ONDEO Services Uganda Limited

concluded

In January 2002, National Water and Sewerage Corp. (NWSC), the Uganda state-owned utility, signed a management contract with Ondeo Services to manage and operate the water supply and sewerage services of the Kampala area. Ondeo Services, a subsidiary of the French multinational Suez (formerly known as Lyonnaise des Eaux), was awarded the two-year contract through a competitive bidding process and replaced Gauff Engineers, a German company, which had held a three-year management contract that ended in June 2001. NWSC operated in fifteen towns with a combined population of 2.1 million. As the capital city of Uganda, Kampala accounted for about 70% of NWSC operations in terms of revenue, water production and infrastructure. Under the terms of the contract, ONDEO Services Uganda Limited (the project company) was to reduce losses and waste from the water distribution system, extend water metering, improve the customer data base and billing system and operate the water supply and sewerage systems in Kampala on an efficient and cost effective basis. Ondeo had to guarantee improvements to the water supply on a long-term basis and was to be paid according to results achieved along with a fixed management fee covering both operational and management costs (Ondeo was to have full control over NWSC staff). Profits earned through increased water supply were to be reinvested in the water system. Germany’s bilateral donor agency, Kreditanstalt für Wiederaufbau (KfW), provided a €3.3 million (US$2.83 million) grant to help modernise the water supply in Kampala and prepare NWSC for a full concession contract which was being planned to be awarded to a private firm sometime in 2005/2006. The operator, after six months of operation, expressed dissatisfaction with the management fees and demanded a renegotiation of the contract. The new terms, agreed to in April 2003, included: an increase of the management fees by 20%; exchange rate to be pegged to the Euro not the US dollar; additional expatriate middle management staff. Ondeo's contract expired in February 2004 as NWSC reassumed operational control of the utility. Results were mixed. Billing and collections increased and annual turnover was 100% of the achievement targets, partially due to an overall tariff increase of 4% in April 2002. On the other hand, the targets for reductions in unaccounted for water were not reached as there were no significant improvements. Average monthly new connections increased to 497, but fell short of the 525 target. http://siteresources.worldbank.org/INTCDRC/Resources/CDBrief13.pdf http://globalwaterintel.com/index.php?page=articleView&articleId=765 http://64.233.179.104/search?q=cache:AOJof3LD8m0J:www.wupafrica.org/nairobi/Workshop%2520-%2520Reform%2520-%2520CharlesOdonga%252017th-6-03.ppt+ondeo+uganda+increase+of+the+management+fees+by+20%25&hl=en&gl=us&ct=clnk&cd=3&lr=lang_en