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OFF TAKE AGREEMENT WITH LOCAL UTILITY COMPANY IN PLACE
VARIOUS PROSPECT SHAREHOLDERS AND OTHER STAKEHOLDERS HAVE BEEN IDENTIFIED
The promoter has conceived a water supply investment hinged on a commercial activity with potential to grow into a sustainable Industry that is historically inseparable to the Taita-rangeland; Livestock farming.
The concept
Develop a bulk water supply network, supply water to idle arable land, water scarce ranches and low coverage small areas. Justification; The region supports vibrant road freight industry, the most important transit between Mombasa and Nairobi and an important junction to Tanzania and Rwanda. It is also home to the largest Wildlife conservancy in the world; The Tsavo East and West National Parks; thus a major contributor to foreign exchange earnings in Tourism. Given water The Taita rangelands has potential to grow into the largest red meat production zone in East Africa with proven capacity to hold more than 1Million ruminants. That Livestock industry would justify the supply of water at current low socially geared tariff regime by combining Irrigated farmlands as primary fodder production in support of the Livestock Industry. Both ends require large volumes of water, large tracts of land and the right climatic conditions to flourish.
Historical justification and practicality of Bulk Water Concept
Various Water development studies by the promoters have been undertaken in and around the Kilimanjaro aquifer and adjacent basins covering an area larger than 24,000Km². The earliest on record dates back to 1922. It created the first ever Irrigation scheme in Kenya. Several other Irrigation schemes ensued in the late 1970s during post independence Kenya, but collapsed or still operate below capacity due to poor water supply regime. Out of 30 Irrigation schemes that existed in the 1980s in the Taveta farmlands near Kilimanjaro Pangani basin, only 5 are commercially viable. The rest are either abandoned or poor-performers as a result of erratic rain dependence. Taveta is still an important producer of horticultural produce to the coast region. Given proper water supply under a regulated regime, the existing farmlands measuring upwards of 10,000Ha could sustainably produce 450,000MT of horticultural produce per season. That translates into farm gate revenue of $ 22 Million per crop season under Irrigated farming.
Recently The Regional water Board; Coast Water Services Board (CWSB) commissioned TAHAL Group the Israeli Engineering firm to undertake a broad water Master plan with the Port City of Mombasa as the main beneficiary. The result is a World Bank funded project currently under design-MWACHE DAM to be sited 30Km West of Mombasa city.
Even more recent water study which focused on commercial Irrigation was commissioned by The Coastal Development Authority. That study was very Site specific to one of the Kilimanjaro Water sources; lake Chala situated on the South eastern edge of the Kilimanjaro massif.
That study is called the Lake Chala Feasibility Study. (Chala study) It provides a good backdrop to this feasibility specific to farming viability in Taveta farmlands region around the foot of Mt.Kilimanjaro.
Legal framework
Comprehensive legislation on water services provision under devolved government system.
PPP law in existence
Water Sector regulator exists.
Water Utility Company legal status
Private company owned by local County Government. Fully autonomous and independent in decision making and Investment strategy. Utility has a Board of Directors appointed by the County executive. It is authorized to approve, veto or negotiate instruments of engagement with suppliers of Goods and Services provided they are within the procurement laws and regulations of Kenya.
Given that phased implementation scenario;
The local Utility Company will immediately build it revenue base from the current $2,1million to $5,8 million within 9 months by Improving water supply services to critical areas as listed:
- Upgrade of existing network and wider consumer base at Mwatate, Taveta and Voi.
- Lowering NRW to less than 15% through smart metering.
- Increased water Storage Capacity on existing Mzima network.
- Additional revenue stream in waste water treatment.
- The local Utility Company will immediately build it revenue base from the current $2,1 million to $5,8 million within 9 months by improving water supply services to critical areas as listed
Tariff
It is the prerogative of the local water company. The current tariff applied is approximately $85 cents per Kilo litre supplied.
Revenue collection
Present mechanism is by physical metering reading and payment at the registered office.
Further study
As a prelude to detailed Engineering design, The promoter’s feasibility study recommends a detailed Condition Analysis of existing distribution network and water storage capacity moreover, mapping of Consumer network upgrade
Capacity of local Utility to Execute, Implement and Operate Bulk Water Infrastructure
The local utility is a small operation which is fairly well managed but lacks the requisite skills to execute, implement and operate a project of this magnitude, and so do several other water utility entities in east Africa. Therefore, it is incumbent upon the project developers and technology partners to put in place a well structured Project Company with the right skills and expertise to operate the new Bulk water Asset.
Further enhancement of the Utility Company internal structures
The promoters will implement the project in phases commencing with network upgrades at Taveta and Voi urban areas, Increase water storage capacity and wastewater treatment facilities. That approach would help the Utility entity grow the revenue base in slabs and learn to manage a Bulk water Asset at controlled pace.