NETWORK 136 Norah Mwamadi Project Officer FAO Fresh water Project 137 Geoffrey Nkhoma Project Officer Blantyre 138 Dayan Mitumbili (ESQ) Chief Executive Officer DSPV Chemicals Limited 139 Dr. Judith Kamoto Board Chairperson WES NETWORK 140 Evans E. Msiska Director of Generation ESCOM Limited 141 Duncan Mhlanga Consultant Delta Partnership Ltd Source: Aggie Fundani and Rhoda Chisuwo, MOAIWD. 112 Appendix G Projects in the Sector Funded and unfunded projects for urban and rural, water supply and sanitation are presented in this Appendix. G.1 Funded Projects for Urban and Rural, Water Supply and Sanitation This section shows projects that received funding, and that will most likely be implemented in the current plan period (2012-2015). These have been incorporated into the investment plan presented. Table G.1 below, lists funded urban water supply projects according to each Water Board. Table G.1: Complete List of Funded Urban Water Supply Projects Project Project Name Estimated Cost Beneficiaries Cost per Capita Description of Project ID (USD Equivalent) (Individuals) (USD/capita) BLANTYRE WATER BOARD A020 Rehabilitation of Walker's 4,000,000 150,000 27 Improvement of Walker's Ferry treatment works by increasing Ferry Treatment Plant capacity of treatment plant from 78,000 m3 to 96,000 m3. NWDP Progress Report: Indicates that 105,000 m3 will not be achieved. Currently work is being done under EIB. A142 Chapima Heights 565,088 5,000 113 Supply water to 1,000 plots that are being developed. Project co- funded with Press Properties Ltd. Extend water supply service to new areas being developed. A018 Construction and 9,200,000 Improve pressures in high upland areas by construction of pipeline supervision of three construction for reservoir. Some resources for construction storage reservoirs supervision and others for consulting service. Reservoirs at Kameza, Chilobwe, and Chigumula. A019 Rehabilitation and 7,820,000 Replacement of pumps at Chileka pumping station. BWB water renewal of Chileka supply investments and project report say it involved repairing pumping station electrical transformers, pumps, and motor at two main pumpingg stations. Allowed for increased water production and transmission due to shortened breakdown time. This will enable transfer for additional quantity of water to Blantyre city through walker's ferry. There will be need to increase pumping capacity to match treatment works expansion. A140 BWB-Prepaid metering 30,060 Immediate phase is a pilot (my 5M). Aims to improve collection efficiency and enable board to manage projects through increased funds that they will put towards service delivery and increased coverage. Project Project Name Estimated Cost Beneficiaries Cost per Capita Description of Project ID (USD Equivalent) (Individuals) (USD/capita) A141 BCA Mavuto Branch 173,401 Lay reticulation for newly developed plots so future residents have MHC. access to water supply services. Extend water supply service to new areas being developed. A145 Mudi Rehabilitation 2,000,000 Works would be undertaken with funding from current IDA. Works. Improve water supply and have impact on people living in Blantyre as more than 35% of served population rarely gets water services 24 hours. NWDP Progress Report says that the design report and draft bidding documents were submitted to the Bank in May 2011 for review. Bank granted a conditional no objection for works. Board responded to Bank comments, and bidding process is expected to commence by mid October 2011. Will improve water supply (continuity of service). A148 Kanjedza Lands. 787,572 The project is co-financed by Ministry of Lands to supply water to over 1,000 plots that would be developed in Kanjedza. Extend water supply service to new areas being developed. A155 CCODE Projects in 180,360 BWB is planning to supply water to project where number of plots Machinjiri. are going to be formed. Jointly funded by BWB and CCODE. Extend water supply service to new areas being developed. A156 Mpemba DC. 159,879 Extend service to several plots that would be developed in area. Jointly financed with Blantyre District Council. Extend water supply service to new areas being developed. LILONGWE WATER BOARD A027 Supply and installation of 850,000 600,000 1 Renewal of convey valves for Kamazu Dam 2 and Bunda Plant and penstock (for TW2), Cone piezometers at KD 1. Supply and installation of penstock for TW2, Valves for Kamuzu Dam Cone Valves for Kamuzu Dam 2 and Bunda Plant, and 2 and Bunda Plant, and Piezometers for Kamuzu Dam 1 to reduce NRW. Lilongwe Piezometers for KD 1 to Corporate Plan 2008-2013 :TW2 high lift station pumps water reduce NRW. simultaneously both to Mtunthama and Chayamba. Comprises of 4 no. high lift pump sets each with design capacity of 1,147 m3/hour. Three pumps can be run simultaneously with one pump serving as standby. Maximum achievable flow of three pumps is 2,937 m3/hour. EIB Project shortfall to accomplish objective. Otherwise scope will be reduced. Project Project Name Estimated Cost Beneficiaries Cost per Capita Description of Project ID (USD Equivalent) (Individuals) (USD/capita) A023 Chikungu-Construction of 8,150,000 150,000 54 Construction of Area 9 tower and pumping mains: This sub 2000m3 area 9 tower and component involves the construction of 2000m3 RC tower at area 5000 m3 storage tank; 9; construction of 5,000m3 RC GL tank; construction of operators Supply of pipes and building, fencing, and landscaping. Supervision will be carried out fitting for Chikungu and by consultants. Bidding documents will be finalized soon and the area 9 water supplies. works will be tendered out. A012 Construction of 100 300,000 Design and bid documents are ready. Supervision will be carried kiosks for Chikungu out in-house, by LWB staff. Tendering could commence as soon as development project. funds are approved. A026 Procurement of materials 1,682,833 Procurement of materials for TW1 rehabilitation, for Mwenda. for TW1 rehabilitation. Lilongwe Corporate Plan 2008-2013: TW1 high lift station pumps water to Mwenda (southern part of Lilongwe City). The station comprises of pump sets in three sections A, B, C with difference capacities. A032 Supply 2 pump sets each 700,000 Supply of 2 No. Pump Sets at booster station to pump water to for Mtunhama and 2000m. Installation by supplier. Lilongwe Corporate Plan 2008- Chikungu (4 total). 