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Rajesh Advani, Finance Specialist, Water and Sanitation Program – Africa

Commercial finance for water utilities in Kenya - Overview. Rajesh Advani, Finance Specialist, Water and Sanitation Program – Africa. Water and Sanitation Program. Workshop objectives. Discuss & obtain utility feedback on:

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Rajesh Advani, Finance Specialist, Water and Sanitation Program – Africa

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  1. Commercial finance for water utilities in Kenya - Overview Rajesh Advani, Finance Specialist, Water and Sanitation Program – Africa Water and Sanitation Program

  2. Workshop objectives Discuss & obtain utility feedback on: • Proposed commercial finance facility for WSPs to be supported with OBA subsidies • Pre-requisites for utilities to access commercial finance • Bankers’ expectations • Utility expectations?

  3. Why commercial finance? • Demand • 77 utilities serve 8 million customers (45%) • Top 41 generate KES 10bn in revenue • Limited public finance for investment • Rising block tariffs support access by the poor • Viable investment projects • Supply • Liquidity in local financial markets – over KES 1 trillion in deposits • IFC local currency finance • Guarantees • GPOBA subsidies (grants) – USD 8 million

  4. Legal framework • Financial autonomy • Legal right to supply water provided by WASREB - SPA • Cost recovery tariff policy • Security obtained through company and project cash flow • Concessional finance • Cost • Availability X • Speed X Pre-requisites for access to commercial finance  • Commercial Bank • Liquidity • Tenor X • Interest rates X • Product development X initiative  Companies focus on achieving an affordable WACC

  5. Key features • 15 medium sized utilities access USD 12 – 20 million in commercial finance for infrastructure investments • Leverage OBA subsidies of USD 8 million • Local currency - KES • 5 - 10 year loans • Market interest rates • Facility structure will depend on demand for investment (More vol water sold, revenue, connections etc)

  6. Thank you

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