Colombia - Barranquilla Water Supply Project

Document of The World Bank FOR OFFICIAL USE ONLY <(AI. NG3 X Cc Report No. 5631-CO STAFF APPRAISAL REPORT COLOMB IA BARRANQUILLA WATER SUPPLY PROJECT NOVEMBER 8, 1985 Projects Department Latin America and the Caribbean Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = Peso Colombiano (Col$) Average Calendar 1984 US$1 = Col$100.8 Col$1 = US$0.0099 Exchange Rate Effective October 27, 1985 US$1 = 161.6 ColS Col$1 = 0.0062 US$ Weights and Measures Metric System Fiscal Year January 1 to December 31 GLOSSARY OF ABBREVIATIONS EPM Empresas Publicas Municipales (Municipal Public Works Company) EPMB Empresas Publicas Municipales de Barranquilla (Barranquilla Municipal Company) FFDU Fondo Financiero de Desarrollo Urbano (Fund for Urban Development) INAS Instituto Nacional de Salud (National Institute of Health) INCOMEX Instituto de Comercio Exterior (Institute for External Trade) INSFOPAL Instituto Nacional de Fomento Municipal (National Institute for Urban Development) JNT Junta Nacional de Tarifas (National Tariff Board) JAC Junta de Accion Comunal (Neighborhood Action Committee)  FOR OFFICIAL USE ONLY - i - COLOMBIA BARRANQUILLA WATER SUPPLY PROJECT Staff Appraisal Report Table of Contents Page No. I. LOAN AND PROJECT SUMMARY 1 II. THE SECTOR The Setting. . . . . . . . . . . . . . . . . . . . . . . . 3 Sector Organization. . . . . . . . . . . . 3 Sector Performance and Prospects . . . . . .. . . . . . . 4 Past Bank Experience in the Sector . . . . . . . . e . . . 4 Bank Sector Strategy . . . . . . . . . . . . . . . . . . . 5 III. THE CITY AND THE BORROWER Water, Sewerage and Solid Waste Services in Barranquilla . 6 The Borrower/Implementing Agency . . . . . . . . . . . . . 8 Previous Bank Lending to EPMB. .. . . . . . . . . . ... 9 IV. THE PROJECT Project Origin . . . . . . . . . . . . . . . . . . . . 9 Rationale for Bank Involvment. . . . . . . . . . . . . . . 10 Project Objectives . . . .. . . . . . . . 10 Project Description. . . . . . . . . . . . . . . 11 Project Cost and Financing . . . . . . . . . . 12 Project Implementation . . . . . . . . . . . . . . 14 Procurement . . . . . . . . . . . . . . . . . . . . . . . 15 Disbursements. . . . . . . . . . . . . . . . . . . . . . 16 EPMB's Financial Prospects . . . . . . . . . . . . . . . 17 Changes in Service Responsibility. . . . . . . . . . . . 19 Auditingr . . . . . . . . . . . . . . . . . . . . . . . . . 20 Reporting. . . . . . .. . . . . . . . . . . . . 20 Project lustification, Benefits and Affordability. . . . . 20 Project Risks . . . . . . . . . . . . . . . . . . . . . . 22 IV. AGREEMENTS REACHED AND RECOMMENDATIONS This report is based on the findings of an appraisal mission which visited Barranquilla from February 4 to February [5, 1985. The mission was comprised of Messrs. Walter Stottmann, Sr. Engineer, and Thomas Zearley, Financial Analyst. This document has a restricted distribution and may be used by recipients only in the performance of their ofrcidal duties. Its contents may not otherwise be discosed without World Bank authorization.  - ii - Page No. TABLES Table 1: Project Cost Estimate . . . . . . . . . . . . . 13 ANNEXES 1. Projections of Service Levels, Sales and Production. . 24 2. Institutional Assessment of EPMB . . . . . . . . . . . 25 3. Project Description. . . . . . . . . . . . . . . . . 27 4. Detailed Project Cost Estimate . . . . . . . .. 30 5. Procurement Schedule for Major Contracts . . a . . . . 32 6. Project Implementation Schedule. . . . . . . . . . . . 33 7. Plan of Action for the Implementation of the Institutional Strengthening Program. . . . . . . . . 35 8. Limits on Type of Procurement and Prior Review Threshold. . . . . . . . . . . . . . . . . . . . . . 40 9. Allocation of Loan Proceeds. . . . . . . . . . . . . . 42 10. Loan Disbursement Schedule . . . . . . . . . . . . . . 43 11. Notes to the Financial Statements and Financial Projections. ... .. . . . . . .. . 44 12. Key Performance Targets. . . . . . . . . . . . . . . . 63 13. Tariff Structure for Metered Residential Water Consumption Approved in May 1985 by JNT. . . . . . . 64 MAPS IBRD No. 19047, Barranquilla Water Supply System.  - 1 - COLOMBIA BARRANQUILLA WATER SUPPLY PROJECT I. LOAN AND PROJECT SUMMARY Borrower: Empresas Publicas Municipales de Barranquilla (EPNB) Guarantor: Republic of Colombia. Amount: US$24.0 million equivalent. Terms: 17 years, including a grace period of 4 years, at the standard variable interest rate. Description: Sector. The fiscal and external borrowing constraints imposed by the Government's recently adopted macro- economic stabilization and reform program require increased operating efficiency and internal resource mobilization of utilities in the water supply and sewerage sector if increased service coverage is to be achieved. The Government is consequently now reexamining sector-wide policies and institutional arrangements and increasingly emphasizing projects which focus on cost-recovery, rehab- ilitation of existing facilities, more selective invest- ments in system expansions and improvements in the insti- tutional and financial performance of sector companies. Project. The proposed project would primarily support pro- grams to (a) rehabilitate and extend water supply, sewer- age and solid waste management facilities in Barranquilla, Colombia's 4th largest city. About 70% of the beneficia- ries of this program would reside in the city's lower income areas; and (b) to promote the institutional devel- opment of EPIB by strengthening its management, admin- istration and operating efficiency. Such improvements should, in turn, restore the company's financial viabil- ity, enabling EPMB, by 1989, to generate sufficient funds from internal sources to finance a reasonable share of its investment requirements. The project would include the provision of equipment, civil works and technical assist- ance as well as consultant services for the preparation of subsequent water and sewage system expansion to meet demand in the 1990s. Risks: Project risks center primarily around potential disconti- nuity of EPMB's management and insufficient political sup- port at the municipal level to fully implement the finan- cial rehabilitation and institutional development pro- grams. To mitigate these risks, EPMB has already markedly increased tariffs and taken steps to increase revenues and stabilize operating costs. Technical assistance support, legal covenants and close Bank supervision should further lower the level of these risks.  -2- Estimated Project Costs: Foreign Local Total - US$ million- Water Supply 7.7 8.0 15.7 Sewerage 0.3 0.6 0.9 Solid Waste 3.6 0.4 4.0 Institutional Improvement 1.8 1.9 3.7 Studies/Engineering 0.1 1.3 1.4 Incremental working capital 2.5 3.7 6.2 Base cost 1/2/ 16.0 15.9 31.9 Physical Contingencies 1.3 1.2 2.5 Price/Exch.Rate Contingencies 2.3 0.5 2.8 Total Project Cost 19.6 17.6 37.2 Interest during construction 4.4 - 4.4 Total Financing Required 24.0 17.6 41.6 Financing Plan: EPMB Internal Cash Generation - 9.9 9.9 FFDU - 3.4 3.4 Department of Atlantico - 4.3 4.3 IBRD 24.0 - 24.0 Total Financing 24.0 17.6 41.6 Estimated Disbursements: Bank Fiscal Year 1986 1987 1988 1989 1990 1991 US$ Million Annual 1.5 8.7 6.4 4.2 2.3 0.9 Cumulative 1.5 10.2 16.6 20.8 23.1 24.0 Rate of Return: n.a. 1/ Includes about US$2.0 million of value-added tax. 2/ In June 1985 prices.  -3- II. WATER SUPPLY AND SEWERAGE SECTOR The Setting 2.01 Colombia's population (28 million in 1983) is currently growing at an annual rate of 2.1%, down from 3.0% in 1964, due primarily to a rapid fertility decline since 1964. The spatial distribution of the population has also changed considerably in recent years. As a result of high rural- urban migration, the share of the urban population has more than doubled, increasing from 31% in 1938 to over 66% currently. The four largest cities (Bogota, Cali, Medellin and Barranquilla), each with more than a million residents, now account for about a half of the total urban population. The population segments living in small (10,000-50,000) and intermediate-size (50,000-500,000) cities, each account for about a quarter of the urban population. 2.02 About 83% of Colombia's urban population has access to piped water through house connections, and about 65% is served by a waterborne sewerage system. In rural areas, about 18X of the population has access to piped water and only about 10% adequate sanitation facilities. Although with these service levels, Colombia compares favorably with most middle- income countries in the Region, the quality of service remains deficient, particularly in poor urban neighborhoods and rural areas where water- and sanitation-related diseases rank among the principal causes of illness and death. Water pollution is rapidly becoming a major problem in rivers and streams downstream of most large cities which discharge their sewage with- out treatment. In 1982, infant mortality, which can be partially attri- buted to poor water quality and sanitation conditions, was 54 in 1,000 live births in Colombia, as compared with 27 in Chile, 39 in Venezuela, 44 in Argentina and 53 in Mexico. Sector Organization 2.03 The water supply and sewerage sector in Colombia is under the responsibility of the Ministry of Public Health which, in coordination with the National Planning Department, formulates national sectoral policies. Two institutions, the National Institute of Urban Development (INSFOPAL) and the National Institute of Health (INAS), are responsible for implement- ing these