Fourteen (14) WWTP

MINERAL HEIGHTS

SHREWSBURY

LONGVILLE

BAY FARM VILLA

DE LA VEGA CITY

CReW PROGRAMME - WASTEWATER TREATMENT PLANTS 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

FINANCE STRUCTUREFINANCE STRUCTURE

GEF/CReW make available Grant of US$3.0M. GEF/CReW make available Grant of US$3.0M.

NWC secures US$10.0M Loan from Commercial BankNWC secures US$10.0M Loan from Commercial Bank

NWC pledges portion of projected revenue stream (K- NWC pledges portion of projected revenue stream (K- Factor) Factor)

CReW offer US$3.0M ‘Grant’ as a Guarantee to banks to CReW offer US$3.0M ‘Grant’ as a Guarantee to banks to offset any shortfall in revenue stream. offset any shortfall in revenue stream.

Projected annual revenue stream greater than Debt Service Projected annual revenue stream greater than Debt Service obligation.obligation.

K - Factor will service Debt /Loan Repayment K - Factor will service Debt /Loan Repayment

FINANCE STRUCTUREFINANCE STRUCTURE

LENDER Local Finance Institution- LFI

NWC Water/Wastewater

Service Provider/ Borrower

Sewerage Collection/ Treatment

CReW CReW Facility Facility US$3.0MUS$3.0M

Loan US$10.0MLoan US$10.0M Debt Service Debt Service with with

K- Factor K- Factor

GuaranteeGuarantee LenderLender

Borrower Borrower

Project /UsersProject /Users

IADB /GEFInter American Development Bank

Chester Engineers/NWC: T.A. Project Agreement - signed May 2011. Report being reviewed by NWC - Report Completed

CReW / NWC - IMPLEMENTATION SCHEDULE 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 PRGRAMME

‘‘K- FACTOR’ - FINANCE MODEL K- FACTOR’ - FINANCE MODEL

2008 April - OUR Determination Notice 2008 April - OUR Determination Notice - Tariff Regime in place for 5 Years (2013)- Tariff Regime in place for 5 Years (2013) - To increase certainty in loan financing - To increase certainty in loan financing negotiationnegotiation

Tariff - Special Provision deemed K- Factor Tariff - Special Provision deemed K- Factor - K- Factor schedule : 2008 - 2021 - K- Factor schedule : 2008 - 2021

- 44 No. WWTP Rehabilitation (Immediate) - 44 No. WWTP Rehabilitation (Immediate) - Extension of sewerage network in KSA. - Extension of sewerage network in KSA.

- NRW Works - Mains Replacement etc.- NRW Works - Mains Replacement etc.

K- Factor is calculated on all Customer bills - K- Factor is calculated on all Customer bills - (Loan from Customer)(Loan from Customer)

‘‘K- FACTOR’ - FINANCE MODEL K- FACTOR’ - FINANCE MODEL

X- Factor deducted from Bill after application of X- Factor deducted from Bill after application of normal rates. (Repayment/Credit Customer A/C)normal rates. (Repayment/Credit Customer A/C)

K - Factor & X - Factor will continue across tariff K - Factor & X - Factor will continue across tariff regimes to ensure fund availability to service regimes to ensure fund availability to service loansloans

K-Factor K-Factor - ‘- ‘Not for Additional Revenue/Benefit’ Not for Additional Revenue/Benefit’ to NWCto NWC - To improve the financial position of the NWC - To improve the financial position of the NWC via via ‘EFFICINCY GAINS’ ‘EFFICINCY GAINS’ which will be accrued which will be accrued via the financing of the selected worksvia the financing of the selected works

Caribbean Regional Fund for Wastewater Management - CReW Caribbean Regional Fund for Wastewater Management - CReW

K- Factor & X-Factor Schedule K- Factor & X-Factor Schedule Year Year

Ending Ending March March

20092009 20102010 20112011 20122012 20132013 20142014 20152015 20162016 20172017 20182018 20192019 20202020 20212021

K - Factor K - Factor (%) (%)

55 1414 2020 2323 2525

2727 2727 2727 2626 2626 2424 2424 2323

X-FactorX-Factor

(%)(%)

-- 55 1010 1010 1212 1212 1313 1515 1818 2222 2222 2323 2323

Facilities Completed & Work In Progress Facilities Completed & Work In Progress K-Factor Programe - Wastewater Facilities K-Factor Programe - Wastewater Facilities

Cornwall Courts - St. James Cornwall Courts - St. James

Harbour View - KSA Harbour View - KSA Yallahs - St.ThomasYallahs - St.Thomas Negril - WestmorelandNegril - Westmoreland

Barbican Mews - KSABarbican Mews - KSA Western - KSAWestern - KSA College Green - KSA College Green - KSA

St. JamesWastewater to flow to

Bogue WW TP

KSAWastewater to flow to

Soapberry WW TP

ISSUES & LESSONS LEARNT

ISSUES & LESSONS LEARNT ISSUES & LESSONS LEARNT 1.1. Reluctance of Commercial Banks/Bank Policies:Reluctance of Commercial Banks/Bank Policies: Restrict Loan Tenure of no more than 7 years, up Restrict Loan Tenure of no more than 7 years, up to max. 10 years depending on market conditions.to max. 10 years depending on market conditions.

