Project Description: PPP Feasibility Study in Water Sector

Handeni Trunk Main Water Supply and Sanitation Authority (HTMWSSA) in Tanzania has worked out a technical feasibility study and a business plan for the rehabilitation of its water supply infrastructure. As part of this process, HTMWSSA has requested support in preparing a business case to assess the financial and realization options for the project. The main objetive of the project is to advise on PPP financing conducting a feasibility study to assess 3 techncial options and see whether there are any private setor provision options to deliver water services in future through private sedor via service contracting or delegated management contracts. The purpose of the business cases was to develop a comprehensive understanding of technical and financial aspects of the project and to show the additional financial needs of HTMWSSA in response to different technical solutions, each containing a different scope of rehabilitation works, and the connected possible revenues.

Scope of Work

The scope of work for the business cases entails the following:

  1. Preparation of business cases, Outline strategic objectives of HTMWSSA regarding the rehabilitation project, Analysis of technical options, Description of project structure (traditional procurement) and sources of funding
  2. Cost and revenue assessment, Collection of needed cost data (construction, operating, maintenance, indirect costs); Determination of revenue collection and estimation of revenues, financial parameters (interest rates, terms)
  3. Risk assessment and evaluation fom perspective of public and private setors both
  4. Elaboration of three business cases (financial models) based on technical option
  5. Preparation of financial model (including profit and loss account, balance sheet, cash flow)
  6. Stating feasibility and key project indicator: capital requirements, Sensitivity analysis.

Activities

  1. Analysis of fianncal perfoprmance of utlity inculding the energy supply to the pumping stations, and tretament plants
  2. Development of strategic/structural considerations on potential procurement modes
  3. Evaluation of options for the activation of the national private sector (Who are possible contractors? What services could they deliver, etc.); Design and qualitative evaluation of suitable procurement models (single / general, contractor, BOT-model), Recommendation
  4. Recommendations on next steps with respect to the financing and realization of the project
  5. Integration of basic on-site PPP training modules (two days: basics of PPP, calculation of the business case, tender procedures…)
  6. Delivery of workshops and stakeholders consultations.