policies in urban and rural3/ areas, respectively. Both of these institutions have central planning and supervisory functions and act as financial channels for sectoral investments. The Urban Development Fund (FFDU) of the Central Mortgage Bank is also providing increasing financing for investments in the urban sector. On the local level, different types of institutions have responsibilities for constructing, maintaining and operating water supply and sewerage service facilities. In 28 principal cities, where about 75% of Colombia's urban population is concentrated, municipal public works companies (EPM's), independent from the Central Government, are in charge of water and sewerage services, and in many instances, also provide other municipal services, such as solid waste col- lection and disposal. In most smaller towns, water supply and sanitation services are provided by Sanitation Works Companies over which INSFOPAL exerts considerable influence. In rural areas, water and sanitation facil- ities are built, operated and maintained by departmental offices of INAS in coordination with the beneficiary communities. Water and solid waste 31 Communities with less than 2,500 inhabitants.  - 4 - tariffs are controlled by the National Tariff Board which acts on proposals submitted by operating companies. Sector Performance and Prospects 2.04 The performance of most sector institutions on both the national and local levels in Colombia leaves much room for improvement. Poor finan- cial performance and weak management are the main Problems impeding effi- cient operations and service expansions. The combined effect of low tar- iffs, poor comimiercial practices and fast-rising operating costs (mainly personnel costs) have been the key obstacles to achieving financial viabil- ity for many companies. Frequent and mostly politically motivated changes in top- and middle-management positions and poor administrative, budgeting and planning systems are generally at the heart of ineffective management. These shortcomings, together with a general lack of a sufficiently trained work force, manifest themselves in poor upkeep and inefficient operation of many water supply and sewerage systems and in generally high levels of unaccounted-for water. 2.05 Further, Central Government institutions have often not provided the support and incentives needed by utilities at the local level to improve their performance. In particular, INSFOPAL has generally not been able to appropriately assert its technical and financial leadcrship roles in the sector. In the past, the ready availability of grant funds from the national treasury, one of the most important sources of finance particular- ly for small- and medium-sized city companies, has effectively deferred the need for utilities to improve their financial and operational performance. 2.06 The Government, under its plan for "development with equity," aims at providing adequate water and sanitation services tr. all its citi- zens. For 1990, it adopted coverage targets of 90% of the population for water supply and 80% for sewerage for urban areas, and service levels of 40% f r water supply and 35% for sewerage for rural areas. This would mean reaching an additional 5.5 million people in urban areas and about 2 mil- lion in rural areas. It would require annual investments of about US$400 million (excluding operation and maintenance costs and rehabilitation and repair of existing facilities). The Government recognizes that maintenance of this investment level, which is over three times the historic average for the sector, will be a difficult task given the current weaknesses of sector institutions and prevailing fiscal and borrowing constraints. Con- sequently, and in light of its recently adopted macro-economic reform program, the Government is currently reexamining sector policies and insti- tutions, with particular emphasis on (a) adequate cost recovery, investment and credit policies; (b) tariff policies based on financial and operating criteria and the beneficiary's capacity to pay; (c) strengthening of utili- ties through technical assistance programs, such as the FOREC program developed by INSFOPAL under Loan 1726-CO; and (d) a stronger institutional framework at the central level through which investment funds can be chan- nelled and sector policies enforced. Past Bank Experience in the Sector 2.07 Since 1968, the Bank has made 11 loans, totalling US$380.9 million, for water supply and sewerage development in Colombia. The Bank  -5- funds accounted for about 70% of the external loan amounts made available to the sector. Eight loans, US$313.8 million in total, were made to EPM's in Bogota, Cali, Palmira and Cucuta. By far the largest borrower has been the Bogota Water and Sewerage Company to which the Bank has lent US$261 million in four operations, which have contributed to a total investment of about US$800 million and a significant strengthening of the entity. Three Bank loans, for a total amount of US$67.1 million, were made to INSFOPAL for relending to local companies in support of 36 subprojects in 30 medium-size and small cities and towns. In addition, INSFOPAL was the channel used to finance water supply components of Bank-financed small urban development projects. Several small rural water supply projects were supported through INAS, as part of integrated agricultural development pro- jects and nutrition improvement projects. 