Grundfos LIFELINK Reducing Financial and Operational Risks to Water Security at the Community Level

World Bank Webinar

22 May 2012

Rasoul D. Mikkelsen

Funding & Partnership

Manager

rmikkelsen@grundfos.com

Spencer Ochieng

General Manager, East Africa

sochieng@grundfos.com

Agenda

1. Risks & Challenges to Water Security

2. Grundfos LIFELINK Purpose & Concept

3. LIFELINK Turn Key Solution

4. Overcoming risks to water security

5. Experiences from Kenya

6. Questions & Discussion

1. Risks & Challenges to Water Security

"Across rural Africa, some 50,000 water supply points have failed,

representing a waste of US$215-360 million.

It seems simple and obvious but it needs to be said:

There is little point in drilling wells if there is no system to maintain

them. Every day that a borehole does not provide safe water,

people are obliged to drink from unclean pools and rivers,

exposing them to water-borne diseases.”

Jamie Skinner,

International Institute for Environment & Development

From Water Access to Water Security

Risks to Water Security at Community Level

Many types of risks: ADB report identifies 49 different types!

Focus on 3 risks & how LIFELINK system deals with them:

1. Affordability

2. Mechanical and financial sustainability

3. Financial integrity

2. LIFELINK Purpose & Concept

Grundfos LIFELINK Purpose:

» Grundfos LIFELINK will become global leader in innovative water

solutions for the developing world.

» We contribute to sustainable development by creating and applying

cutting edge technologies, business models and partnership structures.

» We are ever committed to improving quality of life for people living in

poverty while caring for the planet.

LIFELINK Total Project Concept

» High quality pump technology

» Renewable energy

» Revenue Management System

» Remote Monitoring System

» Integrated After-Sales Service

» Community Development

» Project Performance Monitoring

Sustainability on all levels

» Technical sustainability through remote monitoring and service contract

» Financial sustainability through revenue management system

» Environmental sustainability through solar energy

» Social sustainability access to safe water means improved health and living conditions

3. LIFELINK Turn Key Solution

LIFELINK Water Management Solution

» 1. Water Dispensing Unit

» 2. Global Revenue Management System

» 3. Remote Monitoring System

The alternative to existing technologies

such as public stand pipes and water kiosks

1. Water Dispensing Unit

» Point source water dispenser » User friendly interface » Integrated payment system

and e-money transfer via smart cards

» Direct distribution outlets

Water Dispensing Unit

2. Global Revenue Management – M-PESA Mobile Banking

Global Revenue Management System – Local vendor

Revenue Transparency and Control

» Payment and e-money transfer via smart cards » Secure and user friendly payment system » Closed and transparent payment system » 100 % revenue collection » Simple revenue management » Tool for transparent wage payment

Various Smart Cards

•Draw water

•Distribute water to e.g. school, clinic, farm

•Transfer e-money

•Transfer wage to water vendor

Various Smart Cards

•Draw water

•Distribute water to e.g. school, clinic, farm

•Transfer e-money

•Transfer wage to water vendor

Global Revenue Management

System

Revenue Administration Website

Global Revenue Management

System

3. Remote Monitoring System

Surveillance parameters •Amount of water tapped (per tap)

•Water Unit operation performance

•Connection to server

•Automatic service alarm sent as email/ SMS

to service team

Remote Monitoring

System

Remote Monitoring Website

Service team schedule planning

Event & alarmlogs

Preventive service planning

Alarm overview

Service team on call

GRM system messages

Trend curves for selected data (acc. water usage, credit balance etc.)

Remote Monitoring

System

LIFELINK Operating & Maintenance System (O&M)

• Lifetime (10-15 years) guarantee backed by Grundfos LIFELINK

• Remote monitoring (24/7) via telephone/internet link

• Long-term, fixed-price service contract

• Local service companies backed by Grundfos LIFELINK

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4. Overcoming Risks to Water Security

Risk 1: Affordability

Service & Maintenance at a fixed and affordable price over 10-15 years

Total life-cycle (TLC) costs as low as USD 1.00/cubic metre

Various business models:

• O&M - Components only: LIFELINK components integrated in existing

water schemes and run by owner.

• Turn Key Project: Full service, installation, maintenance agreement,

support for revenue collection

• Public-private partnership (PPP): Based on agreement includes training

and support for revenue collection and O&M

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Risk 2: Mechanical & Environmental Sustainability

• Extraordinary reliability record of Grundfos pumps and pumping

systems

• Lifetime guarantee (10-15 years)

• Fixed-price service contract (including preventive maintenance,

spare parts, and replacement, if necessary)

• Solar energy means low operating costs, ease of maintenance,

carbon neutral, and zero footprint

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Risk 3: Financial Integrity

• Grundfos LIFELINK can be linked to global water credit system based on

Grundfos servers in Denmark

• Closed system of revenue collection and disbursement begins when

consumer cash is converted to water credits (digital cash) and ends when

accounts paid and any surplus paid to designated beneficiaries

• Fully transparent; fully backed up and archived

• Zero possibility of corruption or malfeasance

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5. Experiences from Kenya

LIFELINK Timeline

Scale up – Africa & Asia

Consolidating operations – 35 projects giving water to 75.000 people in Kenya

Positioning & Partnerships – Danida, Red Cross, UN, Kenya Gov.

Pilot Phase – Pilot projects, stakeholder mapping, evaluation & learning

On the Ground – Market scan, partner search, setting up operations

Fuzzy Front End – Concept idea, technology research & development

2012

2011

2010

2009

2008

2007

Results & Social Impact

35 projects in Kenya – app. 75,000 people

Rural & Peri-urban communities

» HEALTH: Water borne diseases down 60%

» EDUCATION: Increased school attendance

» GENDER: Alleviation of women’s time & energy

» LIVELIHOOD: Home gardens, green houses,

water distribution business, brick making…

» Improved quality of life and wellbeing

Key Learnings from Kenya

» Communities are willing to pay for water if it brings sustainability

» Communities adapt quickly to mobile technology

» Sale of water to other communities creates income for the individuals

around the installations and expands reach of water project

» Partnerships across sectors are important

» Business has a role in providing innovative and sustainable solutions for

water security

Thank you for your attention!

www.grundfoslifelink.com

Rasoul D. Mikkelsen Funding & Partnership Manager

rmikkelsen@grundfos.com

Spencer Ochieng General Manager, East Africa

sochieng@grundfos.com