Public-Private Partnership Stories Rwanda: Kigali Bulk Water Project The rapidly growing population of Kigali, Rwanda, is straining the city’s infrastruc- ture services. Maintaining people’s access to water is a top priority as the city’s population swells, but while water coverage rates are considered high, water production capacity has not kept pace with population growth. To overcome this problem, the Government of Rwanda (GoR) decided to partner with the private sec- tor to diversify and improve water supply for the nation’s fast growing capital city through a public-private partnership (PPP). In September 2010, the Government of Rwanda retained IFC as lead advisor to de- velop and structure this bulk water supply PPP. Metito won a 27 year concession to build, operate and maintain a 40,000 m3/day water supply scheme. Metito commit- ted US$ 75 million to develop the scheme. This series provides an overview of public-private partnership stories in various infrastructure sectors, The project was implemented with the financial support of DevCo, a multi-donor facility affiliated with the where IFC was the lead advisor. Private Infrastructure Development Group. DevCo provides critical financial support for important infra- IFC Advisory Services in structure transactions in the poorest countries, helping boost economic growth and combat poverty. DevCo Public-Private Partnerships is funded by the UK’s Department for International Development (DFID), the Austrian Development 2121 Pennsylvania Ave. NW Agency, the Dutch Ministry of Foreign Affairs, the Swedish International Development Agency, and IFC. Washington D.C. 20433 ifc.org/ppp BACKGROUND The structure adopted for the Project was a 27-year concession Kigali is home to over one million people and is growing rapidly. on a Build, Operate and Transfer (BOT) arrangement. Under This is placing greater strain on infrastructure services in the city. the BOT structure, the private investor, (the Concessionaire), Water coverage rates are good by African standards, estimated at will finance the design, construction, financing, operation and over 80 percent today, but the majority of customers are served maintenance of a water production and treatment facilities to by communal stand posts and supply is intermittent because deliver up to 40,000 m3/day. of limited water production capacity. The government has The sole off-taker for the project is the national water utility, committed to improving water services, aiming for 100 percent Water and Sanitation Corporation (WASAC), while the Ministry coverage in Kigali by 2018. To meet this target and strengthen of Infrastructure (MININFRA) will be the grantor of the project the water supply in a long-term, sustainable way, the Government on behalf of the Government. The legal instruments for the of Rwanda (GoR) sought to develop a new water source for the implementation of the project were integrated into a single project city through a public-private partnership (PPP). In September agreement and jointly signed by MININFRA, WASAC and the 2010, the Government of Rwanda retained IFC as lead advisor to Concessionaire. develop and structure this bulk water supply PPP (also known as the Project). BIDDING The Metito consortium (comprising Metito Utilities Ltd and IFC’S ROLE Metito Overseas Ltd) won a 27 year concession to develop, Under the advisory mandate, IFC was responsible for assisting operate and maintain a 40,000 m3/day bulk water supply scheme the client in the preparation, design, and implementation of comprising a water treatment plant, forwarding infrastructure and private sector participation in the Project by attracting one or three water reservoirs. Metito will invest US$ 75 million in the more private sector investors with established financial standing development of the scheme (to be completed in the first 2 years) and experience in the development, management, operation, and and will then operate and maintain it for the remaining 25 years. maintenance of a bulk water supply facility. The IFC project team The PPP agreement was signed on March 31, 2015. carried out the assignment in two phases, including: This is a landmark transaction, as the first competitively tendered • Phase 1: Due diligence, which included identifying Water Build Operate Transfer Concession in Sub-Saharan Africa the most appropriate location for the Project as well as (outside of South Africa) and will result in an investment of $75 demand assessment to determine the plant sizing, and million from the private sector, the largest amount for many years • Phase 2: Competitive selection of investors to implement invested by the private sector in the water sector in Sub-Saharan the PPP. Africa. Capacity was limited within Kigali’s public water utility, both in terms of developing and implementing the PPP and reforming the utility to ensure the long-term sustainability of water services EXPECTED POST-TENDER RESULTS in the city. Therefore, the IFC team also mobilized funding from • The winning bidder is investing US$ 75 million the Public-Private Infrastructure Advisory Facility (PPIAF) to in the construction of a new 40,000 m3/day bulk support capacity building for the water utility and the water sector water supply scheme. reform process. This step complemented the transaction advisory • The new project will increase water supply in Kigali mandate. by 40% of Kigali. TRANSACTION STRUCTURE • The overall support will result in improved quality Detailed legal, financial, technical and environmental assessments of service and access to water supply for over one of the Project were conducted to assess the feasibility of the million people. proposed project and to inform the preparation of a Strategic Options Report (SOR). The SOR included an assessment of 10//2015 water supply and demand to ensure that an optimal solution for the long-term needs of Kigali was identified and recommended a PPP structure that best suited the development objectives of the government while ensuring adequate conditions for bankability of the transaction.