2.08 Most projects exnprienced lengthy delays in physical execution and shortfalls in financial and institutional development goals. Project completion reports have been prepared for two projects,4/ and two others have undergcne performance audits.5/ The audit reports have been critical of overestimates of demand for water; delays in project execution which, in an inflationary environment, resulted in cost overruns for most of the pro- jects; and the borrowers' failure to raise water rates and to limit the growth of operating costs sufficiently to comply with financial performance targets. 2.09 Lessons learned from the implementation of earlier Bank projects in Colombia have been taken into account in the preparation of subsequent projects. Demand and financial projections are made using more conserva- tive estimates of population growth and water consumption. More comprehen- sive subsurface investigations are being required for tunnels and major structures to minimize delaya and cost overruns after construction is in progress. More realistic implementation schedules are being adopted, and projects are presented to the Board only when a substantial part of physi- cal works is ready for bidding. More specific plans of action for finan- cial and institutional reform and earlier discussion of them with the bor- rower are also part of projects that have been undertaken recently. Bank Sector Strategy 2.10 The Bank's current sector financing strategy distinguishes between three major sector segments (large cities, small- and medium-sized towns, rural areas), each of which cover about one-third of Colombia's total population. The strategy calls for continued lending on a selective basis to the larger municipal companies which have demonstrated the will to improve their standards of performance, and emphasizes lending for rehabil- itation of existing facilities to permit improvements in operational effi- ciency and more intensive use of water production capacity which is already in place. The loans which the Bank made to Cucuta (Loan No. 2470-CO) and Bogota (Loan No. 2512-CO) in FY85 were conceived as a part of this strat- egy. Cartagena, where project preparation work is now in progress, also may benefit from direct Bank lending. The Inter-American Development Bank 4/ Loan 738-CO, Palmira Water Supply Project: Report No. 4589, June 1983; Loan 1523-CO, Second Cali Water Supply and Sewerage Project; Report No. Sec. 85-029, December 1984. 5/ Loan 536-CO, Bogota Water Supply Project; Report No. 2003, March 1978; Loan PU-30-CO, Cali Water Supply Project; Report No. 2638, August 1978.  - 6 - is lending to two of Colombia's major cities (Medellin and Bucaramanga) and may consider lending to Cali. Direct lending to suitable municipal compa- nies in major cities enables the Bank to assist the Covernment in its efforts to extend water supply and sewerage services to large segments of the population, particularly to the urban poor, at a minimum unit cost and to support its efforts to upgrade the financial and operating performance of the publ-ic sector. The performance of the Bogota Water and Sewerage Company, which the Bank first began assisting in 1968, and that of Medellin attest to the fact that with persistent effort municipal companies have the potential to develop into well-run, financially sound institutions. The proposed loan has been designed to help initiate a similar d_velopment pro- cess in Barranoui'Lla. 2.11 Over the longer run, however, the Bank's aim is to progressively support the sector's development in urban areas through intermediary arrangements capable of providing full development banking services and implementing sector policies. In spite of recent improvements in its per- formance, INSFOPAL does not have the capacity to carry out such inter- mediary functions. Current discussions within the Government (para. 2.06) and with the Bank will, hopefully, lead to decisions on a set of institu- tional and policy reforms forming the core of better intermediation for the sector and which the Bank could support through a sector adjustment loan. 2.12 A rural water supply component