Solomon Islands Water Authority

Transcription

1 Solomon Islands Water Authority The Solomon Water Development Plan, The Two-Year Plan A two-year action and investment programme for the improvement of municipal water and wastewater services in Solomon Islands Final version Submitted to AusAID, the Australian Agency for International Development 22 April 2013

2 Solomon Water Development Plan, Table of Contents 1 Introduction Solomon Islands Water Authority and its recent past The Recovery and Action Plan 2011 to Organisational structure of Solomon Water Objectives of the AusAID Solomon Water partnership Objectives of the Solomon Water Two Year Development Plan, JICA projects The JICA Project for the Improvement of Water Supply Systems in Honiara and Auki The JICA Non-Revenue Water Reduction Technical Cooperation Project The Two Year Plan budget 9 2 Improved Levels of Service for water supply Developing operations and technical support System monitoring, management and control Hydraulic modelling of the network Reducing non-revenue water The JICA Non-Revenue Water Reduction Technical Cooperation Project Pressure management Achieving more rapid progress in NRW reduction Improving the capacity of the network Improving the connectivity and reliability of water supply Replacement of transmission main from Titinge to Vavaya Ridge Improved storage and feeds to distribution Panatina Borehole Field Borehole maintenance Standby generators Electrical Engineer Transportation of heavy equipment Security at operational sites Improving water quality Disinfection Water Quality Monitoring Storage of sodium hypochlorite Catchment Area Management 25 i

3 2.5.5 Drinking Water Safety Plan Protecting the environment Sewage pumping stations Point Cruz and King George VI Sewer Outfalls 26 3 Improved customer care and communications Improving customer care The achievements of the Recovery and Action Plan Proposed improvements Improving the image of Solomon Water Proposed improvements 31 4 Strengthened financial management and administration Achievements since May Debt Settlement Tariff Fixed Assets Viability Audit Accounting Internal Controls Improving financial management Billing Debt Collection Accounting Cost and Management accounting Inventory management and procurement Audit Financial Budget Improved organisational capacity Strengthening of Human Resource management Strengthening corporate management General Manager and Finance & Administration Manager Appointment of an Operations and Technical Manager Improving organisational effectiveness Information Technology Assets & Facilities Motor Vehicles 45 ii

4 5.4.2 Accommodation in Honiara 46 6 Improved strategic planning 47 7 Cross-cutting and safeguards issues Gender The Environment Access to water for the disadvantaged Land use issues 52 8 Risk management 53 9 Monitoring and evaluation Programme management Programme Monitoring and Evaluation framework Development outcomes Programme objective Outputs Activities - Improved levels of service for water supply Water production and Non-Revenue Water performance indicators Activities Improved customer care and communications Activities Strengthened financial management & administration Activities Improved organisational capacity Activities Improved strategic planning 67 Appendices APPENDIX A: Programme budget iii

5 List of Tables Table 1: Summary of the Two Year Plan budget 9 Table 2: Costs for developing operations and technical support 12 Table 3: Costs for hydraulic modelling 13 Table 4: Actions, constraints and results in NRW reduction during the RAP 14 Table 5: Costs for installing pressure management 17 Table 6: Non-revenue water targets 18 Table 7: Costs for NRW reduction 18 Table 8: Cost of improving the capacity of the network 20 Table 9: Cost of improving connectivity Titinge to Vavaya Ridge transmission main 21 Table 10: Cost of improving connectivity new service reservoir at East Kola 22 Table 11: Cost improving reliability - borehole replacement at Panatina 22 Table 12: Cost of stand-by generators 23 Table 13: Customer Care progress and future action 27 Table 14: Proposals for enhanced communications 30 Table 15: PWWA Benchmarking 2012 Operating costs 35 Table 16: PWWA Benchmarking data tariff colllection and debt 38 Table 17: Solomon Water Operating Budget Table 18: Costs of strengthening HR management 42 Table 19: Risk management 53 Table 20: Monitoring and Evaluation Development outcomes 58 Table 21: Monitoring and Evaluation Programme objectives 59 Table 22: Monitoring and Evaluation programme outputs 60 Table 23: M & E Activities towards improved levels of service 61 Table 24: M & E Specific performance indicators 63 Table 25: M & E Activities improved customer care and communications 64 Table 26: M & E - Activities towards strengthened finacial management & administration 65 Table 27: M & E - Activities towards improved organisational capacity 66 Table 28: M & E - Activities towards improved strategic planning 67 List of Figures Figure 1: The Management Team 4 Figure 2: Water Supply Operations & Technical Management 5 Figure 3: Service Delivery and Communications 5 Figure 4: Finance & Administration 6 Figure 5: Human Resource Management 6 Figure 6: Solomon Water Two Year Development Plan Program Logic 7 iv

6 Abbreviations AUD AusAID BPT CPI CSO DIa. DMA GIS GPRS GPS GSM HDPE IWA JICA JPY LCZ MDPAC MDPE MID MLD MMERE MOFT MOH NCS NRW O&M OHS&W PIAC PMG PRV PSC PVC PWWA RAP RTU SBD SCADA Australian dollar Australian Agency for International Development Break pressure tank Consumer Price Index (as published by the Central Bank of Solomon Islands) Community Service Obligation (contract) Diameter District metered area geographic Information System General packet radio service Global Positioning System Global System for Mobile communications High density polyethylene International Water Association Japan International Cooperation Agency Japanese Yen Leakage control zone Ministry of Development Planning and Aid Coordination Medium density polyethylene Ministry of Infrastructure Development Megalitres per day (1000 cubic metres or 1 million litres) Ministry of Mines, Energy and Rural Electrification Ministry of Finance and Treasury Ministry of Health Napier Computer Systems Non-revenue water Operations and maintenance Occupational Health and Safety and Welfare Pacific Infrastructure Advisory Centre People Management Group Pressure reducing valve Project Steering Committee Poly vinyl chloride Pacific Water and Wastes Association The Solomon Islands Water Authority Short-Term Recovery Strategy and Action Plan Remote telemetry unit Solomon dollar Supervisory control and data acquisition v

7 SIEA Solomon Islands Electricity Authority SIG Solomon Islands Government SIWA Solomon Islands Water Authority (previous brand name) SMS Short Message Service SOE State-owned Enterprise Solomon Water The brand name of Solomon Islands Water Authority (launched 2013) SOP Standard Operating Procedure SW Solomon Water (abbreviation) TA Technical Assistance TAG Technical Assistance Group TC Technical Cooperation TYP The Solomon Water Two Year Development Plan, WHO World Health Organization vi

8 Definitions for non-revenue water The IWA standard international water balance and terminology System input volume (corrected for known errors) Authorized consumption Water losses Billed authorized consumption Unbilled authorized consumption Apparent losses Real losses Billed metered consumption Billed unmetered consumption Unbilled metered consumption Unbilled unmetered consumption Unauthorized consumption Customer metering inaccuracies leakage on transmission mains and/or distribution mains Leakage and overflows at utility s storage tanks Leakage on service connections up to the point of customer metering Revenue water Nonrevenue water (NRW) Abbreviated definitions System input volume Authorized consumption Non-revenue water (NRW) Water losses Apparent losses Real losses The annual volume input to that part of the water system Is the annual volume of metered and/or non-metered water taken by registered customers, the water supplier and others who are implicitly or explicitly authorized to do so. It includes leaks and overflows after the point of customer metering Is the difference between system input volume and billed authorized consumption. NRW consists of: - Unbilled authorized consumption - Water losses Are the difference between system input volume and authorized consumption and consist of apparent losses and real losses Consist of unauthorized consumption and all types of metering inaccuracies Are the annual volumes lost through all types of leaks, bursts, and overflows on mains, service reservoirs and service connections, up to the point of customer metering. vii

9 1 Introduction The Australian Agency for International Development (AusAID) is considering extending its grantaid support to Solomon Islands Water Authority (Solomon Water) for a further two years after the completion of its current grant-aid project the Solomon Islands Water Authority Short-Term Recovery Strategy and Action Plan (RAP) in June The development of urban water and sanitation 1 is a priority under Priority Outcome 3 Improved Economic Infrastructure of the Australia-Solomon Islands Partnership for Development. This Plan has been prepared to specify and define the outputs and activities of the proposed grant aid to Solomon Water. The Japan International Cooperation Agency (JICA) has been supporting Solomon Water since 2005 when it funded and performed a development survey, The Study for Rehabilitation and Improvement of SIWA s Water Supply and Sewage Systems. This led to a grant-aid project for the Improvement of Water Supply Systems in Honiara and Auki which commenced in late Further support is being provided in the form of a technical cooperation project for Non-Revenue Water Reduction which commenced in late The Two Year Plan will complement existing JICA projects through dialogue and collaborative planning in order to maximise the benefit of all projects and enable Solomon Water to better achieve the objectives of the Two Year Plan and beyond. To ensure this close collaboration, a Memorandum of Agreement was signed by AusAID, JICA and Solomon Water in October 2012 and it is proposed that a similar agreement will be signed before the start of the Two Year Plan. 1.1 Solomon Islands Water Authority and its recent past The Solomon Islands Water Authority is a state-owned enterprise wholly owned by the Government of Solomon Islands. It is mandated to operate as the provider of municipal water and wastewater services in Solomon Islands by the SIWA Act of As a state-owned enterprise it is also subject to the State-Owned Enterprise Act of 2007 modified in The Authority presently provides municipal water and wastewater services in Honiara, the capital of Solomon Islands, and municipal water services only in the provincial urban centres of Auki, Noro and Tulagi. The Authority is governed by an independent Board of Directors, appointed by the responsible Ministers in accordance with the State Owned Enterprises Act, The Board is responsible for the prudent and transparent governance of the organisation. It reports to Minister of Mines, Energy and Rural Electrification and to the Minister of Finance. Solomon Water provides water services to an estimated population of up to 100,000 people in Honiara and over 8000 in the served Provincial centres. Municipal wastewater services are provided to perhaps 30,000 people in Honiara only. During the 1990 s and early 2000 s, SIWA was the recipient of both a number of technical assistance projects provided by various development partners, and grant aid infrastructure investments from ADB and, in particular, JICA. In the case of the JICA grant aid investments, some of the infrastructure provided during this period remains operational components of the current water supply system despite some of it being damaged or destroyed during the Tensions in In the context of Solomon Water, sanitation refers to the provision of municipal wastewater services. Page 1

10 to Unfortunately, lack of maintenance and general care has caused these assets to deteriorate. With regard to previous technical assistances, a key lesson to be learnt is that the problems facing the organisation cannot be solved through short-term technical approaches. A long-term sequenced approach is required and the Two Year Plan is part of such a long-term approach. During the period 2000 to 2010 the condition of the organisation steadily deteriorated through a combination of political instability during the Tensions, poor governance, inappropriate tariffs resulting in a lack of investment in the infrastructure, and poor organisational capacity. By 2010, the organisation was operating in a state of bankruptcy, owing SBD$28 million to its electricity supplier, and the service was approaching a state of collapse. There was a serious risk that the already poor water and municipal wastewater services in Honiara would largely cease to function with significant adverse impacts on human health and the local economy. The unpaid debt was also threatening Solomon Islands Electricity Authority s financial viability, endangering the electricity supply in Honiara and provincial centres. Emergency measures were necessary. As a measure to halt this decline, in late 2010 the incumbent Board was dismissed and a new Board was appointed. The new Board immediately implemented a significant retrenchment in the organisation, including the dismissal of the incumbent management team. The assistance of the Pacific Infrastructure Advisory Centre (PIAC) was sought and in April 2011 an interim General Manager and Finance and Administration Manager were appointed to manage the company. This initial support was provided through the Pacific Regional Infrastructure Facility (PRIF). During the initial six month appointment, the interim managers proposed the RAP designed to stabilise the organisation and begin the task of turning the decline around. SIWA did not have sufficient revenue to implement the RAP on its own. Emergency funding from development partners was essential. Following a request from SIG, AusAID agreed to support the implementation of the RAP. In July 2011, AusAID and SIG agreed that urban water and sanitation would be included as a priority under Priority Outcome 3 Improved Economic Infrastructure of the Australia-Solomon Islands Partnership for Development. The specific outcome sought under the partnership is an increased proportion of urban population with access to clean and reliable water supply. 1.2 The Recovery and Action Plan 2011 to 2013 AusAID bilateral assistance began in September The modality for this assistance has two elements: Direct grant funding to SIWA to implement the RAP. This funding was initially budgeted at AUD 1.6 million but in May 2012, following a request from SIWA, AusAID provided additional funding of AUD 600,000 bringing total grant assistance to AUD 2.2 million. Engaging the General Manager through the Pacific Technical Assistance Mechanism and directly engaging the Finance and Administration Manager. AusAID has also supported the placement of three Australian volunteers through its volunteer programmes. PIAC also provided further support to SIWA beyond September 2011 by engaging several advisers in the fields of finance and tariff, water supply, procurement, human resource management and network hydraulics and management. PIAC assistance since September 2011 was budgeted at AUD 275,000 but it is not expected that PIAC support will be provided beyond the RAP period. Page 2

11 The RAP was initially expected to be delivered within 12 months but AusAID and SIWA agreed to extend this period to the end of June In Australian financial year AusAID spent around AUD 2.54 million with around AUD 300,000 budgeted for the first six months of The RAP proposed a series of measures and investments designed to halt SIWA s decline, stabilise the operation and delivery of water and enable SIWA to recover to a position in which it was able to begin the long process of improvement. The two key priorities were to ensure its financial survival and improve, so far as was possible, the water supply service provided. The key objectives of the RAP were expressed as: The primary objectives of the RAP are to improve service levels and increase revenue through the implementation of a series of individual, but often inter-related strategies to: Improve the reliability and service levels by replacing key pumping equipment and performing urgent maintenance work; Reducing the number of illegal connections; Improve meter reading accuracy, billing efficiency and the management of debt collection; Improve the safety of drinking water by replacing chlorine dosing equipment and improving the control and monitoring of water quality, including the provision of facilities for water quality analysis; Reducing physical water losses (leakage) from the water transmission and distribution network and through the implementation of a suitable leakage reduction strategy involving finding and fixing the leaks. Leakage detection equipment will be procured for use by a special team, and a strategic stock of pipes and fittings will be procured to enable the leaks to be repaired; Develop the standards of Customer Service provision and improve the image of SIWA; Improve the reliability of financial systems and improve HR management. Prepare a proposal for an increase in the tariff of water charges for approval by the responsible Minister(s). The achievements of the RAP programme are described in this document. However, in summary, the quality of the water supply service has been improved and made more reliable, our standards of customer care have been raised, the organisation is more stable and effective and, above all, the financial health of the company has been improved to a position in which it is making a small profit and funding significant investment in the business from revenue. Critical to Solomon Water s recovery was the Debt Settlement Agreement which eliminated the majority of the debt to Solomon Islands Electricity Authority that had grown to SBD37 million. This relieved the company of a level of debt that was crippling its ability to improve its operations. The Agreement also provided Solomon Water with a programme of incremental tariff rises through to 2015 that provide a degree of financial certainty until then. The Solomon Water Development Plan, 2013 to 2015 presented in this document builds on the new, but fragile foundations of the business that have been established during the RAP programme. It aims to target a number of critical issues that must be addressed to ensure the sustainable development of the business into the future. In one sense, the Plan represents a natural continuation of the development and improvement activities of the RAP. In another sense, it represents a new and crucially important phase in the provision of a reasonable quality water supply service to the urban centres of Solomon Islands. The overall objective of the Plan is to move Solomon Water forward to a position where its infrastructure is capable of supporting an acceptable quality of service to the population and which is based on a firm financial position. Page 3

