Many might agree that wastewater is an unattractive business venture. The poor state of wastewater management plants across Jamaica and seemingly low rewards from investment make financial interest in the sector look dismal. Yet, Jamaica has inspired hope and increased the prospects for investment in wastewater management through the implementation of a Credit Enhancement Facility to guarantee sustained funding for wastewater projects and to encourage greater public-private partnerships.
In the 2006-2009 Environmental Action Plan, the National Environment and Planning Agency (NEPA) identified six action items to improve Jamaica’s management of sewage. Among these was the introduction of a tariff structure for costs relating to the provision of sewerage services and the development of public-private partnerships to manage sewerage operations. By 2013, the Office of Utilities Regulation (OUR) authorised the National Water Commission (NWC) to introduce the K-Factor tariff into the (NWC) utility bill to alleviate the capital intensive endeavour of managing Jamaica’s wastewater sector. The K-Factor - which for 2014-2018 is a 14% charge issued monthly to each customer - is used to offset the costs associated with the provision of water services including the maintenance and improvement of wastewater treatment plants and sewerage services. Revenue generated from the K-Factor is placed in a reserve bank account as collateral for loans taken from financial institutions for funding the implementation of different wastewater management projects. In addition to this effort was the establishment of a business unit within the NWC to handle wastewater operations and maintenance, and the outsourcing of private contractors for managing and operating wastewater treatment plants. However, the establishment of the K-Factor and NWC’s new focus on public-private partnerships for wastewater management still needed strong financial backing to convince financial institutions that loans could be properly serviced.
Investing JMD1.5 billion dollars in wastewater management
Realising the strong commitment, political will and minimal investment in Jamaica’s wastewater sector, in 2011 the Global Environment Facility-funded Caribbean Regional Fund for Wastewater Management (GEF CReW) Project selected Jamaica as a pilot project country for wastewater investment. The existence of the K-Factor and other tariffs and the enabling environment for improvement in the sector facilitated the testing of a financing mechanism known as a Credit Enhancement Facility (CEF). The CEF was established by the GEF CReW Project in partnership with the Jamaican government, the National Commercial Bank (NCB) and the National Water Commission through the provision of a grant of almost JMD400 million to be used as collateral for funding from the NCB to finance wastewater projects. This grant provided by the GEF CReW Project enabled Jamaica to secure its first commercial loan to the sum of JMD1.5 billion dollars to aid in the rebuilding and rehabilitation of wastewater treatment plants across the country.
By strengthening the legislative framework and improving standards and guidelines for better wastewater management, the NWC has become better positioned to implement the Credit Enhancement Facility (CEF) and work has already begun in some of the 13 wastewater treatment facilities selected for upgrade. One example is the on-going rehabilitation of the Boscobel Wastewater Treatment Plant that will soon receive thirty times more sewage flows from supported residences. The plant that was designed to accommodate 50 cubic metres of wastewater per day is projected to eventually accommodate a total of 1,200 cubic metres of wastewater per day after full rehabilitation. By increasing the plant’s capacity, excess wastewater overflows into gullies and eventually waterbodies will be drastically reduced. Upgrades such as these signify that plants can increase performance and meet NEPA’s effluent standards to reduce the contamination of waterbodies and potential negative impacts to human and environmental health and tourism.
Recognising that plant upgrades must also be accompanied by increased human technical capacity, the GEF CReW Project encouraged training and certification for wastewater operators and discussions on identifying innovative solutions and new technologies for the operation and management of wastewater systems. This enabled the National Water Commission to carry out training sessions and partner with the University of Technology to establish certification programmes in wastewater operations. Since then, the University has institutionalised a wastewater training programme and opened the first Regional Centre for Wastewater Training and Research, which now offers training and the development of laboratory capacity for wastewater treatment in the region.
The GEF CReW’s motivation to help countries of the Wider Caribbean in meeting their obligations to regional treaties like the Convention for the Protection and Development of the Marine Environment of the Wider Caribbean Region and the Protocol concerning Pollution from Land-based Sources and Activities were key drivers for the selection of pilot projects to test financing mechanisms like Jamaica’s Credit Enhancement Facility. The grant provided through the project enhanced Jamaica’s creditworthiness, hastened much needed developments in wastewater management and exemplified the strong feasibility of public-private partnerships in the wastewater sector. Ideally, to ensure continuity and replication, greater emphasis must now be placed on seeking further private sector investment, and applying the successful experiences of the implementation of the K-Factor and the Credit Enhancement Facility.
A video and case study on GEF CReW’s work on the ground highlights the benefits, successes, lessons learnt and challenges in establishing Jamaica’s Credit Enhancement Facility and emphasises some of the opportunities in Jamaica’s quest for better wastewater management.
By Chrishane Williams
Global Environment Facility funded Caribbean Regional Fund for Wastewater Management (GEF CReW) Project & United Nations Environment Caribbean Environment Programme (CEP)
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