2012: Mtunthama booster station comprises of 3 pump sets. One big pump design flow of 396m3/hr and a pumping head of 54m and two identical smaller pumps with a design flow of 248m3/hr and a head of 54m. The mode of operation is such that 2 pumps are on duty at one particular time, and the other on standby. NORTHERN REGIONAL WATER BOARD A091 Supply of water meters, 889,000 20,000 44 Supply of water meters for Mzuzu, Chitipa, Karonga, Chilumba, and pipes for Mzuzu, Rumphi, Ekwendi, Mzimba, Nkhata Bay and Chintheche Water Chitipa, Karonga, Supply. Chilumba, Rumphi, Ekwendi, Mzimba, Nkhata Bay, and Chintheche Water Supply. A008 Construction supervision 2,500,000 40,000 63 Part of New Water Source for Mzimba—New water intake, 10 km and construction of new of main pipe, water supply improved from 15 to 22 hrs; current water intake weir and intake not reliable in dry season. Construct concrete intake weir transmission pipe for across river and a 12km long 315mm diameter pipeline will be Mzimba; and uprading installed to convey water from river to treatment plant. Design for Project Project Name Estimated Cost Beneficiaries Cost per Capita Description of Project ID (USD Equivalent) (Individuals) (USD/capita) and expansion of Mzimba works available. Construction of project will provide potable water water supply system. for additional 40,000 people. EIA will also be conducted. According to NWDP Progress Report, environmental and social Impact Assessment contract and associated water transmission pipeline was signed in July 2011. Assignment was supposed to be completed in October 2011. World Bank has provided "no objection" for construction of project and associated water transmission pipeline for Mzimba water supply system. Advertisement for works awaits completion of ESIA report. A016 Water Supply 18,550,072 160,000 116 Consultancy service for design of project "distribution pipelines for Consultancy/Supervision, Mzuzu town". Construction supervision of upgrading and and Distribution pipelines expansion works for Mzuzu distribution system. NWDP Progress for Mzuzu Town. Report says bids received by September 2011 deadline. Bids were evaluated and evaluation report is currently being finalized. Then report will be submitted to World Bank's "No Objection". A007 Construction, and 2,590,000 4,000 648 Construction supervision of upgrading and expansion works for construction supervision Songwe water supply scheme. Market center with government of Songwe Water Supply institutions and small businesses. Involves drilling and Scheme and capacity development of boreholes, construction of storage tanks, building of communities installation of water treatment equipment and pipelines. 4,000 at Songwe. beneficiaries of potable water. Water supply engineer submitted revised SEIA report in July 2010 and was accepted. Consultant also submitted a detailed design report which was accepted. NRWB PIU is still carrying out financial analysis of project and preparing business plans. Upgrading and expansion works for Songwe water supply scheme. NWDP Progress report says that bids received to undertake the drilling of three boreholes were received, evaluated, and submitted to Office of Director for Public Procurement for approval. Response has yet to be given. World Bank provided "no objection" on bidding documents for the rest of the works for constructing Songwe water supply system. Advertisement for works will begin after drilling and development of boreholes has been completed. A099 Capacity building of 350,000 131 2,672 Capacity building of NRWB staff to manage upgraded and NRWB staff to manage expanded water supply systems. NRWB says that training of Project Project Name Estimated Cost Beneficiaries Cost per Capita Description of Project ID (USD Equivalent) (Individuals) (USD/capita) upgraded and expanded members of WUA and CWP is in progress in Chizumulu island. water supply systems. Presentation of messages to communities about importance of potable water, sanitation facilities, and HIV & AIDS issues is ongoing. Preparation of radio and video documentaries on construction works for Chizumulu water supply system is also underway. A169 Supply and Installation of 0 NRWB is in the process of engaging a supplier for the generators. 2 diesel generators for The process has taken long because contract negotiation failed with Chitipa Boma. the supplier who was identified initially. NWDP Progress report says that negotiation of contract is dependent on assurance from lowest bidder, that NRWB will pay bidder's supplier directly (in U$), for the generators. NRWB has sent a request for "no objection" to World Bank. Fresh quotations will be sources in Oct- Dec 2011 quarter. CENTRAL REGIONAL WATER BOARD A006 Construction/expansion 2,900,000 70,000 41 7 boreholes, pumps, pump stations, 8km transmission pipeline, 18 of Nkhotakota Water km distribution pipeline. NWDP Progress report: designs are under Supply. final internal review before submission to Bank to start recruitment process for contractor. Designs have been completed. Construction of Nkhotakota Water Supply Rehabilitation, Upgrading and Expansion Works. Detailed designs and bid documents and scope will be submitted to Bank for approval. No objection to commence tendering process given in this period. Tendering will commence. A002 Rehabilitation and 2,830,000 40,000 71 Construction of Mponela Water Supply Rehabilitation, Upgrading expansion of Mponela and expansion works. NWDP AF: Investment for laying 20 km Water Supply. dist. Pipeline, and installation of one water tank of 350m3. Benefits 20,987 people. NWDP Progress report indicates that works contract was signed in May 2011 for U$ 1,899,000 (Contractor is Aquabor International). Works started in May 2011 and is at 52% completion rate. Designs and bid documents for IDA additional financing requirement were submitted to Bank in September 2011. Designs have already been completed