Technical Manual for Drilling Works for Technical Support Plan for the Drillers in DDCA (2013)

AT list sheet

AT list show the attributes which is under each category and group. Each categories has coded

the AT No.and refer to the group in the CT list sheet with using the LOOKUP functions(the cell

with blue color).In case the new categories is added, make sure to expand the range of list(re-

range and rename) there are 190 attributes as the following window shows

Figure 8 Attribute List(AT list)

RAT list sheet

RAT list sheet show the all attributes unfolding the repeating items. Each data has been coded

the RAT No.The group, category and attribute before unfolding the repeating items re-range and

rename the first after addition of the new attribute. RAT No. Is stored into the top row in the data

entry sheet so as to store the attributes into the data entry sheet so as to store the attributes into

the data entry sheet from RAT list sheet in the repository by referring to the RAT No.

Figure 8: Attribute List(RAT list)

 Steps For Additional Attributes To Repository And Data Entry Sheet

1. In AT list sheet, insert the row where the new attribute will be stored

2. Code new AT No and enter the new attribute.

3. The vlookup formula is set into the category column

4. Shift to the RAT list sheet and insert the row where the new attributes will be stored

5. Enter the new RAT No.

6. The VLOOKUP formulas of group and category for new RAT items are set

7. The formula for the RAT items is set as set in the cells up and down cells

8. In case the new attribute is repeating items, the formula is set like that of green colour.In

case of not repeating items, the formula is set as that of red color

9. Shift to the data entry sheet and insert the column in which the new attribute is stored

10. Set the formula of VLOOKUP so as to quote the attribute from the repository into the

data entry sheet.

Output (6) System Design Completed

1. EVALULATION OF OPERATION CONDITION

After the training at the end of Phse-1, LOCAIDES and the Client evaluated the test version of

the database. And two kinds of challenges were observed as follows.

- It is very tough work to enter borehole data into the excel datasheet.

- It is very likely to be changed by human error.

2. SYSTEM ANALYSIS AND DESIGN FOR IMPROVEMENT

In order to solve the challenges described above, further function was designed as follows.

- Making data entry interface for borehole data entry, pumping test summary data entry and

water quality analysis.

- Making sheet protection with password.

As mentioned in the requirement analysis report, a function to export data to other database

form is to be added.

These additional functions were designed centering on being simple operation.

3. SYSTEM MODIFICATION FOR IMPROVEMENT AND

INTEGRAL TEST

The excel database was modified with addition of function. The added interfaces are shown in

Figure 1 to Figure 3. The added data export function is shown in Figure 4 and Figure 5.

The modified database was tested by DDCA users and confirmed that the added functions work

well.

Table of Contents

1. Introduction

1.1 Background

1.2 Purpose and Intended Users of the Guidelines

2. Environmental scan

2.1 Internal Environment

2.1.1 Strength

2.2.2 Weakness

2.2 External Environment

2.2.1 Opportunity

2.2.2 Threat

2.3 Cross SWOT Analysis

3. Segmentaiton of potential clients

3.1 Business Entities in Water Well Drilling Sector in Tanzania

3.2 Characteristics of Private Drilling Companies

3.2.1 Business Establishment

3.2.2 Clients for Water Well Drilling

3.2.3 Performance in the Past Three Years

3.2.4 Possession of Equipment

3.2.5 Human Resources

3.2.6 Interest in Business Opportunities

3.2.7 Investment for New Drilling Rigs

3.2.8 Demand for Technical Support Services of DDCA

3.3 Classification of the Private Drilling Companies

4. scope of services to be provided by ddca in the hiring business

4.1 Conditions Considered in Formulation of the Business Model

4.2 Items to be Hired

4.3 Placement of Drilling Rigs

4.4 Allocation of Drilling Staff

4.5 Maintenance of the Equipment

4.6 Hiring Conditions

5. qualificaitons to be required for clients and other conditions

5.1 Requirements to Applicants

5.2 Use of the Hiered Equipment

5.3 Use of the Equipment by DDCA for Its Own Drilling Activities

6. Laws and regulations to be followed

6.1 Liability of Insurance for the Hiring Equipment

6.2 Taxation

6.3 Regulations Related to the Groundwater Development

7. Establishment of the hiring business unit

7.1 Job Description

7.2 Personnel Arrangement Plan

8. performance management

8.1 Key Performance Indicators

8.2 Performance Monitoring Report

9. outline of the business flow

10. business promotion

11. finance

11.1 Budget Preparation

11.2 Pricing Policy

11.3 Break-Even Analysis

11.4 Accounting

11.5 Investment Plan

List of Tables

Table 1 Cross SWOT Analysis

Table 2 Number of Business Entities in Water Well Drilling Sector in Tanzania

Table 3 Number of Contracts Awarded in the Past 3 Years per Company

Table 4 Categorization of Well Specifications

Table 5 Average Days Required for Drilling Works

Table 6 Distribution of Companies by Type of Working Experience

Table 7 Contract Value and Number of Wells Drilled per Contract

Table 8 Hiring Cost of Drilling Equipment

Table 9 Classification of Private Drilling Companies

Table 10 List of Equipment to be Hired

Table 11 List of Rig Accessories, Casing Tools and Direct Mud Circulation Drilling Tools 26

Table 12 Roles of DDCA Staff to be Attached to the Hired Equipment

Table 13 Demarcaiton of Responsibilities in Logisticts of Hired Equipment

Table 14 Basis of Calculation of Standard Operation Days of Equipment

Table 15 Standard Operation Days of Equipment

Table 16 Classified Groups of Private Drilling Companies and Project Effect Potential

Table 17 Key Performance Indicators of the Equipment Hiring Service

Table 18 Expenditure Budget for Annual Operation of the Hiring Service (with Depreciation

Cost)

Table

19 Expenditure Budget for Annual Operation of the Hiring Service

(without

Depreciation Cost)

Table 20 Estimated Annual Sales

Table 21 Acquisition Cost of Equipment for Hiring

Table 22 Proportion of Hiring Service Cost

Table 23 Rental Fee of Drilling Equipment (with Depreciation Cost Considered)

Table

24 Structure of Rental Cost of Drilling Eqiupment

(with Depreciation Cost

Considered)

Table 25 Rental Fee of Drilling Equipment (without Depreciation Cost Considered)

Table

26 Structure of Rental Cost of Drilling Eqiupment

(without Depreciation Cost

Considered)

Table 27 Estimated Income and Profit

List of Figures

Figure 1 Potential Clinents of the Equipment Hiring Service

Figure 2 Geographical Distribution of Office and Project Location

Figure 3 Year of Establishment and Start of Business Operation in Drilling Works

Figure

Distributions of Companies Awarded Contracts for Drilling Works in

RWSSP/WSDP by Year of Experience of the Organization

Figure 5 Distribution of Companies by Status of Registration at CRB and MoW

Figure 6 Clients for Water Well Drilling (multiple answers)

Figure 7 Proportion of Drilling Works Awarded by the Government in Number of Contracts

and Contract Values

Figure

8 Total Number of Contracts Awarded to and Wells Drilled by the Surveyed

Companies in the Past 3 Years

Figure 9 Distribution of Companies by Number of Contracts Awarded for Drilling of Deep

Wells per Annum

Figure 10 Distribution of Companies by Number of Wells Drilled per Annum

Figure 11 Distribution of Wells Drilled per Annum by All the Surveyed Companies

Figure 12 Distribution of Companies by Number of Rigs Owned

Figure 13 Distribution of Owned Rigs by Drilling Capacity

Figure 14 Distribution of Companies by Number of Owned Rigs in Each Type

Figure 15 Possession of Supporting and Survey Equipment

Figure 16 Workshop Equipment and Tools Owned (multiple options)

Figure 17 Type and Level of Periodical Maintenance of Drilling Equipment the Company

can Perform (multiple options)

Figure 18 Distribution of Companies by Size of Staff

Figure 19 Areas of Capacity Development Needs of Technical Staff (multiple options)

Figure 20 Capacity Development Measures (multiple options)

Figure 21 Needs of Procurement of New Drilling Equipment (multiple options)

Figure 22 Demand for DDCA’s Hiring Service of Drilling Equipment

Figure 23 Demand for Hiring Supporting Equipment (multiple options)

Figure 24 Distribution of Companies by Demand for Different Types of Technical Support

Services by DDCA

Figure 25 Type of Technical Staff Required for Technical Instruction (multiple options)

Figure 26 Contents of Hydrogeological Information Required (multiple options)

Figure 27 Geographical Distribution of Private Drilling Companies and Rural Water Supply

Coverage by Regions

Figure 28 Status of Registration at CRB and MoW by Classification of the Surveyed

Companies

Figure 29 Organizational Structure of DDCA with the Hiring Business Unit

Figure 30 Business Cycle of the Hiring Service

Figure 31 Process of Equipment Hiring

Figure 32 Formula for Pricing of Rental Fee

Figure 33 Break-Even Point in Sales

Guideline on Hiring of Drilling Equipment

1. INTRODUCTION

1.1 BACKGROUND

Aiming at alleviating poverty through improvements in the governance of water resources

management and the sustaiblable delivery for water supply and sanitation services, the Government

of United Republic of Tanzania (hereinafter referred to as “the Government of Tanzania”) has been

implementing the Water Sector Development Program (WSDP) since 2007 to address shortfalls in

urban and rural water supply infrastructure, to improve water resources management, and to

strengthen the sector institutions and their capacities (MoW 2006 a). The target of the Program is

to achieve increase of proportions of the rural population with access to clean and safe water to

90% by 2025. It also calls for increased access to clean and safe water to the urban population to

100% by 2025.

WSDP estimates that approximately 79,000 water points need to be constructed in the Rural Water

Supply and Sanitation (RWSS) component in order to meet the target mentioned above.

