The objective of this consultancy is to provide technical assistance and support to SEDAPAL in: (i) strengthening its corporate governance system to generate economic, financial, social, and environmental value for the company; (ii) recommending a roadmap with a proposal to improve the company’s corporate governance; (iii) accompanying the SEDAPAL team in charge of the definition of a Business Plan;  and (iv) preparing the financial plan that allows it to achieve the established goals.
In this assignment K&M is responsible for preparing: (i) A financial model with a 15-year projection period for SEDAPAL; and (ii) A financial plan, based on the financial model, with a short (five-year), medium (10-year), and long-term horizon. This financial plan will is the basis for a Business Plan for the company and is dynamic so that it can be used to prepare the Business Plan for the next five years.

The Government of Turks and Caicos is interested in improving the water sector in the Turks and Caicos Islands. K&M has been engaged to conduct a rapid pre-feasibility for piped water supply in South Caicos and Salt Cay.

K&M will conduct a rapid technical pre-feasibility of piped water supply in South Caicos and Salt Cay. This will include preparing a demand forecast for Water Undertaking, the government department with responsibility for water supply in Grand Turk, Salt Cay, and South Caicos. K&M will develop a financial and economic model for Water Undertaking to determine if transitioning to a piped water supply is realistic in South Caicos and Salt Cay.

The Caribbean Development Bank contracted K&M Advisors to prepare water and wastewater sector profiles for selected BMCs of CDB, namely Belize, Dominica, Grenada, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago, and the Turks and Caicos Islands. These profiles include key information on macroeconomic indicators, water resource management and supply and demand in the sector. Further the profile, identify key stakeholders, provide an overview of the governance and regulatory framework, tariff regime, and impact of climate change and climate projections. In close coordination with the CDB, Ms. Burkhard is reviewing and updating the country profiles provided by CDB, liaising with CDB and country official for data collection and validation, and preparing the final profiles with CDB’s Division of Communications and Corporate Affairs (DCCA).

The Government of Turks and Caicos is interested in improving the water sector in the Turks and Caicos Islands. This project includes conducting a rapid diagnostic of the sector, conducting a strategy workshop with key stakeholders, and preparing a strategic plan outline and implementation roadmap tool for the next three to four years to achieve that aim.

Task 1: Conduct rapid diagnostic of the current situation of the water sector in TCI.

The objective of this task is to conduct a rapid diagnostic of the current situation of the water sector in the Turks and Caicos Islands. To kick off this important work, we will host a virtual call with key stakeholders in the TCIG with responsibility for water. On the call we will discuss the objectives of the assignment and walk through our request for information. We will carry out a review of the financial, operational, and commercial data received from the water department, and supplement it with benchmarking from other water utilities in the Caribbean. We will review the following areas for which objectives will be defined in the TCI Water Sector Strategic Plan: financial, operational, quality of service, an coverage. This review will consider specific challenges and potential opportunities for improvement in the water sector in the Turks and Caicos Islands. The rapid diagnostic will inform the objectives we propose for TCIG for the next three to four years and the identification of priority actions in Task 2.

Task 2: Identify preliminary objectives and priority actions for the Water Sector Strategic Plan.

The objective of this task is to identify preliminary objectives and priority actions for the TCI Water Sector Strategic Plan. Based on the analysis conducted in Task 1, we will identify preliminary priority actions that could be related to, among others, the following: organization structuring and strategy, financial management, human capital management, commercial matters, technical matters, service to customers, legal and regulatory framework in TCI, and others to be identified.

Task 3: Propose preliminary objectives and priority actions to TCIG.

The objective of this task is to propose the preliminary objectives and priority actions to the Turks and Caicos Islands Government. We will host a virtual call with key stakeholders in the TCIG with responsibility for water. On the call we will discuss the preliminary high-level objectives and proposed priority actions. This will inform the materials prepared for the strategy workshop.

Task 4: Produce presentation to be used during the strategy workshop.

The objective of this task is to produce the presentation material to be used during the strategy workshop. Based on feedback received during the virtual meeting held in Task 3, we will conduct additional analysis, revise the proposed high-level objectives and priority actions as required, and produce a presentation in PowerPoint to be used during the strategy workshop. This presentation will include the following: a summary of the results of the rapid diagnostic; proposed high-level objectives to be achieved within the next three to fours years; proposed priority actions to be included in the TCI Water Sector Strategic Plan; and identification of any legal and regulatory reforms that may be needed to achieve the objectives to be incorporated in the TCI Water Sector Strategic Plan.