12 1.3 Organisational structure of Solomon Water At the start of the RAP the company was reorganised with the objective of providing focus on Operation and Maintenance, Financial Management and Service Delivery (customer service provision and quality). More recently, human resource management was added as a key area of focus in recognition of the need to introduce change and develop the people in Solomon Water. For easier understanding of references to functions in this report, the current functional structure is shown in Figures 1 to 5. In anticipation of the increased staff resources that will be required to implement this Plan, significant restructuring of the water supply operations and maintenance function will be introduced to better reflect identified future needs. More minor changes are also anticipated in the HR management and IT management functions. Figure 1: The Management Team Page 4

13 Figure 2: Water Supply Operations & Technical Management Figure 3: Service Delivery and Communications Page 5

14 Figure 4: Finance & Administration Figure 5: Human Resource Management Page 6

15 1.4 Objectives of the AusAID Solomon Water partnership Solomon Water is likely to require on-going support from AusAID both to upgrade its infrastructure, municipal wastewater, and to improve its organisational capacity. AusAID has indicated its readiness to work with Solomon Water to develop and implement this long-term support. Consistent with the Partnership for Development, it is proposed that AusAID and Solomon Water will work together to improve health outcomes in Solomon Islands by increasing the proportion of the urban population with access to clean, reliable and sustainable water and municipal wastewater services. Solomon Water s services are also essential for government, commercial and industrial activities in Honiara and other urban centres. Clean and reliable water supply will contribute to improvements in the business environment and delivery of public services. Underperforming State-Owned Enterprises have imposed a significant financial burden for the Solomon Islands Government over the past decade. Improving Solomon Water s operational and financial performance will result in lower and more predictable costs to the Government which should be restricted to Community Service Obligation payments and planned capital investments. The programme logic is indicated in Figure 6 below. Figure 6: Solomon Water Two Year Development Plan Programme Logic Page 7

16 1.5 Objectives of the Solomon Water Two Year Development Plan, The challenges now facing Solomon Water after the complete implementation of the RAP improvements are identified as: A water distribution network that is largely incapable of transferring water from the mainly adequate large-diameter transmission pipes through the under-sized and hydraulically inefficient smaller diameter distribution network. A water distribution network that is subject to operation under high static water pressures that greatly exceed the ability of the pipe system to withstand such pressures. This and other factors (unauthorized consumption, apparent losses etc.) results in an unsustainable level of non-revenue water losses. A low, but improving public reputation that must be enhanced through the continued development and improvement of much better customer care provision and communications strategies A still fragile financial status that must be consolidated and improved to ensure the sustainability of the organisation. Critical weaknesses in the capacity of the organisation to manage efficiently and effectively. Weaknesses exist throughout the business and its logistical assets. The objective of the Two Year Plan is that Solomon Water provides improved levels of service (in terms of quality, quantity and reliability) to a larger proportion of the population in the existing service areas, based on a sound financial position. In order to achieve this objective we have identified five outputs for the Two Year Plan which are indicated in the Programme Logic (Figure 6) as follows: 1. Improved levels of service for water supply. 2. Improved customer care and communications. 3. Strengthened financial management and administration. 4. Improved organisational capacity. 5. Improved strategic planning. 1.6 JICA projects The JICA Project for the Improvement of Water Supply Systems in Honiara and Auki This major project, originally designed in 2006, was due to commence in However, delays in land acquisition meant that the project construction did not commence until late The value of this grant aid project is JPY2.09 billion (approx. AUD 21.3 million). The construction programme is on target and completion is expected by late August The infrastructure provided by this project is of vital importance to the ability of Solomon Water to provide continuous water supply. It provides Solomon Water with an additional 7MLD from 4 new borehole sources in Honiara (16 boreholes), 5 new treated water storage and 32 km of new transmission mains to improve the distribution of water to the supply areas. Additionally, a turbidity removal plant is provided at one surface water source. The Solomon Water Development Plan includes specific measures to complement this major infrastructure project, address the serious implications for future management of the water network, and ensure that maximum benefit can be obtained from the project. Page 8

17 1.6.2 The JICA Non-Revenue Water Reduction Technical Cooperation Project To complement the improvements provided by the JICA infrastructure project, JICA is also providing a three year technical cooperation to Solomon Water. The JICA NRW Project is developing the technical capacity of Solomon Water so that it will be able to reduce NRW to an acceptable level in the future and maintain it at that level. The value of this grant aid project is JPY 271 million (approx. AUD 2.76 million). The Solomon Water Development Plan has been formulated to complement this important technical cooperation to ensure that maximum benefit can be obtained and that duplication of effort is avoided through a cooperative relationship. 1.7 The Two Year Plan budget The total budget proposed for the Plan is approximately AUD 10 million to be spent over the two years of the Plan. The Two Year Plan budget is shown in detail in Appendix A. The expenditure across the five outputs is shown in Table 1: below. Table 1: Summary of the Two Year Plan budget Programme output Planned Expenditure (AUD) Improved levels of service for water supply 7,744,783 Improved customer care and communications NIL Strengthened financial management and administration 90,000 Improved organisational capacity 1,681,000 Improved strategic planning 180,000 Management 1,800,000 Monitoring and Evaluation 72,000 TOTAL EXPENDITURE 11,567,783 Solomon Water capital contribution ,052,632 Solomon Water capital contribution ,316 TOTAL AusAID contribution required 9,988,836 Capital contributions by Solomon Water are planned at the levels indicated. The contribution for 2015 will be confirmed when we are able to predict operating costs and the actual effect of the final agreed tariff increase in January The capital contributions from Solomon Water are in addition to the operating and overhead costs allocated in the Solomon Water Operational budgets for 2013 and Overall, the proposed contribution from AusAID will represent 86.3% of expenditure and Solomon Water will contribute 13.7%. Discussions will be held with Solomon Islands Government regarding possible capital contributions to support the programme. Page 9

18 2 Improved Levels of Service for water supply An expert network management advisor was engaged between January and March 2013 to provide independent advice on the condition of the network, the remedial work that will be required to improve its performance and the manner in which the network is managed. The expert has proposed technical and management solutions to the issues identified. The 10 improvement packages recommended for implementation are incorporated in the following recommendations. 2.1 Developing operations and technical support System monitoring, management and control In general there is poor management of the water supply function and operations teams are responsible for rationing water on a 24 hour basis. There is no real-time monitoring of system parameters and often operational staff are only aware of a problem with the network following receipt of customer complaints. The status of valves (open or closed) and other operational parameters are not documented and thus the configuration of the system is held only in the memory of field staff. Bulk meters are read manually and there is no daily information available from which the total volume of water supplied from sources can be obtained easily. Operations management is relatively poor with staff fire-fighting problems continuously with no time and resources available to allow them to review the suitability of the configuration of the transmission mains and identify the fundamental underlying causes of problems. Maintenance of the network is sub-standard. There are little scheduled maintenance activities on system components (e.g. air valves, boundary valves, pressure reducing valves, reservoirs, pumping equipment etc.). The network has historically been developed with poor design standards, materials and poor quality of workmanship, including repairs. Power outages caused by planned load shedding or unplanned failures in electricity supply regularly cause pumps to stop. Although the RAP is providing control panels with higher standards of electrical protection and automatic start-up following a power outage, the water supply system can be affected for significant periods after the restoration of power. Standby generators are only installed at a two pumping stations. There is no remote monitoring of pump operation. A major step-change is required in the manner in which the water supply system and the network are managed. It is proposed that permanent monitoring of essential system parameters at sources, reservoirs and at critical locations within the network be installed and linked by telemetry to a central control point to enable real-time knowledge of system performance. Corrective action to problems can be taken more quickly thus minimising the effect of faults on the continuity of water supply. These changes will require that the capacity of Solomon Water operations and technical staff be strengthened significantly so that the system can be monitored and maintained to much higher standards. There must be a move away from the fire-fighting mode of operation to a more controlled and planned method of working, allowing staff to become available for new scheduled maintenance duties. This will require re-training of staff and the recruitment of more appropriately qualified people if they can be found. The introduction of proactive system operation and maintenance will mean that the system is operated and assets maintained in a planned and coordinated manner according to standard procedures and schedules. Page 10

19 Recommendation 1. That all critical operational components of the water supply system be monitored and linked by telemetry to a central control centre. 2. That the capacity of the operational, technical and maintenance functions be strengthened. 3. That a proactive system of operations and maintenance be developed through the preparation of Standard Operating Procedures (SOPs) for day-to-day system operations and maintenance. 4. That an appropriate Operations & Maintenance plan be developed based on specified performance criteria and defined levels of service. 5. That staff be re-trained to monitor and guide operational management in accordance with the SOP s 6. That additional qualified staff be recruited to establish a fully skilled maintenance team (mechanical, electrical, network). 7. That the capacity of the operational, technical and maintenance functions be strengthened. 8. That additional transport be provided to facilitate mobile maintenance units 9. That external specialist input is appointed to advise on maintenance 10. That external specialist input is appointed to advise on operational planning. Benefits Facilitates proactive operational management of the system Problems resolved before they impact on levels of service Effective and efficient deployment of resources Data can be used for network hydraulic model calibration and NRW management Improved levels of service Service interruptions due to breakdown are minimised Asset performance and service life is maximised Page 11

20 Cost Table 2: Costs for developing operations and technical support Item Activity Cost (AUD) 1 Assessment of SCADA and telemetry needs 30, Install permanent monitoring of essential system parameters at sources, reservoirs and at critical locations. Install remote telemetry units (RTUs) at selected monitoring locations with SCADA (supervisory control, automation and data acquisition) feed to central control terminal (PC) Recruit and train electronics technician to maintain the SCADA system as required (training cost) Development of O&M plan detailing SOPs for day to day system operation and maintenance Re train selected operations staff (four) to monitor real-time system performance to guide day to day operational management of the system following SOPs ( 4 workers x 3 months) 100, ,000 15,000 50,000 40,000 7 HR recruitment - 3 x maintenance technicians SW Budget 8 4x Small maintenance van x International maintenance specialist (6 months). Provides training and guidance to maintenance staff 1x International operational planning specialist (6 months). Provides training and guidance in system operation and management Included in vehicle budget 180, ,000 Total 795, Hydraulic modelling of the network A powerful hydraulic modelling package will be an essential tool in the identification or confirmation of pipes in need of upgrade, and in designing and sizing the new pipe systems to be installed. The cost of purchasing a suitable package and building a static model of sufficient accuracy would be more than justified in the savings that could be achieved by correct and efficient design and sizing of new pipeline construction and in the selection of the most economical mode of operation of the system. Presently, Solomon Water is employing a pipeline hydraulics consultant to advise on several aspects of network management in Solomon Water. A demonstration model has been built using Bentley WaterGEMS modelling software. This model has been used to identify and illustrate problems in the system and demonstrate the benefits that an accurate model could achieve. It is highly recommended that a detailed static network hydraulic model be constructed by consultant advisors in conjunction with the Solomon Water team using proprietary software commonly used in the Pacific region for ease of software support and training. The Benefits of developing and maintaining a powerful network model can be: Page 12

21 The company engineers possess a good understanding of the performance of the network under a variety of operational conditions and therefore they are able to define the minimum pressures and flows that can be provided to the customer. We are able to understand the behaviour of water in the network and manage that behaviour more effectively. We are able to manage the operation of the water supply system more economically by, for example, selecting the most economic combination of pumps to operate to satisfy demand. The causes of supply anomalies can be identified from the model and possible solutions can be tested on the model prior to any investment commitment. Network rehabilitation schemes can be tested on the model to assess the benefits and costs of various rehabilitation options. Rehabilitation work can be prioritised by identifying those works which will create the greatest benefit to the customer at the lowest lifetime cost. Extensions and upgrades to the network can be defined and planned using demand forecasts and estimates of capital costs can be calculated. The system can be linked to the company GIS (Geographic information) and CRM (Customer relations Management and Billing) systems for complete availability information and identification of demands. Recommendation 1. That fully-featured network modelling software is procured. The preferred software is Bentley WaterGEMs based on its ease of use, range of functions, regional availability of technical support and its widespread use in the Pacific region. 2. A calibrated network model is developed using specialist inputs for detailed systems analysis. 3. A small network modelling unit is established to develop new models, collect field data for calibration, and maintain and update models of all Solomon Water managed systems. Cost Table 3: Costs for hydraulic modelling Item Activity Cost (AUD) 1 Procure fully featured network modelling software (2000 pipe perpetual license). Cost includes maintenance subscription (2 years) 20,000 2 Training in modelling and software 10,000 3 Develop a calibrated network model using specialist inputs for detailed system analysis (consultant input estimated at 3 months) 80,000 Total 110,000 Page 13