91% of

these water facilities is expected to be sourced with the groundwater, which requires drilling of

1,200 wells annually. The Urban Water Supply and Sanitation (UWSS) component also has high

demand of borehole construction in specific regional and district centerrs where surface water

sources are scarce. Although private drilling companies are the main actor for groundwater

development in WSDP, their current capacity in drilling wells is approximately 600 per annum. In

other words, their capacities such as technical abilities and resources have a great gap compared

with the demand in the water sector.

Taking this situation into consideration, MoW procures new drilling equipment in WSDP in order

to support Drilling and Dam Construction Agency (DDCA) for strengthening of its capacity in

borehole construction and providing technical support services to private drilling companies with

utilizing the procured equipment. The Strategy for Strengthening Water Well Drilling Industry in

Tanzania formulated by MoW in 2006 in parallel with designing of WSDP states necessity to

establish the plant and equipment hiring unit within DDCA to manage the equipment procured for

the hiring service (MoW 2006 b). This is supported by the Executive Agencies (Drilling and Dam

Construction Agency) (Establishment) Order, 1999, which describes that hiring of the drilling

equipment to other organizations is a part of the secondary functions of DDCA.

Objectives to establish the equipment hiring service within DDCA are firstly to enable private

companies enhance knowledge and skills on water well drilling works through utilization of the

equipment hiring and technical instructions to be provided by the Agency as the technical support

services. Secondly, it is aimed to create a new revenue source for DDCA which is required to

operate the business autonomously.

1.2 PURPOSE AND INTENDED USERS OF THE GUIDELINES

The guidelines are intended to describe the business model and operational principles of the hiring

service of drilling equipment to be operated by DDCA. The Manual on Hiring of Drilling

Equipment supplements these guidelines and provides a source of reference on daily operation of

the hiring service in accordance with its business cycle.

These guidelines are the property of DDCA and to be used by authorized officers of the Agency

only. Amendments and additions on the guidelines will be issued from time to time by the

Business Support Manager after approval by the management of DDCA and Ministerial Advisory

Board (MAB). Hiring Business Unit is responsible to keep all editions of the guidelines

approved.

Guideline on Hiring of Drilling Equipment

2. ENVIRONMENTAL SCAN

The purpose of this chapter is to describe the internal and external environment of DDCA in

establishment of the equipment hiring service to accelarate participation of private drilling

companies in WSDP.

2.1 INTERNAL ENVIRONMENT

The internal environment of DDCA can be considered from viewpoints of strength and weakness.

2.1.1 STRENGTH

DDCA can utilize its human resources, facilities, organizational knowledge, and partnership with

other institutions and the private sector as its strength to establish and operate the hiring service of

drilling equipment. Firstly, DDCA has skilled drilling staff who can be transformed into technical

instructors to support capacity development of private drilling companies. As described in

Chapter 3, a certain percentage of the private drilling companies express their demand to receive

technical support from DDCA to enhance skills and knowledge of their drilling staff. Providing

Training of Trainers’ courses to them and certifying those who are qualified as the technical

instructors, DDCA can make good use of its senior drilling staff to conduct this function.

Secondly, DDCA has office and workshop facilities at the headquarters in Dar es Salaam and five

zonal offices. These facilities make it possible for DDCA to 1) promote the hiring business to

various entities which are involved in drilling works in every corner of the country, 2) collect needs

and perception of

(potential) owners/users of boreholes, and

3) provide quick actions for

maintenance and repair of equipme for hiring.

Thirdly, DDCA has accumulated knowledge and data on hydrogeological conditions and

specifications of boreholes in different areas of the country through implementation of drilling

works. These can be regarded as part of “assets” of the organization to add value to the technical

instructions to the private sector.

Lastly, the Agency can collaborate with WDMI in development of teaching guide and materials to

be used in technical instructions to the private sector in the manner that those contents will

supplement curriculum of WDMI, especially for the incumbent of the position of drilling staff.

DDCA has also established working relationship with the private drilling companies for years.

DDCA sometimes rented the drilling equipment with its drilling staff to private companies. In

other case, the Agency hired rigs from the private sector. Informal communication is also

maintained between DDCA and some of the drilling companies to exchange information on drilling

works. This kind of network with the private sector can be utilized in identification of potential

clients and business promotion.

2.2.2 WEAKNESS

While DDCA has advantages to start the hiring service as mentioned above, some weakness are

observed in terms of equipment owned by the organization, financial status, and practice of

capacity development of its staff members.

Although DDCA currently operates a total of 15 drilling rigs, 11 out of the existing equipment were

procured more than 15 years ago and the oldest one ages 52 years. It causes DDCA to spend

significant proportion of budget for maintenance and repair of these old rigs due to frequent

breakdown. As DDCA has to sequre reliable equipment for operation of its drilling activities, it is

difficult for the Agency to reallocate part of the existing rigs to the hiring service.

With regard to the financial status, DDCA relies on the government subventions for initial capital

investment for the equipment and part of the recurrent cost. The drilling rigs and supporting

equipment have never been replaced with own fund of the Agency as it does not employ the

concept of cost recovery of the initial investment from sales from the drilling activities. This

practice would affect sustainability of the hiring service since there will be no guarantee of

Guideline on Hiring of Drilling Equipment

financial resources for the future investment if the government stops provision of subventions to

the Agency.

The other weakness is that DDCA does not conduct capacity development of the staff members

systematically in accordance with analysis on capacity gaps of each position of the staff. In case

of the drilling staff, their capacity development is implemented mostly in the forms of training at

external academic institutions or on-the-job training at drilling sites by senior staff at ad hoc basis.

It would hinder the Agency from maintaining required number of the technical instructors who

possess standard teaching skills.

2.2 EXTERNAL ENVIRONMENT

The external environment of DDCA is analyzed from viewpoints of opportunity and threat.

2.2.1 OPPORTUNITY

Some favorable environment can be observed as opportunities for DDCA to operate the hiring

service. First of all, demand for water wells in the country is increasing with growth of

population both in rural and urban areas. WSDP projects 90% of water points to be constructed in

the Rural Water Supply and Sanitation (RWSS) component will be sourced from groundwater.

The urban water supply also relies on the groundwater sources in particular areas where there are

no perennial rivers or available amount of water is limited to meed demand.

Secondly, the water well drilling industry, especially the private drilling companies, has inadequate

capacity to respond to increasing demand for borehole construction. As described in detail in

Chapter 3, there is a limited number of private drilling companies which have conducted drilling

works in WSDP. This is partly due to the reason that the marjority of the private drilling

companies do not possess any large rotary drilling rigs which can perform DTH drilling, the

drilling method used in most part of inland areas of the country. Interest of the drilling companies

is very high in terms of participation in drilling works in WSDP as well as expansion of business

opportunities in the program. This situation can be regarded as an opportunity for DDCA to

provide the hiring service of drilling rigs in combination with technical instructions to the private

sector.

Thirdly, DDCA receives financial support and policy guidance from MoW. MoW supports

DDCA in procurement of new drilling equipment through WSDP. Part of these items are meant

for use for the hiring service. Reinforcement of regulation of the drilling companies by MoW will

also create an opportunity for DDCA to respond to needs of the private sector to fulfill allocation of

drilling equipment with appropriate specifications and practice of code of conducts in drilling

works.

The fourth point is the privilege of exemption from VAT on sales of the Agency. Hirers of the

equipment will also benefit from it as the cost they have to bear will be reduced.

2.2.2 THREAT

There are some competitors who hire drilling equipment to others in the country although the

number of such companies and available equipment are limited. These competitors operate

drilling works as their primary business and rent rigs to others when the equipment is not occupied

for their activities. These competitors might pose a threat to DDCA in pricing of rental fees when

they intend to maximize the number of hiring period by reducing the price without considering

costs to be incurred to manage and maintain the equipment.

Other factors which would become threat for DDCA are shortage of skilled and experienced

drillers in the private sector and insufficient understanding of drilling companies as well as

groundwater users on legislation related to water resources management. Operation of hired

drilling rigs by drillers with few experiences with large rotary rigs entails risks of accident during

works. Furthermore, unless drilling companies and groundwater uesrs have good understanding

on requirements by laws on procedures of the groundwater development which should be followed

Guideline on Hiring of Drilling Equipment

by the professionals and owners of wells, respectively, there will be less demand for

implementation of proper drilling works.

2.3 CROSS SWOT ANALYSIS

Analysis on internal and external environment of DDCA mentioned in the previous section can be

further used to strategize operation of the hiring service. Table 1 shows results of the cross

SWOT analysis which describe possible strategic directions in different situations which are

categorized into four scenarios mentioned below;

− Maximization of opportunities with utilizing strength of the organization [Strength and

Opportunity]

− Transformation of weakness to strength or reinforce weak points to loose opportunities

[Weakness and Opportunity]

− Differentiate from others with utilizing strength [Sthrength and Threat]

− Defend from the worst scenario [Weakness and Threat]

Table 1 Cross SWOT Analysis

Strength

Weakness

How to seize opportunities?

How to avoid missing opportunity because of

presence of weakness?

- Utilize senior drilling staff as the technical

- Allocate six drilling rigs under procurement in

instructors who will be attached to drilling rigs for

WSDP to be fully used for the hiring service.

hiring.

- Employ an internal transaction system in DDCA

- Reinforce workshop facilities and skills of

to be accounted as “sales from the hiring

mechanics at some of the zonal offices which are

service” for the case that the Agency uses these

strategically important to provide maintenance and

drilling rigs for its drilling activities.

repair of equipment for hiring.

- Apply pricing policy to recover initial

- Identify information and service options to which

investment for the equipment to secure funds for

the private drilling companies recognize value and

replacement of rigs and other machinery in the

come up with contents of the technical support

future

services including the equipment hiring to satisfy

- Conduct capacity assessment and training of the

different types of demand.

technical instructors and senior drilling staff

periodically to

- Institutionalize a systematic capacity

development support for the staff members of

the Agency.

How to change threat to opportunity with strength?

How to avoid the worst situation?

