Assessment of processes and measures for the strengthening and modernization of financial management of SEDAPAL
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
The objective of the assignment was to assist WEB in performing a spot background check of five companies that will be invited to submit proposals for a turnkey contract for constructing an SWRO plant in Aruba. The background check will cover the companies’ activities in their country of origin (location of their headquarters) and their subsidiaries in a sample of countries where they are active.
K&M performed a background check that identified the red flags that WEB could consider when deciding if any of the five tenderers should not be invited to submit a proposal. To this end, the background check included a review of each tenderer’s legal, reputational, and financial background. The background check was performed using publicly available information.
K&M calculated the financial ratios that indicate the tenderers’ financial strength relative to the SRWO turnkey contract size and performance guarantee. K&M obtained the information to calculate these ratios from the financial statements included in the tenderers’ latest annual reports and/or the financial information submitted by the tenderers in the expression of interest.
An electric utility is selecting a company that will supply natural gas for power generation. The prospective supplier is expected to import LNG delivered at an onshore or floating terminal and send gas via pipeline to the client’s power plants. The client intends to select one of the shortlisted firms as a “Preferred Supplier” and commence negotiations. The client requested K&M’s commercial and technical advisory services during these negotiations and the contract implementation with the prospective gas supplier. The services K&M is providing in this project include estimating the LNG demand, analyzing the business case to switch from diesel to natural gas, analyzing the viability of various sites, developing the gas quality specifications, and advising throughout the process of negotiating a gas supply agreement (including setting a negotiation roadmap, developing an issues list, participating in negotiations, and providing support until the agreement is executed).
K&M’s scope of work includes:
- Analyzing historical operational and dispatch information of power plants that will be converted to gas
- Developing an hourly merit order dispatch model to estimate hourly generation for each plant during the next 25 years
- Analyze the technical viability and costs of converting generation units to gas
- Calculate the levelized-cost of electricity under various generation expansion scenarios and advise on the least-cost option
- Develop gas quality specifications
- Estimate the all-in cost of gas delivered at the power plant battery limit and benchmark it against similar projects
- Actively support throughout the negotiation process
The Water and Sewerage Corporation of The Bahamas has engaged K&M to undertake the preparation of a Corporate Business Plan. The primary objective of this consultancy is to develop a comprehensive plan that will guide the Water and Sewerage Corporation’s activities from 2023 to 2027. The plan will encompass various aspects such as service quality, operational efficiency, financial management, capital investments, and the legal and regulatory framework.
Within this assignment, K&M has been assigned the following responsibilities:
- Preparation of a financial model for the Water and Sewerage Corporation (WSC) to facilitate effective financial planning and management.
- Conducting a cost of service study for WSC, which will help determine the appropriate pricing structure for services.
- Developing an action plan for tariffs, ensuring a strategic approach to tariff adjustments in line with the cost of service study outcomes.
- Providing advisory support on existing water supply contracts, reviewing their terms and conditions, and making recommendations for improvements or updates.
- Creating a prioritized capital expenditure (CAPEX) plan for WSC, outlining investments aimed at enhancing operational efficiency, improving service quality, and strengthening the overall resilience of the organization. Additionally, developing a financing plan to support the implementation of the CAPEX plan.
- Recommending changes to government policies and the legal and regulatory framework governing the water and sewerage sector, aiming to create an enabling environment for WSC’s operations.
- Establishing a baseline of Key Performance Indicators (KPIs) to measure customer satisfaction, enabling WSC to monitor and enhance its service delivery.
- Providing advisory support for the update of WSC’s emergency response plan, ensuring preparedness and efficient response in emergency situations.
- Ultimately, K&M will prepare the Corporate Business Plan itself, incorporating all the necessary components and recommendations.
Throughout the process, K&M will also lead stakeholder engagement forums and present the developed recommendations to the Government, ensuring transparency and collaboration in shaping the future of the Water and Sewerage Corporation of The Bahamas.
The World Bank, as part of an ongoing program to support SEDAPAL in improving its operational and commercial performance, hired K&M to provide support in strengthening SEDAPAL’s financial performance. As part of their assignment, K&M supported SEDAPAL through workshops aimed at developing an action plan to enhance the organization’s financial management. This action plan had been formulated as terms of reference for contracting services financed by a World Bank loan and had constituted one of the components of Component 2 of the Program.
K&M’s scope of work included the following:
- K&M conducted a desk review of at least three years of SEDAPAL’s financial statements. This review involved analyzing the financial performance and trends over the specified period.
- An analysis of key financial indicators and their benchmarking across other water utilities in Latin America had been carried out by K&M. This analysis allowed for a comparison of SEDAPAL’s financial performance with similar entities in the region.
- K&M conducted an analysis of the current tariff structure employed by SEDAPAL. This assessment aimed to identify any areas for improvement in terms of revenue generation and cost recovery.
- Recommendations for the enhancement of SEDAPAL’s financial management had been developed by K&M. These recommendations included strategies and measures to improve financial planning, budgeting, and reporting.
- Materials and analysis results had been prepared by K&M for the client through virtual workshops. These workshops facilitated discussions and knowledge sharing to support the implementation of the action plan.
- Additionally, K&M contributed to the creation of part of the project appraisal document (PAD). Their input had been included either in the main text or as an annex, describing SEDAPAL’s areas of financial improvement and the corresponding recommendations.
The Inter-American Development Bank (IDB) is a champion of the Regional Strategic Action Plan for Governance and Building Climate Resilience in the Water Sector in the Caribbean (RSAP). In support of the implementation of the RSAP, the IDB and K&M have prepared a report for publication on water utilities in the Caribbean. This report will serve as reference document and a key guide for prioritizing improvements needed by water utilities of the Caribbean. This report includes:
- Benchmarking of water utilities in the Caribbean
- The benefits of implementing non-revenue water (NRW) reduction projects
- Identifying the level of resilience of water utilities in the Caribbean
- Assessing the impact of COVID on water utilities in the Caribbean.
Under this contract, the K&M team processed new data provided by water utilities in the Caribbean, ensuring that the report is reflective of the most current data available.
K&M’s scope of work included:
- Processing new data from utilities
- Updating the database for individual utilities and consolidating the database
- Produceing new charts and figures
- Updating accompanying text in report
- Proofeading report for publication
The IFC contracted K&M Advisors LLC (K&M) to assess the feasibility and market opportunities for the implementation and operation of wastewater reuse projects to supply off-takers in CDMX. The team will conduct a market assessment to understand the potential demand for and supply of treated wastewater in CDMX and identify, contact, and survey the alternative off-take uses for treated wastewater in CDMX. Additionally, the team will develop a detailed analysis regarding the basic technical aspects of the implementation, including potential locations based on demand forecast for potential off-takers by types of water quality and location requirements. K&M will outline and evaluate the possible financial and contractual structures for the development of water reuse projects. The team will prepare a final report and lead a Workshop on key findings and recommendations for the IFC, World Bank and other external guests to be agreed with the IFC.
The IDB Group, through the assistance of K&M Advisors LLC (K&M) and Alliant Insurance Services (Alliant), has completed the initial development of the proposed Caribbean Water Utilities Insurance Company (CWUIC). CWUIC will be a mutual insurance company for water utilities in the Caribbean. In this phase of development, CWUIC’s main components, governance framework, potential sources of funding, and target members have been largely defined. As a result, the IDB Group plans to submit a proposal to the Green Climate Fund (GCF) requesting funding for CWUIC. Before the IDB Group submits the proposal to the GCF, it must define the entity—whether an existing one or one to be created—in which CWUIC will be established. The K&M team is advising the IDB on the best alternatives for establishing CWUIC