Professional Drilling Enterprises and Consulants

Code of Practice for Cost Effective Boreholes Principle 1: Construction of boreholess and supervision is undertaken by professional and competent organisations which adhere to national standards and are regulated by the public sector.

Sub-principles

Construction of drilled water wells and installation of pumps should normally be undertaken by local private sector firms (or NGOs) rather than by Government or donor agencies.
Subsidised drilling by public/state drilling enterprises and NGOs should be avoided. If considerable drilling is undertaken directly by the public sector or the private sector drilling capacity is weak, stakeholders should develop a strategy for achieving local private sector involvement in a time-bound manner.
Similarly, the siting and design of boreholes and supervision of construction should normally be undertaken by local private sector consultancy firms. Subsidised consultancy services by public/state enterprises and NGOs should be avoided. If considerable work is undertaken directly by the public sector or there is limited capacity within private sector consultants, stakeholders should develop a strategy for improving local private sector involvement.
Drilling enterprises and consultants should be registered and issued with a licence or permit, or be recognised by a national or international engineering board, council or institution. They should be registered as a company with the relevant authorities, including for tax purposes. The permit should be renewed annually (or every 2 to 3 years) provided that conditions are met, including the submission of drilling completion reports as specified, and even successful completion of further training. Consultants will also need to demonstrate their experience and competence.
A national drillers association should exist and be active in discussing and expressing drillers’ concerns.

Disucssion

The public sector has tended to undertake the construction of boreholes in many countries. However, the preferred option is for construction to be undertaken by the local private sector (or NGO) with Government responsible for planning, resource mobilisation, policy making and regulation. Government and donor support agencies as well as NGOs are therefore encouraged to provide support to build up the local private sector, rather than to purchase state-owned drilling equipment.

If the local private sector is particularly weak, the asset base and capacity may take a decade or more to be built. Investment requirements for large drilling equipment are hundreds of thousands of dollars and it takes several years to build up skilled drillers. The use of mechanisms whereby an enterprise leases equipment with the first right of refusal to purchase it over a period of one to three years is one way to build the asset base. Such mechanisms should be considered as they enable the capital cost of drilling equipment to be progressively recovered over time from contract payments. However they require the establishment of honest, open and transparent processes.

In cases where support agencies have already supplied drilling equipment there is a need to ensure that there is support in the form of spare parts, tools, management support and training, for a ten-year period (estimated rig life), following the rig commissioning. If support agencies provided drilling rigs to Government within, a rig information management system (Box 1) should be established, utilised and reported on. Private enterprises are also encouraged to utilise a rig information management system to record key information.

Box 1. Outline for Rig Information Management System

A rig information management system (RIMS) enables information regarding the utilisation, maintenance and repair of drilling equipment to be recorded, stored and analysed. It can be in paper-format or software-aided. A RIMS enables drilling programme managers to monitor equipment productivity, track equipment use and reduce misuse or abuse by recording the following:

Details of drilling rigs, compressors and support vehicles (all equipment has a unique identification number and description).
List of the Region/State, Local Government and Village/ Community of operation (with identification codes).
Details of each borehole drilled (i.e. location with grid reference, e.g. from a GPS, borehole identification number, start date, completion date depth drilled, drilling time and idle time on site). Note that this does not replace a national groundwater database.
Distance travelled (initial mobilisation as well as between individual sites) and downtime (due to idleness, maintenance and repair).

The RIMS needs to enable information to be retrieved regarding drilling activities for particular equipment, the local authority, community or period of time as well as maintenance and repair activities for particular equipment. A RIMS underpins the equipment maintenance plan.

What do we know?

The extent of private sector capacity in the borehole-drilling sector varies. Some countries have more national expertise, eg Nigeria (Adekile, 2007), while others are still heavily reliant on foreign companies. Costs of expatriate staff are more expensive than local staff. Antea (2007) found that they cost four to eight times as much in Burkina Faso, Senegal, Mali and Mauritania.

Baumann et al (2005) point out that although the Drilling and Dam Construction Agency (DDCA) in Tanzania employs many well-trained drillers and hydrogeologists, and covers about 60% of the drilling market, their skills are underutilised. In contrast, private sector consultants are still lacking. There are 40 registered drilling companies of which only ten are fully active in rural Tanzania. Burkina Faso has an estimated 49 drilling enterprises, of which four have more than 20 rigs and capacity to drill 1000 boreholes per year while Mautitania has only seven companies (Antea, 2007). Adekile (2007) estimates that there are 1,000 drilling companies in Nigeria.

Ideally, the private sector should not only survive, but also flourish. This is not always easy. Setting up in business can be extremely difficult which makes it very difficult for enterprises to enter the sector. There are cases in Mozambique where it has taken three years for a company to establish itself.

There are many examples of people with the skills, but not the finances to invest. Conventional drilling is a very capital-intensive undertaking. There are challenges with the banking sector across the continent. Interest rates on loans are high, eg 40% in Mozambique; 18% in Tanzania (Baumann, 2005). Repayment periods can be short, eg 3 years in Tanzania (Baumann, 2005). In Nigeria, people generally use their own savings and those of relatives as start-up capital. There are major difficulties of showing sufficient collateral to obtain credit throughout SSA. Commercial banks in Tanzania require a security of 125% and the assurance of continual Government work (Baumann, 2005). Existing, and potential drillers are often cash-strapped (Baumann, 2005). Delays in payment for work done are also a major problem (Antea, 2007).

Importation of equipment and spares can be very difficult if contractors do not have foreign connections (Carter et al, 2006; Robinson, 2006; Adekile, 2007). Regulation on number of employees and equipment is demanding in some countries, eg Ethiopia (Carter et al, 2006) and lacking in others, eg Nigeria (Adekile, 2007).

Equipment productivity is also a problem for private drillers thanks to use of old equipment, and the challenges of obtaining spares. Maintenance and repair of equipment can be difficult, and necessary skills are often lacking (Baumann, 2005).

Obtaining steady and regular work is essential to enable capital-intensive drilling enterprises to remain in business, and be cost-effective. Despite this, contractors generally have to tender for work every year, and to many different projects or local authorities. Only one documented case of a drilling concession, running over several years has been found in the literature (Robinson, 2006).

The capability and availability of skilled personnel (professionals and technicians) is an issue for both the public and private sector. Many drillers, supervisors and technical staff were originally working for Government and trained within projects. Given the shift in emphasis to decentralised service delivery by the private sector, there are serious questions regarding adequate opportunities for training and skills development. Ethiopia is a case in point, where an estimated 4,000 technicians are needed to enable the MDG water target to be met. However, there is only one training school where 200 are trained per year. Contractors in Nigeria and Ethiopia face problems in retaining personnel due to skills shortages (Adekile, 2007; Carter et al, 2006).

Networking, collaboration and lobbying are recognised as important mechanisms to professionalize organisations and bring about policy shifts. A Mozambique Drillers Association was established in 2006 with donor support but has failed to take off as expected. The Ugandan Drillers Association had collapsed by 2003, although plans are in place to revive it having woken up to the need to associate. A process of forming a national Nigerian drillers association commenced in 2007 (Adekile, 2007). The Project Management Unit in South Sudan provides an interesting example of drilling enterprises are collaborating with each other. Documentation and analysis of the success of networking and collaboration of drillers is lacking, but evidence from other sectors indicates that it could be instrumental in bringing about change.

Despite the above challenges, it is possible for private sector drilling to flourish. Dar Es Salaam in Tanzania provides a case in point where a substantial private market for boreholes has developed with about 9,000 private boreholes now extracting from the aquifer in an unregulated manner. Several drilling companies only operate within the city.