- Differentiate the service contents from the ones

- Prevent excessive reduction of rental fees to

provided by other companies through focusing on

compete with other companies in hiring

potential clients who are willing to pay for reliable

business.

quality of the equipment and technical instructions

- Apply a certain criteria to screen drilling

by skilled drilling staff at corresponding price.

companies who are qualified as hirers of the

- Enhance teaching skills of the technical instructors

equipment.

enough to provide adequate guidance to and

supervision of drilling staff from hirers on site.

- Provide guideance to the private drilling

companies on legal requirements on groundwater

development in cooperation with MoW and

WDMI.

3. SEGMENTAITON OF POTENTIAL CLIENTS

3.1 BUSINESS ENTITIES IN WATER WELL DRILLING SECTOR IN TANZANIA

Table 2 shows the total number of business entities involved in drilling works, which were

identified through the registrations at MoW and Contractors Registration Board (CRB), baseline

survey, and the Water Sector Management Information System (MIS). A total of 174 business

Guideline on Hiring of Drilling Equipment

entities were found from these sources of information. Further examination made it clear that

some of the business entities listed had already stopped operation of water well drilling or were

specialized in other activities such as soil testing and groundwater exploration. There were also a

certain number of organizations which could not be reached due to unavailability of updated

information on their contacts.

After excluding these organizations, 104 entities were confirmed to be currently involved in water

well drilling either by directly conducting drilling works or contracting out the whole works to

other specialized contractors. These 104 business entities are, therefore, regarded as the potential

clients of the technical support services of DDCA (Figure 1).

There are another 52 entities which status of business operation is currently unknown as some were

refused to be interviewed in the baseline survey and others could not be physically located.

DDCA will continue to try to establish contacts with these organizations to increase the number of

the potential clients for the hiring service.

Table 2 Number of Business Entities in Water Well Drilling Sector in Tanzania

Category

Total

Breakdown

: Listed in the original list of drilling permit

126

holders of MoW

: Added to the target list of baseline survey

: Registered as specialist contractors (drilling

Total No. of Business Entities

174

works) under CRB but not on the original list of

Identified

drilling permit holders of MoW

: Recorded on Water Sector MIS as contractor of

drilling works but not on the original list of

drillimg permit holders or CRB Directory

No. of Entities which are

currently involved in

104

drilling works

Interviewed in Baseline

Survey

: not found

: refused interview

Not interviewed

: not on the original list of the registered

companies obtained from MoW.

No. of Entities which are not

: perform survey works or soil testing only.

involved in drilling works

: stopped drilling works.

Could not confirm current status of the business as

No. of Entities which status is

some were refused to be interviewed and others could

unknown

not be located.

Note: The status in the table is as of December 2012.

Guideline on Hiring of Drilling Equipment

Figure 1 Potential Clinents of the Equipment Hiring Service

3.2 CHARACTERISTICS OF PRIVATE DRILLING COMPANIES

This section describes characteristics of private drilling companies¹ currently involved in water

well drilling in the country. Data and information referred here are results of a baseline survey

which was conducted in 2012. Analyses were made on 94 companies which operate water well

drilling in order to assess capacities of the private drilling companies and their needs for technical

support from DDCA.

3.2.1 BUSINESS ESTABLISHMENT

(1) Geographical Distribution

The majority of the organization surveyed is established as private companies limited by shares

while six of them are formed as NGOs or religious organizations. Offices of these companies²

are concentrated in major cities in the country. Figure 2 shows distribution of the companies by

locations of their offices and project sites where they have worked in the past three years.

Regions are grouped into five zones where DDCA operates through its Zonal Offices.

companies (65.9%) are based in Dar es Salaam, which is followed by Arusha and Mwanza.

Projects the companies have worked in the past three years are located in most of the regions

although there are several areas such as Ruvuma, Kagera, Rukwa and Kigoma where few

companies have working experience in the same period. Half of the borehole drilling works

performed by the companies is located in districts with basement rock-dominant areas or

combination of basement rock and other types of geological formation.

¹ The word “privte drilling companies” or “companies” refer to all the organizations interviewed in the baseline survey

although the rspondents included NGOs and religious organizations.

² The word “private drilling companies” or “companies” refer to all the organizations interviewed in this baseline

although the respondents include NGOs and religious organizations.

Guideline on Hiring of Drilling Equipment

Note: The number of companies which have worked in the region indicates cumulative figures consolidated from 75

valid cases.

Figure 2 Geographical Distribution of Office and Project Location

It is observed that the companies in each zone have geographical advantage in performing works in

the area where they are based. Those which are operating from regions in Eastern Zone have

obtained more business opportunities in the same area than the companies in other zones. The

same tendency is seen in Northern and Lake Zones, too.

(2) Year of Establishment and Experience in Drilling Works

Half of the private drilling companies surveyed are relatively new as they were established after

2006, which coincides the launch of WSDP (Figure 3). The number of companies which start

business operation in drilling works doubled in 2009-2011 compared to the preceding period. In

these three years, 10-13 companies a year started drilling works as (a part of) their business while

there were maximum 7 entities per annum from 1985 to 2008. Nearly 60% (56 nos.) of the

companies have fewer than six-year experience in operation of the drilling works.

In comparison of years of experience of the company in drilling works with the number of

contracts awarded in WSDP, there is no clear correlation between these two factors. A total of 21

companies were involved in the drilling works as the contractors for 10-village subprojects in

RWSS Component of WSDP (Phase 1). Among these organizations, 16 companies are included

in the respondents of the baseline survey. As Figure 4 indicates, relatively new companies are

awarded contracts more than the ones that have longer experience in operation of drilling works.

It implicates that there is possibility for the companies with a few experience in the drilling

industry to have business opportunities in WSDP in case that other factors such as experience of

key personnel in similar works, arrangement of drilling equipment to be used in the works, and

financial status satisfy requirements in evaluation of bidding.

Guideline on Hiring of Drilling Equipment

Figure 3 Year of Establishment and

Figure 4 Distributions of Companies

Start of Business Operation in Drilling

Awarded Contracts for Drilling Works in

Works

RWSSP/WSDP by Year of Experience of the

Organization

(3) Registration to Regulatory Bodies

35 companies are registered at CRB while the number grows to 59 in case of those which are

regulated by MoW as the holder of valid water well drilling permit³. Of these entities, there are

25 companies (26.6%) which have registration at both CRB and MoW as shown in Figure 5.

Note: Each label in the figure shows category name, number of the case, and its proportion in the total number of the

valid cases.

Figure 5 Distribution of Companies by Status of Registration at CRB and MoW

The specialist contractors in drilling works

(28 nos.) occupy the majority in the surveyed

companies which are registered at CRB. Others, however, possess registration in the areas of civil

works, building or electricity only which are not included in the conditions of eligible bidders of

drilling works in WSDP.

Attention should be paid to a fact that about 15% of the permits are not renewed annually as per

requirement although three fourth of the surveyed companies have once obtained the water well

drilling permit from MoW, according to findings from the interviews. This also suggests that

MoW should update information on the water well drilling permit holders annually.

Also, one fourth of the companies are registered neither of the authorities, which would hinder

these organizations from participating in tendering of drilling works in WSDP. Even if they show

high interest in DDCA’s hiring business of drilling equipment, possibility of this group to utilize the

equipment in WSDP will remain low unless they register themselves at CRB and MoW to satisfy

the eligibility.

³ The validity of the drilling permit is one year. The companies which updated the permit in 2011 or 2012 were

counted as the holders of the valid permits in this analysis.

Guideline on Hiring of Drilling Equipment

3.2.2 CLIENTS FOR WATER WELL DRILLING

The major clients for water well drilling for the surveyed companies are individual households

(90.4%), followed by private companies (81.9%), government (71.3%), and donor/NGO(57.4%)

according to Figure 6.

27 companies have never worked for borehole drilling funded by the

government.

For approximately 60% of the companies, the drilling works procured by the government account

for less than 40% of the total number of contracts and amount of contract values the company has

been awarded (Figure 7). Meanwhile, the contractors which have been awarded the contracts in

WSDP concentrate in the groups that have more than 60% of sales from the contracts with the

government.

12 companies out of 21 contractors for drilling works in RWSSP/WSDP (Phase 1)

are categorized into these groups. This situation indicates that the companies which regularly

work with the government are in the minority while the rest usually deal with demand of the

private sector and individual households.

Note: No. of valid cases is 65 for the variable of “No.

Figure 6 Clients for Water Well Drilling

of Contract” and 63 for “Contract Value”.

(multiple answers)

Figure 7 Proportion of Drilling Works

Awarded by the Government in Number

of Contracts and Contract Values

3.2.3 PERFORMANCE IN THE PAST THREE YEARS

This subsection describes the performance of the companies in drilling works from viewpoints of

the number of contracts awarded, number of boreholes drilled, and amount of contract value in the

past three years from 2008/2009 to 2010/2011.

(1) Number of Contracts Awarded

In terms of the number of the contracts, the borehole drilling occupies the majority of works

awarded to the surveyed companies as a whole. Figure 8 shows an aggregate of number of

contracts awarded to the companies for each type of work annually. Information of the graph also

includes the grand total of boreholes drilled by the surveyed companies. It indicates that the

greater number of the contracts is for drilling of wells, followed by groundwater survey. Works

for borehole construction increased steeply in the period while contracts for other works reduce or

remained at the same level. As the number of contracts for deep well construction grew, the total

of wells drilled also rose accordingly. The increase of the contracts for borehole construction

coincides with growth of the numbers of business entities which started the operation of drilling

works as well as procurement of contractors for exploratory drilling in RWSSP/WSDP in the same

period.

Guideline on Hiring of Drilling Equipment

Note: Total number of wells drilled contains both successful and unsuccessful boreholes.

Figure 8 Total Number of Contracts Awarded to and Wells Drilled by the Surveyed

Companies in the Past 3 Years

The median of the number of contracts awarded to a company is eight to nine a year in case of

drilling of deep wells (Table 3). Among 75 companies which provided valid answers on the

number of the contracts for drilling of deep wells, approximately 60% (48-54 companies) worked

for less than 20 contracts a year (Figure 9). Those which had more than 120 contracts a year are

contractors which have participated in the drilling works for RWSSP/WSDP (Phase 1).

