WELCOME to the divestiture of ... 

Dar es Salaam Water and Sewerage Authority

Dar es Salaam Water and Sewerage Authority (DAWASA) is a Public Corporation established by statute, the Dar es Salaam Water and Sewerage Authority Act, 1981 as amended in 1989, 1999 and 2001.   The Government of Tanzania wholly owns it. It is responsible for the provision of water supply and sewerage services in the Greater Dar es Salaam area covering Dar es Salaam and part of Coastal Region.

The Existing Water Supply Services:

DAWASA has used the Ruvu River as its main water source since the 1950s.  The Upper Ruvu scheme has a present capacity of about 81Mld (millions of litres per day), while the Lower Ruvu scheme has a design capacity of 182 Mld. Other sources, which are being used are at Mtoni to the south of the city with a capacity of about 9 Mld., and ground water.

The DAWASA area of supply covers not only the city but also the villages and townships on the route of the two transmission mains.  The approximate length of existing mains in the city is about 824km, with 237km of primary distribution and 587km of secondary distribution mains.

DAWASA provides water from the distribution mains at standpipes located around the city.  There is no charge for this water, which is used by individuals, as well as water vendors who charge their customers for the water they transport.

There are numerous private businesses operating  water tanker services within the city, and it is estimated that about 16 tankers are used to ferry water to premises with underground water tanks on a daily basis.  DAWASA does not provide such a service.  Private vehicles carrying water containers are a common sight in the city, as people transport water to their homes.  A feature of life in the city is the number of water vendors providing a valuable service to the people by transporting water to their premises in custom built carts carrying six 20 litre containers. Why are giving this information? I do not think it serves much purpose as far as DAWASA is concerned. I would suggest that it be deleted.

The Existing Sewerage Services:

The sewerage system of Dar es Salaam is really a collection of independent micro-systems, rather than a fully integrated network.  The systems are (in theory at least) of the separate type and have been developed since the 1950s. The City Centre and immediate surrounding areas are served by a sewer network with ultimate discharge to the ocean via an outfall.  Other sewered areas of the City are mostly centred on institutional areas such as the Airport and the University of Dar es Salaam.  The sewage from these areas is treated in stabilisation ponds with discharge to rivers or streams.  All systems are a combination of both gravity and pumped flow.

The sewerage systems of Dar es Salaam comprise the following major components:

• Nine stabilisation pond sites; 

• Fifteen sewage pumping stations; 

• Approximately 170 km of gravity sewer and pumping mains;

• A 1 km long, 1,000mm diameter ocean outfall and screening house; 

• Three depots with office, workshop and storage facilities.

There are some nineteen different organisations, which collect waste from septic tanks and pit latrines etc.

Key Features of the Divestiture of DAWASA: 

1.      The provision of water and sewerage services in the DAWASA designated area (the City of Dar es Salaam and some parts of the Coastal Region) will be undertake by an asset holding authority/ Public Granting Authority (DAWASA), a Private Operator (PO) and a regulator (Energy and Water Utilities Regulatory Authority.  This is in accordance with the GoT decision, which is re-stated in the Dar es Salaam Water and Sewerage Authority Act, 1981 as amended.

2.      Private sector participation is through a ten year lease contract. This lease will be granted by DAWASA.
 

3.      The International Professional Partner (IPP) or preferred bidder will form a local Operating Company (PO) with the IPP having a minimum shareholding of 51% and local investors a minimum of 20%.  The onus is on the IPP to identify its local partners. The Private Operator will have a minimum paid up equity of US$ 2.5 million.
 

4.      DAWASA will be responsible for the vast majority of the capital investment programme, the immediate requirement is estimated at US$ 120 million.  It will be responsible for securing financing and subsequent debt servicing.  It will enter into a lease contract with the Private Operator to operate the water supply and sewerage services and monitor the performance of the Private Operator.
 

5.      There will be a Development Contract between the GoT (Ministry of Finance) and DAWASA which will set out conditions for preparing short and medium term investment programmes, consolidated financial forecasts, financing plans, requests for adjusting consumer rates and procedures for budgeting and paying water bills of GoT agencies.
 

