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Water Management Financing in the Caribbean - Part 4
 

Water Management Financing in the Caribbean - Part 4

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Part 4 of the presentation entitled "Water Management Financing in the Caribbean."

Part 4 of the presentation entitled "Water Management Financing in the Caribbean."

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    Water Management Financing in the Caribbean - Part 4 Water Management Financing in the Caribbean - Part 4 Presentation Transcript

      • MINERAL HEIGHTS
      • SHREWSBURY
      • LONGVILLE
      • BAY FARM VILLA
      • DE LA VEGA CITY
      CReW PROGRAMME - WASTEWATER TREATMENT PLANTS
      • LLANDILO
      • ELLESTON FLATS
      • HUGHENDEN
      • ARCADIA
        • HUGHENDEN
      • GREATER PORTMORE
      • BLACKWOOD GARDENS
      • BOSCOBEL
      • SPRINGFIELD/ RED HILLS PEN
      PHASE No.1 - Fourteen Pilot WWTPs Fourteen (14) WWTP
    • FINANCE STRUCTURE
      • GEF/CReW make available Grant of US$3.0M.
      • NWC secures US$10.0M Loan from Commercial Bank
      • NWC pledges portion of projected revenue stream (K- Factor)
      • CReW offer US$3.0M ‘Grant’ as a Guarantee to banks to offset any shortfall in revenue stream.
      • Projected annual revenue stream greater than Debt Service obligation.
      • K - Factor will service Debt /Loan Repayment
    • FINANCE STRUCTURE
      • CReW
      • Facility
      • US$3.0M
      LENDER Local Finance Institution- LFI NWC Water/Wastewater Service Provider/ Borrower Sewerage Collection/ Treatment Loan US$10.0M Debt Service with K- Factor Guarantee Lender Borrower Project /Users IADB /GEF Inter American Development Bank
    • Chester Engineers/NWC: T.A. Project Agreement - signed May 2011. Report being reviewed by NWC - Report Completed CReW / NWC - IMPLEMENTATION SCHEDULE IDB/NWC Grant Agreement: signed July 26, 2011- Completed USTDA/NWC Grant Agreement Aug.2010- Completed Invitation of RFPs - Capital Financing - October 2011 Invitation - RFPs Design/Build WWTP 14 WWTPs - Oct 2011 Rehabilitation of 14 No. WWTPs - 2012 - 2014 Engagement of Consulting Engineer : Baseline Study
      • K- FACTOR PRGRAMME
    • ‘ K- FACTOR’ - FINANCE MODEL
      • 2008 April - OUR Determination Notice
      • - Tariff Regime in place for 5 Years (2013)
      • - To increase certainty in loan financing
      • negotiation
      • Tariff - Special Provision deemed K- Factor
      • - K- Factor schedule : 2008 - 2021
      • - 44 No. WWTP Rehabilitation (Immediate)
      • - Extension of sewerage network in KSA.
      • - NRW Works - Mains Replacement etc.
      • K- Factor is calculated on all Customer bills - (Loan from Customer)
    • ‘ K- FACTOR’ - FINANCE MODEL
      • X- Factor deducted from Bill after application of normal rates. (Repayment/Credit Customer A/C)
      • K - Factor & X - Factor will continue across tariff regimes to ensure fund availability to service loans
      • K-Factor
      • - ‘ Not for Additional Revenue/Benefit’ to NWC
      • - To improve the financial position of the NWC
      • via ‘EFFICINCY GAINS’ which will be accrued
      • via the financing of the selected works
    • Caribbean Regional Fund for Wastewater Management - CReW
      • K- Factor & X-Factor Schedule
      Year Ending March 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 K - Factor (%) 5 14 20 23 25 27 27 27 26 26 24 24 23 X-Factor (%) - 5 10 10 12 12 13 15 18 22 22 23 23
    •  
    • Facilities Completed & Work In Progress K-Factor Programe - Wastewater Facilities
      • Cornwall Courts - St. James
      • Harbour View - KSA
      • Yallahs - St.Thomas
      • Negril - Westmoreland
      • Barbican Mews - KSA
      • Western - KSA
      • College Green - KSA
      St. James Wastewater to flow to Bogue WW TP KSA Wastewater to flow to Soapberry WW TP
    • ISSUES & LESSONS LEARNT
    • ISSUES & LESSONS LEARNT
      • Reluctance of Commercial Banks/Bank Policies:
      • Restrict Loan Tenure of no more than 7 years, up
      • to max. 10 years depending on market conditions.
      • Bank Stringent Measures: Project’s Receivables are paid directly to Commercial Bank by the NWC
      • ( Bank has first call on Contractors’ Receivable)
      • 3. Commercial Loans – Expensive (Return Greater)
      • 4. Risk Classification / Risk Profile of the Country
      • - MIGA & Co-Face = Insurer’s of the Bank’s Loan
      • 5. Government relation with IMF & Multi-laterals
      • - Fiscal Space/Budgetary Provision has to created prior to accessing the loan for Project
      • - “Gateway Relation” impact on the ability of
      • GoJ/NWC to secure loan from other Multi-laterals.
      • 6. Project Benefits are not realized immediately
      • (Repayment of Loan commences prior to project
      • benefits being realized)
      • 7. Long Lead Time for Project Implementation :
      • - Pre-Feasibility , Feasibility ,Negotiation
      • - Design, Procurement and Implementation
      • 8. Multi-Competitive Procurement &Agency Approvals:
      • - Pre-qualification & Tendering Process for
      • Contractors, Consultants, Supplies etc.
      • - Government Agency Approvals NEPA, NWA NLA
      • INFLEXIBLE PROJECT DEFINATION: Long time table and project scope and needs may change over the period
      ISSUES & LESSONS LEARNT
    • CONCLUSION
      • NWC recognizes that : NO SINGLE or PRECISE or DEFINATIVE APPROACH’ to project financing/development.
      • Financing is dependent on the TIMELINESS OR ‘ URGENCY’ of the PROJECT’S BENEFITS/NEEDS and its ‘FINANCIAL’ and ‘ECONOMICAL FEASIBILITY.
      • Projects which are ‘deemed’ URGENT and FINANCIALLY FEASIBLE IN THE SHORT TERM ( PROVIDES EARLY REVENUE STREAM) provides prospects for financing via :
      • a. Commercial Financing
      • b. Partnership with Private Sector - PPP
      • (i.e. Commercial and Industrial Development) Spanish Hotel Construction North Coast - Tourism Sector
    • 2. Projects which are ECONOMICALLY FEASIBLE in the LONG TERM or have benefits accruing to more than direct users ( and are predictive/incremental growth) i.e. Sewage Projects : a. Bi-Lateral & Multi-lateral Funding are perused 3. Projects which are deemed ‘UNECONOMICAL ’ such as small remote, sparsely populated communities and rural districts : a. Grants and Subsidies (GoJ & Development Funding Agencies) b. Rural Water Supply ( RWL) etc. 4. Parish Plans – JM$100.0B / US$1.15B CONCLUSION
    • THANK YOU !