Table 3 Number of Contracts Awarded in the Past 3 Years per Company

Number of Contracts by Fiscal Year

Valid

Type of Works

2008/09

2009/10

2010/11

Mean

Median

Mean

Median

Mean

Median

Construciton of shallow well

40.8

65.3

42.4

Construction of deep well

13.7

15.9

21.7

Rehabilitation of well

10.5

11.1

12.2

Piping works

5.8

5.4

5.9

Construction of water supply

9.3

3.5

8.5

5.5

12.6

facility

Groundwater survey

15.2

16.0

16.2

Guideline on Hiring of Drilling Equipment

Figure 9 Distribution of Companies by Number of Contracts Awarded for Drilling of

Deep Wells per Annum

(2) Number and Type of Wells Drilled

From the valid data obtained from 89 companies, it is estimated that one company drilled 10-13

wells⁴ including unsuccessful ones as the median per annum in the period of

2009-2011.

Approximately 68% (61 nos.) of the companies drill less than 20 successful wells a year (Figure

10). This proportion remains almost same even in case including unsuccessful ones.

Note: The number of valid cases is 89.

Figure 10 Distribution of Companies by Number of Wells Drilled per Annum

Distribution of these drilled wells was also obtained by type of wells categorized according to use

and depth of the well, size of casing pipe, and drilling method as listed in Table 4.

Table 4 Categorization of Well Specifications

Type

Use of Well

Well Depth

Size of Casing

Drilling

Pipe

Method

Hand pump

30-100m

4” or 5”

DTH

Hand pump

30-100m

4” or 5”

Mud rotary

Medium-scale piped scheme

30-200m

6”

DTH

Medium-scale piped scheme

30-200m

6”

Mud rotary

Large-scale piped scheme

30-200m

8” to 10”

DTH

Large-scale piped scheme

30-200m

8” to 10”

Mud rotary

⁴ This number includes the wells drilled with hired equipment. Information could not be obtained from the respondents

on the proportion of wells constructed with the drilling equipment owned by the company and those which were drilled

with the hired rigs.

Guideline on Hiring of Drilling Equipment

The biggest number of wells constructed in the period is Type 2D which is drilled with DTH

method and mainly meant for the medium-scale piped water schemes (Figure 11). The second

largest number is Type 1M constructed with mud rotary drilling method for hand pump water

facilities.

Note: The number of valid cases is 89.

Figure 11 Distribution of Wells Drilled per Annum by All the Surveyed Companies

These water sources constructed in each year vary in depth depending on type of wells. Type 1D

and 1M have approximately 90m depth while 2D and 2M are more or less with 100m depth on

average. The depth of wells in Type 3D and 3M is in almost same range with those of 2D and 2M.

There are no marked changes in the average depth of each type of wells in three years.

The average days required to drill a successful well is five to eight days depending on type of well.

Working days involved is relatively smaller in case of use of DTH method, as shown in Table 5.

Type 1D, 2D and 3D, in comparison with the period taken for mud drilling (Type 1M, 2M and 3M).

It takes another one or two days in case that pump installation is included in the works.

Table 5 Average Days Required for Drilling Works

Type of Work

No. of Working Days Required per

Each Type of Well

Drilling a successful well including drilling, development

and pumping test

Drilling an unsuccessful well excluding PVC installation,

development and pumping test

Pump Installation (hand pump or submersible pump)

Note: The number of valid cases is 93.

Based on information on the type of wells drilled, the proportion of the companies by drilling

methods they have experienced is 36.9% with mud rotary drilling only, 35.7% with DTH method

only, and 27.4% with both DTH and mud rotary drilling (Table 6). This means that approximately

63% of the companies have experience in using DTH drilling method.

With regard to type of water supply facilities, 45.2% of the companies worked for borehole

construction for piped schemes only in these three years and 34.5% was involved in drilling works

for hand pump water facilities only. The remaining 20.2% has experience of drilling works for

both hand pump and piped schemes. From the survey results mentioned above, it is observed that

Guideline on Hiring of Drilling Equipment

about two third of the companies possess working experience in drilling works with DTH method

to construct wells which can be served for the medium-scale piped schemes.

Table 6 Distribution of Companies by Type of Working Experience

Valid

Drilling Method

Type of Facility

Mud drilling only

34.8

36.9

42.

DTH only

33.7

35.7

Piped scheme only

45.2

Both DTH and mud

32.

drilling

25.8

27.4

HP only

34.5

Total

94.4

100

Both HP and piped

19.

scheme

20.2

5.6

94.

Total

100

Total

100

Note: NA

(Not applicable: no drilling works were

conducted in the period.)

5.6

Total

100

(3) Size of a Contract for Deep Well Construction

The drilling works accounts for approximately 80% of the sales of the surveyed companies.

Average size of a contract for deep well construction is analyzed in terms of the contract value and

number of wells drilled. Valid data was obtained from 59 companies on variables of the number

of contract, contract values and number of drilled wells per annum for three successive financial

years from 2008/2009 to 2010/2011. The median of a contract value is within a range of Tsh

7million - 8million in these three years, which covers construction of one well (Table 7). The

number of wells drilled per contract appears small as the major clients for drilling works for the

companies are individual households and private sector. In case of the works in WSDP, one

contract is made for construction of an average of nine wells.

The contract value awarded by those which have participated in drilling works in WSDP appears

relatively larger than the ones without experience in the same programme. The difference

becomes much more significant, especially in 2010/2011. With considering that the procurement

of contractors for drilling works in RWSSP/WSDP (Phase 1) reached a peak in 2010/2011, the

contract value of the companies with experience in WSDP seems to be pushed up by the contracts

awarded from the programme. This finding is also supported by the fact that the average value of

a contract for drilling works in RWSSP/WSDP (Phase 1) is approximately Tsh20million per well,

which was obtained from calculation of actual contract prices of the works conducted by all the 23

contractors involved in the programme, as explained in Section 3.1.3. The drilling works in

WSDP provide the contractors with opportunities to have larger size of the contract in terms of its

value and the number of boreholes required than those of clients in the private sector.

Table 7 Contract Value and Number of Wells Drilled per Contract

Contract Value (Tsh)

No. of Wells Drilled

Category of Company

2008/09

2009/10

2010/11

2008/09

2009/10

2010/11

Whole Cases

21,978,884.9

19,030,230.2

Mean

(N=59)

18,105,406.38

1.91

3.56

2.75

Median

7,000,000.00

8,000,000.00

7,729,312.50

1.00

Has experienceMean

42,495,047.87

50,896,878.47

56,275,838.09

3.72

4.19

3.50

WSDP

14,935,483.8

Median

(N=13)

8,650,000.00

11,834,734.85

1.00

No experienceMean

16,180,838.85

8,838,251.22

8,504,297.64

1.40

3.38

2.54

WSDP

Median

(N=46)

6,733,333.33

6,000,000.00

6,333,333.33

1.00

Guideline on Hiring of Drilling Equipment

3.2.4 POSSESSION OF EQUIPMENT

(1) Drilling Equipment

The number of drilling rig owned by a company is one on average. Figure 12 indicates that the

capacity of the private companies is relatively small in terms of possession of drilling rigs as 75%

of the companies have only one or two sets of the machinery. There is only one entity which

owns more than 10 rigs although it is far below the number of drilling equipment that DDCA

possesses. Meanwhile, nine organizations have no rigs at all. They hire drilling equipment from

others or contract out the whole scope of drilling works to specialized companies.

Note: The number of valid cases is 93.

Figure 12 Distribution of Companies by Number of Rigs Owned

The survey found a total of 156 drilling rigs owned by 84 companies among the surveyed. As a

result of categorization of these rigs by capacities, 45.5% (70 nos.) is classified into the large-size

rig which can perform both DTH and mud rotary drilling methods (Figure 13). The second

largest proportion is the small-size rig for mud drilling only with 28.6% (44 nos.). The definition

of large-size rig refers to the one that has capacities to drill up to maximum 150m depth and

12-inch diameter.

Note: The number of valid cases is 154. For the remaining 2 rigs, there is no information which can be used to

identify specifications and capacity of the equipment.

Figure 13 Distribution of Owned Rigs by Drilling Capacity

Further analysis in Figure 14 shows distribution of companies by the number of owned rig

according to the capacities. The proportion of companies which owns more than two units of

large-size rigs for both DTH and mud rotary drilling accounts for less than 20% (15 nos.) of the

surveyed companies.

Guideline on Hiring of Drilling Equipment

Figure 14 Distribution of Companies by Number of Owned Rigs in Each Type

In order to supplement shortage of the required number of rigs for particular works, 51% of the

companies have ever hired drilling rigs from other business entities. This includes 13 companies

which have used rigs owned by DDCA. There are more than 30 entities listed as the lender of the

rigs. Almost all of these lenders operate drilling works as their business and hire out the

equipment to others when it is available.

The cost for hired equipment is mainly charged either by meter or well. Table 8 shows the

median of the hiring costs which were actually charged to the respondents. The figures are

compared between the small-size drilling rigs which are mostly dominated with PAT model and

other types of equipment. The medina of the hiring cost is Tsh 80,000 per meter and Tsh 2million

per well for all types of the equipment. The hiring cost for PAT is cheaper than large-size

equipment.

Table 8 Hiring Cost of Drilling Equipment

Charging

Median of Hiring

Type of Rig

Method

Cost (Tsh)

Small-size (PAT)

50,000

Large-size

(Excluding

110,000

per meter

PAT)

All types

80,000

Small-size (PAT)

1,500,000

Large-size (Excluding

6,000,000

per well

PAT)

All types

2,000,000

(2) Supporting and Survey Equipment

More than 60% of the companies own each type of supporting equipment consisting of water

tanker, cargo truck, generator, compressor and vehicle (Figure 15). An average of one or two

units of each type of the equipment is available in an entity. Meanwhile, the companies which

have survey equipment are in small number except for the pumping test unit.