according to NWDP excel file. A022 Expansion Salima 7,570,000 50,000 151 Construction and Expansion of Salima Lakeshore Water Supply Project Project Name Estimated Cost Beneficiaries Cost per Capita Description of Project ID (USD Equivalent) (Individuals) (USD/capita) Lakeshore Water Supply Schemes: New intake structure + 3 structures, treatment plant 1.2 Scheme. km pumping main, 14 transmission pipelines, storage tanks, 30 km distribution network, 14 new communal water points, 12 rehab communal water points, etc. NWDP Progress Report: Design and financial analysis, together with bid documents 1st phase (U$ 2 million), were submitted to the Bank in May 2011. Comments from Bank have since been incorporated in designs and submitted. ToRs for recruitment of Consultant for Construction Supervision will be reviewed together with submitted designs. A034 Rehabilitation and 3,770,000 12,700 297 Construction of Kasungu Water Supply Rehabilitation, Upgrading expansion of Kasungu and Expansion Works: Construction of 11 km distribution pipeline Water Supply Project. supply and install 350m3 storage tank and 19 community water points. Estimated 12,700 beneficiaries of low income areas around casing town. NWDP Progress Report says works commenced in April 2011 by contractor (Proprietary Manufacturing and Engineering-Western Construction JV). Contract for construction supervision was signed in January. Consultant is Metaferia Consulting Engineers of Ethiopia, in association with Hydroconsult of Malawi. Additional Financing is on hold to observe progress and performance of contractor. Designs have been completed. A149 Kochilira-Kamwendo. 737,000 Draft designs completed August 2010; final approved July 2011. Bid submitted in October 2011. NWDP Progress Report: final designs and tender documents preparation were submitted to Bank in July 2011. Bank approved float tender in September. Bid submission are in October 2011. A153 Mitundu & Linthipe 390,613 100m3 tanks were installed in each market center in December (MCs). 2009. Contracts for boreholes awarded in July 2010. Two boreholes drilled in each center and wait to be equipped. Contract for installing reticulation was signed in April 2011. Works started in May 2011 and was expected to be completed in October 2011, but is delayed. Contract for completing installation of system for both centers was signed in April 2011. Work began in May 2011, work should have been completed by October 2011. Progress in Mitundi and Linthipe is approximate 75% and 60% respectively. Contractor Project Project Name Estimated Cost Beneficiaries Cost per Capita Description of Project ID (USD Equivalent) (Individuals) (USD/capita) is Grimo Contractors (local). Installation of pipes and fittings for both centers to be done between Oct-Dec 2011. SOUTHERN REGIONAL WATER BOARD A176 Feasibility Studies and 400,000 26,733 15 The raw water surface will be for multi-purpose use. The preliminary designs for population presented is for towns under SRWB jurisdiction. raw surface water sources. A013 Construction Supervision 4,200,000 220,000 19 Construction Nsanje Water Supply Project: drill and equip and Construction of boreholes, 7km transmission lines, 2 concrete reservoirs, 32.5 km Nsanje Water Supply distribution pipelines, 20 new communal water points (CWPs), Scheme. rehab and upgrade 21 CWPs. USD 4M for works and USD.2M for construction supervision. According to info provided by SRWB, Final detailed design report is awaited from consultant after SRWB commented. All detailed designs have been completed. A154 Construction of Lirangwe 270,000 7,620 35 Supervising consultant is Eng. Owen Kankhulungo at MK Market Center. 6,240,000. Mr. Ephrone Mwenitete, is an individual consultant for Miseu Folo at a price of MK 5,610,000. The contractor for Lirangwe is Hema Construction Civils & Building Contractors at a price of MK 40,735,500. Contractor mobilized in February 2011 for a period of 4 months. Works completed and waiting for ESCOM connection. Local Utility operators were recruited. . A080 Construction supervision 100,000 2,000 50 Construction supervision of Neno water supply : Designs, tender of Neno water supply. documents, and technical specifications for Neno Market Centre were completed in July 2011. No obligation to tender from MAIWD received in April 2011. Revised design report resubmitted to PMU after incorporating comments from WB. Contract is in post review; comments were addressed and resubmitted to PMU to forward to Bank. Approval from IPC to notify shortlisted consultant was received in August 2011. Reviewing technical and financial proposal from Mr. Tutule Msukwa under progress to be completed October 2011. Proposals are under review though contract signing will pend waiting for works contract. A150 Construction of Miseu 450,000 8,000 56 Contract for Miseu Folo awarded to Munshi & Nephew JV, Folo Market Center. contract price MK 67,981,180. Works completed in September 2011 and awaiting for ESCOM connection. Local Utility operators Project Project Name Estimated Cost Beneficiaries Cost per Capita Description of Project ID (USD Equivalent) (Individuals) (USD/capita) were recruited .According to NWDP Progress Report (July-Sept 2001), construction of buildings and pipe networks have been completed, and boreholes and service reservoirs are at 80%. A005 Upgrading of Zomba 5,613,800 92,507 61 Zomba and Mangochi Water Supply Project will be executed as Water Supply. one contract although there are different financiers. Recruitment of contractor is almost finalized. Works to commence in September 2011. A146 Construction of Chididi, 1,400,000 22,458 62 Contractor Saifro Ltd & Unipumps Nigeria Ltd JV mobilized in Ntowe and Tengani May 2011 at price MK 157,293,485. Supervising Engineer is Market Centres. DDMA at contract price: MK 25,619, 305. Contract is for period of 10 months. A143 Construction of Jali, 2,700,000 26,675 101 Malbro International (CIVILS) engaged in April 2011 to construct Mayaka, and Chambe water supply and sanitation facilities for listed MC. Contract Market Centers. amount MK 400,233,858. The same consult hydroconsult will also supervise these