2.2. Bank Stringent Measures: Project’s Receivables are paid directly to Commercial Bank Bank Stringent Measures: Project’s Receivables are paid directly to Commercial Bank by the NWCby the NWC

( Bank has first call on Contractors’ Receivable) ( Bank has first call on Contractors’ Receivable)

3. Commercial Loans – 3. Commercial Loans – Expensive (Return Greater) Expensive (Return Greater)

4. 4. Risk Classification / Risk Profile of the Country Risk Classification / Risk Profile of the Country - MIGA & Co-Face = Insurer’s of the Bank’s Loan- MIGA & Co-Face = Insurer’s of the Bank’s Loan

5. Government relation with IMF & Multi-laterals 5. Government relation with IMF & Multi-laterals - Fiscal Space/Budgetary Provision has to - Fiscal Space/Budgetary Provision has to created prior to accessing the loan for created prior to accessing the loan for

ProjectProject - “Gateway Relation” impact on the ability of - “Gateway Relation” impact on the ability of GoJ/NWC to secure loan from other Multi-laterals.GoJ/NWC to secure loan from other Multi-laterals.

6. 6. Project Benefits are not realized immediately Project Benefits are not realized immediately (Repayment of Loan commences prior to project (Repayment of Loan commences prior to project benefits being realized)benefits being realized)

7. Long Lead Time for Project Implementation : 7. Long Lead Time for Project Implementation : - Pre-Feasibility , Feasibility ,Negotiation- Pre-Feasibility , Feasibility ,Negotiation - Design, Procurement and Implementation- Design, Procurement and Implementation

8. 8. Multi-Competitive Procurement &Agency Multi-Competitive Procurement &Agency Approvals:Approvals: - Pre-qualification & Tendering Process for - Pre-qualification & Tendering Process for Contractors, Consultants, Supplies etc.Contractors, Consultants, Supplies etc. - Government Agency Approvals NEPA, NWA NLA- Government Agency Approvals NEPA, NWA NLA

9.9.INFLEXIBLE PROJECT DEFINATION: Long time table INFLEXIBLE PROJECT DEFINATION: Long time table and project scope and needs may change over and project scope and needs may change over the period the period

ISSUES & LESSONS LEARNT ISSUES & LESSONS LEARNT

CONCLUSION CONCLUSION NWC recognizes that : NWC recognizes that : NO SINGLE or PRECISE or NO SINGLE or PRECISE or

DEFINATIVE APPROACH’DEFINATIVE APPROACH’ to project financing/development. to project financing/development.

Financing is dependent on the Financing is dependent on the TIMELINESSTIMELINESS OR OR ‘‘URGENCY’ URGENCY’ of the PROJECT’S BENEFITS/NEEDS of the PROJECT’S BENEFITS/NEEDS and its and its ‘FINANCIAL’ ‘FINANCIAL’ and and ‘ECONOMICAL ‘ECONOMICAL FEASIBILITY. FEASIBILITY.

Projects which are ‘deemed’ Projects which are ‘deemed’ URGENTURGENT and and FINANCIALLY FINANCIALLY FEASIBLE IN THE SHORT TERM ( PROVIDES EARLY FEASIBLE IN THE SHORT TERM ( PROVIDES EARLY REVENUE STREAM) REVENUE STREAM) provides prospects for financing via : provides prospects for financing via :

a. Commercial Financing a. Commercial Financing

b. Partnership with Private Sector - PPP b. Partnership with Private Sector - PPP

(i.e. Commercial and Industrial Development) Spanish Hotel (i.e. Commercial and Industrial Development) Spanish Hotel Construction North Coast - Tourism Sector Construction North Coast - Tourism Sector

2. Projects which are 2. Projects which are ECONOMICALLY FEASIBLE ECONOMICALLY FEASIBLE in in the the LONG TERM LONG TERM or have benefits accruing to more than direct or have benefits accruing to more than direct users ( and are predictive/incremental growth) i.e. Sewage users ( and are predictive/incremental growth) i.e. Sewage Projects : Projects : a. Bi-Lateral & Multi-lateral Funding are perused a. Bi-Lateral & Multi-lateral Funding are perused

CONCLUSIONCONCLUSION

3. Projects which are deemed 3. Projects which are deemed ‘UNECONOMICAL‘UNECONOMICAL’ such as small ’ such as small

remote, sparsely populated communities and rural remote, sparsely populated communities and rural

districts : districts : a. Grants and Subsidies (GoJ & Development Funding a. Grants and Subsidies (GoJ & Development Funding

Agencies) Agencies) b. Rural Water Supply ( RWL) etc. b. Rural Water Supply ( RWL) etc.

4. Parish Plans – JM$100.0B / US$1.15B4. Parish Plans – JM$100.0B / US$1.15B

THANK YOU !