Thursday, Dec 14, 2017
Infrastructure | Africa | Rwanda

Water & Sanitation

Rwandan utility sets water bar high


1 year ago

James C. Sano, CEO of WASAC
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James C. Sano

CEO of WASAC

Rwanda’s award-winning Water and Sanitation Corporation Ltd (WASAC) has made some outstanding achievements in streamlining and improving the efficiency of its operations, and has ensured every business in Rwanda has access to water and sanitation. CEO James C. Sano explains the leaps and bounds the company has made, its teamwork and collaborations that are ensuring its success is ongoing, and what opportunities lie ahead for investors in both the sector and Rwanda as a whole. 

 

As embodied by China’s and America’s massive investment campaigns, Africa is undergoing a transformation and becoming a growing destination for FDI. What do you think is attracting this attention towards the continent?

It is all about opportunities for investors and businesses. A lot has been done in Europe and in the USA in terms of setting the right infrastructures and the right education. This has led to a clear growth in all sectors of these economies, from healthcare to agriculture. If you compare Africa to the US or to Europe, we are still lagging behind. This need for development creates opportunities as there are demands to be addressed.

We have a lot of resources and that is why investors come here. Our natural resources attract the world. In our sector, water, there are so many opportunities waiting to be addressed. We have access to an abundance of water; however, we do not yet have the right infrastructure to distribute this supply to all the people demanding it.

In Rwanda, we have the objective of granting water access to 100% of the population by 2020. Even though our goal is extremely ambitious, we are confident that we can achieve it. However, we cannot reach this target by only relying on governmental resources. The private companies need to work towards this common goal. We need the private sector, from within Rwanda and from abroad, to work collaboratively. The opportunities are there and it is already happening. For example, the majority of our water system today is managed by private operators. This is a move taken by the government to increase access to water.

National distribution cannot be achieved by a single agency, especially when you take into account our most rural and remote areas. Water distribution is divided by districts, and these district hire private operators to fulfill their demand.

 

Infrastructure Minister James Musoni told The Worldfolio that for both private and public sectors, “the PPP format is very attractive.” What opportunities would you like to highlight with regards to the water and sanitation sector?

In our sector, PPPs make growth possible. For some years now, we have successfully attracted the private sector to come into water production thanks to the PPP model. The only difficulty we have faced has been to agree amongst ourselves upon the right tariff to implement. Water is a social root and it should be affordable to all, so we are personally pushing for the right tariffs to be installed.

One of the great achievements we have been able to complete at WASAC is that we do not rely on any governmental subsidies. We live on our own revenue. The only money we get from the treasury is meant to increase water access to the population. However, our overall operations and service provisions are self-financed. Even though the prices regarding our activities are high, we are now able to break even. We started from a negative operating balance, which evolved into a break-even point, and we are now starting to work for profit. We are proud to be able to pay for our electricity consumption independently.

Because of Kigali’s hilly landscape, every drop of water uses a great amount of energy, which translates into a greater cost. Today, we cover this cost by ourselves. We pay over 100 million Rwandese Francs every month in electricity bills. Today we are able to pay for it all. We pay our salaries and all operating costs on time, and still manage to at least break even. We are one of the only utility companies in sub-Saharan Africa who achieve this without subsidies.

Now we are competitive and willing to go further. We have the means to compete against any foreign investor. The challenge for potential investors is now to come and get to our level! I believe that competition is a positive thing. Having a strong and diversified private sector will multiply water resources and the ultimate beneficiary of this competition will be the people.

 

WASAC and REG are the result of the split in two of the former EWSA. Jean Bosco Miguiraneza told us how this boosted REG, especially in efficiency, profitability and infrastructure investments. What have been the improvements experienced by WASAC?

The split between the two companies is arguably the best thing that could have happened. On the short term, we have increased revenues from 900 millions to 1.5 billion Rwandan francs per month. The number of connections to our utilities in urban areas has increased from 120 to 200,000 customers. We have increase production from 65,000 cubic meters per day to 90,000 cubic meters a day. We have recently signed a contract to add an additional 55,000 cubic meters per day. This means that by April 2017 we will have enough water to cover Kigali’s entire H2O demand.

This achievement would have been impossible if we were to focus on water and energy simultaneously. The problem prior to the separation was that there was too much argument to decide what activity to prioritize. Nowadays, it is easier for me to present my plan and budget. We have reduced our working staff from 1,200 to 650 people, which resulted in a great increase in efficiency. The number of staff per customer ratio has reduced from 8 to 4.5, diminishing cost.

We achieved this by developing an effective billing system designed by WASAC’s IT department. We have collaborated with various banking systems, such as Bank of Kigali, I&M and Bank Populaire, as well as with Airtel and MTN, and we are currently in discussions with Tigo. In association with these organizations, we have developed a customer interface allowing our clients to pay via mobile and by using online banking systems. By removing cashiers from our branches, we have made our company a cashless company.