22 2.2 Reducing non-revenue water When the RAP was implemented Solomon Water suffered from a high rate of non-revenue water (NRW) losses. One of the objectives of the RAP was to begin the process of reducing these losses through the gradual implementation of a coordinated NRW reduction strategy that would involve significant input from various sections of the organisation. Unfortunately, although attention has been paid to each of the components of the NRW reduction effort, there has been little effect on the actual level of NRW. In fact, the most recent studies suggest that NRW may be as high as 60%. The following Table 4 illustrates the constraints to progress: Table 4: Actions, constraints and results in NRW reduction during the RAP Action Constraint Result Better monitoring of bulk imports Increasing detection of physical losses Increasing network maintenance activity Improving in meter reading and data entry Cleaning-up the Billing System Poor maintenance of the water resource facilities due to limited staff resources and poor supervision of the water source facilities. Poor management capability for leakage detection. Insufficient skills and knowledge of Team Leader and field workers. A higher level of activity is required but will require additional field staff, vehicles and pipes and fittings. The meter reading team is still too small, especially given the added responsibilities. Inaccuracies of meter reading are still common and largely due to the mix of imperial and metric meters, insufficient handheld PDA s and the deficiencies inherent in the aged NCS customer billing system. The NCS billing system is difficult and cumbersome to use. Staff are not trained in the system and automatic reports are not available to help speed up the process of identifying errors, duplicate entries and dead accounts. No significant result obtained No significant result obtained Maintenance of the network has been increased substantially with the availability of additional fieldstaff and pipes and fittings. The work has contributed to leakage reduction and to improvements in water supply to localised areas. The quality of meter reading has been improved through the replacement and expansion of the meter reading team, dedicated supervision of the team and improved systems for data entry. Meter readers have been given additional responsibilities of reporting meter faults, illegal connections and making simple disconnections. The customer database has been cleaned and errors removed but there is still more work to complete. Page 14

23 Action Constraint Result Disconnecting unauthorized (illegal) connections Eliminating unmeasured connections connections without a meter. The disconnection process can often create anger and threat to our field staff and Customer Care staff. The disconnection process is costly in terms of fittings and replacement pipes. Management resources to implement a conversion programme have not been available. Implementation of a conversion programme in the provinces has not been possible due to inadequate staffing of the Provincial operations. Since mid-2011 we have operated a regular programme of disconnections. On average, over 30 disconnections per week have been performed with the objective of converting them to authorized connections. A programme of conversion has been implemented but on too small a scale to produce a significant result. Currently, there are estimated to be 2,400 unmeasured domestic connections. The major activities to reduce NRW in Solomon Water are: The JICA Non-Revenue Water Reduction Technical Cooperation Project The project will develop between 15 and 20 pilot demonstration zones in which the various aspects and techniques for NRW reduction will be implemented by Solomon Water staff working under the supervision and direction of experts provided by JICA. The Project Purpose is stated as the non-revenue water ratio in Honiara is reduced. The project is strongly based on capacity development and training and the by the end of the project Solomon Water will possess the capabilities to reduce and control the level of NRW in the future. In addition to the expertise and training provided through the project, a range of equipment is also being provided by JICA: A medium sized excavator 2 utility vehicles Leakage detection equipment Ultrasonic flow meter Pipe locator Data loggers Bulk water meters Hand-held PDM s for meter reading data capture Domestic water meters (1000) Other equipment and tools PC s and office equipment Prior to the inception of the project, Solomon Water established a Non-Revenue Water Task Force. A NRW Task Force Team Leader and two full-time assistants are major counterparts of the project. The remainder of the Task Force is made up of staff from all parts of the organisation that are seconded as required to project whilst also ensuring their own functional responsibilities are met. As the activity of the project increases it will be necessary for Solomon Water to provide more staff dedicated to the project. Solomon Water also contributes all pipes and fittings required for replacement pipes, leakage repair and service connections. Page 15

24 2.2.2 Pressure management Water sources are at high level (typically over 130 metres above sea level) and feed all areas down to sea level. Historically, mains have been poorly placed without consideration of the topography and network components designed to reduce hydraulic pressures such as break-pressure tanks and service reservoirs have been bypassed because they have been leaking badly. This situation means that internal pressures in the pipe systems at lower levels are far in excess of the capacity of the pipes to bear them. The lack of pressure control within the system is identified as being a main contributor to the suspected high level of leakage. Without effective pressure control any improvements in source inflows to the system will result in further increased pressures and consequent increased leakage. The replacement of system inflow pumps under the RAP at Kongulai Spring, Mataniko, and Kombito will increase the amount of water available. For example, the work at Kongulai will enable inflows to Tasahe reservoir to be increased to up to 150 l/s and additional water will be available to facilitate improved 24 hour service delivery to 6 supply zones in west Honiara. However, these increased inflows will raise system pressures further. Recent hydraulic modelling has confirmed that the work in progress under the JICA Project for the Improvement of Water Supply System in Honiara will increase overall system inflows from 25MLD to 38MLD and improve levels of service in all supply zones except some zones in the east of the city which will see no improvement unless system connectivity is improved. In those areas that will benefit, the improved supply will increase system pressures. Increased pressures will cause increased leakage reducing the benefits of more water being available for supply. Pressures will not be as good as anticipated and may possibly return to their current low levels. Of the increased volume of water pumped into the system, a significant volume will be lost through increased leakage. Unless pressure management is introduced prior to the introduction of the increased volumes of water, there is the potential that the high pressures created could result in further damage to the pipe system. It is therefore a matter of urgency that Solomon Water introduces effective pressure management and control into the network prior to August Pressure management is an essential element in systems operating in topography such as is Honiara where sources are at high level and supply zones are at low level. The Solomon Water NRW strategy must include comprehensive pressure management as a key element to enable Solomon Water to reduce and control leakage. Additional benefits are also brought to the customer through lower delivery pressures. Pressure management will entail: The separation of the system into discrete district meter areas (DMAs); The creation of pressure control zones which can be the same or as, sub-divisions, of the DMAs. It is planned that 11 pressure control zones will be established; The installation of a flow meter and a pressure reducing valve (PRV) on the inflow mains to each of the pressure control zones; The installation of mobile telephone GPRS/SMS enabled PRV controllers (with feedback loop) on each of the PRV s to continuously monitor and control the performance of the PRV s; Routine and regular maintenance of the PRV s and the controllers to ensure proper continuous operation. Page 16

25 Recommendations That DMAs are created That by-passes, flow meters and pressure reducing valves be installed on all pressure management zones and housed in reinforced concrete chambers constructed to international standards That GPRS/SMS PRV controllers be installed with all PRV s Benefits Distribution mains will be protected from high static pressures and new bursts occurring Existing leakage will be reduced Provides environment in which leakage can be proactively controlled Improved customer comfort levels Improved understanding of leakage nature and distribution throughout the service area Increased speed of burst repair Water loss reduction activities are targeted and set against measurable performance indicators Estimated costs Table 5: Costs for installing pressure management Item Description Cost (AUD) 1 Procure PRVs for all locations not protected by break pressure tanks (estimated 10 x 100mm, 1 x 150mm required). Cost includes Technolog Ecowat electronic pressure controller or similar 30, Procure electromagnetic battery-powered flow meters (ABB Aquamaster S or similar) for 11 locations Construct by-pass and chamber (works may be included with DMA set up) a district meter to be installed with strainer on same by-pass 30, ,000 4 Customer awareness campaign (pressure reductions) in 13 zones SW budget 5 Set up selected existing supply zones as DMAs at high priority zones. Works include procure and install of district meter, boundary proving (13 locations). 100,000 6 Procure and install GSM data loggers for remote monitoring of DMA s 25, Provision of training to strengthen the capacity of the NRW task force and role expanded to include management of pressure and leakage control zones. Geo spatial referencing of all registered connections including those currently without a meter fitted. Work requires application of Trimble type GPS/ PDA in field over 2 to 3 months to ensure all connections captured Establish MapInfo GIS link to customer billing database to enable improved access to meter data and estimations of supply zone consumption. 20,000 SW budget 5,000 Total 510,000 Page 17

26 2.2.3 Achieving more rapid progress in NRW reduction Solomon Water must pursue an aggressive strategy for NRW reduction using the strategies, techniques and knowledge learned through the JICA NRW project if we are to fully address the serious problem of NRW losses. The following targets for NRW levels in future years are proposed in Table 6 (subject to more detailed review with the JICA/SW Team). These targets are considered achievable although challenging: Table 6: Non-revenue water targets Current % 42% 35% 30% 25% 20% held In order to meet the human resource needs of both the JICA NRW project and an aggressive NRW reduction programme, it is intended to increase the number of directly employed engineering, supervisory and field staff. Estimated costs Table 7: Costs for NRW reduction Item Activities Cost (AUD) 1 Develop standard specifications for material and modify procurement procedures to ensure no substandard materials ordered or available for installation. SW budget 2 Training of supervisors in quality pipeline construction and repair 20,000 3 Develop procedure for effective rapid registration or removal of illegal connections. Procedures to include improved logging and actioning of reported illegal connections SW budget 4 Disconnection of illegal connections SW budget 5 Meters fitted to all existing connections (unmetered, faulty, unreadable etc.) 260,000 Pipes, fittings and materials for leakage repair or replacement of sections of 6 mains 2 1,300,000 Additional staff required for: Field AUD its Leak repair teams, disconnections teams 7 SW budget Meter reading Billing data input, bill processing and debt recovery Meter fitting, repair and replacement 8 Vehicles and plant 70,000 Total 1,650,000 2 The cost of materials required to support NRW reduction activities for both the JICA NRW Project and the Solomon Water activity is estimated at a minimum of AUD 650,000 per year. This is based on placing 2 orders per year similar in size and cost of the pipes and fittings package (RAP/SD/02) procured under the RAP. The procurement of domestic meters, estimated at 3000, required will also be supported by this budget. Page 18

27 2.3 Improving the capacity of the network The completion of the JICA Project for the Improvement of Water Supply Systems in Honiara and Auki in September 2013 will provide Solomon Water with up to an additional 7 MLD of water available for distribution. The replacement of pumps through the RAP will also generate an increased volume. Over the past 20 years, the smaller diameter network has been extended in a haphazard manner creating a complicated and hydraulically inefficient small diameter distribution system. Due to increasingly serious budget deficiencies and as a false economy, very small distribution pipes (25mm to 50mm) have been laid over long distances and intended to supply many households. The pressures that are available from the transmission networks to force water through these small diameter systems are limited. The level of leakages, unauthorized connections and poor quality construction severely exacerbate the problem. The ultimate result is that water supplies must be alternated (rationed) on a regular basis so that pressures are increased to provide water to subzones of a network. It can be expected that demand from these systems will increase substantially due to: Increased pressures that will encourage a higher rate of leakage and pipe bursts in the ageing and poorly constructed networks. Increased availability that will increase the demand for new supplies. Increased availability that will increase the individual household consumption of water. Population growth over the next 5 to 10 years may increase overall demand by up to 40%. Given the above factors, it is highly likely that a large proportion of the small diameter distribution network will be unable to supply sufficient water at acceptable levels of service defined in terms of pressures and flows. The implication of the poor hydraulic capacity inherent in the current distribution system is that the promises of 24/7 water supply for all will not be realised unless the system s capacity is rapidly upgraded where necessary. In addition, the promise of an increased area of supply to provide water to areas heretofore unable to be provided with a water service cannot be realise without first constructing (or replacing) a water distribution network in those areas. It is estimated that 60km of small diameter pipelines are in need of replacement either due to their condition or their inadequate size. Clearly, the scale of cost and the volume of work required are such that an upgrade programme would span several years. The speed of renovation or replacement will be dictated by the amount of capital available for the work and by the resources available to undertake the construction programmes. At this time it has not been possible to put an estimate on the capital cost of replacement. The upgrade programme could not be performed by Solomon Water as it lacks the workforce and contract management skills for such a large pipe laying project. Therefore, Solomon Water would need to contract-out the work. Solomon Water would specify the standards of construction and supervise the contract(s). Alternatively, turnkey contracts could be let in which a construction company designs, procures and installs the new pipelines to standards specified by Solomon Water. A systematic method of prioritisation of all work proposed in the programme will be required if the benefit of expenditure is to be maximised. For example, this could be based on achieving benefit for most customers at the earliest possible time and at least capital cost per customer connection. The use of the hydraulic modelling package as a decision tool will be essential. It is recommended that we seek the advice of an international pipeline consultant in setting priorities as well as Page 19

28 construction standards, design criteria for hydraulic capacity and the award of a pipeline replacement contract. Considering the duration of the network upgrade programme (potentially between 5 and 10 years depending on the desirability of speed and availability of capital for investment), it will be necessary to perform NRW activities on the existing networks in order to reduce NRW more rapidly. Clearly, we would prefer to avoid duplication of investment and effort between network upgrade and NRW reduction, but this may not be possible in the majority of cases. Benefits Infrastructure has better performance and is easier to operate and maintain Facilitates operation of distribution at lower pressures Customers receive improved levels of service Length of mains for which Solomon Water is responsible is reduced Meter reading more efficient Estimated costs Table 8: Cost of improving the capacity of the network Item Description Cost (AUD) 1 Review and select appropriate international design and construct standards to local Solomon Island application 60, Trial relocation of 200 worst case meters to property boundary (i.e. move meter to roadside to shorten the service pipe) Solomon Water repair teams properly supervised by supervisors whom are trained in quality construction and repair SW budget SW budget 4 Develop a prioritised distribution main replacement/ upgrade programme SW budget 5 Commence rolling replacement of substandard distribution mains (cost for 2 years at 6km/ year) ESTIMATED COST ONLY 1,500,000 Total 1,560, Improving the connectivity and reliability of water supply Hydraulic modelling by the expert network consultant indicates that Solomon Water could benefit from improved options for utilisation and optimization of sources whilst increasing flexibility to meet changing demands. In order to achieve these benefits significant capital investment will be required Replacement of transmission main from Titinge to Vavaya Ridge To ensure that the full benefits of the current RAP pump upgrade works (RAP/SD/01) can be realised once the existing trunk main system has been adapted to suit the new system layout required under that JICA improvement works, the existing trunk main system between Tasahe and Skyline Reservoirs should be selectively replaced from Titinge to Vavaya Ridge. Page 20

29 Benefits Improved flexibility of source utilisation. Increased transfer of water to Skyline Reservoir from Tasahe Reservoir of up to 6 MLD. Reduced operating costs through lower use of the Mataniko Bore field Estimated costs Table 9: Cost of improving connectivity Titinge to Vavaya Ridge transmission main Item Description Cost (AUD) 1 Construction of 1200m of 250mm diameter MDPE main between Titinge Reservoir and Vavaya Ridge supply zone connection. 450,000 2 Main reconfiguration including valving operations as required 30,000 Total 480, Improved storage and feeds to distribution The objective is to improve the transfer of water to the East Kola and Upper West Kola areas of the system and improve storage and pressure management of the supply zones in the East Kola area. It is predicted that the East Kola area will be least likely to benefit from any of the improvement projects currently being implemented and the new Borderline Bore field provided under the JICA Project for the Improvement of Water Supply Systems in Honiara and Auki will not be fully utilised unless the transmission system is improved. In summary, a new treated water service reservoir is required at East Kola and sections of the existing feed from Skyline reservoir to East Kola reservoir need to be constructed. Considerable mains reconfiguration will be required. Benefits Increased storage for zones in East Kola and West Kola Upper areas Pressure management of zones in East Kola and West Kola Upper areas Improved transfer of water between Skyline and the new East Kola reservoir Increased potential for transfer between Borderline and East Kola reservoir. Page 21