In case that the supporting equipment is not available at the company, the majority utilizes hiring

service of those items. In contrast, the proportion of sub-contract becomes larger than use of the

hired equipment in case of pumping test unit, well logging machine and geophysical prospecting

instrument.

Guideline on Hiring of Drilling Equipment

Note: Figures in the table above indicate number of companies while the graph shows its proportion.

Figure 15 Possession of Supporting and Survey Equipment

(3) Maintenance of Drilling Equipment

The majority of the companies attend the maintenance of the owned drilling equipment either at

their workshops or on site. Only eight companies do not have workshop facilities with them

while the rest installs equipment and tools as listed in Figure 16.

With regard to the type and level of routine maintenance of the owned rigs, more than 80% of the

companies assess that they can attend all necessary works such as greasing up, checking and

adjusting of condition of rigs and trucks, and changing hydraulic oil, engine oil and filters (Figure

17).

Note: The number of valid cases is 86.

Figure 16 Workshop Equipment and Tools Owned (multiple options)

Guideline on Hiring of Drilling Equipment

Note: The number of valid cases is 90.

Figure 17 Type and Level of Periodical Maintenance of Drilling Equipment the

Company can Perform (multiple options)

3.2.5 HUMAN RESOURCES

(1) Staffing

The median number of the staff in one company is 15 in total including non-regular workers. The

largest proportion of the companies has

10-19 employees followed by those with below 10

members (Figure 18). These groups account for 70% of the surveyed companies.

Figure 18 Distribution of Companies by Size of Staff

Drilling staff employed in an entity consists of one drilling supervisor, one driller (rig in charge),

one assistant driller, and two workers on average. More than 60% of the companies also have

staff in expertise as the engineer or hydrogeologist.

It is observed that the management staff serves as an engineer, hydrogeologist or drilling supervisor

in several organizations as they have limited number of human resources. Staff at other position

also makes similar arrangement to supplement shortage in staffing.

(2) Working Experience and Qualification of Technical Staff

As to working experience of these staff members, the management has the longest period of

experience in the drilling industry. The average period of their working experience is 14 years,

followed by the engineer, hydrogeologist, drilling supervisor, and driller with 10-12 year career on

average. Other employees such as assistant drillers, drilling workers

(helpers and assistant

technicians), mechanics, welders and plumber have been in the drilling industry for an average of

five to eight years.

The majority of the engineers possess bachelor degrees, whereas most of the hydrogeologists and

the drilling supervisors possess diplomas. The drillers (rig in charge) and assistant drillers are

holding Form IV certificates, whereas the drilling workers are STD VII leavers. STD VII

certificate holders are the majority of the workers in the surveyed drilling companies followed by

Guideline on Hiring of Drilling Equipment

the Form IV certificate holders. It is observed that the proprietors of the drilling companies call

some of their staff engineers or hydrogeologist while they only possess FTC, Form VI, Form IV or

Basic Certificates which are not qualified for those positions.

(3) Capacity Development of Technical Staff

Of all the companies surveyed, the respondents at 91 entities expressed capacity development

needs of their technical staff. The highest proportion of the companies see necessity of

strengthening of knowledge and skills of the staff on well logging (76.9%), followed by planning

of drilling works and designing of water wells (72.5%), drilling by DTH method (64.8%) as shown

in Figure 19. Approximately 30% (29 nos.) of the respondents chose all the areas listed in the

same graph as their needs for capacity development of the technical staff.

Only two organizations answered that they did not require capacity development of the technical

staff as they have enough skills necessary for drilling works. One of them is a private drilling

company which had the largest share in the contracts for drilling works in RWSSP/WSDP (Phase

1) and the other is a charitable organization providing support for water supply projects.

Note: The number of valid cases is 91. Another one case is no answer and two cases are not applicable as the

respondents do not see necessity of capacity development of their technical staff.

Figure 19 Areas of Capacity Development Needs of Technical Staff (multiple options)

Aiming at the human resources development of their staff, 89 companies have conducted some

forms of the training or sent the selected staff to educational institutions. Figure 20 shows type of

capacity development activities the companies have ever employed as well as their preferable

measures for the same. Provision of On the Job Training (OJT) from senior staff was most widely

practiced among the companies (88.4%). Less than 40% of the companies have also organized

training on drilling site by trainers invited from outside and/or sent the staff to educational

institutions in contrast to relatively high preference to these measures.

In most cases, the company bore the costs for these capacity development measures. There are

only three cases that the staff member paid the cost. It is observed that the companies show

tendency to rely on utilizing the experienced personnel in their organizations for capacity

development of other staff rather than employing other measures which incur monetary burden.

Guideline on Hiring of Drilling Equipment

Note:

1. The number of valid cases for the variable “CD measures taken in the past” is 86. The remaining eight cases are

not applicable as the companies have never conducted capacity development for their technical staff.

2. The number of valid cases for the variable “Preferable CD measures” is 93. Another one case has no answer.

Figure 20 Capacity Development Measures (multiple options)

3.2.6 INTEREST IN BUSINESS OPPORTUNITIES

As mentioned earlier, 16 companies among the surveyed have worked as the contractors for drilling

works in

10-village subprojects in RWSSP/WSDP (Phase

1).

The interviewed companies

including the contractors which already had experience in the programme expressed high interest in

participating in drilling works in WSDP. Almost all the companies (93 nos.) showed their interest

in the programme. The remaining one is a charitable organization which does not operate the

drilling works at commercial basis.

78.7% (74 nos.) perceives that there are some obstacles to participate or expand business

opportunities in drilling works in WSDP while the rest does not see any such difficulties. Of

those obstacles raised by the respondents, the biggest proportion of opinions goes to concern on

high requirements in procurement rules for drilling works in WSDP (43.2%). Delay in payment

of the contract amount is also pointed out as one of the obstacles. Except for these difficulties

related to the implementation procedures of the programme, 36.5% expressed hardships to source

sufficient investment fund for the business operation as part of problems in the organizations. The

companies which have worked or are working in WSDP also pointed out difficulty in

hydrogeological conditions of project areas more frequently than the group without experience in

the programme.

3.2.7 INVESTMENT FOR NEW DRILLING RIGS

Nearly three third of the companies only rely on personal funds of proprietors when new

investment is required in their business. One third also borrows money from friends, relatives

and/or banks.

For those which consider new investment for the drilling equipment, demand for large-size rigs is

especially high.

79 companies answered that they had investment plans to purchase new drilling

equipment. This number includes the entities which have experience in drilling works in WSDP.

The highest demand goes to a drilling rig with capacity to drill 100-200m depth, followed by a rig

with drilling capacity of more than 200m depth (Figure 21).

Guideline on Hiring of Drilling Equipment

Note: The number of valid cases is 79. Another 11 are not applicable as they do not have any investment plan for

new equipment and four have no answer.

Figure 21 Needs of Procurement of New Drilling Equipment (multiple options)

3.2.8 DEMAND FOR TECHNICAL SUPPORT SERVICES OF DDCA

(1) Hiring Service of Drilling Equipment

Of 94 companies interviewed, 88% (83 nos.) showed interest in using the hiring service of drilling

equipment from DDCA. These companies expect increase of contracts to be awarded in WSDP

(85.5%), acquisition of eligibility to participate in tendering in the same programme (62.7%), and

reduction of investment costs for the equipment (47.0%) as major benefits from using drilling rigs

hired by DDCA. High expectation to expand business opportunities in drilling works in WSDP is

observed on both the companies which already have experience in the programme and those which

are interest to participate newly. Regardless of possession of past experience in using hired

drilling equipment, needs for DDCA’s hiring service is high as shown in Figure 22.

Note: Figures in the table indicates the number of companies while the graph shows its percentage distribution.

Figure 22 Demand for DDCA’s Hiring Service of Drilling Equipment

As to options of the hiring service, these companies much prefer to have hired rigs accompanied

with technical staff from DDCA (81.5%) rather than use the equipment only (25.9%). The survey

results also shows high demand of the companies to hire truck/ trailer mounted air compressor for

DTH drilling as well as rig accessories and work tools (Figure 23) together with the drilling

machine. Fishing tools, pumping test equipment and mud pump are also selected by half

proportion of the companies as items which they would like to hire from DDCA according to their

necessity. Meanwhile, generator, water tanker or cargo truck are not in acute needs compared

with other supporting equipment. It seems to be due to wide availability of these items for hiring

in the market.

Guideline on Hiring of Drilling Equipment

Note:

1. The number of valid cases is 80. Another three cases have no answer and 11 cases are not applicable as they are

not interested in the hiring service.

2. “Other” includes a flow meter, logging machine, and survey equipment.

Figure 23 Demand for Hiring Supporting Equipment (multiple options)

11 companies which did not show interest in hiring the equipment explained the reasons that they

have enough number of drilling rigs. The number of rigs owned by these companies varies from

one to six, which implicates that they do not intend to scale up their drilling works by hiring

equipment from others.

(2) Other Forms of Technical Support Services

The surveyed companies also showed high demand for other forms of the technical support

services of DDCA. Such services refer to technical advice for drilling works on site from the staff

of DDCA and provision of hydrogeological information on project areas where DDCA drilled wells

in the past. The percentage of the companies expressing their interest in these services is 95.7%

(90 nos.), bigger than demand for the hired equipment. Especially, all of these 90 companies

expect to access to hydrogeological information kept at DDCA while the number of companies

which are interested in receiving technical advice is counted 65 in total (Figure 24).

92.5% of the

companies are willing to pay for the technical support services to be provided by DDCA.

Figure 24 Distribution of Companies by Demand for Different Types of Technical

Support Services by DDCA

With regard to the technical advice, skilled and experienced instructors are mostly needed by the

companies, followed by drilling supervisor who will control drilling works to be conducted by the

team from the lessee (Figure 25). Some companies also raised necessity of mechanics who will

conduct daily maintenance of hired equipment and/or teach the lessee on required maintenance

procedures.