Task 5: Lead strategy workshop in TCI.

The objective of this task is to lead a strategy workshop in TCI. We will lead a productive and efficient discussion of the proposed high-level objectives for the TCI water sector to be achieved within the next three to four years, the related priority actions, and any legal and regulatory reforms required to meet those objectives. We expect the strategy workshop could take place in Grand Turk and last about four hours. To adequately prepare for the workshop, we will arrive the day before to attend meetings with TCIG and other stakeholders, as necessary. The outcomes and agreement reached during the strategy workshop will inform the TCI Water Sector Strategic Plan Outline and the implementation roadmap tool for the sector.

Task 6: Produce Water Sector Strategic Plan Outline and Implementation Roadmap Tool

The objective of this task is to produce the final version of the TCI Water Sector Strategic Plan Outline and develop the implementation roadmap tool for the sector. The outline will include the agreed upon high-level objectives for the TCI water sector to be achieved in the next three to four years, the related priority actions, and the identification of any legal and regulatory reforms required to achieve the objectives. In addition, it will include the next steps and timing for the development of the TCI Water Sector Strategic Plan . The final version of the Strategy Plan Outline and implementation roadmap tool will be delivered two weeks after the strategy workshop in Grand Turk.

SEDAPAL (Servicio de Agua Potable y Alcantarillado de Lima) is the primary water and sewage company responsible for providing and managing water and sanitation services to the Lima metropolitan area. As the city faces significant challenges due to its location in a desert region, rapid urbanization, and the impacts of climate change, SEDAPAL needs to undertake substantial investments to improve and expand its services. SEDAPAL has embarked on a comprehensive plan involving nearly $7 billion in new infrastructure projects to address these challenges. These projects aim to enhance water quality and improve sewage treatment. Additionally, SEDAPAL is focusing on building more reservoirs in the mountains near Lima to capture and store precipitation, a critical step in ensuring a more reliable water supply for the city’s growing population, which is expected to reach 13 million by 2030​​.

The necessity for these investments is underscored by the vulnerability of Lima’s water supply system to climate change. The city relies on three key rivers – the Rimac, Chillon, and Lurin – which are increasingly unable to meet the rising demand for water. The melting of mountain glaciers, which contributes significantly to these rivers’ flow, and the unpredictable impact of climate change on precipitation patterns in the Andes further complicate the situation. The water tariff system is a cornerstone of SEDAPAL’s ability to provide high-quality and sustainable water and sanitation services in Lima, especially in the face of growing demand, infrastructure needs, and the challenges posed by climate change.

In this context, and within the strategic partnership framework between SEDAPAL and IFC, IFC seeks to contract a consultant to identify global best practices for water tariff determination in terms of methodology and inputs and provide a comparative analysis with Lima’s current framework.

The services provided by K&M Advisors were structured into three main tasks:

Task 1 (Work Plan): K&M prepared a comprehensive work plan that detailed each task and activity, the organizational structure of the consultancy, involved parties, and a timeline including milestones and expected outputs.

Task 2 (Comprehensive Assessment of WACC Methodology): Following Peru’s Legislative Decree No. 1620 aimed at reforming water and sanitation services, K&M undertook a detailed study to propose a relevant WACC (Weighted Average Cost of Capital) methodology for SEDAPAL. This involved reviewing the current regulatory frameworks, existing methodologies, and assessing risks associated with SEDAPAL’s operations. A SWOT analysis was conducted to tailor the WACC methodology effectively to the needs and challenges specific to the Peruvian water sector and SEDAPAL’s operations.

Task 3 (Review of Tariff Models): Concurrently, K&M reviewed tariff models by analyzing SEDAPAL’s operational efficiency indicators and the existing tariff model used by SUNASS. This review also included a benchmarking analysis against similar regulatory frameworks globally. The consultant prepared a comprehensive presentation on the findings, which included strategies to address identified weaknesses and optimize tariff models to enhance SEDAPAL’s financial and operational performance.

These tasks were completed in collaboration with IFC and SEDAPAL, ensuring that the consultancy’s recommendations were well-grounded and actionable, tailored to the specific operational realities and regulatory requirements of the water sector in Peru.