30 Estimated costs Table 10: Cost of improving connectivity new service reservoir at East Kola Item Description Cost (AUD) 1 Construct new 1.5ML steel storage reservoir on site of existing reservoir. Cost includes inlet and outlet pipework as required, demolition of the existing disused tank and clear site 700, m x 250 dia. MDPE main 650,000 3 Main reconfiguration works as required 20, Panatina Borehole Field Total 1,370,000 The Panatina Bore field is important for the maintenance of adequate supplies to the Ranandi industrial and commercial zone. The internal casing of Borehole No. 1 has collapsed and the borehole has been shut down. Borehole No. 3 has a poor yield. This source is critical to maintain supplies to the eastern districts. Its importance is emphasised as, even after the commissioning of the JICA Project for the Improvement of Water Supply Systems in Honiara and Auki, this area will not benefit from those improvements in terms of improved water supply. The bore field generally suffers from poor storm water drainage and surface water infiltrates the bores during heavy rainfall. It is proposed to protect the sources by improving the drainage systems and improve the access road which becomes impassable during wet weather. Benefits Increased availability of water in a water supply area unserved by other sources Improved water availability to the economically important industrial area of Ranadi Improved water quality. Estimated cost Table 11: Cost improving reliability - borehole replacement at Panatina Item Description Cost (AUD) 1 Replace these two defective boreholes by the construction of two new bores each of 200mm diameter to a depth of approximately 60 metres. 300,000 2 Improve drainage to protect water quality and improve the access road 100,000 Total 400, Borehole maintenance Routine maintenance of boreholes is necessary on a 3 to 6 monthly cycle to maintain their full yield. This maintenance involves the removal of the header pipes and air blasting the internal bore. A mobile compressor is required for this purpose. Page 22

31 Estimated cost The estimated cost of the mobile compressor is AUD 9, Standby generators Electricity power failures regularly affect the operation of our pumping stations and cause failures in our ability to supply water on a continuous basis. The Head Office is also affected by power cuts causing interruptions to work. Stand-by generators are required at sites where no stand-by generator is installed and a new generator is required at Headquarters. A replacement unit is necessary at Kongulai to meet the power demands of the new pumps installed under the RAP programme. It is envisaged that a phased replacement/installation of generators will be implemented with Kongulai being of highest priority but the existing unit may be suitable for use at an alternative site. The full requirement, with estimates of cost, is detailed in Table 12. Benefits Improved productivity at Head Office and IT system availability uninterrupted. Interruptions in water supply resulting from electricity power outages eliminated. Disinfection of water supply uninterrupted Estimated cost Table 12: Cost of stand-by generators Location Quoted Capacity (kva) Generator Cost ($SBD) Transfer Panel Cost ($SBD) Installation ($SBD) Delivery ($SBD) Total ($SBD) Total (AUD) 3 Kongulai ,236 86,764 57,830 36,000 1,089, , Rove ,310 23,680 37,720 15, ,910 39, Mataniko ,990 41,344 46,970 18, ,304 56, SIWA Kombito ,310 23,680 46,970 18, ,960 40, Noro ,988 41,344 57,830 92, ,162 66, Auki Kwaibala ,310 23,680 46,970 59, ,960 45, Auki Gallery ,041 23,680 46,970 59, ,691 45, Point Cruz ,041 23,680 37,720 15, ,641 38, Pumping Station KG6 Pumping ,041 23,680 37,720 15, ,641 38, Station Solomon ,215 86,764 57,830 18,000 1,068, , Water Office Complex (3 Buildings) Total 3,866, , , ,600 5,084, ,783 3 Exchange rate $1 AUD = $ SBD Page 23

32 2.4.6 Electrical Engineer As a result of delays and unforseen issues for the installation of new pumps at the Kongulai source, it will be necessary to retain the services of an electrical engineering advisor for 2 months to complete this project. By doing so, we will maintain continuity of project management at a crucial phase of the contract. Estimated cost The estimated cost is AUD 60, Transportation of heavy equipment The existing 8 tonne truck with a hydraulic crane is aging and in need of replacement. It is essential that Solomon Water has a truck of this type for loading and transporting heavy equipment and machinery requiring maintenance and for borehole maintenance. Estimated cost The estimated cost of the vehicle with hydraulic crane is AUD 40, Security at operational sites The security of our sites is a major concern as unauthorised access and vandalism threatens the continuity of supply and pollution of water. It also presents a risk to the safety of the public. Good quality security fencing is required at several of our sites. We propose an overall budget for the provision of security fencing at sites most at risk. Estimated cost Our proposed budget is AUD 50, Improving water quality Disinfection Improvements in water disinfection have resulted in improved compliance with WHO recommendations. Our compliant has increased from below 50% at the start of the RAP to a current level of 75%. The new chlorine dosing systems purchased under the RAP are now being installed and we expect to achieve compliance in excess of 95% with the new equipment. There remain a number of problems with disinfection: 1. We often need to overdose water which can lead to customer complaints as a result of the high chlorine residual. 2. Chlorine dosing is not flow proportional and this can result in under- or over-dosing. 3. There are no breakdown alarm facilities at the dosing locations to warn of failure of dosing. 4. There are insufficient permanent sampling points distributed throughout the distribution network and therefore it is not possible to gauge the chlorine decay times and chlorine residuals at the extremities of the network. We intend to conduct trials on automatic control of dosing rates and breakdown monitoring. If successful, we can develop more reliable and consistent water quality control. We anticipate that future incremental improvements in water quality management will be funded by Solomon Water. Page 24

33 2.5.2 Water Quality Monitoring To meet the WHO recommendation for water quality sampling, it will be necessary to significantly increase the number of sampling locations and the frequency of water quality sampling and analysis. With the exception of an additional vehicle that will be required to facilitate this activity, it is anticipated that Solomon Water will fund the extension of the water quality sampling programme Storage of sodium hypochlorite The storage facilities for water treatment chemicals are unsuitable. We estimate that savings could amount to 20% to 30% of annual expenditure if the chemicals are stored well. We propose to construct a purpose-built storage facility Catchment Area Management The surface catchments are under a growing threat of pollution from urban development. Within the Honiara City boundary continued and largely uncontrolled development of housing served by sub-standard septic tanks is causing the bacteriological quality of borehole water to deteriorate. We are planning to perform a study on the effects of development on our borehole sources and perform more regular monitoring of the raw water quality. It is anticipated that we will use the services of volunteer water quality scientists to implement the study and formulate our monitoring procedures Drinking Water Safety Plan Solomon Water has not yet assessed the potential risks to water safety through the water supply process from source to tap. This assessment and the resultant plan to eliminate or reduce the risks identified is a Drinking Water Safety Plan. The Water Quality Team will lead the risk assessment and preparation of the Drinking Water Safety Plan. 2.6 Protecting the environment Solomon Water is responsible for the management of municipal wastewater in the Solomon Islands but only provides this service in Honiara. Here, the existing system is aging, dating from the Colonial period and only serves a relatively small proportion of the population. The system is under-capacity and inadequate. Municipal effluent collected by the system is discharged to sea without treatment. The current National Development Plan of the Solomon Islands gives priority to the provision of safe and clean water to the population and this priority is reflected in the Solomon Water development Plan. Therefore, although the Honiara wastewater system is inadequate and in need of improvement, priority is given to improving water supply services. However, It is intended that the issue is addressed by the Five Year Strategic Plan (See Section 6), through the development of a high level municipal wastewater plan. Currently, the existing municipal wastewater system is presenting some serious issues regarding pollution of the environment. Therefore some remedial works are necessary and will be funded through this Plan Sewage pumping stations Point Cruz and King George VI Both sewerage pumping stations suffer from repeated breakdowns, surcharge and overflows. These give rise to frequent complaints from the public about odour, pollution and inconvenience Page 25

34 and present a risk to public health. Both stations require some refurbishment including the replacement of pipework, pumps and electrical control panels. Estimated cost The estimated cost of refurbishment is AUD 125, Sewer Outfalls Municipal waste collected by the sewer network is disposed to the sea through 13 sewer outfalls, two of which are pumped. All outfalls have been damaged on or above the shoreline. Raw sewage is often discharged to beaches creating a health risk to the public and odour complaints. Solids are not disbursed to sea and are being carried back onto the shoreline causing widespread pollution. All outfalls should be replaced with new HDPE outfalls extended to discharge well below the lowtide mark. However, careful design of new outfalls is required. We do not propose to include this work in the Two Year Plan but wish to raise awareness that the problem does exist. Page 26

35 3 Improved customer care and communications 3.1 Improving customer care The achievements of the Recovery and Action Plan The RAP identified many weaknesses in the manner in which Customer Services were provided or, more accurately, not provided. The RAP has enabled Solomon Water to embark on the process of developing the nature and quality of customer care and reduce the widespread criticism received from many quarters that the customer service provided by SIWA was inadequate, unresponsive, inefficient and inconvenient. Table 13 below lists some of the weaknesses identified at the beginning of the RAP, describing what has been achieved during the RAP and what need to be done further: Table 13: Customer Care progress and future action Status at start of RAP Activity during RAP Proposed enhancements The concept of Customer Service in SIWA was synonymous with billing. The provision of other services which involved direct contact with the customer was poorly organized, ineffective and unresponsive. The Customer Service Centre at the SIWA Head Office was unwelcoming and did not convey an image of professionalism, reliability and caring. SIWA did not provide any alternative methods for customers to pay their bills e.g. payment at banks, credit cards, through the internet etc. The Customer Care Team has been created with the emphasis placed on the quality of the customer experience and efficiency. A new Service Delivery and Communications Manager has been appointed. All members of the Team have received training. The new customer care centre at Point Cruz has been fitted out and we propose to move to this new location in March This remains the same mainly because the banking systems in Solomon Islands are limited. The Customer Care team needs to be enlarged and receive more advanced training in service skills and general administration. Communications between customer care staff and between operations and finance must be improved.. We propose to further enhance the professionalism of our people, the Customer Care environment. We propose to accept card payments from each of the three primary retail banks operating in Solomon Islands. The handling of telephone calls queries, customer complaints and business related calls was poor. SIWA had an old telephone exchange with only three incoming lines. Answering time for calls was too long and many calls went unanswered. The receipt of out-of-hours calls relied on security staff redirecting them to the duty manager on his mobile phone. This issue is much improved through the installation of a new telephone system, an improved organisation and training of our Customer Care Team and the appointment of more people, there remains much room for improvement. We propose that a dedicated receptionist be assigned to answer and direct all incoming calls to relevant sections. We intend to: 1. Install a Customer Hot Line. 2. Provide 24 hour emergency call response and emergency operational call-out cover. 3. Develop 24 hour monitoring of the operation of our water supply system through a simple telemetry system. Page 27

36 Status at start of RAP Activity during RAP Proposed enhancements Operational staff did not provide operational information to Customer Service staff in order to respond to complaints efficiently. The management of new connections was poor and there was a back-log of over 400 applications waiting action. There was no system of recording or tracking the resolution of customer complaints or queries which often remained unresolved. Organisational enhancements and the developing customer orientation of all staff have improved this situation. Operational staff now provide timely advice to the Customer Care Team. Daily briefings and weekly coordination meetings are held. Improvements have been made and the waiting list is now less than 40. Delays are generally related to insufficient numbers of plumbers employed by Solomon Water. Improvements have been made but Solomon Water is still reliant on a paper system to monitor the progress of customer query resolution. We intend to implement a Management Information System that will enable real-time operational information to be available to all staff. New Connections, Disconnections (Illegal or for debt Recovery) and Meter repair and Replacement have been merged into one management unit under the Service Delivery Manager. We propose to implement a Customer Relations Management System to record each customer contact and track their resolution. The CRM will retain a complete history of all interactions with individual customers Proposed improvements 1. Introduce a Customer Relations Management System Solomon Water has no systems that allow us to record and manage the receipt and resolution of customer enquiries and complaints. In the absence of systematic recording of each customer contact, it is difficult to verify what actions have been taken or what assistance has been given to resolve the customer s problem. We cannot reliably measure our performance in resolving our customers problems. Recommendation Solomon Water will purchase, install and maintain a dedicated Customer Relations Management System (CRM); Benefits Solomon Water will be more responsive to customer enquiries and requests, leading to better customer relationships Improved enquiry follow-up and complaints handling will enable Solomon Water to measure its performance against the Customer Charter that will be introduced. Estimated cost The cost is included in Section 6 Information Technology. Page 28

37 2. Enhance the ease of water bill payments Customers have informed us of three main impediments to paying bills in full and on time: The need to visit Honiara CBD to make payments; A lack of payment options with no credit card or EFTPOS facilities; The amount of time taken to receive bills due to poor postal service and lack of addresses. Recommendation Solomon Water will: Introduce EFTPOS and credit card payment facilities at its Customer Care Centres. Provide an option to customers for the delivery of bills by Investigate methods by which the number of locations authorised to accept payments on behalf of Solomon Water is expanded. Benefits A higher rate of bill payment will be encouraged; Greater customer satisfaction will be generated; Solomon Water will be shown as responsive to customer needs, leading to a better corporate image; Postal costs will be reduced; There will be less cash handling on company premises. Estimated cost There will be no additional costs associated with these developments. We will also review the need for additional customer care staff so that our customer care centre can remain open for longer hours, particularly during lunch hours and weekends. More advanced training will be provided through the Learning and Development budget. Page 29