We are in discussion with IREMBO (an online portal for government services and information) to make sure that we use IT-driven facilities in order to register our customers. Furthermore, we have electronically mapped our water system so that we know exactly where our customers are. By modeling this geographic metric, we are able to understand what factors are most required to advance.

 

WASAC received this year the Water Leaders Award 2016 and the Culligan Leading Edge Award 2015. What do these awards mean to you personally and how are you working to continue to be recognized?

It is a clear message that we are on the right track. What remains now is to uphold the values that made us reach this state of excellence. We need to keep motivating our staff by staying positive as to what we are doing. We need to keep on setting realistic but challenging targets, while making every member of WASAC involved and accountable to our results. Internationally recognized performing indicators show us that we have already built the right performance contracts.

To stay at the top, we have elaborated a strong partnership with the Dutch company Vitens and also with a Japanese water company. We use their expertise and technicians to ameliorate our operations. This has allowed us to effectively install our billing system. When you encourage people to pay, they will eventually believe that they are paying the right tariff in the right manner. Before, we used to have un-billed customers. So to answer that problem, we have metered 100% of our customers. When payment is due, WASAC sends a message to an online application before mailing a hard copy of the bill to the client’s home. This has allowed us to process transactions on time. Before, this process could take up to three months. Today, a client can pay his due over 24 hours.

 

In a recent interview, Claudien Habimana from Société Pétrolière told us proudly the assistance the GoR gave them by building the necessary infrastructure to their depot, such as roads, electric and water utilities and even fiber optic. How would you assess the support the government offers to interested investors?

Our government has done a lot in terms of business promotion. Working together with the World Bank, the government has launched an initiative called “Doing Business.” At WASAC, we are part of this initiative. The aim of this program is to ensure that all businesses are effectively connected to the right infrastructures. From restaurants to factories, any enterprise that needs water will be connected to a water system for free, guaranteed that it is built in specific business-marked areas. The connection for individuals costs around 20 Rwandese Francs. For businesses, the connection comes free of charge. We do not demand an administrative charge for providing or billing water. Companies just have to come here and tell us how much water they need per day. We take care of the rest for them. Investors coming to Rwanda should expect a zero-fee for connection.

As we increase production, we must also consider the economic development of the country. Today in Rwanda, there isn’t a single company that does not have access to running water. We are thriving to meet this demand. Earlier on this year, we signed a contract to construct a 65,000 cubic meters treatment plant. By 2017 we will have enough water to answer Kigali’s demand up to 2020-2023. However, we are already thinking ahead. The next projects pending to be implemented will be targeted at answering the demand till the year 2050.

 

Two of the biggest IPPs here in Rwanda are American companies. You have also partnered with Culligan International to develop a mega water production project. What are the future investment opportunities you would like to highlight to our international readership?

We are opened to all investors. These US investors that have engaged in our projects do not finance them completely. What they do, is that they give us short payment schedules. The government finances these projects, but US investors help us stretch the payment schedule. So investors aren’t investing per se, they are facilitating and accelerating the cashflow necessary to finalize a project on time. This investment security represents a great opportunity.

Furthermore, we are currently in the process of signing an agreement with a United Arab Emirates company called Metito to be launched for the Kigali market in 2024. We have pre-signed a deal with them and they have started obtaining their work permit. Once we agree on tariffs, this collaboration will start.

There are opportunities in terms of water production, not only in Kigali but also across the country. There are also plenty of opportunities in terms of sewage management, as the latter is lucrative and under exploited. With a city of 1 million people, the lifestyles of people are changing. The way they eat and dress are transforming, and it’s the whole production chain that needs to be remodeled.

 

How is WASAC contributing to enhancing environmental friendliness?

First we make sure that we have effective sewage treatment plants. We abide according to the highest of environmental standards. To ensure that we respect these codes, we make our sewage treatment plants pollution free. We are currently finalizing the designs for our new treatment plants to meet the national standards for environmental protection.

 

Does WASAC engage on public education, to make the consumer aware of this scarce resource?

The Minister of Natural Resources is responsible to build awareness. Our job is to sell water in an environmentally friendly manner. We also have a budget to educate people, but it is aimed at showing them how to properly use water consumption.

 

What is the ultimate achievement you would like to leave behind upon departing from this office?

I still have a lot of work to do. What drives me most is the need to solve people’s problems. I also want to make sure that I leave behind me a clear and effective business plan, upon which future generations will be able to thrive under.

Our vision at WASAC is to be the most sustainable water utility in Africa, exceeding stakeholders’ expectations. To achieve this objective, we have started the construction of two megaprojects. The first one is aimed at increasing our water production in order to meet future demand. The second is to renew our existing network in order to gradually increase effectivity.

As a previous coordinator of water supply and sanitation in the Ministry of Infrastructure and as the current CEO of WASAC, my goal is to make this company one of the most attractive companies in Africa – not only in terms of management, but also in terms of benefits to the community. I want WASAC to become the leading regional solution in terms of water and sewerage system. 



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