centers. A147 Construction of Maldeco 1,300,000 12,819 101 Proprietary Manufacturing Engineering were engaged in June 2011 Market Center. for construction works for water supply and sanitation facilities for Maldeco Market Centre. Contract amount is MK 187, 400,000. Supervising engineer is hydroconsult. A015 Upgrading of Mangochi 3,000,000 17,634 170 Zomba and Mangochi Water supply project will be executed as one Water Supply Scheme. contract although there are different financiers. Recruitment of the contractor is almost finalized. Works will commence in early September. A081 Construction supervision 4,500,000 22,110 204 Construction of Balaka Water Supply will help with water supply and Construction of shortage by constructing boreholes, rehabilitating and extending, Balaka Water Supply transmission and distribution network, reservoirs, administrative Scheme. block, operational and supervision consultancy. New water sources are being proposed to supplement to Mpira Balaka Dam. Will also help water supply shortage and enhance system performance. Includes drilling and equipping boreholes and associated structures, Laying of 150mm diameter pumping main, supply and, installation of 2no. Tanks, Laying of extension pipelines at Balaka, Carry out new water connection. Project Project Name Estimated Cost Beneficiaries Cost per Capita Description of Project ID (USD Equivalent) (Individuals) (USD/capita) A014 Construction Supervision 7,138,674 24,460 292 To cover construction supervision costs of Mangochi Water supply and Construction of scheme. Supervising Consultant is SSI in association with Chapita Mangochi Water Supply Consultants at a contract price of U$480,233. Scheme, and new connections. The following table lists funded rural water supply projects. These have also been included in the investment plan. Table G.2: Funded Rural Water Supply Projects Project Project Name Estimated Cost Beneficiaries Cost per Capita Description of Project ID (USD Equivalent) (Individuals) A177 WASH - Develop and 5,454,021 940,000 6 Nationwide program that aims to increase access to safe drinking Rehabilitate drinking water sources, as well as sanitation facilities (with emphasis on water sources, and women and children). Works in primary schools and teaches Sanitation Marketing proper hygiene methods. Campaign. A046 Chikwawa East Bank 165,058 11,040 15 Construction of Chikwawa water supply. Rehabilitation and GFS. expansion of GFS—covers work contract expenses, materials, fittings, and accessories for rehabilitation and construction of system components. According to AM Oct/Nov 2011, the scheme has 4 water systems. The 4 schemes had intakes rehabbed, mainlines upgraded; 1 set of treatment works was rehabbed. The project had 350 taps, of which 6% were repaired. Works related to this project, pending, are construction of chambers for gate and air valves, pipe connections between treatment works, construction of river crossings on some main lines (i.e. under-bed and suspended and completion of tap unit rehabilitation). An estimate of $90,000 is required to complete rehabilitation of remaining treatment works (4 roughing and 2 slow sand filters). NWDP Progress report: contract is 98% complete. 269 water point committees have been formed. 35 committees trained. A047 Usisya GFS. 274,999 18,360 15 Rehabilitation of treatment works at Usisya-Nkhatabay. Rehabilitation of GFS—covers works contract expenses, materials, fitting, and accessories for rehabilitation and construction of system components. Schemes to be rehabilitated and extended in the second phase of the project. A043 Nkhamanga-Katizi GFS. 538,999 34,200 16 Rehabilitation of treatment works at Nkhamanga-Rumphi (Katizi new line). 90m3 tank has been built for Nkamanga scheme. Rehabilitation and expansion of GFS—covers works contract expenses, materials, fitting, and accessories for rehabilitation and construction of system components. 85% complete. A114 Strengthening of 12,160,559 625,000 19 Goal is to improve access to water supply in rural areas: Project Project Name Estimated Cost Beneficiaries Cost per Capita Description of Project ID (USD Equivalent) (Individuals) Decentralized Water Karonga(45,537), Rumphi(45,228), Nkhota- kota (93,752), Management Structures. Ntcheu(108,350), Ntchisi(69,721), Balaka(50,502), Chikwawa(104,807), Mangochi (179,496), Nsanje(42,488), Phalombe(42,184), Thyolo(192,492). Components: Awareness creating in local councils, community mobilization campaigns, rehab/maintain non-functional water points; construct new water facilities; assess capacity gaps ;conduct training for water point committees in local council; monitor and supervise facilities repair/maintenance/training sessions; monitor/evaluate local mgmt. structure in communities. Progress to date according to PSIP profile: 2,500 boreholes were assessed for rehabilitation or maintenance; all of them will be rehabilitated or maintained between November 2011- October 2012; water point committees will be established between December 2012- August 2013; Committees will be trained between October 2013- May 2015; All water points will be commissioned between July 2015- June 2016. A044 Ntonda GFS. 159,999 7,680 21 Rehabilitation and expansion of GFS—covers works contract expenses, materials, fitting, and accessories for rehabilitation and construction of system components. A059 Chapananga GFS. 1,144,999 49,320 23 Rehabilitation and expansion of GFS—covers works contract expenses, materials, fitting, and accessories for rehabilitation and construction of system components. Tender documents for goods for schemes developed and ready for advertising. According to NWDP Progress Report (July-Sept 2011), preliminary designs for scheme have been completed, and final design is in final stage. A117 Ground Water 2,404,800 100,000 24 Build 119 boreholes and rehabilitate 281 (400 boreholes total with Development & Mgmt. corresponding water point committees); benefitting 100,000 people Programme. total providing them with water supply and capacity to operate and maintain facilities; also includes procurement of