38 3.2 Improving the image of Solomon Water The image that Solomon Water presents to its customers and other stakeholders is important in that it provides a reflection of the quality of management and service provision. An image that is characterised by professionalism and which promotes a caring, communicative organisation will support Solomon Water as water charges increase and the willingness of customers to pay is challenged. A good image instils confidence in both the service and the product on the part of all stakeholders provided that the image does not overstate the reality of the service. During the period of the RAP the public perception of Solomon Water has gradually improved. Although service levels have not risen for all customers, there have been noticeable improvements in many areas of Honiara through better management of water supply, improved reliability of supply and improved responsiveness to customer queries, problems and network maintenance needs. The start of the JICA Project for the Improvement of Water Supply Systems in Honiara and Auki has been highly visible to the public with construction projects in several parts of Honiara. The public can see positive actions through the Project which demonstrate Solomon Water s commitment for the future. Solomon Water has initiated a growing pro-active public relations policy using all sections of the media and also through direct interaction with communities. There has been close cooperation between Kitano Construction and Solomon Water to promote the construction work being done and explain the need for the works to the public at large and communities directly affected by construction. A new corporate branding will be officially launched and this is intended to signal that we are a new organisation that is shrugging off the poor reputation of the past. The launch will coincide with the opening of the new, centrally located, Customer Care Centre in Honiara. Whilst recognising that the image of Solomon Water has improved, the organisation has much more work to do to ensure that our corporate image is enhanced in line with future improvements in water services. Table 14 below summarises the progress that has been made: Table 14: Proposals for enhanced communications Status at Start of RAP Current Status Proposed Enhancements The poor image results from a combination of the low levels or quality of the overall service which SIWA provides. The image has improved as our service provision has improved. Improvements in the levels and standards of service delivery throughout the organisation will continue under this Plan. The image is not enhanced by the manner in which some SIWA staff interact within the community. The appearance and state of our offices. All staff have received basic training in customer service. They are better equipped to deal with customers more effectively although much more effort is required. The condition and age of the buildings, their limited size and their appearance remains a major barrier to improving our image. We will continue to drive a cultural change throughout the organisation to reorientate staff towards a focus on the customer and the public. The issue of accommodation is addressed elsewhere. Significant progress in improving the quality of our service will be delayed if the accommodation issue is not solved. Page 30

39 Status at Start of RAP Current Status Proposed Enhancements The behaviour of our staff (including anecdotal evidence of dishonesty, petty corruption, inefficiency, casualness, unauthorized use of vehicles & etc.) results in a negative public perception of SIWA. While our operational sites have been improved, much work is yet to be done. In particular, good security fencing is urgently required. The quality of staff has improved and the organisation is moderately more efficient. Corruption has been reduced (although possibly not completely eliminated). Staff attitudes and behaviours need to be modified. Continued improvement in the quality of the workforce is to be realised through better recruitment techniques, increased training and mentoring. SIWA makes almost no attempt to interact with the public through media and community meetings. Solomon Water is pro-active in the media and community with staff dedicated to communications. Our communications activities will be further enhanced. See following sections Proposed improvements In addition to the general improvements in management described in Table 14, the following initiatives are planned: 1. Communication campaign planning 2. Development of a website for Solomon Water 3. Customer attitude surveys Communications campaign planning Recommendations A focus on coordinated communications activities running alongside projects/initiatives from inception to completion (with designated budget and resources) will result in better community and stakeholder understanding of Solomon Water s business. Solomon Water must be able to maximise the promotional benefits of the major investments and resultant service improvements that will be implemented during this time. In particular, the commissioning of the JICA-funded infrastructure, the Nonrevenue water activities and the individual improvements to be made under the Two Year Plan can all be used as powerful PR events to promote Solomon Water, water savings education and awareness. Develop specific programmes of communication that recognise and address the importance of water to the female population and young children through targeted messages relating to water and hygiene. We will develop these programmes using the materials already developed in the Solomon Islands rural water and sanitation initiatives, WASH and WHO programmes. Benefits Community and stakeholders will understand water supply challenges and improvements; Better knowledge of water issues and Solomon Water s business in the community will be encouraged; Page 31

40 Solomon Water will have greater ability to change water use behaviours and cultural norms regarding water use and the value of water; Solomon Water will contribute to the overall improvement in health through education in water-related health, hygiene and sanitation issues; Better communications will improve Solomon Water s overall image. Estimated cost No additional funding will be required. Development of a website for Solomon Water Solomon Water does not currently have a dedicated online presence. Facebook is utilised for sharing photographs and short messages and the Facebook page has become increasingly popular. However, there is no way for customers to access detailed information about the company. Solomon Water is missing a very important mode of communicating with its customers and this means that customers must visit the Customer Care Centre to obtain information. Recommendations The development of a Solomon Water website is proposed. To facilitate the management of the website, and to enable unrestricted future development, a Content Management System (CMS) is recommended. To facilitate the addition of website functionality (for example to support on-line bill payment, on-line account viewing, on-line applications etc.) it will be necessary to develop a professionally constructed website. Benefits Community and stakeholders will be able to obtain up-to-date instantaneous information about Solomon Water. Stakeholders, including schools and students, will be able to download information rather than visiting offices. Better knowledge of water issues and Solomon Water s business in the community will be encouraged. Better communications will improve Solomon Water s image and customer relationships. Estimated cost The estimated cost for commissioning the development of a professionally produced website is AUD 20,000. This cost could be reduced by sourcing the development locally with a lower specification for functionality. Solomon Water will finance this development at the appropriate time. A communications assistant, preferably with graphic design skills, will be required to take on the role of webmaster and manage the site. The necessary desktop and other hardware will be required. Staff will require training in CMS usage. Page 32

41 Customer surveys and market research Solomon Water has not been able to measure the level of customer satisfaction in the provision of our services. Although we can use anecdotal information and observation to form an opinion, this is insufficient to enable us to measure the improvement in satisfaction levels as we improve our services. To form a base-line measure of customer satisfaction we intend to conduct market research to benchmark our current position and quantify our improvement over the period of the Two Year Plan. Our market research may include measuring, for example, satisfaction rating, willingness-topay, future needs, demographic segmentation etc. More focussed research (for example using structures interviews) will be performed to assess the impact of water availability on the lives of women. It is anticipated that the services of a volunteer, if available, may be used to formulate and implement our market research. Page 33

42 4 Strengthened financial management and administration 4.1 Achievements since May Debt Settlement Debt Settlement negotiations for the restructuring of the debt owed by Solomon Water to SIEA were completed in an agreement of 31 st May The settlement was agreed as follows: 1. Settlement of the Debt accumulated to February 2012 of $36.7 million by: a. A capital injection by the Solomon Islands Government to Solomon Water of $5 million at 31 st May 2012 to be paid to SIEA immediately as part settlement of the debt. b. A capital injection by the Solomon Islands Government to Solomon Water of $15 million on the 2013 National Budget becoming effective to be paid to SIEA immediately as part settlement of the debt. c. The granting of an interest-free loan from SIEA to Solomon Water of $7.5 million to be repaid over 8 years commencing 1 st January d. SIEA to write off $9.2 million of the debt. 2. Solomon Islands Government granted pre-determined tariff increases (See below). 3. Solomon Islands Government granted Solomon Water a Community Service Obligation (CSO) of $3.176 million for 2012 to support its Provincial operations in Auki, Tulagi and Noro. 4. SIEA was granted goods tax relief and customs duty exemption for certain equipment and materials to be imported ($34.5 million of tax and duty); 5. Solomon Water was granted Goods Tax relief for equipment purchased up to a limit of $5 million of tax over 2 year period; 6. Solomon Water agreed to pay its electricity bills in full within one month of receipt of invoices; By March 2012 electricity payments by Solomon Water had reached $250,000 per week, compared to $50,000 per week at the same time in the previous year. By 31st May 2013 electricity payments increased to $375,000 per week. Increased consumption has required that we now maintain payments of $430,000 per week to achieve payment in full each month. Electricity accounts are now being paid in full within one month of the invoice. Loan repayments included in the Debt Settlement Agreement commenced in January 2013 at $78, per month over the next 8 years Tariff An interim tariff increase of 33% was negotiated by the management team and granted in October This tariff rise was based on estimates of break-even at the time. Once the new tariff was applied, it improved the ability of the Solomon Water to pay its bills. As part of the Debt Settlement Agreement, the Solomon Islands Government granted a series of pre-determined tariff increases: i. 33% base tariff from 1st June 2012; ii. 27% base tariff from 1st January 2013; iii. 17% base tariff from 1st January 2014; iv. Quarterly Electricity Price Adjustments commencing in September 2012; v. Annual CPI adjustments commencing on 1st October Page 34

43 Predetermined base tariff increases in January 2013 and 2014 and legislated Electricity Price and Consumer Price Adjustments have ensured that our tariffs should adequately cover normal running expenses and nominal capital works for the next 2 years. The Minister of Finance was reluctant to consider reviewing tariffs to provide lifeline support to lower income households at the time of the negotiations. Solomon Water must negotiate a tariff review to address any anomalies or inequities in the rates charged and the consumption bands used to calculate bills. At this time it may be possible to review the tariff structures, the differential between domestic and commercial and industrial rates, and propose possible tariff solutions to provide a lifeline support to lower income households and ensure access to a water supply for all Fixed Assets Real Estate Assets were recently re-valued from their book values of $1.7 million to $9.7 million creating a Reserve of $8 million whilst bringing the Equity into a positive balance Viability Table 15: PWWA Benchmarking 2012 Operating costs 4 Benchmarking Statistics Operating Cost Recovery % (excl. Depreciation) Electricity/Fuel $ as % of Revenue Labour $ as % of Revenue Maintenance Costs as % of Revenue 2011 PWWA Target 2011 PWWA Average 2010 Solomon water 2011 Solomon water 2012 Solomon water 2013 Budget Solomon Water 120% 95% 82% 57% 105% 115% 50% 75% 41% 32% 38% 32% 22% 20% 8% 15% 15% 11% Tariff increases should result in modest profits enabling Solomon Water to pay its bills on time and also implement minor or emergency maintenance. Despite increases in staff numbers, retirements, retrenchments and rationalisation of the salary structure, tariff increases have resulted in Solomon Water reducing its labour costs from 32% of revenue to 22%. For the same reason, electricity costs are currently running at 41% of revenue compared to 75% a year before. Further efficiencies will result from the installation and operation of the new pumps and switchboards provided under the RAP. 4 Water & Wastewater Utility Benchmarking in the Pacific, Benchmarking report, December Pacific Water and Wastes Association Page 35

44 Additional electricity costs for the new installations provided under the JICA Project for the Improvement of Water Systems in Honiara and Auki will be offset by reduced operation of existing pumping installations and additional revenue produced from increased and more regular supply. This assumes that proposed network pressure management is implemented as a matter of urgency. Because of the years of neglect of the water supply lines and equipment external subsidies will be required for the next 7 years to bring the network up to a standard which will permit Solomon Water to maintain capital improvements from its own revenue. It is unlikely that Solomon Islands Water Authority will be in a position to pay dividends to its shareholders within the next 7 to 10 years. Any surplus funds will be reinvested into the water supply system Audit External audits for the years 2008, 2009, 2010 and 2011 have now been completed by KPMG and submitted to the Auditor General. Audited Financial Statements have been lodged with the Accountable Ministers. Solomon Islands Water Authority Financial Reports have been completed for 2012 and an interim audit was completed in December The financial report for 2012 has been submitted to the external auditors and the 2012 audit was completed by the due date of 31 st March An audit of the Short Term Action and Recovery Plan was carried out for the period ended 31 st October 2012 by Morris & Sojnocki, Chartered Accountants. No material issues were identified and a generally unqualified audit certificate was issued. Audit arrangements for AusAID s funding for this Plan will be agreed between Solomon Water and AusAID. AusAID funding will be subject to Solomon Water s internal audit arrangements Accounting Overall the financial reporting is now more accurate and reliable as a result of the installation of reliable internal controls, better supervision, regular reconciliations, staff upgrading and the implementation of a new chart of accounts. A new Chart of Accounts was introduced to the existing Attaché accounting system from January 2012 which provides much more detailed and reliable information. This Chart of Accounts will be updated from January 2013 and our system should be able to provide even more reliable and meaningful financial information by cost centre. We consider the Attaché system quite reliable and sufficient for our immediate needs. Management Reports are provided to the Board and Management each month (generally within 2-3 weeks of the end of month). Effective training has been delivered to finance staff on International Accounting Standards as part of the RAP. Solomon Water has arranged training in the Attaché Accounting System. Qualified staff have been encouraged to join the Solomon Islands Accounting Association and to attend their seminars Internal Controls Internal Controls have been steadily tightened during the year. Bank and Ledger Reconciliations are prepared monthly and are checked by supervisors. Debtors Transactions and Cash Collections are cross-matched and balanced through to the General Ledger Page 36

45 4.2 Improving financial management Billing Customer meter reading and billing efficiencies and controls have improved. However, despite an update to the NCS billing system and accompanying training in November 2011 funded through the RAP programme, the billing system is still not reliable and all controls are manual. The system is accessed by all billing and customer care staff, cashiers, statistical and finance staff. We were prepared to retain the NCS system for 12 months before considering whether to replace it. However, we have experienced no overall improvement in its performance. On this basis, we are now firmly convinced that the system should be replaced. The decision to replace the NCS system is reinforced by the need for a billing system to provide geospatially referenced consumption information for use by the network modelling activity, the NRW activities and for the planning of the network expansion. The need for connectivity with the proposed Customer Relations Management system (CRM) requires that the system be replaced with a modern package. Recommendations A new customer billing system will be purchased that will meet the following general requirements: User friendly Windows based screens; More accurate and sophisticated analyses of customers, ageing, water usages, geospatial information and collections; Fields for owner and tenant and additional contact addresses; other future data requirements. Inbuilt internal controls; Connectivity with CRM system; Improved reports; Speedier access; Continued access to hand held Data Recorders (PDAs); Remote offices and provincial access (live). Initial enquiries with other regional water utilities reveal that none are satisfied with their current systems. Staff will need to be retrained and of course there will be large initial set up costs. Estimated costs 1. Dedicated server running Windows Server 2011 AUD 40, Replacement Customer & Billing system would be expected to cost AUD including implementation and training. The first year annual maintenance fee of approx. AUD 12,500 would be pre-paid in the purchase cost. 3. Future annual maintenance fees estimated at AUD 12,500 to be funded by Solomon Water Debt Collection Collections have improved from 64% of billed accounts in 2010 to 82% by December Regular disconnections are carried out to customers who have arrears. Although debt collection has improved, no significant legal action has been taken against outstanding debtors or illegal diversions of water. Known Bad Debts (particularly since many of them dated back to ) are progressively written off. Page 37

46 Table 16: PWWA Benchmarking data tariff colllection and debt Benchmarking Statistics Collection Ratio as % of Billings Receivables # Days (after allowing for Doubtful Debts) 2011 PWWA Target 2011 PWWA Average 2010 Solomon water 2011 Solomon water Dec 2012 Solomon water 2013 Budget Solomon Water 95% 83% 64% 83% 82% 90% days Recommendations The debt collection activity needs to be intensified and an officer will be appointed to undertake some training from our lawyer in initiating legal action (which would be followed up by a lawyer s action in significant or disputed cases). Costs will be borne from the Solomon Water operating budget. Debt collection staff would benefit from further paralegal and general training in debt control and collection once this becomes available. Hopefully the resulting publicity from prosecutions and court recovery will encourage customers to take a more responsible approach to payment of accounts and illegal connections. Alternative methods of bill payment need to be further investigated (Online, EFTPOS, and Mobile Banking). With the opening of the Point Cruz Customer Care Centre we will have cashiers available at 2 central retail locations. The majority of our larger commercial customers are located at Ranadi and we may benefit by having a cashier based at Ranadi, perhaps sharing an office with SIEA in the same way we do at Hyundai Mall. Once office space is available again we plan to reintroduce a cashier at Headquarters. Debt Collection vehicle is one of the oldest in our fleet and is continually breaking down and requires urgent replacement. Estimated costs Replacement Vehicle: Included in the Two Year Plan Vehicles and Plant budget. 5 At the close of the Financial Year 2011 an increase was made to the Provision for Doubtful Debts from $10.6 million to $19.8 million at the direction of the Auditors having the effect of reducing the number of days debt outstanding. Page 38

