Bringing piped water to more Cambodians
In Cambodia water is delivered by companies with a special licence from the Ministry for Industry and Handicrafts. In 2016, there were 137 of these companies, each delivering clean treated water to a few thousand households.
Most households outside the major towns however still don’t have access to clean water. Our assessment is that between 50 and 100 more companies could commercially deliver clean water to households, benefiting more than 100 000 additional households.
In discussions with the Ministry, it was decided to assist with two types of grants. One type for companies that agree to upgrade and expand their facilities and one type for communes where no water company yet exists.
Over the last decades the Cambodian government has established public water companies in a dozen large towns, but beyond these towns, small private companies deliver filtered and treated water to between 500 and 5000 households. But in many rural areas, Cambodians are still collecting water from wells, rivers or ponds.
Most of the smaller companies are family-run businesses and often part of the local community. The costs of new treatment plants and pipelines are usually financed using family capital with the profits being reinvested. Some commercial finance is available, but uncertain returns make loans too expensive to cover the full costs of the investment.
Investing in Infrastructure can contribute the additional funds needed if the company is deemed viable. Viability normally means the company has access to year-round water and there are enough households nearby to generate demand.
The Ministry of Industry and Handicrafts has requested Investing in Infrastructure’s support to upgrade the facilities of existing small scale companies that sell untreated water.
We also support the Ministry in a tendering process where successful candidates can qualify for a 20-year operating licence. Investing in Infrastructure and the successful company agree on the outputs that will trigger payments, usually full construction of the facility, and our typical contract allows 18 months for completion.
Investing in Infrastructure uses criteria like payback time and internal rate of return to calculate how much support would be needed to attract companies to invest in existing or new facilities. This is typically between 30 and 50 percent of the initial investment cost.