costing US$16 million forms part of the recently approved Health Project. It provides the Bank with the opportunity to support a modest investment program for rural water supply systems and strengthen INAS, the specialized agency responsible for rural water supply, through a technical assistance program and the preparation of a National Rural Water Supply Plan. This plan is expected to define more accurately the needs and priorities in the rural subsector and develop an investment strategy. Together with the experience acquired in working with INAS, this project could help prepare the way for increased investments in rural water supply, with Bank support. III. THE CITY AND THE BORROWER Water, Sewerage and Solid Waste Services in Barranquilla 3.01 Barranquilla, located on the Atlantic coast near the mouth of the Magdalena River, is Colombia's fourth largest city with an estimated pres- ent population of about 1.1 million and annual growth of about 3.5%. As the commercial center of Colombia's Atlantic Coast Region, the city attracts migrants from rural areas, and is expected to continup ' do so for the foreseeable future. Public services in Barranquilla are the lowest in coverage and quality among Colombia's larger cities. Most of these services are provided by Empresas Publicas Municipales de Barranquilla (EPMB), an autonomous municipal company. 3.02 EPMB's water supply facilities serve about 600,000 people (half of the city's total population) through about 80,000 residential house con- nections. An additional 5,000 connections provide water to industrial and commercial enterprises. EPMB estimates that about 150,000 persons receive  water through illegal connections. The remaining population, Barranrui- lla's poorest who live predominantly in the southwestern part of the ci.ty, purchases water from private vendors. 3.03 Barranquilla's water source is the Magdalena River. Water deliv- ery to the city is accomplished through a system of storage/pumping facil- ities running in a southwesterly direction along an axis formed by the Treatment Plant El Recreo-Las Delicias-La Mina (IBRD Map 19047). The sys- tem's high point is at La Mina, located about 70m above the Magdalena River level. This system has major shortcomings. Ini particular, the transmis- sion capacity is insufficient to deliver the additional production from a new treatment plant (para. 3.05) to the southwestern part of the city where most of the future urban development is expected to take place. Consult- ants to EPHB have identified a long-term water transmission strategy whose main feature is to gradually establish a second transmission system along a southwest axis (Treatment Plant Ciudadela 20 de Julio-Carizal) and to bring about the general rehabilitation of the El Recreo-Las Delicias-La Mina sys- tem. The proposed project would finance part of the first stage of this strategy, with the remaining works to be executed in the 1990s. 3.04 The water system is generally in a very poor state of maintenance and repair. In April 1985, this was illustrated dramatically when a pump for transmitting treated water failed, paralyzing most of Barranquilla's water system and leaving some 400,000 of EPMB's customers without water for almost 4 days. A similar water emergency was experienced in June 1985. EPMB's actempts to alleviate this crisis by better distributing the exist- ing pumping capacity were seriously hampered because many of the system's key valves were inoperable. The proposed project would consequently focus on the rehabilitation of the most deteriorated parts of the system, reequipping of existing pumping stations and repairing of treatment plants and transmission, storage and distribution facilities to reduce the risks of future breakdowns and increase the system's efficiency. 3.05 Extensive leakage, a great many illegal connections, and the vir- tual absence of consumption metering are responsible for a high level of unaccounted-for water rate (about 45% of total production). Lack of meters and the tropical climate encourage high water use which is estimated at about 300-350 I/cap/day. Under these conditions, the capacity of EPMB's facilities is not even sufficient to meet the demand cf those connected, and rationing is therefore widespread. However, EPMB is constructing a fifth treatment plant (Planta No. 5) which, when completed in early 1986, will boost total net water production capacity by 2.25 m3/sec to about 6.5 m3/s (205 million m3/year). Taking Into account expected significant decreases in average per capita consumption (due to extension of service to lower-income neighborhoods which generally consume less), and in physical water losses to be achieved under the proposed project, EPMB's water pro- duction capacity is expected to be