47 4.2.3 Accounting This Chart of Accounts will be updated has been expanded from January 2013 and our system should be able to provide even more detailed and meaningful financial information by cost centre. The Attaché Fixed Assets module has been activated from January 2013 and will be integrated into the General Ledger Accounting system. The current Attaché stand-alone payroll system has also been integrated from January 2013 with the General Ledger to allow automatic posting of salary dissections. Further and continual quality training is still required for Finance & Administration staff Cost and Management accounting A Costing (and Inventory) System should progressively be put in place to allow for Costing for Projects along with Charging Labour and Materials to Provinces or Departments (refer to IT Integration Plans below) Inventory management and procurement A Procurement advisor will be engaged for 3 months on an intermittent basis to advise on the preparation of a Procurement Plan and assist in the procurement of the packages, particularly pipeline construction and construction activities. A Procurement Manual for Solomon Water will be prepared which will incorporate the recommendations provided by the procurement advisor engaged during the RAP. All procurements under the Two Year Plan will be made in accordance with the Manual. Until preparation of the manual is completed, procurements under the Two Year Plan will be made in accordance with the RAP procurement guidelines and the terms of the Direct Funding Agreement. Over the next year we aim to introduce an Inventory Management and Costing system to both control stock and provide more accurate costing to the various activities carried out by Solomon Water. This will also include the facility to charge labour costs to projects and cost centres Audit Internal Audit An Internal Control Charter and a Strategic Work Plan have been written and submitted to the Board for approval. An Annual Internal Audit Work Plan has also been written for There is currently one full time employee designated Internal Auditor. Much time and effort has been invested by Ministry of Finance and Treasury advisers and the Finance and Administration Manager along with outside training in building the capacity of the incumbent. If necessary, we propose to appoint an assistant Internal Auditor to enable the Work Plan to be implemented to the required level. External Audit An interim audit was conducted in December 2012 and the 2012 audit was completed satisfactorily by the due date 31 st March Page 39

48 4.2.7 Financial Budget The Solomon Water Operating Budget for (See Table 17) will include the necessary additional Human Resources and Consumables to support the proposed Two Year Plan. Table 17: Solomon Water Operating Budget 2013 Solomon Islands Water Authority Brief Summary of 2013 & 2014 Operating Budget Income Water Sales 63,439,567 80,703,059 CSO Payment SIG 3,471,085 3,644,639 Other Income 379, ,501 Sales of Assets 980, ,000 Total Income 68,270,558 85,728,199 SBD $ SBD $ Less Expenditure Electricity & Fuel 22,182,604 23,291,734 Maintenance & Materials 9,546,261 10,023,074 Vehicle Fuel and Repair 1,863,248 1,966,835 Bad & Doubtful Debts 6,243,699 6,555,884 Personnel 13,852,722 14,545,358 Overheads & General 5,784,893 7,103,854 Depreciation 2,961,670 4,442,505 Total Expenditure 62,435,097 67,929,244 Net Operating Surplus 5,835,461 17,798,955 Capital Expenditure 3,177,499 9,164,685 Page 40

49 5 Improved organisational capacity The developments proposed in this Two Year Plan represent a significant challenge to Solomon Water. The capacity of the entire organisation, although improved, is still too low. Despite the fact that we have increased the number of employees from 82 in 2011 to the current 127, we still lack sufficient numbers of skilled and experienced people to perform work to a much improved standard. We estimate that the number of employees will increase to over 150 in the next year providing that we can recruit people who possess the appropriate skills and work ethics. We have brought some new skills and attitudes into the organisation and developed the existing workforce to an extent through training and mentoring. However, much more needs to be done. Strengthening the organisation is the key to the success of both the Two Year Plan and to the longer-term health of Solomon Water. Without a major focus on improving the quality of our people and the facilities that they need to enable them to do their work, the development of Solomon Water will be delayed. 5.1 Strengthening of Human Resource management An international consultant, supported by a local consultant, was engaged to develop a framework for HR future management and policies. The achievements during the RAP have been: The instigation of the People Management Group (PMG) The appointment of a Human Resources Manager The development of revised Terms and Conditions of Employment & Salary Structure Job Descriptions have been updated and will be used for salary grading and performance appraisal. We need to build on this foundation through improved HR management processes and planning. Six areas of development have been identified. 1. Development of an HR Plan We will develop an HR Plan that will recognise the HR needs of the Two Year Plan and the changes to the organisation that are required. The plan will define our needs in terms of skills, qualifications and numbers and will enable us to define and implement: a) a recruitment plan to import the new skills that will be required in Solomon Water; b) a training plan based on a Skills Gap Analysis of current employees to develop their potential; c) a retirement plan; d) Career and succession planning. 2. Strengthening the People Management group The People Management Group (PMG) is a group of volunteer representatives from all departments that has been set up to promote the development of the company through involvement in the formulation of policy and two-way communication between work teams and management. The members of the PMG are motivated individuals who can act a change agents and who have potential to develop their careers. We wish to encourage and develop the PMG through the provision of training and learning opportunities. Page 41

50 3. HR systems and tools The HR administrative processes are entirely manual and represent a burden on the HR department. Personnel records are inaccurate and incomplete. There is no link between the HR records and the payroll system to track salaries, leave entitlements, sickness and absence etc. There are currently no formal procedures and tools to formalise several important HR management responsibilities and activities such as recruitment, employee relations, performance management and occupational health and safety. We plan to introduce an HR database as a platform for accurate personnel management and develop systems and procedures to guide HR management. 4. Performance management Performance standards of employees are generally low. Solomon Water has limited means to penalise poor performance or reward good performance. The workforce is generally underperforming and those employees who do perform can be demotivated. We need to adopt a remuneration policy that encourages higher standards of performance, increased productivity and quality of work. 5. Learning and development The organisation suffers from inadequate capacity of managers and a shortage of advance technical skills. There is an urgent need to up-skill the workforce through recruitment and by developing existing staff who possess potential. We plan to develop an effective Learning and development function in the HR department to define training needs, source training requirements and manage the development of our employee s skills and competence. 6. Occupational Health, Safety and Welfare Occupational health, safety and welfare policies are poor in Solomon Water. There are no policies to provide guidance for management, no safe working procedures and awareness of the issue among staff is low. It is essential that we develop formal policies, procedures, guidelines and safe working practices to ensure the safety of our staff. Recommendation, benefits and costs Table 18: Costs of strengthening HR management Recommendation Benefits Cost (AUD) An international advisor be engaged to advise on the introduction of change management strategies appropriate for Solomon Water. Management can lead the change in organisational culture in a planned and effective manner The attitude of employees to work will be improved Productivity and quality will be improved 60,000 Page 42

51 Recommendation Benefits Cost (AUD) The PMG members are developed through undertaking a Train-the- Trainer course. HR Database software be purchased An international advisor be engaged to advise on the introduction of performance management strategies and policies appropriate for Solomon Water. A Learning and Development budget is provided to support training needs. Provides training skills for change agents. Provides opportunity to be involved in management. Develops an in-house training capability Accurate records maintained. Promotes reliability and uniformity. Reduces administrative burden. Improves people management. Increased performance and productivity. Improved motivation, morale and job satisfaction. Improved staff supervisor relationships. Enables the provision of quality training. Up-skills the organisation and improves performance. Enables a wider choice of training resources. Links training needs analysis to the managed provision of training. 30,000 78,000 (See Organisational effectiveness - Information Technology 5.3.1) 60, ,000 (over 2 years) An international advisor is engaged to formulate occupational health, safety and welfare policies and provide training to management and staff safety representatives. Introduces of a safety culture. Promotes safe working practices, equipment and workplace. Safety awareness and accident prevention. Protects the public from injury through hazardous works and practices. 60,000 Page 43

52 5.2 Strengthening corporate management General Manager and Finance & Administration Manager The deployment of the General Manager and Finance and Administration Manager will continue Appointment of an Operations and Technical Manager The extent and nature of the work involved in all aspects of improving the technical management, operational management and maintenance of the network, pipeline replacement and the non-revenue water reduction activities is such that it is beyond the scope of the present management team to effectively manage these activities. It is therefore proposed that an Operations and Technical Manager be appointed for the period of this Plan to manage the technical operations and maintenance of the water supply system. 5.3 Improving organisational effectiveness Information Technology During the Short Term Recovery and Action Plan: A new server funded through the RAP has been installed. 8 new Desktop PC terminals and 3 laptops have been purchased through the RAP. Microsoft Office software has been updated through the RAP whilst anti-virus and internet security software has also been maintained. Solomon Water has purchased an additional 9 computers. Remote wireless access has been installed for the new Customer Care centre Hardware requirements We have 20 desktop terminals that are between 5 and 10 years old and operating with out-dated operating systems with restricted compatibility with newer equipment. The phased replacement of this equipment is required. We estimate that 15 additional new terminals will be required to meet the needs of the growing organisation. In addition, 10 network printers are required to replace obsolete units and increase availability. Estimated cost The cost of IT hardware is estimated at AUD 57,000 Software requirements In previous sections of this report reference has been made to the need to replace existing but outdated and poorly functioning software packages. Improvements in management and the increasing use of technology also need relevant and necessary software packages. Our identified priority needs are as follow: Customer Billing, Property and Customer Relations Management o Customer billing and property management system o Customer Relations Management (CRM) Operations Management o Network modelling software o SCADA software and database o GIS additional licences Page 44

53 Integrated HR and Payroll package Asset management including procurement, stores inventory, asset management. The packages listed above can be obtained as stand-alone packages. In this case, any integration of data or functionality will be provided by specific programmes designed to link the packages. An alternative approach will be to opt for a single integrated information management package that can be developed sequentially on a modular basis over time. Links to other IT based resources can also be integrated into this type of package. It is recognised that the introduction of new systems will require significant preparatory work, training and new skills. Therefore, installation of such systems would be performed on a phased basis so as not to over-stress the organisation in the introduction of new systems of management as the IT solutions are introduced. Completion of the overall IT development strategy may extend beyond the two year plan period. Estimated cost Indicative costs based on selecting an integrated package solution are: Customer Billing, Property and Customer Relations Management Package Cost - AUD 125,000 Implementation support and training AUD 125,000. Annual maintenance would be approximately AUD 25,000. Supply Chain Management Package Cost - AUD 29,000 Implementation & Training AUD 29,000 Annual maintenance AUD 16,000 HR & Payroll Package Cost - AUD 40,000 Implementation & Training AUD 38,000 Annual maintenance AUD 9,000 Asset Management Package Cost - AUD 58,000 Implementation & Training AUD 29,000 Annual maintenance AUD 6,000 Solomon Water would support the cost of future annual maintenance fees. 5.4 Assets & Facilities Motor Vehicles The need for replacement and additional vehicles has been identified in the in each Section of this Plan. The estimated cost of vehicle replacement and the provision of additional vehicles is estimated at AUD 670,000. Recommendations Dispose of ageing vehicles and replace them as soon as possible. Purchase additional vehicles for additional teams as they are appointed. Page 45

54 Aggressively pursue Preventative Maintenance and Service Contracts. Build new fleet with similar composition. Purchase Operations vehicles. As we transform our fleet we are introducing a policy for the private use of vehicles. Currently, no employees are allowed to use vehicles between hours and hours during the week and at any time at weekends, without prior approval of management and for operational purposes only. Occasionally employees are authorised to use vehicles for private use in special circumstances. In this case, employees are not allowed to use our recently purchased vehicles, whether financed by Solomon Water or donors. This policy will continue and as our fleet is renewed, private use of vehicles will be progressively prohibited. We have introduced vehicle maintenance scheduling to ensure all vehicles are serviced routinely. One vehicle mechanic performs simple maintenance checks and services the older vehicles. All new vehicles are maintained by manufacturer s agents Accommodation in Honiara The office accommodation occupied by Solomon water at its Head Office in Honiara consists of three separate buildings, one of light steel frame construction with block infill, and two small prefabricated huts. Some overflow accommodation is provided in a converted shipping container. The increase in staff numbers and the additional activities and working teams (including the JICA NRW Team) have now fully occupied all space available. Further expansion is virtually impossible in the existing buildings. This situation presents a serious barrier to the successful implementation of future improvements. The Solomon Water stores (situated opposite the Head Office) are housed in a wartime hanger which is unsuitable for its purpose. We are under verbal notice to quit as the site of the building ( borrowed from the Ministry of Infrastructure Development) has been sold to private developers. We have no workshop for routine mechanical and electrical maintenance, no storage for plant and equipment, no vehicle workshop for routine vehicle maintenance. The accommodation is served by sub-standard toilet facilities and there are no washing facilities for field staff. We have no training room and only one unsuitable meeting room. The standard of our accommodation is so poor and it is now so overcrowded that the performance of our staff is affected. The separation into four buildings is detrimental to communications and team work. We have appointed architects to provide an assessment report on our accommodation and outline proposals for new accommodation based on steel framed and aluminium laminate panel clad double storey buildings. The estimated cost is assessed at a minimum of SBD 12 million. Solomon Water is investigating ways of raising the capital to finance the cost of new accommodation or alternatives to provide productive workspace through leasing suitable accommodation. We have included in this budget AUD 75,000 to enable us to procure new office furniture to fit-out leased accommodation. Page 46

