r - part - usaid

Rate of Discount NPV Total O & ?I
Deciding upan, and justifying, the rate of &~SCQU~~ 50 be
used for a non-co~nercia1 investment can be problematical.
fs;ves?ment in we13 constructlan, as carried t by the
Groundwater Project, canno2 be considered as a comercia1
investment. In evaluating investment in well canstructidn Par
the purpose of comparing it to investment in alternative memads
of providing water in Somaiia, the sane discounting rate should
be used throughout.
4.3.3, Amortization of Total Costs.
The total amortized ccsts of well construction, operation
and maintenance, assumin9 a 12 year life and a 10% discounting
rate, are shown in Table 2.4.15 for the Bay Region and in Table
2*4.16 for the Central Range. The share of the cost of
exploratory wells is based on the program success rate in the
two regions, 60% in the Bay Region, and 50% in the Central
Range. It Ls apportioned between diesel equipped and hand pump
equipped wells in proportion to the ratio of the total program
cost of each. The amortized operatisz and maintenance casts are
taken directly from Tables 2.4.11-14,
Table 2-4-17, the Szmzlary Tatal Cost of We11 Equipped w ith
Diesel map, is provided to sz-arize the analysis ta this
point. It night also serve to answer khe question posed so
often, "Eow much does it really cost to construct a well in
SamaliaZw, As shown already, the number of variables involved,
and the decision to include, and how to include, capital casts,
expfaratary drilling costs, life-time operation and maintenance
costs, and overhead costs, renders this a complex question. The
"average* shown in the cable is a simple average, and not
weighted to represent any "average" csndktions found in Somalia.
Because mcnetary values carmot be detemined for the
benefits, and therefore a cost-benefit analysis is not feasible,
a useful costinq statistic is the "ccst per cubic meter of water
produced over t6e life of the vell". ~ b this, r the quantity of
water produced each year over the life of the well must also be
a~mrtized to a *'net present valueH- Assuming 12 cubic meters
per hour for 8 burs each day for 248 days each year for 12
years, this computer to a present value ef 156,987 cubic meters.
Wszng the total well construction, operation and maintenance