This is part of an occasional series that I’m calling “Coffee Talk” (in homage to a Saturday Night Live skit). I get to talk to many people about their organization’s water and sanitation models, their experiences with monitoring, and what they happen to be thinking about right now, and I thought I would share those conversations. These blogs are intended to reflect the nature of my conversations as I remember them (since I’m usually scribbling notes on a napkin), and are not intended to be direct quotes. These blogs are not meant to be endorsements or full profiles of any organization, person, or company.
September 2011, Pershing Square Café, NY
Susan – Sameer, it’s great to see you. We got together to talk about the WaterHealth International (WHI) guarantee. What exactly is your guarantee and to whom?
Sameer – we guarantee each plant will last 10-15 years. The guarantee is to donors, community, shareholders, other investors, and, ourselves. If something breaks during that time, WHI will fix it.
Susan – So what’s your oldest kiosk?
Sameer – Our first plant was built in India in 2006 and it’s still operating. We now have 450 plants and 600-700 employees; most of whom are plant operators. We only have 6 employees in the US, and one in Geneva.
And by the way, please don’t call them kiosks. “Kiosks” makes me think of just a distribution point. Our WaterHealth Centers are actually small purification plants. There are two big costs associated with water supply – treatment and distribution infrastructure (e.g., water mains, pipes). We built the plants in the communities they serve. By decentralizing the treatment, we have removed the distribution costs from the equation. We do some distribution with trucks and filling tanks.
According to their website ”WaterHealth maintains a centralized real-time monitoring and quality control system to guarantee an immediate and agile response to any system or water quality issues. We also extensively test our purification systems with third-party laboratories, verifying the efficacy of our systems against a broad range of bacteria, viruses, and parasites.”
Susan – What happens after 10 – 15 years?
Sameer – The community has the option to take over the plant, or they can have a contract with WHI to continue to manage it. This hasn’t happened anywhere because our oldest plant is 5 years. We anticipate that most communities will want to contract with us.
Susan – Does the community have to pay you to take over the plant? Does WHI continue to make profits off the water services?
Sameer – No, the community can take it over for free. Our assumption is that WHI will recover our costs and make a profit in 15 years. WaterHealth International is 100% for profit. But the business model is flexible. For example, we have partnerships with corporations, foundations, and financiers (e.g., Safe Water For Africa (SWA) Partnership with the Coca-Cola Africa Foundation, Diageo Plc, and the International Finance Corporation (IFC)).
Susan – It sounds like some of this is donor money, but you are a for-profit. How is that managed?
Sameer – The Global Environment Technology Foundation is managing the donor funds, which pay for installation of the plants. In the SWA partnership, IFC is providing debt finance. In Bangladesh we have an equity partnership with IFC and AK Khan.
Susan – Is WHI currently making a profit?
Sameer – Not right now because we are expanding.
Susan – We often talk about “the poor” as one giant demographic. But there are distinct markets within the poor. Who are your customers?
Sameer – On average our customers make about $2 to $5 per day.
Susan – How many more potential customers do you have then?
Sameer – It’s hard to tell. Our model works in communities with populations of 5000 – 15,000 people.
Susan – How do you determine pricing?
Sameer – Often our prices are at or below market prices. Many people where we do business are paying high prices for (maybe unsafe) water from a tanker.
Susan – As a business you probably know a lot about your customers. How much water do people buy on average?
Sameer – It’s actually quite random. Some people come twice a day and get smaller amounts. Some come every couple of days. The maximum capacity at our biggest plant is 100,000 liters per day (if it was running 24 hours a day); on average the plants’ maximum capacity is 65,000 liters per day. We have started using a smart card which will tell us how much one family buys.
Susan – What are your goals for the future?
Sameer – Through our partnerships we plan to build 1000 plants in the next two years.
Susan – Who builds the plants?
Sameer – We have a team who provides oversight, but we hire locally for construction. The plants are modular structures shipped in for assembly. We also contract labor from the community.
Susan – Does anyone else have a similar model to WHI? Who are your competitors?
Sameer – None that I know of. There are copycats in India. We have discussions with a municipal system: we would provide the treatment and they would provide the distribution infrastructure.
Susan – Do any of your Centers offer other services?
Sameer – We’re open to that but we have to make sure they are appropriate; for example, we wouldn’t want to sell cigarettes. There’s some interest in offering sanitation services but we need to find a successful model.
Susan – What is the biggest threat to your business?
SM – Probably governments and regulations. But most governments in countries where we operate seem to understand that WHI is working in places that the government can’t or won’t (e.g., unplanned settlements).
Susan – Where are you looking to expand?
Sameer – We are looking at expanding into Latin America, Middle East, other African Countries, maybe even the United States.