6.      The GoT will enter into credit agreements with four co-financiers (the World Bank, African Development Bank (AfDB) ,European Investment Bank (EIB) and Agence Française de Développment (AfD)) to cover the immediate investment programme, and on-lend these funds to DAWASA.

7.      The availability of the funds under the Dar es Salaam Water Supply and Sanitation Project is a prerequisite for the Private Operator to take over the DAWASA operations. 

Milestones:

1.      Terms of reference soliciting private sector participation in DAWASA were issued in 1997. Seven IPPs were interested, four pre-qualified, two were denied a time extension and therefore didn’t submit and one was disqualified.   Each of the four IPPs offered different arrangements including a management contract, a lease and a concession.  It proved impossible to evaluate the “best” submission.  It was decide that supplementary information was needed to reach a common ground for comparison.  

2.      Divestiture advisers (Severn Trent Water International, (STWI)) were recruited under a competitive process and appointed in June 1998 to assist in the preparation of the Supplementary Information Paper (SIP).  

3.      In November 1998 the GoT approved the strategy to let a ten year lease to a Private Operator and to restructure the sector.
 

4.      PSRC held a Local Investors meeting to explain the divestiture and their potential involvement in February 1999.     
 

6.      In May 1999 PPSRC carried out a pre-qualification update on the IPPs.  The update was extended to the two IPPs who hadn’t submitted in 1997 – United Water and Thames Water both of the UK – but neither participated.  Northumbria Water withdrew from the transaction.  But three IPPs – Biwater PLC of the UK, Saur International, and Vivendi (Generale des Eaux) both of France - successfully passed the pre-qualification update.
 

7.      In June 1999 the draft SIP was issued to the three pre-qualified bidders for their comments in June 1999.  The draft SIP contained draft transaction documents – Development contract, lease contract, Memorandum of Understanding, customer contract.
 

8.      In June 1999 PPSRC held pre-bid meetings with the pre-qualified bidders to obtain their feed back on the draft transaction documents.  One meeting also included potential local investors.
 

9.      The final SIP was issued on 20 August 1999.  This event marked the start of the bid period for the pre-qualified bidders.  The deadline for bid submission was originally 11 November 1999 but this was extended to 10 January 2000 and finally 31 January 2000.
 

10.  PPSRC issued an information memorandum for local investors in September 1999.  Eleven were purchased at Tshs 80,000 each, including CDC, First Capital Partners and PROPARCO who have since been deemed not be to classified as local investors for the purposes of the DAWASA divestiture.
 

11.  Further issues raised by the bidders during the bid period and withdrawal of one IPP together with the notable lack of interest of another resulted in the need to amend the final SIP.  PPSRC held bid meetings with all three bidders in London in October 1999 and subsequently issued a major addendum to the final August 1999 version of the SIP in November 1999. 

12.  On 31 January 2000 two bids were received (one from Saur International the other from Vivendi) and opened in public.  The financial submissions were placed in a safe with PPSRC’s bankers.  As previously informed, no bid was received from Biwater International Ltd of the UK. The technical evaluation concluded that both submissions were acceptable. 

13.  PSRC opened the financial submissions of both pre-qualified participating bidders on Friday 25 February 2000 at 3pm in public. The financial evaluation of the financial bids resulted in the GoT deciding to reject both bids. In June 2000 it was decided to carry out a full re-bid open to all international water operators. 

14.  In April 2001 Parliament passed the Energy and Water Utilities Regulatory Authority Act and Amendments to the DAWASA Act whereby a multi sector regulator was provided to regulate the water sector nationally. 

15.  In November 2001 Parliament passed the DAWASA 2002 legislation which consolidates earlier legislation governing DAWASA and sets out the regulatory environment for DAWASA. 

The Re-bid Process:

The strategy for the re-bid process is to identify a Private Operator and to enter into a ten year lease contract for the provision of water supply and sewerage services.  The Private Operator will also be expected to carry out sizable construction activities during the early years of the lease.  Pre-qualified bidders are Biwater of the UK with Gauff of Germany, General des Eaux of France and Saur International of France.