The Water and Sewerage Corporation (WSC) engaged K&M to conduct a comprehensive financial analysis regarding the potential takeover of seven desalinated water plants from Aqua Design in The Bahamas. These plants operate under a Build-Own-Operate (BOO) model within a framework defined by a Master Agreement and individual sub-agreements, with three contracts still active, one under extension, and three expired. K&M’s task was to evaluate four distinct options concerning the future ownership and operation of these plants, providing a detailed financial analysis and strategic recommendations to assist WSC in making an informed decision. This involved scrutinizing the operational and financial implications of each option, offering cost estimations, and developing a strategic framework to ensure that WSC’s decisions are financially viable and aligned with governmental directives, thereby facilitating a smooth transition in the management and operation of these vital water resources.

The IADB contracted K&M to be part of a committee that is evaluating SEDAPAL´s performance and recommending key measures for improvement. As part of this work, K&M is evaluating SEDAPAL’s processes and identifying challenges to understand how and to what extent they impact SEDAPAL’s ability to provide quality services to the public. This assessment intends to propose measures to strengthen and modernize the company’s financial management. The scope of the consultancy includes producing an assessment report on SEDAPAL’s current status and a report on proposals for modernization. Key activities involve reviewing financial data, assessing organizational structures, examining strategic plans, and evaluating investment portfolios. The consultancy will also propose guidelines for financial sustainability, organizational efficiency, and potential modifications to the regulatory framework. Additionally, they will suggest alternative financing solutions and engage in coordination meetings with various stakeholders.

The objective of the service contract was to evaluate SEDAPAL’s processes to consistently deliver quality services. The assessment identified challenges and proposed measures for financial management and modernization. The consultancy tasks included producing a report on SEDAPAL’s current status and creating a preliminary document for organizational enhancement.

The consultancy reviewed SEDAPAL’s financial data, analyzed the organizational structure, and assessed strategic plans. K&M evaluated the proposed investment portfolio, focusing on financing sources and borrowing capacity, and proposed solutions for SEDAPAL to be able to implement the investment plan. Benchmarking was conducted to measure SEDAPAL against international standards. K&M also examined tariff structures and the regulatory framework, providing insights into SEDAPAL’s operational and financial direction. Recommendations were made for financial sustainability, organizational improvements, and potential regulatory changes. They also considered alternative financing for investments. The consultancy coordinated with entities like the Technical Secretariat and SEDAPAL during a week of discussions.

The Inter-American Development Bank (IDB) has contracted K&M Advisors LLC (K&M) to support the establishment of CWUIC SP, an insurance company for Caribbean water and sanitation utilities to provide reasonably priced natural disaster insurance, as well as complementary post-disaster operational support and loans for resilient infrastructure investments. K&M supported the IDB Group with the conceptualization and development of CWUIC SP since 2019. Through this assignment, K&M will continue supporting the IDB and other entities related to CWUIC SP with the establishment of and initial operations of CWUIC SP.

Within this assignment, K&M has been assigned a range of responsibilities to support the Caribbean Water Utilities Insurance Company Special Purpose (CWUIC SP) project. These responsibilities include promoting CWUIC SP training and awareness at the Caribbean Water and Wastewater Association (CWWA) conference, facilitating the collection of data essential for CWUIC SP’s risk modeling, providing advisory services to the CWUIC SP Working Group regarding its implementation, and developing a preliminary Financial Model for the capitalization of CWUIC SP. Additionally, K&M is tasked with engaging various stakeholders such as Caribbean water utilities, governmental bodies, insurance brokers, and regulators. They are also responsible for preparing Statements of Work (SOWs) for consultancy services funded by the Foreign, Commonwealth & Development Office (FCDO), structuring Component 3 of CWUIC SP, conducting Component 3 training, and actively supporting the Inter-American Development Bank (IDB) in fundraising efforts for CWUIC SP. These responsibilities collectively contribute to the successful realization of the CWUIC SP project’s objectives.

The Water and Sewerage Corporation (WSC) contracted K&M Advisors to develop an initial Strategic Plan Outline with the objectives and priority actions for WSC for the next four years. The objective of this assignment was to develop an initial Strategic Plan Outline with the objectives and priority actions for the Water and Sewerage Corporation (WSC) for the next four years. Having been validated at a stakeholder workshop that included WSC staff, members of WSC’s board, and authorities from the Ministry of Finance and the Ministry of Public Works, this outline is being used to prepare WSC’s Corporate Business Plan and the associated legal and regulatory reforms required to achieve the objectives established in the plan.

In this assignment, K&M carried out the following activities:

• Conducted a preliminary review of WSC’s coverage, operations, and financial performance
• Proposed objectives and priority actions to WSC Board and WSC EXCOM
• Led a Workshop in Nassau to review proposed objectives and priority actions
• Prepared the Strategy Plan Outline for WSC’s Corporate Business Plan for 2023-2027