equipment. Chitipa, Karonga, Mzimba, Nkata-Bay, Rumphi, Dedza, Dowa, Kasungu, Lilongwe, Mchinji, Nkhota-Nhkota, Ntcheu, Ntchisi, Salima, Balaka, Blantyre, Chikwawa, Chiradzulu, Machinga, Mangochi, Mulanje, Mwanza, Neno, Nsanje, Phalombe, Thyolo, Zomba—increase access to water supply in rural areas mainly through constructing boreholes and rehabilitation of 300-700 non- Project Project Name Estimated Cost Beneficiaries Cost per Capita Description of Project ID (USD Equivalent) (Individuals) productive boreholes. Project will contribute to reducing water- borne diseases through improved water supply facilities. Also will produce groundwater map (3 years) and will have a capacity building component (5 years). A041 Mpira-Balaka GFS. 1,239,999 49,800 25 Rehabilitation and expansion of GFS—covers works contract expenses, materials, fitting, and accessories for rehabilitation and construction of system components. AM Oct/Nov 2011: Works at main treatment plant are in progress. MoIWD staff and community upgraded lines, construct one under bed crossing, rehabilitated over 200 taps and constructed 50 additional taps. MoIWD established Trust in Balaka to oversee management. The tariff in place is not enough to sustain scheme operations. Need to hire Local Utility Operator, but will be difficult do due to limited financial resources. NWDP Progress Report: Contract offer withdrawn and works were re-advertised, bids have been evaluated and another contractor is yet to start works. A040 Mvula GFS. 1,107,999 27,600 40 Rehabilitation and expansion of GFS—covers works contract expenses, materials, fitting, and accessories for rehabilitation and construction of system components. AM Oct/Nov 2011: Works at main treatment plant are in progress. MoIWD staff and community upgraded lines, construct one under bed crossing, rehabilitated over 200 taps and constructed 50 additional taps. MoIWD established Trust in Balaka to oversee management. The tariff in place is not enough to sustain scheme operations. Need to hire Local Utility Operator, but will be difficult do due to limited financial resources. NWDP Progress Report: Contract offer withdrawn and works were re-advertised, bids have been evaluated and another contractor is yet to start works. A053 Ifumbo GFS. 409,999 7,800 53 Rehabilitation of Ifumbo piped water supply system in Chitipa: Rehabilitation and expansion of GFS - covers work contract expenses, materials, fitting, and accessories for rehabilitation and construction of system components. NWDP Progress Report mentions that survey was done for this scheme, and that designs are being completed by an engineer. A048 Chinukha GFS. 339,999 4,800 71 Rehabilitation of Chinukha piped water supply system in Chitipa: Project Project Name Estimated Cost Beneficiaries Cost per Capita Description of Project ID (USD Equivalent) (Individuals) Rehabilitation and expansion of GFS—covers work contract expenses, materials, fitting, and accessories for rehabilitation and construction of system components. NWDP Progress Report mentions that survey was done for this scheme, and that designs are been are being completed by an engineer A042 Misuku GFS. 1,192,999 13,920 86 Rehabilitation and expansion of GFS—covers work contract expenses, materials, fitting, and accessories for rehabilitation and construction of system components. Tender documents for goods have been developed and ready for advertising. A045 Lizulu GFS. 229,999 2,400 96 Lizulu Scheme-Ntcheu-Construction of treatment works. Rehabilitation and expansion of GFS—covers work contract expenses, materials, fitting, and accessories for rehabilitation and construction of system components. NWDP Progress Report says that detailed designs for treatment works have been completed and have been submitted for further checking and approval. Table G.3below, lists funded sanitation projects that will be developed in urban and rural areas. An additional category is included in this table to indicate whether the project is urban or rural. If one of the Water Boards is listed under the “Implementing Agency� column that indicates it is an urban sanitation project. If the MoAIWD (the Ministry Responsible for Water Supply and Sanitation) is listed, than this is a rural sanitation project. Table G.3: Funded Urban and Rural Sanitation Projects Project Project Name Estimated Cost Implementing Beneficiaries Cost per Description ID (USD Equivalent) Agency (Individuals) Capita A180 WASH - 3,385,255 MoAIWD 1,000,000 3 Nationwide program that aims to increase access to safe drinking Hygiene and water sources, as well as sanitation facilities (with emphasis on Sanitation women and children). Works in primary schools and teaches Practices. proper hygiene methods. A001 Investments 800,000 BWB 21,390 37 Continue implementation of sanitation marketing under NWDP II: under BWB aim to increase adoption of latrine options, hand washing, use of and LWB - safe drinking water, and clean latrines. -Same campaign carried out Sanitation by BWB and LWB—estimated 4,650 beneficiaries. Combined. Planning and NWDP Progress Report says that a Bids Reevaluation Report Marketing. (BER) was submitted to Bank after IPC approval. Bank rejected this BER, and asked to re-issue bidding documents. The new deadline is Oct 12, 2011. Contract would be for 6 months. The table below shows school projects that have been funded. Table G.4: Funded Projects for Schools Project Project Estimated Cost Status of Beneficiaries Cost per Description of Project ID Name (USD Equivalent) Funding (Schools) School A003 School 1,000,000 Funded 63 15,873 Construction of improved latrines urinal blocks, and hand washing Sanitation in facilities, construction supervision of promotion of hygiene. Dedza. A179 WASH- Safe 188,070 Funded 300 627 Nationwide program that aims to increase access to safe drinking sanitation water sources, as well as sanitation facilities (with emphasis on facilities in women and children). Works in primary schools and teaches schools. proper hygiene methods. G.2 Unfunded Projects for Urban and Rural Water Supply and Sanitation This section lists projects for urban and rural water supply and sanitation that have not yet received funding. Projects are listed