sufficient to satisfy Barranquilla's water demand until the early 1990s (Annex 1). The proposed project would finance investments in additional transmission and storage capacity which is now insufficient to deliver the additional production from the new treatment plant, to the low income southwestern part of the city. 3.06 EPMB has about 80,000 registered sewer connections (48% service coverage level). The present system is severely overloaded, creating over- flow of sewage in some sections of town. EPMB forecasts the addition  - 8 - of another 40,000 connections by 1990, which would increase the service level to about 58% of the population. Many of the additional connections already exist but reed to be registered. The proposed project would include the expansion of the capacity of three interceptors designed to eliminate sewage overflows in some crucial downtown areas. It would also, through technical assistance, support a program to register existing con- nections. 3.07 SPMB has traditionally provided door-to-door collection of solid waste to about half of Barranquilla's population. Recently, however, col- lection efficiency and service quality have dropped dramatically as EPHB's equipment, because of age and deficient maintenance practices, is becoming obsolete. Solid waste management in public markets is very poor and there is no organized collection of solid waste in the poor neighborhoods at all. Unccntrolled dumping of waste in vacant lots has become increasingly a public health problem in many parts of the city. Likewisa the city's waste dump is poorly controlled and a growing health hazard. To address the most urgent needs of EPMB's solid waste operation, the proposed project would, following the recommendations made by a Bank-supported solid waste study, finance the purchase of much needed equipment and vehicles to upgrade and extend collections, and technical assistance to improve equip- ment maintenance and to introduce more sanitary waste disPosal practices. The Borrower/Implementing Agency 3.08 The borrower and project executing agency would be EPMB, an auto- no&ious municipal agency responsible for the following services: water, sewerage, solid waste collection and disposal, street cleaning, park main- tenance, public markets and a zoological park. The Mayor of Barranquilla serves as the Chairman of EPHB's Board, which includes representatives of the city's main political and civic groups. EPMB's General Manager is appointed by the Mayor. The Company derives its revenues from tariffs and user fteq (water, sewerage, solid waste, markets, zoo) and municipal pro- perty taxes, 95% of which the Municipal Council has assigned to EPMB towards covering the costs of providing services other than water supply and s2werage. 3.09 EPMB is a weak and inefficient institution (Annex 2). It is heavily overstaffed (1,600 employees in total, about 780 for water and sew- erage, i.e. about 8 per 1,000 water connections). General managers change frequently, staying in post on average about 1.5 years. The quality of staff is generally deficient. Experience and talent in management posi- tions is rare since poor remuneration, job instability, lack of career prospects, and EPMB's poor overall performance deter many qualified indivi- duals from working at EPMB. Strong trade unions oppose improved efficiency and have been successful in securing expensive compensation packages. Administrative and financial systems are weak and do not permit adequate management control. Lack of equipment, trained staff and procedures hinder the systematic maintenance and operation of EPMB's facilities. Because of its inability to provide acceptable services in an efficient manner, EPMB's image in Barranquilla is poor. 3.10 In recent years, EPMB experienced substantial consolidated oper- ating and cash deficits. EPMB's water and sewerage operations, which  - 9 - traditionally have been the company's strongest performer, were partly responsible. The main source, however, has been solid waste services where cash deficits totalled C$256 million (US$3.2 million equivalent) in 1983 and C$400 million (US$4.0 million equivalent) in 1984. These deficits resulted primarily because municipal property taxes, frozen between 1979 and 1984, were insufficient to cover the operating deficits incurred by these services. Inadequate water and sewerage tariff levels, poor collec- tion of accounts and excessive operating costs have also contributed to EPMB's poor overall financial performance. EPMB's cash deficits have been financed mainly by commercial bank overdrafts and by a large increase in arrears to suppliers and creditors; primarily the electric company, the National Social Security Agency and INSFOPAL. The accumulated overdue debt owed to these institutions