Webinar on financing facilities and non-revenue water performance-based contracts
Shannon Riley and Lisa Nations delivered a webinar on the topics of financing facilities and non-revenue water (NRW) performance-based contracts (PBCs). These could be two viable options to help utilities secure the resources they need to continue operations in response to the massive decrease in collections they are experiencing due to COVID-19. This webinar was hosted by RockBlue, an organization that partners with water and sanitation utilities in the developing world, empowering them to grow and optimize their operations.
You can watch the webinar and the Q&A session here. Below the two videos, you will also find a list of the questions and the time in the video at which they occur is listed.
1.1 Presentation
1.2 Q&A Session
- Question 1: “In Kenya, the problem with facilities is that the investment rules (ticket size, creditworthiness of borrowing entities, etc.) are misaligned with realities of the local market. Do the facilities proposed here address that in any way?” Answer: 1:01.
- Question 2: “Are there currently liquidity facilities operating in response to COVID-19?” Answer: 3:10.
- Question 3: “What about the option of bundling electricity and water liquidity facilities together? Target customers are likely to be the same and they are all critical services with similar tariff structures. Are there examples out there?” Answer: 4:23.
- Question 4: “One of the issues for NRW contracts is an accurate baseline. Many utilities/municipalities have a water balance that is not wholly accurate and it’s hard to get a handle on those estimates. How do you ensure in setting up an NRW-PBC that you can achieve an objective baseline that is transparent, that provides the incentives for both parties?” Answer: 6:28.
- Question 5: “One of the things we’re addressing is trying to respond to a pandemic which hopefully will come to an end and we’re facing cash constraints today. Are these mechanisms realistic answers to immediate cash concerns? Is it more appropriate looking at a 2-3 year, mid-term approach? Or are we talking about a long-term resilience mechanism for whatever the next crisis might be?” Answer: 9:43.
- Question 6: “Are utilities receptive to innovative financing? Do they have bandwidth to address this? Is there an uptake/willingness to spend time/energy/resources in structuring innovative contracts to address their short-term or medium-term financial constraints?” Answer: 13:18.
- Question 7: “Are NRW-PBCs appropriate/can they be used in utilities that are under-performing?” Answer: 18:07.
- Question 8: “A concern with liquidity facility model: you have assumed a v-shape recovery. Many utilities are taking severe long-term impacts in their performance so you’re going to see a u-shaped recovery. How long is the timetable of disbursements? What would be repayment periods? How would we address something with a longer trailing leg of recovery?” Answer: 22:00.
- Question 9: “The reforms that you envision in the liquidity model usually require some form of CAPEX investment to drive that performance improvement. Will most utilities that are not recovering costs currently going to be able to achieve substantial improvements on their own that would be necessary to receive additional disbursements? How are the utilities going to repay the financing unless it’s on a grant basis if these reforms don’t achieve recovery levels?” Answer: 24:37
- Question 10: “Your illustrative model demonstrates a potential 6-year payback period. There’s a concern where the lending markets aren’t willing to take on long-term risk. There’s a risk that even a 6-year payback period is out of line with the financial investors that are currently out there. Do you believe those are possible? In testing your model, have you looked at countries in that circumstance?” Answer: 28:39.