Guideline on Hiring of Drilling Equipment

Note: The number of valid cases is 65. Another one case has no answer and 28 cases are not applicable as they do not

require technical advice from DDCA’s staff.

Figure 25 Type of Technical Staff Required for Technical Instruction (multiple options)

As to access to the hydrogeological information kept by DDCA, the respondents are mostly

interested in drilling depth of existing wells and success rate of drilling in the areas where they are

going to work (Figure 26). Other types of information such as discharge rate, water quality and

detailed structure of wells are also with high demand.

Note: The number of valid cases is 90. Another one case has no answer and three cases are not applicable as they are

not interested in accessing to hydrogeological information at DDCA.

Figure 26 Contents of Hydrogeological Information Required (multiple options)

The survey revealed high demand of the private companies for hiring service of drilling equipment

as wells as other forms of technical support services of DDCA.

63.8% (60 nos.) of the surveyed

companies have also experience in use of such services provided by DDCA in the past although

DDCA had not developed procedures for service provision in formal manner. In most cases, these

companies requested DDCA for hydrogeological information and/or technical advice for drilling

works while 13 companies have hired drilling rigs from DDCA. Conclusion is drawn from these

facts that provision of technical support services by DDCA is not quite new in the drilling industry

in Tanzania. Rather, private companies have been keeping expectation that DDCA should play

such roles to support strengthening of capacities of the private sector.

3.3 CLASSIFICATION OF THE PRIVATE DRILLING COMPANIES

(1) Criteria for Classification

The technical support services to be provided by DDCA consists of i) hiring of drilling equipment,

ii) technical instructions on drilling works on site, and iii) hydrogeological information. Two

main criteria listed below are applied to classify the private drilling companies according to their

interest in the technical support services as well as current capacities in terms of experience of

DTH drilling and possession of equipment to respond to demand for drilling works in WSDP, so as

to estimate the number of potential clients with different needs.

Guideline on Hiring of Drilling Equipment

1) The company has experience of DTH drilling with a large rotary rig.

2) The company is interested in DDCA’s equipment hiring service.

The reasons of selection of above criteria are described below:

1) Experience of DTH Drilling with Large Rotary Rig

In order to obtain business opportunities for drilling works in WSDP, the private drilling

companies need to posssess drilling equipment and techniques which correspond to

specifications of boreholes required in the program. According to the results of drilling works

in the first phase of RWSS component of WSDP, the maximum drilling depth is 114m and the

minimum is 78m in minimum on average. Diameter of casing and screen pipes is not less than

150mm in 97% of drilled boreholes⁵. Furthermore, almost of all the project areas of WSDP are

with hard rock formation which requires employment of DTH method for drilling.

Contractors for drilling works in WSDP are, therefore, required experience in DTH drilling with

large rotary rigs⁶. The companies which fulfill this condition are regarded to be capable of

drilling works under WSDP in respects of both equipment and techniques.

2) Interest in DDCA’s Eqiupment Hiring Service

The second criterion is set set to identify companies which are interested to hire drilling

equipment from DDCA which is the major component of the technical support services by the

Agency. A sub-criterion is also considered if the companies are interest in other forms of the

technical support services such as technical advice on drilling works and hydrogeological

information in case that they do not consider to hire equipment from DDCA. Application of

these criteria enables DDCA to further segment the private companies according to their interest

in the hiring service and/or other forms of the technical support.

(2) Distribution and Characteristics of the Companies Classified

With applying the above criteria, 94 private drilling companies interviewed in the baseline survey

were classified into five groups as shown in Table 9. It is evaluated that 83 companies which

belong to Group A and B are the main target to promote the hiring service combined with the

tecnnical instructions on site. While Group C and D are currently not showing interest in the

hiring service, DDCA will keep the companies in these groups informed on available services for

the equipment hiring for their future demand. The characteristics of companies which belong to

each group are described below.

⁵ Calculated from Water Sector MIS and records of Rural Water Supply Division of MoW.

⁶ The definition of large rotary rig here refers to the one that has capacities to drill up to maximum 150m depth and

12-inch diameter with both DTH and mud drilling methods.

Guideline on Hiring of Drilling Equipment

Table 9 Classification of Private Drilling Companies

Interest in DDCA’s Service

Experience

Number

Technical Advice

DTH Drilling

Group

Equipment

and/or

with

Large

Company

Hiring Service

Hydrogeological

Rotary Rig

Information

Total

1) Group A

23 companies consisting Group A have experience of DTH drilling with large rotary rigs and are

interested in hiring drilling equipment from DDCA.

22 of them are also interest to receive

technical advice from and/or access to hydrogeological information at DDCA. Companies of

this group have drilling techniques to correspond to drilling works under WSDP. It is supported

by the fact that 11 companies in this group have participated in drilling works in WSDP.

As 17 companies of this group have a purchase plan of large drilling rigs, they seem to have an

intention to expand their business opportunities in drilling works. The hiring service would

provide an advantage to these companies to save investment costs to purchase new rigs.

2) Group B

Group B contains 60 companies, the largest group among five. While this group has no

experience of DTH drilling with a large rotary rig, they are interested in hiring drilling

equipment from DDCA. Although some of them possess large rotary rigs, they have only used

mud rotary drilling method. Others have experience to perform DTH drilling with rigs with

small capacity.

52 companies have a purchase plan of drilling rig capable to drill not less than 100m in depth.

58 companies also expressed their interest in technical support services. This proves that they

are highly motivated for the capacity development in drilling techniques to gain business

opportunities by acquiring skills and knowledge on operation of large rotary rigs to perform

DTH drilling which can respond to requirements in WSDP. Currently, only three companies

have provided drilling works in WSDP in this group.

3) Group C

The companies in Group C have experience of DTH drilling with large rotary rigs. They are

not interested in equipment hiring but willing to use other forms of technical support services of

DDCA such as provision of technical instructions on site and hydrogeological information.

One company of three in this group has experiences of drilling works under WSDP.

4) Group D

Seven companies consisting Group D have neither experience of DTH drilling with large rotary

rigs nor interest in hiring drilling machine from DDCA. However, they are interested in other

forms of the technical support services. DDCA can provide technical instructions and/or

hydrogeological information according to needs of each company of this group.

5) Group E

Group E is an exceptional case among 94 companies surveyed. It has experience in DTH

drilling with large rotary rigs and is not interested in neither hiring of equipment nor accessing to

other forms of the technical support of DDCA. Only one company is categorized into this

group. The company operates drilling works exclusively for boreholes with large diameter

Guideline on Hiring of Drilling Equipment

meant for urban water supply. As it is observed that their needs for equipment and drilling

techniques are currently satisfied, this group is excluded from the target of the technical support

services.

4. SCOPE OF SERVICES TO BE PROVIDED BY DDCA IN THE

HIRING BUSINESS

4.1 CONDITIONS CONSIDERED IN FORMULATION OF THE BUSINESS MODEL

MoW has a plan to procure a total of 20 drilling rigs for DDCA in WSDP. However, the ministry

has not yet concluded a procurement plan of the remaining number of the drilling equipment.

The business model is, therefore, formulated to operate the hiring service with six drilling rigs and

supporting equipment which are under procurement in the first phase of WSDP.

4.2 ITEMS TO BE HIRED

Table 10 shows items to be made available for hiring to the private companies. Hirers will choose

items necessary to execute contracts with their clients. In case that the hirer needs other

equipment which is not listed below, he will procure it in the market or borrow it from DDCA, if

available, at cost.

Table 10 List of Equipment to be Hired

Item

Specification

Qty

Remarks

1. Truck mounted drilling rig

Rotary cum DTH, max. depth 150m

6 units

2. Trailer mounted air

650CFM, 246 psi

5 units

Optional

compressor

3. Trailer mounted mud pump

20kg/cm², 600 l/min.

5 units

Optional

4. Trailer monted pumping test

Generator, riser pipe, submersible

5 units

Optional

unit

pump

5. Rig accessories

6 sets

6. Casing tools

6 sets

7. Fishing tools

Tap, jack, etc.

6 sets

Optional

8. Direct mud circulation drilling

6 sets

tools & accessories

Rig accessories, casing tools, and direct mud circulation drilling tools and accessories contain i)

items which are permanently provided with the drilling rigs and ii) consumables which use is

optional for the hirer. Details of the items in each category are shown in Table 11. Maintenance

costs need to be considered for those which are equipped with drilling rigs permanently.

Meanwhile, the hirer will choose if he uses stocks of consumables kept by DDCA at cost or the

ones owned by the hirer.

Guideline on Hiring of Drilling Equipment

Table 11 List of Rig Accessories, Casing Tools and Direct Mud Circulation Drilling

Tools

Equiped

No.