from lowest cost per capita (most cost effective), to highest cost per capita (least cost effective). Cost per capita could provide a realistic indication of how much the project will achieve in terms of contributing to increases in access to water supply and sanitation. However, investment decisions should take into account other considerations as well, such as the particular benefits the project will have, the capacity of institution to implement the project, and equity. Table G.5: Unfunded Urban Water Supply Projects Project ID Project Name Estimated Status of Beneficiaries Cost per Capita Description of Project Cost (USD Funding (Individuals) (USD/capita) Equivalent) LILONGWE WATER BOARD A024 Procurement of meters 300,000 Not 3,000 100 Procurement of meters and connection fittings in new areas and connection fittings Funded of 25, 49, and Chikungu. in new areas of 25, 49 and Chikungu. NORTHERN REGIONAL WATER BOARD A123 Repair & replacement of 240,000 Not 30,000 8 malfunctioning meters. Funded A119 Rehabilitate water closet 1,000,000 Not 40,000 25 systems in public Funded schools. B016 Water Supply 4,600,000 Component 160,000 29 Upgrading and expansion works for Mzuzu water supply Consultancy/Supervision Not distribution system. NWDP progress report indicates and Distribution Funded Submitted bids are under review. Supply and installation of pipelines for Mzuzu app. 95 km of pipeline. Expected additional beneficiaries of Town. 28,000 with continuity of 20-23 hrs. of supply. 28,000 beneficiaries. Follow up to earlier works in Mzuzu in order to extend supply to low income areas. A097 Karonga Intake structure 1,100,000 Not 30,000 37 and Suction Pipe Funded Construction. A121 NRWB Prepaid metering 44,370 Not 1,000 44 system for prioritized Funded institutions. Project ID Project Name Estimated Status of Beneficiaries Cost per Capita Description of Project Cost (USD Funding (Individuals) (USD/capita) Equivalent) B091 Supply of water meters, 900,000 Component 20,000 45 Supply of water meters for Mzuzu, Chitipa, Karonga, and pipes for Mzuzu, Not Chilumba, Rumphi, Ekwendi, Mzimba, Nkhata Bay, and Chitipa, Karonga, Funded Chintheche Water Supply. Chilumba, Rumphi, Ekwendi, Mzimba, Nkhata Bay and Chintheche Water Supply. A122 Individual metering for 285,000 Not 5,000 57 security forces. Funded A120 Develop laboratory in 35,000,000 Not 359,000 97 Mzimba and Karonga. Funded A093 Design, construction 9,200,000 Not 90,000 102 Design and construction supervision of sewerage system for supervision, and Funded Mzuzu. construction of sewerage system for Mzuzu. A105 Design, construction 7,153,750 Not 47,350 151 Design and construction supervision for Wovwe, Nyungwe supervision, Funded and Ngala water supply systems. construction, and capacity building for communities at of Wovwe, Nyungwe, and Ngala water supply systems. A118 Develop investment 3,520,000 Not 20,000 176 appraisals for at least 4 Funded potential market centers, and develop potential market centers. A103 Design, construction 7,656,750 Not 32,554 235 Design and construction supervision for Hewe and supervision, Funded Livingstonia water supply systems. construction, and capacity building for Project ID Project Name Estimated Status of Beneficiaries Cost per Capita Description of Project Cost (USD Funding (Individuals) (USD/capita) Equivalent) communities at Hewe and Livingstonia water supply systems. A094 Design, construction 13,800,000 Not 50,000 276 Detailed design and supervision of Karonga and Mzimba. supervision, and Funded construction of Karonga and Mzimba. A101 Construction 4,263,750 Not 12,100 352 Construction supervision for Mpherembe and Embangweni supervision, Funded water supply systems. construction, and capacity building for communities at Mpherembe and Embangweni water supply systems. A096 Design, construction 11,500,000 Not 30,000 383 Design and construction supervision of upgrading and supervision, and Funded expansion works for Karonga. construction of upgrading and expansion works for Karonga. A104 Design, construction 11,692,500 Not 26,700 438 Design and construction supervision for Wenya, Chisenga, supervision, Funded and Misuku water supply systems. construction, and capacity building for communities at of Wenya, Chisenga, and Misuku water supply systems. A102 Construction 3,375,000 Not 7,000 482 Construction supervision for Mwazisi water supply system. supervision, Funded construction, and capacity building for communities at Mwazisi Project ID Project Name Estimated Status of Beneficiaries Cost per Capita Description of Project Cost (USD Funding (Individuals) (USD/capita) Equivalent) water supply system. A092 Construction and 13,570,000 Not 25,590 530 Construction supervision of upgrading and expansion construction supervision, Funded works for Chitipa water supply system. of new water intake, treatment plant, transmission mains, and upgrading and expansion of distribution system for Chitipa water supply scheme. A106 Design, construction 12,000,000 Not 18,000 667 Design and construction supervision for Usisya, Mpamba supervision, Funded and Kande water supply systems. Surveys have been construction, and completed for this scheme, and designs are being capacity building for completed by Engineer. Preliminary design for this scheme communities at Usisya, has been completed and submitted for checking. Mpamba and Kande water supply systems. A095 Construction 18,440,000 Not 25,910 712 Construction supervision of upgrading and expansion supervision, and Funded works for Chilumba, Rumphi, and Nkata Bay. construction of upgrading and expansion works for Chilumba, Rumphi, and Nkata Bay. A009 Detailed design and 41,130,000 Not 50,000 823 Detailed design and supervision of Mzimba Dam. supervision, and Funded Feasibility designs and preliminary designs completed. construction of Mzimba Dam. A100 Design, construction 5,400,000 Not 5,000 1,080 Design and Construction supervision for Jenda water supervision, Funded supply system. construction, and capacity building for communities at Jenda water supply system. Project ID Project Name Estimated Status of Beneficiaries Cost per Capita Description of Project Cost (USD Funding (Individuals) (USD/capita) Equivalent) A098 Design, construction 13,800,000 Not 10,000 1,380 Design and construction supervision of upgrading and supervision, construction Funded expansion works for Ekwendi & Chintheche. of upgrading and expansion works for Ekwendi & Chintheche. B099 Capacity building of 350,000 Component 131 2,672 Capacity building of NRWB staff to manage upgraded and NRWB staff to manage Not expanded water supply systems. NRWB says that training of upgraded and expanded Funded member of WUA and CWP is in progress in Chizumulu water supply systems. island. Presentation of messages to communities about importance of potable water, sanitation facilities, and HIV&AIDS issues is ongoing. Preparation of radio and video documentaries on construction works for Chizumulu water supply system is also underway. A107 Design, construction 21,000,000 Not 5,000 4,200 Design and construction supervision for Chikangawa, supervision, Funded Euthini, Edingeni, Kafukule, and Manyamula water supply construction, and systems. capacity building for communities at Chikangawa, Euthini, Edingeni, Kafukule, and Manyamula water supply systems. CENTRAL REGIONAL WATER BOARD B034 Rehabilitation and 400,000 Component 12,700 31 Construction of Kasungu Water Supply Rehabilitation, expansion of Kasungu Not Upgrading and Expansion Works: Construction of 11 km Water Supply Project. Funded distribution pipeline supply and installation of 350 m3 storage tank and 19 community water points. Estimated 12,700 beneficiaries of low income areas around casing town. NWDP Progress Report says works commenced in April 2011 by contractor (Proprietary Manufacturing and Engineering-Western Construction JV). Consultant is Metaferia Consulting Engineers of Ethiopia, in association with Hydroconsult of Malawi. Additional Financing is on hold to observe progress and performance of contractor. Project ID Project Name Estimated Status of Beneficiaries Cost per Capita Description of Project Cost (USD Funding (Individuals) (USD/capita) Equivalent) Designs have been completed. A037 Construction of 1,500,000 Not 25,000 60 Continuation of ACGF intervention to reach more low Extension of Dwanga Funded income areas. Drilling of boreholes started in October 2010; Water Supply Scheme to 3 were unsuccessful, 1 more will be drilled and tested. new zone including NWDP Progress Report: 88% of planned pipeline surface water treatment extension has been installed. Remaining pipelines are for package plant. transmission and part of new distribution of new supply zone on southern side works wait for drilling of boreholes from internal resources. SOUTHERN REGIONAL WATER BOARD B081 Construction supervision 275,000 Component 22,110 12 Detailed design and construction supervision for Mwanza, and Construction of Not Balaka, Chikwawa, and Mulanje water supplies. Balaka Water Supply Funded Scheme. A175 Muloza Water Supply 707,617 Not 6,257 113 Scheme. Funded B004 Construction 2,242,278 Component 19,200 117 Construct water supply scheme for Zomba and expand Supervision and Not supply to low income areas. AF is for rehab and Construction of Zomba Funded replacement of 35 km asbestos cement and galvanized iron Water Supply Scheme, pipes and construction of reservoir to improve capacity. 2 and new water components: works -USD 2.35 m and supervision—USD connections. $1.5 M. Contract awarded to SSI in association with Chapita Consultants at contract price $480,233; signed March 2011. Supervision to start in November 2011. A086 Construction of Ngabu 3,316,666 Not 7,510 442 Construction of Ngabu Water Supply. Water Supply. Funded A083 Mulanje Water Supply 7,681,693 Not 15,790 486 Construction of Mulanje Water Supply. Scheme. Funded A085 Construction of 5,316,666 Not 10,750 495 Construction of Lucheza Water Supply. Luchenza Water Supply. Funded A084 Construction of 3,775,000 Not 7,000 539 Construction of Chikwawa Water Supply. Project ID Project Name Estimated Status of Beneficiaries Cost per Capita Description of Project Cost (USD Funding (Individuals) (USD/capita) Equivalent) Chikwawa Water Supply. Funded A082 Mwanza Water Supply 8,322,981 Not 14,560 572 Construction of Mwanza Water Supply. Scheme. Funded A087 Construction of 2,916,666 Not 4,500 648 Construction of Namwera Water Supply. Namwera Water Supply. Funded The table below lists rural water supply projects that have not been funded. Table G.6: Unfunded Rural Water Supply Projects with Complete Information Project ID Project Name Estimated Cost Status of Beneficiaries Cost per Description of Project (USD Funding (Individuals) Capita Equivalent) (USD/capita) B041 Mpira-Balaka GFS. 11,364 Component 49,800 0 Supply and delivery of 1800 water meters (800 for 7 Not Funded schemes and 1000 for 11 schemes). B059 Chapananga GFS. 11,364 Component 49,320 0 Supply and delivery of 1800 water meters (800 for 7 Not Funded schemes and 1000 for 11 schemes). B043 Nkhamanga-Katizi 11,364 Component 34,200 0 Supply and delivery of 1800 water meters (800 for 7 GFS. Not Funded schemes & 1000 for 11 schemes). B040 Mvula GFS. 11,364 Component 27,600 0 Supply and delivery of 1800 water meters (800 for 7 Not Funded schemes and 1000 for 11 schemes). B047 Usisya GFS. 11,364 Component 18,360 1 Supply and delivery of 1800 water meters (800 for 7 Not Funded schemes and 1000 for 11 schemes). B042 Misuku GFS. 11,364 Component 13,920 1 Supply and delivery of 1800 water meters (800 for 7 Not Funded schemes and 1000 for 11 schemes). B046 Chikwawa East Bank 11,364 Component 11,040 1 Supply and delivery of 1800 water meters (800 for 7 GFS. Not Funded schemes and 1000 for 11 schemes). A060 Three focus districts— 200,000 Not Funded 175,000 1 Procurement of materials, tools, and equipment for Procurement of rehabilitation of piped water supply systems in 3 focus materials and tools and districts. AM Oct/Nov 2011: the 3 districts have distributed equipment for sanitation plans and are mobilizing communities to build rehabilitation of piped improved latrines. Designs completed months ago, but water supply systems, procurement is not up to date. Additional resources and rehabilitation of required especially for Chapananga scheme. piped water supply systems. B053 Ifumbo GFS. 11,364 Component 7,800 1 Supply and delivery of 1800 water meters (800 for 7 Not Funded schemes and 1000 for 11 schemes). B044 Ntonda GFS. 11,364 Component 7,680 1 Supply and delivery of 1800 water meters (800 for 7 Not Funded schemes and 1000 for 11 schemes). Project ID Project Name Estimated Cost Status of Beneficiaries Cost per Description of Project (USD Funding (Individuals) Capita Equivalent) (USD/capita) B048 Chinukha GFS. 11,364 Component 4,800 2 Supply and delivery of 1800 water meters (800 for 7 Not Funded schemes and 1000 for 11 schemes). A050 Dombole-Ntcheu. 