Modernization of the water supply system, Aktobe

“Akbulak” JSC together with Akimat of Aktobe region and Akimat of Aktobe city approached EBRD with a request to provide technical assistance on a project for modernization of water supply and sanitation services in Aktobe city. BDC Consulting in partnership with Corporate Solutions Consulting UK supported the “Akbulak” JSC in strengthening the financial stability and implementing stakeholder engagement program as well as promoting to work efficiently with respect to rational attitude to the environment.

The project consisted of three main parts:

Development of a set of key performance indicators

An important goal of the Corporate Development Program was development and implementation of the Financial and Operational Performance Improvement Program (FOPIP). The FOPIP project was supported by a set of agreed key performance indicators (KPIs) which can be used to measure the operational and financial performance of “Akbulak” JSC. On the basis of basic performance analysis, a performance monitoring method was developed and presented.

Preparation of the draft Public Service Agreement:

In close cooperation with “Aktobe” JSC and in coordination with the city Akimat and the sector regulator the consultants contributed to strengthening corporate planning and management of the Company, realizing that financial sustainability cannot be achieved solely through investments in physical rehabilitation of water supply and sanitation systems. The updated Public Service Agreement recommended for implementation was signed in July 2018 and includes:

• Efficient use of water resources to achieve balance between consumption and economic, technical, environmental sustainability of the city's production and water supply system;
• Cost recovery and tariffs reflecting these costs, as well as the willingness of the population to pay the bills so as the costs of water supply and production are fully covered by consumers’ payments, whereas subsidies are only provided to the most vulnerable group of people;
• Improvement of the performance of water service company in terms of water quality, water supply reliability, wastewater treatment at the required level, cost-effectiveness, transparency and accountability, customer relations based on performance indicators.

Development of activities for improving financial performance

Commitment reports, including ratios and performance analysis of the IFRS financial reporting format, which will be prepared quarterly and annually and submitted to the EBRD under the covenants of the Loan Agreement. BDC Consulting consultants provided on-the-job training to improve financial performance and strengthen financial planning and budgeting procedures, develop procedures for preparing long-term financial forecasts, and implement an administrative reporting system.

Improvement of billing and revenue collection procedures

A detailed assessment of the existing functions and procedures for collection and sales, and the billing system allowed BDC Consulting consultants to develop a set of recommendations to improve the quality of the billing and reporting procedures of the sales system.

Operational efficiency

In order to improve the operational efficiency of “Akbulak” JSC BDC the optimal level of water losses was assessed by BDC Consulting. The purpose of this was to enable the company to implement an optimal water loss management system, improve the efficiency of the maintenance function by integrating maintenance activities at water supply and sewerage facilities.

Addressing environmental and social issues

As part of providing assistance to “Akbulak” JSC, in accordance with labor, health and environmental requirements a corporate social responsibility policy (CSR) was developed and a feedback mechanism was introduced for consumers to report problems related to services (filing complaints through the contact form on the official website of the company: aoakbulak.kz).

The consultant trained employees on topics such as the implementation of an integrated management system for environment, health and safety protection in accordance with ISO 14001, OHSAS 18001, ISO DIS 45000 international standards, and a package of documentation (procedures and policies ) for their implementation was elaborated and submitted to JSCB.

Public and consumer relations

As it was decided this aspect of the project will focus on the development of a consumer awareness program to encourage the population to inform the Company about illegal connections, about consumers who use water bypassing meters or tweak the meters, and about consumers who use fire hydrants.

Business project development

The consultant assisted the Company when developing and implementing the corporate planning process that focused on continuous corporate, financial and operational improvements in order to promote further development and transformation of the enterprise into a viable business organization. In this regard, the Consultant assisted the Company in preparing a business plan, which was the start of an annual rolling plan that will evolve in response to changing circumstances, information updates and work progress.

Tariff policy and methodology

The aim of helping the Company in the implementation of the tariff recommendations prepared by Ernst & Young within the framework of the EBRD project was to apply a new tariff methodology, which would need to be piloted to establish guidelines that could be followed by other companies in the municipal water sector in Kazakhstan.