55 6 Improved strategic planning As part of the Two Year Development Plan, it is proposed that a longer-term strategic plan be formulated to map out and define Solomon Water s development during the period 2015 to The Plan would set out the organisations longer-term investment needs for improved and expanded service delivery and coverage in urban centres. In developing policies and strategies for the Five Year Strategic Plan, Solomon Water will consult with relevant Ministries and other government organisations to ensure that the objectives of SIG are addressed by the Strategic Plan. The key Ministries involved and to be consulted are: MMERE As one of the SIG ministries responsible for the management of Solomon Water MOFT As the second ministry responsible for Solomon Water particularly in the areas of economic reform of the SOE s, the manager of CSO s and in relationship to the overall control of fiscal and borrowing policies. MDPAC As the main coordinator of development and donor funding should new funding be required from donors. MOH In relation to the health impacts resulting from improved water supply and the development of municipal wastewater collection, treatment and disposal infrastructure. MID In relation to the impact of Solomon Water activities on roads and other infrastructure in Solomon Islands. The proposed objectives of the 5-year plan are: 1. Improve the coverage, quality and reliability of water service delivery in Solomon Water s service areas, and, where appropriate, expand coverage to other urban areas. 2. Improve the coverage and management of sewerage services in Solomon Water s service area to improve public health and the management of environmental impacts and, where appropriate, expand coverage to other urban areas. 3. Continue the development of Solomon Water s organisational and human resource capacity for the management and delivery of improved water and municipal wastewater services. 4. Implement governance and institutional reforms to improve the effectiveness and efficiency of Solomon Water s services including possible private sector participation. 5. Ensure that Solomon Water has sound financial management and has access to sufficient resources from all sources to meet its capital and operational needs, including through a sustainable and equitable tariff structure, Community Service Obligation payments or SIG capital investments, and assistance from development partners. The issues addressed in preparing the 5-year plan would include, but would not be limited to the following: 1. Distribution system renovation and replacement The phased renovation, replacement and capacity upgrade of the distribution system will continue beyond the 2-Year Plan. The required work can be identified, prioritised and designed with the assistance of network modelling during the 2-Year Plan period, for completion during the 5-Year Plan period. 2. Non-revenue water reduction and control NRW reduction will continue to eventually achieve an economic level of NRW and of leakage (ELL as yet undefined). Once this level is achieved, NRW activity must continue to ensure that NRW does Page 47

56 not begin to increase through neglect. Further improvements in network management techniques and technology will be made. 3. Operational management Continue to introduce improvements to the operational management of the water infrastructure including extensions to remote monitoring and incorporating remote control of critical control points. 4. Provincial operations Although as much attention as possible will be paid to improving the operations in Auki, Tulagi and Noro during the 2-Year plan, it is unlikely that network problems will be remedied due to lack of resources. Therefore, during the 5-Year plan period, relevant improvements must be introduced into these supply areas. 5. Water Supply Master Plan The objective would be to perform a fundamental study of all aspects of water supply from catchment to tap and recommend options for the development of water services in Honiara, the existing served provincial centres and potential new centres for water supply. The study would cover: The availability and management of water resources, including modes of partnership with landowners. Population and water demand forecasts for Honiara and the Provinces. The potential to develop upland surface water sources and a gravity-pressurised water supply system to reduce the reliance on pumping powered by increasingly more expensive electrical energy. The need and demand for enhanced water treatment including physical and chemical treatment and filtration. Options for enhanced water treatment (if appropriate). The development of the water supply transmission and distribution systems to minimise capital costs of construction and maximise energy efficiency. Water supply investment programme with investment prioritised to meet demand. A review of the potential to expand provincial operations into new urban centres. Input required and estimated cost A water infrastructure consultant/advisor to provide a 2 months input at a cost of AUD 60, A Master Plan for municipal waste water collection and treatment The objective would be to perform a scoping study for the development of municipal wastewater services from their current under-capacity and neglected condition and taking into account population growth, health and environmental factors etc. The study would produce a relatively high level plan which would present a range of options for future requirements for municipal wastewater collection and treatment infrastructure. The estimated capital cost of each option and their operating costs would be used to enable the Solomon Islands Government and development partners to scope the financial needs and determine the likely level of tariffs required, and their affordability, to support the sustainable provision of municipal wastewater services. Page 48

57 Input required and estimated cost A municipal waste water infrastructure consultant/advisor to provide a 2 months input at a cost of AUD 60, Governance and the potential for private sector participation The objective of this study would be to consider reformation of the institutional arrangements for Solomon Water and the desirability of, and the options available for the introduction of a form of private sector involvement in the future ownership, management and financing of Solomon Water. The study should analyse the benefits and disadvantages of the present status as a State-Owned Enterprise and present practical models for change. In developing options for the future corporate development of Solomon Water, it will be recognised that the policies of SIG in this respect will be critical to the strategies developed and it is proposed that SIG be closely involved in the development of options. Furthermore, it is recognised that other SOE s will also be involved in policy reform strategy. For example, SIEA may be a candidate for similar reform and the views of both SIEA and the World Bank will be sought. In this respect, it may be advisable to coordinate or combine any studies relating to policy reform with SIEA and other interested SOE s. Input required: See 6.8 below. 8. Water sector regulation and tariff reform The degree of regulation of quality, standards of service and prices relating to the services provided by Solomon Water is currently extremely limited. This study would examine the need for regulation, and propose alternative options for the establishment of independent regulation of the water supply services in the Solomon Islands. Sector regulation would be essential if private sector participation in Solomon Water was introduced. However, a form of independent regulation would be highly desirable if Solomon Water remained as a SOE. Options for tariff reform should be proposed that, for example, introduce tariff structures that may facilitate a move towards full cost recovery; that remove or reduce cross-subsidy; that discourage excessive consumption and that provide affordable access to water for the disadvantaged. Input required and estimated cost Under the assumption that a combined study on governance, regulation, tariff reform and corporate modality by the same advisor, a single 2 months assignment at a cost of AUD 60,000 is proposed. Page 49

58 7 Cross-cutting and safeguards issues 7.1 Gender 1. The Board of Solomon Water has three women members out of total of seven directors, one of the most balanced Boards of all SOE s in the Solomon Islands. The Senior Management Team of the company totals five managers, two of whom are women. Thus, the organisation possesses a strong balance of representation at the most senior level. The Board and senior management team will continue to give due consideration to the interests of women, families and children in formulating and implementing policies which affect the health and hygiene of women and children. 2. Solomon Water is an equal opportunities and equal-pay employer but we have historically had a gender imbalance. Currently 28% of our workforce is female, and while not high enough, this imbalance is largely due to the nature of the business which employs a sizable proportion of engineers, plumbers, labourers and security staff, all of which tend to be male-dominated. Solomon Water will continue to be an equal opportunities and equal pay employer and will employ staff on the basis of their merits and qualifications. There will be no discrimination on the grounds of gender. 3. Solomon Water recognises that, on occasions, female employees can experience difficulties outside of the workplace. Solomon Water provides counselling for all employees through the HR department and has offered to support professional counselling for staff who wish to avail themselves of this support. We will continue to offer counselling to all staff. 4. Solomon Water recognises that women (and children) are most affected by a poor water supply service and obtain most benefit from a regular, safe and reliable water supply. Whilst we do not discriminate with regards to gender in the provision of improved water supplies which are provided to benefit all people equally, the provision of improved water services will by its nature, prove to be of particular benefit to women in performing their domestic duties and caring for their children. Solomon Water will never discriminate in its provision of water supplies on the grounds of gender to all legally registered and connected customers. Solomon Water will consult with women s representative groups and, non-governmental organisations that could provide guidance and suggestion as to how our services can be improved to the benefit of women. 5. The end-of-plan outcome for the Solomon Water Development Plan is to provide a quality service to an increased share of the population of the areas served by the company. This will mean that access to water for all is improved and that the water will be of better quality and safe for consumption. Over time, the improvements generated by this Plan in the quality of the water supply service will generate an improvement in the overall health of the population, especially children and the vulnerable, by reducing the occurrence of illnesses caused by water-borne organisms and through lack of access to water for hygiene purposes. Solomon Water is confident that the improvements in water supply generated by this Plan will provide a long-term benefit and improve the health of the population as a whole and, in particular, women carers will benefit more. Page 50

59 6. Solomon Water recognises that women generally consume and use most water and that they are most affected by water wastage, losses, and the effect of illegal connections on our ability to provide adequate supplies. As part of its Community Awareness and Public Relations strategy, Solomon Water target women in the community, women s groups and their children through schools programmes, to create an awareness of the value of water and its relevance to health and hygiene. 7.2 The Environment Water supply We do not envisage that any of the activities described in this Plan will have a permanent, detrimental effect on the environment. The Two Year Plan includes a significant amount of civil engineering work that will require excavation and other earthworks. Our operations can cause temporary water run-off. We will ensure that: 1. All excavations and earthworks will be secures against possible injury to the public and will be clearly signed. 2. Disturbance to the landscape cause by excavations and other construction activities will be reinstated. Certain of our proposals carry environmental benefits. In the short-term: 1. A reduction in leakage and consumption through the NRW programme will reduce the rate at which we abstract water. 2. Improved efficiencies of pumping and energy consumption will reduce greenhouse gas emissions as we consume less oil-generated electricity. In the longer-term: 1. Policies for catchment management and the relationship with landowners should be based on rewarding landowners for improvements in the quality of the catchments and the water resources. 2. Possible development of surface water gravity supplies would dramatically reduce the amount of energy consumed to provide our services. 3. The development of relevant municipal waste water collection and treatment facilities will reduce coastal pollution and improve the urban environment. Solomon Water will always give due consideration to the effect of its activities on the environment. Municipal wastewater disposal We have highlighted in Para. 2.6, that the unreliable operation of sewerage pumping stations and the poor condition of sea outfalls cause environmental pollution through the discharge of untreated municipal effluent. Whilst Solomon Water will do its best to minimise pollution, we cannot eliminate the problems until funding is available to deal with them in the most appropriate manner. 7.3 Access to water for the disadvantaged Solomon Water recognises the importance of providing access to potable water for all, including the disadvantaged. During negotiations on the water tariff with SIG we submitted some outline proposals to structure our water tariff such that it would provide for a life-line support to enable families who cannot afford the full tariff to benefit from a small volume allowance at a low cost and Page 51

60 that this policy could be supported by a form of CSO Contract. SIG considered the proposal but felt that it was not appropriate at that time. We will develop similar tariff options for consideration in future tariff discussions. Our programme of disconnecting illegal connections and connections that are the subject of debt are supported by a policy by which we offer easy payment terms for consumers that are unable to repay connection fees or their debt prior to reconnection. We will continue to offer and refine such terms for payment. A primary and essential business objective of Solomon Water is to operate the business in an efficient and effective manner under a tariff and connection policy that ensures financial stability. However, it is recognised that increases in the sale price of water and the effect of our essential drive to remove illegal connections and reduce outstanding debt can have a greater effect on the poorer members of the community. We also recognise that there are problems with lack of water supply in the peri-urban areas where squatter settlements are growing in an uncontrolled manner. Solomon Water s policy will always consider the impacts that these problems cause but it will also promote a user must pay principle. We believe that it the responsibility of SIG to provide, support and fund any initiatives that provide better or cheaper access to water for the disadvantaged. Therefore, Solomon Water will work closely with the relevant parts of Government to develop any pro-poor policies that SIG requires. 7.4 Land use issues 1. No major land use issues are anticipated in the implementation of the 2-Year Plan. If land and land ownership issues arise, Solomon Water will ensure that they are dealt with within the relevant laws of Solomon Islands. The provisions of the SIWA Act 1973 impose a duty on the part of Solomon Water to negotiate with landowners with regard to any damage that may be caused, or is inadvertently caused by our activities. We will continue to ensure that we comply with this duty. 2. In the event that our development activities require that persons are displaced from land owned by Solomon Water, we will make every endeavour to manage these issues well including taking due regard of the relevant laws and engaging professional land-advisors to provide advice to Solomon Water and negotiate with persons affected. Page 52

61 8 Risk management The main risks identified for the project, the proposed mitigating measures and risk rating 6 are presented in Table 19 below: Table 19: Risk management Risks Mitigating Measures Risk Rating A major failure of the water supply system will cause a catastrophic and sustained The ability of Solomon Water to deal with major failures has improved through the RAP. Implementation of the Plan will continue to reduce the Moderate disruption to water supply services. risk of occurrence of major failures and reduce the effect of such a failure. Lack of resources to carry Solomon Water has improved its financial situation out adequate operation and dramatically and has the capacity to sustain its increased maintenance and to support operational and maintenance expenditure. Allocations of the Plan with capital funds for increased operation and maintenance costs and for Low contributed by Solomon capital investment have been made in the Solomon Water Water. budget for Greater contributions are expected in That there will be insufficient in-house skills to support the delivery of the 2-Year Plan Cost-overrun Delivery of the Plan will put considerable pressure on the organisation. The Plan recognises that it has insufficient resources and that the skill levels in the company are too low. The senior management team has been reinforced with solid local managers. We do not envisage significant problems in Finance and Administration and in Customer Care and Communications. For NRW reduction we have a 3-year JICA TC project that is providing training and development to many people in the organisation in various aspects of NRW management. The organisation is lacking in pipeline engineering and design skills, project management and supervision skills, network hydraulic expertise and proficiency in network modelling. We are proposing to hire good graduate engineers as they are identified but recognise that there is a shortage of good candidates. We will mitigate these problems by proposing and specifying the activities of expert advisors and the recruitment of an Operations & technical Manager. We will give strong consideration to letting pipeline construction contracts on a turn-key basis in which design, procurement, and construction will be packaged and provided by the contractor. The network renovation and construction projects described in this Plan range from large individual projects (e.g. transmission pipelines, a storage reservoir), to continuous projects aimed at upgrading the network. These projects will be prioritised in terms of cost and benefit and project funds will be allocated in accordance with this prioritisation. Moderate to High 6 The method of risk rating is based on the guidelines provided in the Australian Government/AusAID document Investment Concept Risk and Value Assessment. Page 53

62 Risks Mitigating Measures Risk Rating Significant funds are allocated to the gradual upgrading of the small diameter water distribution network. Any probability of cost overrun will be monitored and controlled by reducing the pace or extent of this work to remain within the budget. Land issues and disputes regarding the abstraction of water derived from Customary Lands can result in a threat to the availability of raw water or result in malicious damage to operational facilities. Fraud and Fiduciary risks Deterioration of yield and quality of water sources will affect the achievement of the objective. i. The yield at some existing borehole sources has reduced due to collapse of the internal walls. However, there is little operational evidence that yields in general have reduced. ii. The bacteriological quality of water derived from a minority of Land issues, especially relating to the use of water sources derived from Customary Land, continue to pose a threat to the operations of Solomon Water. Currently, all such issues are dealt with by the Commissioner of Lands. The current situation is unsatisfactory and lacks a clear and standard policy approach. We continue to engage with MMERE and the Commissioner of Lands on the resolution of these issues. The SIWA Act 1973 provides Solomon Water with a degree of legal protection. However, enforcement can prove difficult. It is proposed that AusAID will fund the plan through Solomon Water s systems in a similar manner to the RAP funds management. Under the RAP assistance to Solomon Water fiduciary risks were managed well. Risk management measures included: Allocating the funding to an agreed budget with material variations being approved by AusAID. Using a separate bank account for project funds with one signatory external to Solomon Water. Solomon Water agreeing to apply the Commonwealth Procurement Guidelines for its procurement using the advice and recommendations of a procurement advisor. An independent audit of the RAP funds identified no material problems in the management of the RAP funds. We have employed a Procurement Officer who is experienced in international donor procurement procedures and policies. The Project for the Improvement of Water Supply Systems in Honiara and Auki is providing additional new water sources that increase the water available for supply. At Kongulai, the amount of water available at the source remains well in excess of the amount abstracted. The quality of water has been affected at a number of boreholes where human settlement has encroached on the areas surrounding the boreholes. This pollution can be mitigated by improving land drainage around the boreholes. High Low Low Page 54

