There are many ways to combine the relative strengths of public and private partners to provide water and wastewater services. By balancing risks and responsibilities with adequate incentives for, and measurement of, performance, cities worldwide are gaining valuable experience with these models. PA helps structure dozens of such transactions and brings this experience to each of our assignments.
Track record
Management agreement for the water utility in Tallinn, Estonia
PA is helping the city of Tallinn, Estonia, negotiate and establish a Management Monitoring Unit (MMU) within the city to manage the performance of a newly autonomous water utility, which PA helped create in a previous assignment. Our work includes defining the legal structure of the MMU, developing its scope and functions, developing operating principles of the MMU and recommending mechanisms to ensure the independence of the MMU. Our work is designed to support an independent legal entity with defined structure and mode of working (eg internal procedures, communication mechanisms, etc).
To emphasize the MMU's independence from Tallinn City as a separate corporate entity, PA is developing policies and procedures for recruitment, budgeting, financing, auditing and work programs.
Management agreement for the water utility serving coastal Montenegro
The government of Montenegro wanted to establish a public/private company (MonteAqua) to carry out a private concession contract involving the provision of all municipal and regional water and sewerage services for six towns along the coastal region. The infrastructure was in poor condition so a large, focused investment and co-ordinated management were needed. After the concessionaire was selected, the government sought to establish the full institutional and contractual basis for the public/private company as well as develop the structures and organizations necessary for the contract's effective long-term implementation.
After conducting a detailed review of institutional and funding relationships, PA developed a comprehensive contract and agreement structure, including the concession contract, lease and purchase agreement, asset transfer, staff transfer and staff employment agreements, social and equity creation funds and corporate and statutory agreements for the creation of the public/private company. We also assisted in developing an interim regulatory process and governmental concession management unit.
Working with the government, regional water executives, and private sector stakeholders and their lawyers, PA also assisted in developing detailed contracts and agreements to ensure a comprehensive and stable arrangement.
Development of the Jordan Valley Authority
To shape a new future for the Jordan Valley Authority (JVA), the organization decided that it should develop a rigorous and public strategic planning process. PA was engaged to lead the process to develop a strategic plan for JVA.
The first phase was to expose JVA to strategic planning concepts and approaches, build change management capacity and assess the external and internal environments that affect JVA. In the second phase, USAID is working to facilitate the strategic plan's development while building JVA's capacity in strategic planning approaches and privatization. A major decision of the strategic planning process is to have JVA play a stronger role as regulator and manager, letting farmers, co-operatives and others in the private sector implement and handle the delivery of services.
JVA and other stakeholders also decided to plan and implement a program of participatory irrigation management and the privatization of bulk and retail water supply in the Jordan Valley. As a result, draft bid documents have been prepared for a contractor to manage the bulk and retail water supply in the Jordan Valley. A new law is being drafted to codify the organizational changes that come as a result of privatization.
Transaction advisory - concession contract bidding, Chile
The government of Chile has tendered two concessions for water and wastewater involving a combined investment of $500 million. AquaMundo has formed an international/Chilean consortium to take part in the international competitive bid for the operating rights of ESSAM and ESSAR.
PA helped AquaMundo identify the most suitable strategic partner to pursue this opportunity and provided specific support at the pre-qualification stage. PA was then engaged to act as the bid manager, helping AquaMundo throughout the bidding process including regular briefings to its board of directors. Our work included reviewing all transaction documentation, making recommendations on contractual arrangements including customer contracts, identifying priority asset plans and giving post-transaction advice and advice on approaches to the tariff and regulatory regimes.
PA also reviewed and evaluated financial and business models, consortium financials and the business using different valuations techniques (DCF, EBITDA multiples, etc). We then developed an AQM takeover plan and integrated it into the national and regional business development strategy. Finally, PA reviewed specific efficiency gains and devised a strategy for driving business efficiencies over the first five years through organizational, operational and business improvement processes.