174,286 Not Funded 60,000 3 Procurement of material,s tools, and equipment for Procurement of rehabilitation of pipelines at Dombole-Ntcheu. materials and tools and equipment for rehabilitation of pipelines, and Rehabilitation of treatment works. A049 Lingamasa-Mangoch.- 314,286 Not Funded 100,000 3 Procurement of materials, tools, and equipment for Procurement of rehabilitation of pipelines at Lingamasa-Mangochi. materials and tools and equipment for rehabilitation of pipelines, and rehabilitation of treatment works. A058 Kavomolo in Chitipa. 237,286 Not Funded 70,000 3 Procurement of materials, tools, and equipment for Procurement of rehabilitation of Kavomolo piped water supply system in materials and tools and Chitipa. equipment for rehabilitation of piped water supply system, and rehabilitation of piped water supply system. A054 Champila South- 264,286 Not Funded 75,000 4 Procurement of materials, tools, and equipment for Mzimba. Procurement rehabilitation of pipelines at Champila South-Mzimba. of materials and tools Schemes to be rehabilitated and extended in the second and equipment for phase of the project. rehabilitation of pipelines, and rehabilitation of Project ID Project Name Estimated Cost Status of Beneficiaries Cost per Description of Project (USD Funding (Individuals) Capita Equivalent) (USD/capita) treatment works. A052 Mwasambo-Nhotakota 214,286 Not Funded 60,000 4 Procurement of materials, tools, and equipment for &Ntchisi. Procurement rehabilitation of pipelines at Mwasambo-Nhota kota of materials and tools &Ntchisi. Schemes to be extended in the second phase of and equipment for the project. rehabilitation of pipelines, and rehabilitation of treatment works A056 Chisenga in 429,286 Not Funded 100,000 4 Procurement of materials, tools, and equipment for Chitipa.Procurement of rehabilitation of Chisenga piped water supply system in materials and tools and Chitipa. equipment for rehabilitation of piped water supply system, and Rehabilitation piped water supply system. A051 Chipoka-Salima- 219,286 Not Funded 50,000 4 Procurement of materials tools and equipment for Procurement of rehabilitation of pipelines at Chipoka-Salima. materials and tools and equipment for rehabilitation of pipelines, and rehabilitation of treatment works B045 Lizulu GFS. 11,364 Component 2,400 5 Supply and delivery of 1800 water meters (800 for 7 Not Funded schemes and 1000 for 11 schemes). A055 Dwambazi-Nkhota kota 371,886 Not Funded 70,000 5 Procurement of materials, tools, and equipment for and Nkhata Bay. rehabilitation of pipelines at Dwambazi-Nkhota kota and Procurement of Nkhata Bay. Schemes to be rehabilitated and extended in materials and tools and the second phase of the project. equipment for Project ID Project Name Estimated Cost Status of Beneficiaries Cost per Description of Project (USD Funding (Individuals) Capita Equivalent) (USD/capita) rehabilitation of pipelines, and rehabilitation of treatment works. B117 Ground Water 601,200 Component 100,000 6 Build 119 boreholes and rehabilitate 281 (400 boreholes Development & Mgmt. Not Funded total with corresponding water point committees); Programme. benefitting 100,000 people total providing them with water supply and capacity to operate and maintain facilities; also includes procurement of equipment. Chitipa, Karonga, Mzimba, Nkata-Bay, Rumphi, Dedza, Dowa, Kasungu, Lilongwe, Mchinji, Nkhota-Nhkota, Ntcheu, Ntchisi, Salima, Balaka, Blantyre, Chikwawa, Chiradzulu, Machinga, Mangochi, Mulanje, Mwanza, Neno, Nsanje, Phalombe, Thyolo, Zomba—increase access to water supply in rural areas mainly through constructing boreholes and rehabilitation of 300 -700 non-productive boreholes. Project will contribute to reducing water-borne diseases through improved water supply facilities. Also will produce groundwater map (3 years) and will have a capacity building component (5 years). A057 Chitekwa in Chitipa. 198,000 Not Funded 30,000 7 Procurement of materials, tools, and equipment for Procurement of rehabilitation of Chitekwa piped water supply system in materials and tools and Chitipa. equipment for rehabilitation of piped water supply system, and rehabilitation of piped water supply system. A111 Dispersed Boreholes 4,779,540 Not Funded 225,000 21 Drilling and rehabilitation of boreholes in 27 districts. Construction and Increase access to potable water supply to meet MDG by Rehabilitation 2015. Programmes. Table G.7 below, lists projects for urban and rural sanitation, that have complete information (estimated cost and number of beneficiaries), but have not received funding. Table G.7: Unfunded Projects with Complete Information for Urban and Rural Sanitation Project ID Project Name Estimated Cost Status of Implementin Beneficiarie Cost per Description of Project (USD Funding g Agency s Capita Equivalent) (Individuals (USD/capit ) a) B180 WASH - Hygiene 16,402,424 Component MoAIWD 1,000,001 16 Nationwide program that aims to increase access to and Sanitation Not safe drinking water sources, as well as sanitation Practices. Funded facilities (with emphasis on women and children). Works in primary schools and teaches proper hygiene methods. A093 Design, 9,200,000 Not NRWB 90,000 102 Design and construction supervision of sewerage construction Funded system for Mzuzu. supervision, and construction of sewerage system for Mzuzu. A094 Design, 13,800,000 Not NRWB 50,000 276 Detailed design and supervision of Karonga and construction Funded Mzimba. supervision, and construction of Karonga and Mzimba