Frequently Asked Questions
Q1: Why are groundwater sites ineligible?
3i is undertaking a ground water study to better understand suitability of ground water. For this reason it is not offering grants to companies that rely on ground water at the moment. In the future, 3i may offer a grant to companies that require ground water.
Q2: What if groundwater is the only water source in the area because ponds in the area hardly store the water in the dry season and pond digging requires huge investment?
3i technical staffs will go to study possible options of water source available in the proposed sites. If the study shows only groundwater is possible, we will not further support the project. But if the study shows pond can be an alternative option, 3i would recommend the operator to invest in digging pond and 3i will co-share the cost of pond excavation (but NOT the cost of land to dig the pond).
Q3: I have got 20-day announcement from MIH, Can I apply?
It depends. If it is before June 21, your application is ineligible. But if it is later than June 21, your application is eligible. Also, please do not get confused between feasibility study approval and 20-day announcement. The two are different.
Q4: 3i just mentioned the grant is water treatment plant, storage tank and pipe. Will 3i include other investment costs in the calculation?
The three outputs we mentioned are what we will monitor. However, to calculate the total investment cost, we include every item necessary for investment in such as cost of pond excavation, water treatment plant, water storage tank, pipe network, electricity connection, pumps, office supplies, etc. BUT the cost of land to dig pond or to build the water station and office will not be included nor will the construction monitoring costs.
Q5: Does 3i require the whole investment is from the business owner only or third party can co-invest with the business owner?
Co-investment is allowed. However, if you have other partners to co-invest with you, you need to declare all their names and details in due diligence conducted by 3i when we work together.
Q6: Will 3i still offer the grant if operator has capacity to test the well capacity and ensure the flow rate is enough for the supply?
No, 3i will not. As mentioned above, though the flow rate is enough at the moment, there is no guarantee on sustainability and negative impact on other users in the area in the long run. Thus, 3i need to conduct a further study on this before coming back to support groundwater sites.
Q7: How does 3i calculate the payback period of 7 years? If the payback is later than 7 years, won’t 3i help?
There is a financial model 3i uses internally to calculate the payback period and grant. If the payback period of the investment is shorter than 7 years, 3i will not help. But if the payback period of the investment is longer than 7 years, 3i will give a grant to reduce the payback period to 7 years. The grant is also limited to maximum of 65 USD per future potential connection and 60% of the overall initial investment.
Q8: Will 3i include tax of construction in the calculation?
No, 3i will not. 3i include only expense on patent in the calculation. VAT and other taxes are the responsibilities of operators.
Q9: Can operators use public water source?
3i will study the capacity of that public water source and the impact on other users dependent on that source. Usually, operators can extract the water from a public water source if the capacity is enough and the operators can obtain permission from relevant local authorities.
Q10: Is grant on connection subsidy attached with infrastructure grant or is it a separate one?
Yes, it is attached with the infrastructure grant. Only the operators that are eligible for infrastructure grant can get grant on connection subsidy from 3i.
Q11: 3i requires structural drawing is done by a reliable company. How is “reliable company” defined?
Normally, 3i will give a list of companies operators can choose from. However, the operators also have freedom to choose any company that they trust to do the job. But the final structural drawings need to be checked by 3i technical staffs.
Q12: What is the period of 3i’s contract? Can you make it longer?
3i contract is valid for 1.5 years in general. PWSP can extend the contract longer as long as the size of investment is huge. In exceptional cases 3i can consider extending it to 2 years.
Q13: Do we have to install everything in before getting all payment from 3i?
In general a contract between 3i and PWSP is milestone-based. When the PWSP finishes a milestone and the specification complies with what is stated in the contract, 3i will disburse the grant.
3i includes all investment in order to calculate a grant. But, 3i checks only big components in an output-based contract in order to disburse a grant, i.e. a treatment plant, storage tank, and main pipes. 3i’s last payment can be used to finish the investment.
Q14: How is the output based contract developed? How is the sequence determined?
An output-based contract is developed in accordance with the construction stage, and 3i grant is disbursed to a PWSP based on the finished outputs in each stage. During contracting, 3i will discuss with the PWSP which outputs will be finished first and next in order to disburse a grant.
If the service area that requests for a grant does not have a treatment plant, 3i will require the PWSP to construct a treatment plant first before installing pipe network. This is to ensure that 3i grant will not be used to support the untreated water.
Q15: How does 3i determine how much an operator get?
3i conducted a market assessment in order to determine construction costing and operational costing. Based on this study, 3i developed a model to calculate the needed investment and revenues. For this round of funding, 3i will calculate the grant to reduce the payback period of the investment to 7 years.
Q16: What if we build things differently from the output specified in the contract?
The operator is always allowed to construct larger or better.
If the PWSP constructs bigger and better infrastructure, 3i will disburse the grant. If smaller, 3i will check the degree of acceptance. There will be a discussion if this happens. If the PWSP constructs things differently from what is stated in contract, the PWSP needs to inform 3i in advance.
Q17: How does 3i provide connection subsidy?
3i provides connection subsidy to any villages that do not access pipe network yet and this subsidy is provided to ID poor families only. One ID poor is for only one connection. The subsidy will be disbursed to the PWSP not directly to ID poor families.
Q18: How long does it take for a project to sign contract?
Duration varies from one PWSP to another. The factors that cause the delay in process include:
- The PWSP is not clear of his service area.
- The PWSP does not define the location of a treatment plant yet.
- The PWSP has problem with his shareholders.
- Water source is not sufficient and requires an additional study.
Q19: Can I apply more than one location?
Yes. But please indicate them in the EOI application.
Q20: When will you provide grant to other provinces?
After 3i has finished the majority of the projects this round, 3i will proceed with the next round.