63 Risks Mitigating Measures Risk Rating boreholes has deteriorated. Improved disinfection of water will eliminate the increasing, but not yet unmanageable, level of bacteriological pollution resulting from uncontrolled squatter settlements and Natural disasters The likely causes of natural disaster in Solomon Islands are earthquake, tsunami, and flood. Localised landslips caused (through fluidisation of slip planes) could damage pipelines. Climate change The most likely effect of climate change will be extremes of seasons. In Solomon islands this would be characterised by wetter wet seasons and dryer dry seasons. A prolonged drought may affect the outcome of the Project. unauthorised development of dwellings. Earthquake: A significant earthquake centred locally (say magnitude 7.5 and above) could potentially cause major or severe damage to water production and storage facilities, transmission pipelines and the distribution network. Damage to SIEA s power generation and transmission systems would also seriously affect our ability to abstract and supply water. Solomon Water does not presently have a disaster emergency plan to help cope with the effect, provide pre-planned potable water distribution points, and restore the water system. We do not retain a comprehensive strategic stock of pipes and fittings and plant (e.g. pumps), that can be used for emergency repair of pipelines and water production equipment. Recovery time would be severely extended. We do not possess emergency disinfection equipment or stocks of emergency disinfectant chemicals (beyond our normal stock) Not all pumping facilities have stand-by generators. Tsunami: In the event of a tsunami it is possible that: Inundation of the ground could cause pollution of the water in pipes through reverse leakage and back-flow. The sewer outfalls would be damaged or destroyed. Sewer pumping stations (e.g. at Point Cruz) would be flooded. Sewers would not drain to sea-level causing overflows at higher levels. Mitigating Measures: We must develop a Disaster Plan and assess the need for emergency stocks of pipes and fittings, disinfectant equipment and chemical, fuel for generators etc. There is evidence that previous short-term climatic events have resulted in drought conditions in Guadalcanal. However, there is no reason to believe that there will be significant shortages of water. NRW reduction, diversification of sources and watersavings education will reduce the effect of any drought on our ability to supply water. In the event of prolonged and severe drought conditions, water rationing would be used to share limited supplies equitably. The Plan is unlikely to be affected by prolonged period of drought during the two years of the project. However, it is possible that the 5-year plan horizon may experience such an event. Moderate Low/Moderate Low Page 55

64 9 Monitoring and evaluation 9.1 Programme management The Direct Funding Agreement for the Two Year Plan will acknowledge that regular consultation between AusAID and Solomon Water is critical to the effective implementation of the Programme. Key requirements will be that a Programme Steering Committee be established and that the programme be reviewed periodically by an evaluation mission. The Programme Steering Committee The Programme Steering Committee will comprise representatives from AusAID, Solomon Water, the Ministry of Mines, Energy and Rural Electrification and from The Ministry of Finance and Treasury. Representatives from other development partners will also be invited to participate, including from JICA, Asian Development Bank and World Bank as a minimum. The Committee will convene every three months. The roles and responsibilities of the Programme Steering Committee will be defined in the Direct Funding Agreement. An Annual Programme Review and Planning meeting of the Steering Group will be convened in June Evaluation mission An evaluation mission will evaluate the performance of the Programme on a periodic basis. Procurement A procurement specialist will be engaged to support Solomon Water and assist to develop its procurement programme to provide support during the implementation of the Programme. The Procurement Specialist shall be responsible for: Audit a. The development of Implementing Partner staff capacity in procurement; b. Provide specialist procurement advice to the Implementing Partner ; c. The oversight of major procurement tender documentation; d. Oversight of the selection process and associated documentation; e. Review small scale procurement practices and provide advice for improvement as required; f. Review existing procurement process and recommend improvements if required. An annual audit will be held to ensure that Solomon Water: a. performs financial management in accordance with sound financial management procedures including internal control mechanisms of mutually acceptable standards (national or international); b. keeps proper and detailed accounts, records and assets registers along with adequate Programme management records providing clear audit trails in relation to expenditure; Page 56

65 9.2 Programme Monitoring and Evaluation framework The achievements of the Two Year Plan will be measured in terms of the four levels illustrated in Figure 6: Solomon Water Two Year Development Plan Programme Logic. They are: 1. Development outcomes 2. Programme objective 3. Outcomes 4. Activities The following Tables provide a framework for monitoring and evaluation at each level. In cases where no indicators are provided, it has been agreed that these will be provided to the first meeting of the Project Steering Committee. These are marked to be confirmed or TBC in the tables. Page 57

66 9.2.1 Development outcomes Table 20: Monitoring and Evaluation Development outcomes Development Outcomes Indicator(s) Baseline Year 1 Target Year 2 Target Improved human health Incidence of diarrhoea disease among children aged less than five years old 7 9.4% 8 TBC 9 TBC Improved business environment and public services Lower and more predictable fiscal costs to SIG Reliability of supply measured as: average hours of water supply per head of 14.2 hrs/capita 18.8 hrs/capita 21.5 hrs/capita population (Hrs/day/capita) 10 Water quality bacteriological compliance with WHO recommendations. (%age of samples with Nil e-coli and nil coliform) 11 73% 90% 97% Return on capital 82% 10% 12% Operating cost recovery % 115% 120% 7 Source is Demographic Health Survey (last conducted in 2007 with next survey due in Baseline is 9.4% in the 2 weeks prior to the survey in TBC To be confirmed prior to the first meeting of the Programme Steering Committee 10 PWWA benchmark O2 11 PWWA benchmark HE2 12 PWWA benchmark F1 Page 58

67 9.2.2 Programme objective Table 21: Monitoring and Evaluation Programme objectives Objective Indicator(s) Baseline Year 1 Target Year 2 Target Solomon Water provides improved Continuity of water supply service: levels of service (in terms of quality, average hours available per head of population quantity and reliability) to a larger (Hrs/day/head) proportion of the population in the Level of Service measured as: existing service areas, based on a sound financial position. % of registered customers receiving water supply not available TBC TBC at pressures between 3 and 7 bar at the property boundary on a 24 hour basis Water supply coverage % of population TBC TBC TBC Solomon Water provides improved levels of service (in terms of quality, quantity and reliability) to a larger proportion of the population in the existing service areas, based on a sound financial position. Water quality bacteriological compliance with WHO recommendations. (%age of samples with Nil e-coli and nil coliform) 73% 95% 97% Return on capital 8% 10% 12% Operating cost recovery 105% 115% 120% Page 59

68 9.2.3 Outputs Table 22: Monitoring and Evaluation programme outputs Outputs Indicator(s) Baseline Year 1 Target Year 2 Target Reliability of supply measured as: average hours of water supply per head of population (Hrs/day/head) 13 Level of Service measured as: % of registered customers receiving water supply at Not available TBC TBC Improved levels of service for water pressures at the property boundary of between 3 and 7 bar supply Water quality bacteriological compliance with WHO recommendations. (%age of samples with Nil e-coli and nil 73% 95% 97% coliform) 14 Estimated % of population with registered water connections TBC TBC TBC Complaints ratio: 15 Improved customer care and Complaints/1000 registered customers communications Customer satisfaction level through market research Not available TBC TBC Customer perceptions - through market research Not available TBC TBC Strengthened financial management & administration Improved organizational capacity Improved strategic planning Return on capital 82% 10% 12% Operating cost recovery % 115% 120% Collection ratio : 17 Actual cash vs. billed revenue 82% 90% 92% Accounts receivable (days) Proportion of the Study s total Terms of Reference completed 0% 60% 100% 13 PWWA benchmark O2 14 PWWA benchmark HE2 15 PWWA benchmark CM2 16 PWWA benchmark F1 17 PWWA benchmark F2 18 PWWA benchmark F3 Page 60

69 9.2.4 Activities - Improved levels of service for water supply Table 23: M & E Activities towards improved levels of service Activity Component Indicator(s) Baseline Year 1 Target Year 2 Target Developing operational & technical support Reducing non-revenue water System monitoring, management and control Operations & Maintenance Plan Skill level of Operations & Maintenance staff Routine planned maintenance Hydraulic model JICA NRW Project internal measures Pressure reduction Non-revenue water Standard specification for materials Proportion of critical elements monitored. Key milestones 19 0% TBC TBC Developed Implemented 0% TBC TBC Qualifications Experience TBC TBC TBC Numbers of staff trained Key milestones % performed to schedule NIL TBC TBC Completion Training TBC TBC TBC Expertise Separate report by JICA NRW Team TBC TBC TBC % of network protected by pressure control 0% TBC TBC Various indicators based on IWA recommended See Table 24: M & E Specific performance indicators classification 20 Completion NIL TBC TBC 19 In cases where Project Key Milestones are included as a performance indicator, the definition of key milestones will depend on the nature of the individual activity. Typical examples may be, for example, TOR completed, expert engaged, interim report, final report, implementation of recommendations etc. 20 Losses in Water Distribution Systems by Farley M. and Trow S. IWA Publishing, 2003, 2007 Page 61

70 Activity Component Indicator(s) Baseline Year 1 Target Year 2 Target Improving the capacity of the network Improving the connectivity and reliability of water supply Adoption of design & construction standards Completion NIL TBC TBC Replacement of sub-standard distribution mains Km replaced or renovated NIL TBC TBC Water supply coverage % of population served 21 TBC TBC TBC Construction of transmission mains % progress Key milestones TBC TBC TBC Improved storage % progress Key milestones TBC TBC TBC % of production protected by Standby-by generation stand-by generators TBC TBC TBC Key milestones Drinking water quality compliance residual 80% 90% 100% chlorine 22 Drinking water quality Water quality compliance 72% 85% 95% microbiological 23 Percentage of customers supplied with treated water 79% 100% 100% or % of water treated PWWA benchmark O1 22 PWWA benchmark HE1 23 PWWA benchmark HE2 24 PWWA benchmark Page 62

71 9.2.5 Water production and Non-Revenue Water performance indicators Table 24: M & E Specific performance indicators Water Production Non-revenue water Indicator Units Baseline Year 1 Year2 Volume of water produced total produced from sources (V1) KLitres/connection/day 3.05 TBC TBC Volume of water produced (V1b) Litres/capita/day 406 TBC TBC Volume of water sold (i.e. billed) through meters or estimated unmetered (V2) KLitres/connection/day 1.37 TBC TBC Volume of water sold (i.e. billed) in l/capita/day (V2b) Litres/capita/day 183 TBC TBC Electricity or fuel cost as 5 revenue % 41% 32% 27% Labour cost as % revenue % 22% 20% 17% Maintenance as % revenue % 15% 11% 12% Number of connections Metered connections 3970 TBC TBC Meter coverage rate for water supply customers (all meters) (CM1) % of customers 49% TBC TBC Non-revenue water % (O3b) % of water produced 55% 42% 35% Non-revenue water per connection (O3) m 3 /connection/day Non-revenue water per km pipeline(o3c) m 3 /km/day Page 63

72 9.2.6 Activities Improved customer care and communications Table 25: M & E Activities improved customer care and communications Activity Indicator(s) Baseline Year 1 Target Year 2 Target Customer contacts ratio: Contacts/1000 registered customers TBC TBC TBC Improving customer care Improving the image of Solomon Water Complaints ratio: Complaints/1000 registered customers Response time - days TBC TBC TBC Complaint Resolution time - days TBC TBC TBC Quality of customer care Contact Event scoring ( ) NOT AVAILABLE TBC TBC Customer satisfaction level through market research NOT AVAILABLE TBC TBC 25 PWWA benchmark CM2 Page 64

73 9.2.7 Activities Strengthened financial management & administration Table 26: M & E - Activities towards strengthened finacial management & administration Activity Indicator(s) Baseline Year 1 Target Improving financial management & administration 1. Billing % Meter reading cycles completed within month TBC TBC TBC % Reading errors TBC TBC TBC 2. Debt collection Collection ratio Actual cash vs. billed revenue 26 82% 90% 92% Accounts receivable (days) Cost & Management accounting 4. Inventory management Month end accounts availability days TBC TBC TBC Implementation of cost accounting TBC TBC TBC Progress to implementation Year 2 Target TBC TBC TBC 5. Audit Completed on schedule YES YES YES 26 PWWA benchmark F2 27 PWWA benchmark F3 Page 65

74 9.2.8 Activities Improved organisational capacity Table 27: M & E - Activities towards improved organisational capacity Activity Indicator(s) 28 Baseline Year 1 Target Strengthen human resource management Year 2 Target Change management advisory NIL 100% 100% PMG Train-the trainer NIL 100% 100% Performance management advisory NIL 100% 100% Learning & development programme NIL 100% 100% OHS&W advisory NIL 100% 100% Strengthen corporate management Appointment of General Manager TBC 100% 100% Appointment of Finance & Administration Manager TBC 100% 100% Appointment of Operations & Technical Manager NIL 100% 100% Improving organisational IT System Customer Billing and CRM effectiveness NIL TBC TBC IT System Asset Management NIL TBC TBC IT system HR & Payroll NIL TBC TBC IT Supply Chain Management NIL TBC TBC Improved organizational capacity Fleet replacement and expansion NIL TBC TBC Accommodation NIL 100% 100% 28 Note: In all cases key project milestones and/or performance indicators will be established for each of the projects/activities when the Terms of Reference (for advisory services) or the individual Project Development Plans (for projects involving the procurement of goods and services) have been determined. Page 66

75 9.2.9 Activities Improved strategic planning Table 28: M & E - Activities towards improved strategic planning Activity Indicator(s) Baseline Year 1 Target Year 2 Target Formulation of the Five Year Plan Provincial operations key milestones NIL TBC TBC Water Supply Master Plan - key milestones NIL TBC TBC Municipal wastewater Master Plan key milestones NIL TBC TBC Governance key milestones NIL TBC TBC Regulation and Tariff Reform key milestones NIL TBC TBC Page 67