Developing a New Business Model for the National Water Commission, Jamaica

The problem

To meet the increasing demand for water and sewage services driven by Jamaica’s growing economy, the National Water Commission needed to invest US$3.5 billion. However, the utility is not profitable and tariffs are already reaching unaffordable levels.

How we helped

Castalia designed a new business model for the National Water Commission that involves listing the utility on the Jamaica Stock Exchange and bringing an industry partner, to provide the expertise, incentives, and financing essential for the utility to be efficient, profitable, and creditworthy. To do this, we developed business model options based on a review of international experience, and consulted on these options with stakeholders, including: the utility’s Board and management, the Government, financial institutions, and union representatives. Castalia built consensus among these stakeholders with differing views on government ownership, public-private partnerships, and privatization to decide on a model that will deliver the efficiency gains and profits needed to finance capital expenditures.

Castalia also prepared the utility’s submission to the regulator seeking a tariff increase based on a marginal cost analysis and recommended improvements to the utility’s corporate governance, planning, and operations functions based on a diagnosis.

Impact

The National Water Commission has accepted Castalia’s recommended business model and is awaiting Cabinet approval to begin implementation.