Description

Consumable

with Rig

Rig Accessories

Drill pipes 41/2'' 0.D flush type with API 31 1/2''IF BOX and pin joints

furnished with wrech squares and steel made protectors,6m long/pc

Drilling collars 5''0.D,2''IF BOX and pin joints,furnished with wretch

squares and steel protectors,6m long/pc

Hoisting swivel API 1/2'' IF Pin joint

Hoisting plug API 1/2'' IF Pin joint

Drill pipes collar hanger

Cross over sub API 3 1/2 IF BOX and pin

DTH Hammer assembly for 6 1/4''(150mm) hole drilling API 3 1/2

Regular pin and 8'' to 10'' hole drillling

DTH Hammer assembly for 12''(300mm) hole drilling API 3 1/2

Regular pin

DTH Button Bit for 12''(300mm) hole drilling

Bit sub for drill pipes/collar to 6 1/4'' DTH Hammer API 3 1/2''

Regular box and API 3 1/2'' IF Box joint

Bit sub for drill pipes/collar to 6 1/4'' DTH Hammer API 3 1/2''

Regular box and API 3 1/2'' IF Box joint

DTH Button bit for 6 1/4''(159mm) hole drilling

DTH Button bit for 8 1/4''(216mm) hole drilling

DTH Button bit for 10''(254mm) hole drilling

Bit grindeer for button bit and body dressing,furnished with 15 m long

high pressure air hose

Tricone roller bits 6 1/2'' dia

Tricone roller bits 8 1/2'' dia

Tricone roller bits 10 1/2'' dia

Tricone roller bits 12 1/2'' dia

Roller bits 8 1/2'' dia

Roller bits 10 1/2'' dia

Roller bits 12 1/2'' dia

Roller bits 14 1/2'' dia

Drag bits three winged 8 1/2'' dia

Drag bits three winged 10 1/2'' dia

Drag bits three winged 12 1/2'' dia

Drag bits three winged 16 1/2'' dia

Roller bit 16'' dia for soft formation

Stabilizer for

6 1/4'' hole body dia,1.5m long API 3 1/2 IF BOX and

pin joints furnished with wretch squares and steel made thread

protectors on both ends

Stabilizer for

8 1/2'' hole 5'' body dia,1.5m long API 3 1/2 IF BOX

and pin joints furnished with wretch squares and steel made thread

protectors on both ends

Stabilizer for

10'' hole 5'' body dia,1.5 long API 3 1/2 IF BOX and pin

joints furnished with wretch squares and steel made thread protectors on

both ends

Stabilizer for

12'' hole 5'' body dia,1.5m long API 3 1/2 IF BOX and

pin joints furnished with wretch squares and steel made thread

protectors on both ends

Casing Tools

a) Casing lamp with bolts,nuts,wrench and sling wire for 4'' PVC

casing ,3 pairs/sets

b) Casing lamp with bolts,nuts,wrench and sling wire for 6'' PVC

casing ,3 pairs/sets

c) Casing lamp with bolts,nuts,wrench and sling wire for 8'' PVC

casing ,3 pairs/sets

d) Casing lamp with bolts,nuts,wrench and sling wire for 10'' PVC

casing ,3 pairs/sets

e) Casing lamp with bolts,nuts,wrench and sling wire for 12'' PVC

casing ,3 pairs/sets

Guideline on Hiring of Drilling Equipment

Equiped

No.

Description

Consumable

with Rig

f) Casing head for 8'' casing

g) Casing head for 10'' casing

h) Casing head for 12'' casing

i) Casing shoe for 8'' casing

j) Casing shoe for 10'' casing

k) Casing shoe for 12'' casing

l) Casing sub , API 3 1/2 IF BOX to 8 '' casing

m) Casing sub , API 3 1/2 IF BOX to 10 '' casing

n) Casing sub , API 3 1/2 IF BOX to 12 '' casing

o) Casing hoist plug with sling wire for 8'' casing

p) Casing hoist plug with sling wire for 10'' casing

q) Casing hoist plug with sling wire for 12'' casing

Direct Mud Circulation Drilling Tools & Accessories

Mud testing kit including mud balance ,marsh funnel,viscocity meter

with measuring cup sand content kit,stop watch and thermometer

Collapsible water tank with housing bag 3000 Litre capacity

Portable water level indicator,dry battery operated type,measuring

capacity of 200m

4.3 PLACEMENT OF DRILLING RIGS

Taking into account of convenience of hirers to access to the equipment, DDCA will decide

allocation of the drilling rigs and compressors to be newly procured among its headquarter and

zonal offices. The column chart in Figure 27 shows the number of private drilling companies

interviewed in the baseline survey according to their office locations and project areas where they

have worked in the past. The regions are grouped into five zones based on jurisdiction of DDCA’s

zonal offices. The private companies classified in Group A and B mostly concentrate in Dar es

Salaam while around 20 companies operate from Northern part of the country such as Arusha,

Mwanza and Shinyanga.

Figure 27 also indicates the rural water supply coverage as of 2011. From the viewpoint of

demand for improved water supply, regions which water supply coverage is below the national

average are Tabora, Singida, and Dodoma in the central part of the country, Shinyanga, Mara, and

Kagera in Lake zone, Rukwa in western zone, and Lindi and Mtwara in eastern zone.

Based on these points, rigs will be allocated depending on the demand for drilling works to the

specific time. It also needs to consider capacities of each zonal office in conducting maintenance

and repair works of the equipment.

Guideline on Hiring of Drilling Equipment

Figure 27 Geographical Distribution of Private Drilling Companies and Rural Water

Supply Coverage by Regions

4.4 ALLOCATION OF DRILLING STAFF

DDCA will attach the following staff to the hired equipment (Table 12). At least one technical

instructor and driver are required for hiring of one set of the drilling rig. The purpose of

allocation of these personnel is firstly to ensure liability of operation of the government-owned

vehicles and machinery. The government prohibits driving of vehicles registered under the

government by personnel from the private sector. Secondly, it is meant for provision of technical

instructions to the drilling staff from the hirers on site. It is of cardinal importance that DDCA

operationalizes the technical instructions as an integral component in the hiring service in order to

support capacity development of the private sector.

Table 12 Roles of DDCA Staff to be Attached to the Hired Equipment

Responsibility in Operation of the Hired

Position

Required No.

Equipment

Techncial Instructor

- to teach how to operate the drilling rig.

1 person/ rig

- to provide technical advice on

management of the process of drilling

works on site.

- to supervise and control appropriate use

and routine maintenance of the hired

equipment.

Driver of carrier truck of

- to drive trucks owned by DDCA to and

1 person/ truck

drilling rig

from the drilling sites.

Guideline on Hiring of Drilling Equipment

DDCA will allocate necessary number of the technical instructors and drivers who operate the

drilling rigs to be hired. Furhtermore, the technical instructors need to refresh their skills

regularly to keep standardized quality of instruction techniques. When it is short of the technical

instructors compared to demands, DDCA will appoint additional ones from senior drilling staff in

accordance with the Technical Support Plan for the Drillers in DDCA.

4.5 MAINTENANCE OF THE EQUIPMENT

DDCA will be responsible for preventive maintenance and repair works of the equipment before

the equipment is hired and after the items are returned from the hirer. Maintenance Section

conducts necessary maintenance works in accordance with the guidelines, plan and manuals for

maintenance system of the equipment for hiring which are formulated separately.

On the other hand, the hirer will conduct routine maintenance of the hired equipment on site under

supervision of the technical instructor from DDCA. DDCA will provide the hirer with a manual

for maintenance of the hired equipment which describes procedures of daily maintenance check

and safety measures. The hirer wil bear the costs to be incurred for routine maintenance and

repairs required during operation of the equipment on site.

For any mechanical troubles which cannot be attended by the drilling staff from the hirer or

technical instructor, DDCA will send a mechanic to the site either from the headquarter or the

nearest zonal office. The contract will specify demarcation of responsibilities between two parties

on maintenance and repair of the equipment.

4.6 HIRING CONDITIONS

The basic hiring model of the drilling equipment is use of a truck mounted drilling rig to be made

available with one truck driver and one technical instructor. Hirers will choose other supporting

equipment as per their requirements.

(1) Responsibilities in Logistics Arrangement

Table 13 shows demarcation of responsibilities in logistics associated with use of the hired

equipment. The owner is responsible to arrange a carrier truck of drilling rig as it is mounted on a

truck. A driver for the carrier truck will be from DDCA as the vehicle is registered as the

government property. The owner is also responsible for fuel for carrier truck of the rig during

mobilization and demobilization. These costs will be recovered from the rental fee of the

equipment.

On the other hand, the hirer is responsible for fuel as used during the operation of the equipment on

site.

The hirer is also responsible to arrange carrier trucks and fuel to be required for

transportation of the compressor, mud pump, and pumping test unit.

Guideline on Hiring of Drilling Equipment

Table 13 Demarcaiton of Responsibilities in Logisticts of Hired Equipment

Responsibilities

Equipment

Fule for

Fuel for

Driver for

Carrier Truck

Transport

Operaiton on Site

Carrier Truck

Truck mounted drilling rig

Owner

Hirer

Owner

Trailer mounted aire compressor

Hirer

Trailer mounted mud pump

Hirer

Trailer mounted pumping test unit

Hirer

(2) Standard Operation Days of Equipment

Standard operation days of each type of equipment for hiring is calculated in order to estimate

expenditure budget of the hiring service. Table 14 shows calculated annual operation ratio of one

drilling rig and other assumptions applied to estimation of the annual operation days of equipment.

Each drilling rig requires periods for transport of the equipment from DDCA yard to sites and

between sites. Also, there would be some waiting periods until a new hiring contract is signed.

Excluding these non-operation days, it is estimated that one drilling rig can serve for 197 days a

year. Approximately 33 boreholes can be drilled with one rig during the annual operation period

if it takes six days to construct one borehole as the results of the baseline survey of the private

drilling companies indicated.

Other assumptions considered are the number of hiring contract per rig, proportion of drilling

methods to be applied, and success rate of borehole drilling. With regard to the number of hiring

contract per rig, it is assumed that 10 boreholes will be drilled in a hiring contract based on track

records of drilling contracts in WSDP (Phase 1), which makes four contracts per rig per annum.

The proportion of drilling methods is estimated as DTH method will be used for the majority of the

boreholes to be drilled because of the geological formation of target areas of WSDP. The success

rate of the borehole drilling refers to performance of contractors in drilling works in WSDP (Phase

1).

These assumptions should be reviewed time to time based on historical operation records of the

equipment so as to improve accuracy of the analysis.

Table 14 Basis of Calculation of Standard Operation Days of Equipment

Calculated Annual Operation Ratio per Rig

1) No. of days for maintenance

24 days/year

2) No. of days for transport between sites

60 days/year

3) Standby period

84 days/year

4) Total of non-operation days

168 days/year

=1)+2)+3)

5) Operation days

197 days/year

6) No. of days required to drill a well

6 days/well

(baseline survey)

7) No. of wells which can be drilled

33 wells/rig/year

Assumption of Number of Hiring Contract per Rig

1) No. of wells to be drillied in one contract

10 wells

2) No. of contract per rig

4 / year

Assumption of Proportion of Drilling Method to be Applied

1) Use of DTH method

70% of total number of wells to be drilled

2) Use of mud drilling method

30% of total number of wells to be drilled

3) Success rate of borehoel drilling

70%

The standard operation days of the equipment are set in Table 15 by applying the conditions

mentioned above.

Guideline on Hiring of Drilling Equipment

Table 15 Standard Operation Days of Equipment

No. of Operation

Item

Qty

Calculation*

Days per Annum

Truck mounted drilling rig

6 units

197 days/unit

= 1.5)

Trailer mounted air compressor

5 units

139 days/unit

= 1.6) x 3.1) x 1.7)

Trailer mounted mud pump

5 units

59 days/unit

= 1.6) x 1.7) x 10%

Trailer mounted pumping test unit

5 units

69 days/unit

= 1.7) x 3.3) x 3 days/ well

Rig accessories

6 sets

197 days/set

= 1.5)

Casing tools

6 sets

197 days/set

= 1.5)

= 40% of the operation day

Fishing tools

6 sets

79 days/set

of drilling rig

Direct mud circulation drilling tools &

accessories

6 sets

59 days/set

= 1.6) x 1.7) x 3.2)

* The numbers in the column refer to the ones in Table 14.

5. QUALIFICAITONS TO BE REQUIRED FOR CLIENTS AND

OTHER CONDITIONS

5.1 REQUIREMENTS TO APPLICANTS

DDCA will hire the equipment to qualified private drilling companies which will fulfill criteria

listed below;

 To possess a valid water well drilling permit issued by MoW.

 To be registered as the specialist contractor at CRB.

 To have at least one permanent employee among the drilling staff to be on site

with the hired equipment and to receive the technical instructions from DDCA.

(1) Registration to CRB and MoW

Registrations at MoW and CRB are required by relevant laws, respectively, as the contractors to

execute a certain type of works governed by these organizations. For water well drilling permit,

the Groundwater (Exploration and Drilling) Licensing Regulation 2011 of the Water Resources

Management Act 2009 is in the proess of formulation by MoW and to be enacted soon.

For CRB registration, MoW is considering to stipulate possession of the CRB registration as one of

the conditions to issue a water well drilling permit in the said regulations. Registration as the

specialist contractor is also one of the conditions for contractors for drilling works in WSDP.

According to results of the baseline survey, most of the companies classified into Group A have

both valid drilling permit of MoW and registration at CRB (Figure 28). In contrast with this

situation, Group B is occupied by the companies which have the drilling permit only or no

registration at all. If these conditions are applied, around 23 companies in Group A and Group B

have higher advantage than others to access to the hiring service. DDCA will update information

on status of registration of the potential clients continuously.

Guideline on Hiring of Drilling Equipment

Figure 28 Status of Registration at CRB and MoW by Classification of the Surveyed

Companies

(2) Drilling Staff of the Hirer

The third condition is set based on intention that the hirer will utilize skills and knowledge acquired

from the technical instructors in other drilling works in the future by transferring such skills and

knowledge from the trained personnel to others.

5.2 USE OF THE HIERED EQUIPMENT

(1) Priority among Projects

The equipment to be hired should be primarily utilized in drilling works for WSDP in order to

contribute for attainment of the programme goal for improvement of water supply coverage in the

country. Meanwhile, it is predicted that the number of procurement for drilling works in WSDP

will much vary from time to time as the first phase of the programme experienced. The

equipment will also be hired for the use in drilling works to be procured by the private sector

including individual households in order to mitigate reduction of operation ratio of the equipment

during the period when procurement in WSDP is not concentrated. WSDP counts improvement of

water supply by the private sector into the water coverage.

(2) Priority among Applicants

Segmentation of the surveyed companies identified a total of 83 business entities which are

interested in the equipment hiring service. These were further divided into two groups. Group A

(23 nos.) already possesses experience in operation of DTH method with a large rotary drilling rig.

Group B (60 nos.) has no experience in DTH drilling with a large rotary rig.

It is expected that the project will create greater effect on Group B than Group A in terms of

increase of number of contractors which can perform drilling works in WSDP (Table 16). In case

that DDCA needs to choose hirers among applicants due to limited number of the available rigs, the

first priority in selection will, therefore, be given to the companies classified into Group B.

Guideline on Hiring of Drilling Equipment

Table 16 Classified Groups of Private Drilling Companies and Project Effect Potential

Interest in DDCA’s Service

Project

Experience

Technical

Experience

Number

Effect

DTH Drilling

Equipment

Advice and/or

of Drilling

Group

Potential

with

Large

Hiring

Hydrogeological

Works in

Company

(5: highest,

Rotary Rig

Service

Information

WSDP

1: lowest)

from DDCA

Total

5.3 USE OF THE EQUIPMENT BY DDCA FOR ITS OWN DRILLING ACTIVITIES

DDCA also plans to use the equipment for hiring in its own drilling works. In such cases, Drilling

Project Department will “hire” the equipment from Hiring Business Department and transfer the

fund equivalent to the rental fee to the account for the hiring service while the first priority in use

of the equipment will be given to applicants from the private sector.

6. LAWS AND REGULATIONS TO BE FOLLOWED

6.1 LIABILITY OF INSURANCE FOR THE HIRING EQUIPMENT

It was confirmed that there was no particular legal requirement for DDCA to start the hiring service.

Hiring of equipment to other organizations is included as the secondary function of DDCA in the

Executive Agencies (Drilling and Dam Construction Agency) (Establishment) Order, 1999, by

which DDCA is legally recognized to operationalize such function.

With regard to the administrative procedures, DDCA needs to decide arrangements of insurance for

machinery and vehicles to be hired out. All the equipment owned by DDCA belongs to the

Government of Tanzania and is insured by Ministry of Finance and Economic Affairs (MoFEA).

The Treasury of MoFEA is responsible for registration and management of all the

government-owned vehicles and machinery.

The arrangement of the insurance of the hired equipment varies depending on how the business is

going to be operated and what are to be charged as the rental fee to hirers. In case that the

equipment hiring is operated as part of the governmental services and to recover operation costs

only, MoFEA will insure the equipment in the same manner with other equipment that DDCA uses

for its own drilling works. On the other hand, if it pursuits profits at commercially viable basis,

the responsible party for the insurance needs to be agreed in a contract between DDCA and the

hirer.

6.2 TAXATION

As to taxation of the hiring service, the Value Added Tax (VAT) will not be charged to the service

as DDCA is exempted from taxation of VAT on its sales.

6.3 REGULATIONS RELATED TO THE GROUNDWATER DEVELOPMENT

MoW regulates development and use of groundwater in the framework of the Water Resources

Management Act of 2009. Regulations governing the groundwater development in the framework

of the Water Resources Management Act include the following;

Guideline on Hiring of Drilling Equipment

(1) Water Resources Management

(Water Abstraction, Use and Discharge)

Regulations, 2010

The regulation specifies procedures for administering permits for water use, groundwater

development, and wastewater discharge. The Act requires water users to apply for a water use

permit at Basin Water Board (BWB) when they intend to divert, dam, store, abstract or use surface

water or groundwater⁷. The water use permit allows a water user to exclusively use the water

resources within the terms and conditions specified in the permit. Meanwhile, the discharge

permit is issued to regulate those who discharge effluents from any commercial, industrial or

agricultural source or from any sewerage works or trade waste systems into surface water or

underground strata.

In case that owners or users of wells plan to construct, enlarge, or deepen wells, they are obliged to

apply for a groundwater permit prior to commencement of the works. The Act regards that

construction of a well by a person without a groundwater permit is an offence. Further, an

application for a water use permit is required for the owner or user of the well when the source is

successfully developed for water abstraction.

Although it is water users who are responsible to apply for these permits, drilling contractors

should also be aware of these regulations, especially in the context of the groundwater development,

as the water users would require information and report on drilling works from the contractors for

submission to BWB.

(2) Groundwater (Exploration and Drilling) Licensing Regulations, 2011

MoW is currently preparing the Groundwter (Exploration and Drilling) Licensing Regulations to

regulate professionals who undertake works relating to groundwater prospecting and construction

of wells. Taking over the existing water well drilling permitting system, the draft regulations

stipulate necessity of acquisition of a groundwater drilling license by any person who is involved in

groundwater drilling activities. Other licenses or permits newly created or reinforced by the

regulations are the groundwater exploration license, drillers license and drilling clearance permit.

DDCA will provide advice to hirers to consult with MoW for required procedures to acquire

licenses and permits necessary for operation of drilling works by hirers. The Water Resources

Management Act also mentions the following with regard to the groundwater development;

− The Minister responsible for Water has power to prescribe in regulations the minimum

distance for the sinking, enlargement or deepening of wells.

− Those who are engaged in drilling of wells or groundwater explorations are required to keep

and submit any relevant data on groundwater to BWB.

− BWB has power to determine the safe yield of any aquifer for the purpose of guiding

determinations concerning the abstraction and use of water from the aquifer.

DDCA will keep itself updated about new regulations formulated in the Water Resources

Management Act so that legal requirements in the groundwater development will be incorporated

into administration of the equipment hiring service where necessary.

⁷ Application for a water use permit is exempted for the following caeses, provided that its purpose of water abstraction

is for domestic use;

− Any person having lawful access to any water course uses the same for domestic purposes without construction

of any works.

− Any person being a legal occupier of land constructs a shallow hand dug well not exceeding a depth of 15m and

uses the water for domestic purposes.

− The owner or occupier of any land constructs any works for rainwater harvesting or for recycling of used water

other than in a river or stream and abstracts and uses the water conserved or recycled for domestic purposes.

The works should not exceed 20m capacity of water.

Technical Manual for Drilling Works for Technical Support Plan for the Drillers in DDCA (2013) - page 5