is currently about Col$1100 million (US$8.1 equivalent). During the last four years, EPMB's only major investment was the construction of a new water treatment plant (Planta No. 5) costing about US$12 million. Irevious Bank Lending to EPMB 3.11 EPMB was among the beneficiaries of Loan 1072-CO made to INSFOPAL in 1972. The loan proceeds allocated to EPMB were US$10.5 million. The Barranquilla sub-project was completed in i982 after considerable delay. A project completion report for Lean 1072-CO is under preparation. EPMB was unable to meet fully the rate of return covenant and other financial and operational targets contained in the subsidiary Agreement with INSFOPAL partly because various governments did not authorize the tariff levels needed by EPMB. Other shortcomings in the execution of the sub-project under Loan '.072-CO can be attributed to EPMB's institutional weakness (para. 3.09) and INSFOPAL's inability to provide sufficient supervision and support. IV. THE PROJECT Project Origin 4.01 Feasibility studies completed under the Bank's purview in July 1983 by consultants to EPHE identified an investment program in water, sew- erage, and solid waste with a total estimated base cost of about US$65 mil- lion (1983 prices). However, it was evident from EPMB's inefficient opera- tions and poor financial performance that the company could not support an operation of this magnitude. In August 1984, under the direction of a new management, EPMB renewed discussions with the Bank and requested financing for a smaller project emphasizing financial rehabilitation and institu- tional development and the execution of only the most urgently needed investments in water supply, sewerage, and solid waste. As a condition of loan processing, EPMB subsequently identified and took initial key steps to implement an institutional and financial recovery program agreed upon with  - 10 - the Bank. Particularly after the water emergency in April 1985 (para. 3.04), local authorities seem to be prepared to support EPMB's rehabilita- tion efforts. They realize that drastic measures are necessary to reverse the deterioration of public service in Barranquilla. Rationale for Bank Involvement 4.02 The proposed Bank participation in the project stems from a country strategy designed to support Colombia's efforts to promote socio- economic investments substantially benefitting lower-income segments of the population and to bring about better financial and institutional perform ance of public sector entities. For Barranquilla in particular, the Bank would, among other things, help to ensure an effective project design for the vital institutional development program for EPME and provide the reinforcing incentives and conditionality needed for EPMB's management to impleme.. the program. These are presently beyond the capabilities of local institutions to undertake alone. ProJect Dbjectives 4.03 The proposed project would address the urgent need to restore and extend acceptable water, sewerage and solid waste services to Barranqui- lla's population and to bring about financial strengthening and institu- tional development of EPMB. Its immediate objectives would be to: (a) Service rehabilitation and expansion program: (i) restore the most deteriorated parts of the water system; (ii) expand service to low-income neighborhoods in the southwest part of the city so as to increase water supply coverage from a cur- rent 50% to about 95X by 1990 (75% through house connections and 20% by public standpipes); (iii) eliminate sewerage overflows in some key downtown areas and residential neigh- borhoods through the expansion of collector capacity; and tiv) reestablish regular door-to-door solid waste collection services to about 50% of the city's area and establish pro- per waste management services for public markets and presently unserved poor neighborhoods and make the final disposal of wastes more sanitary; and (b) Financial and institutional program: (i) improve EPMB's financial performance such that the company would be able to finance by 1989 about one-third of its investment needs from internal generation; (ii) increase the operating efficiency of all EPMB's services, and for water, reduce unaccounted- for water from the currently estimated 45% to about 32% by [991 and stabilize the cost per m3 of water sold at Its present level in real terms through 1990; and (iii) establish an adequate capacity for maintenance of EPMB's equipment and facilities. 4.04 The successful execution of the service rehabilitation and the financial and institutional strengthening programs would put EPMB in a bet- ter position to undertake the larger investments which will be needed in the 1990s to provide in Barranquilla water, sewerage and solid waste ser- vice levels comparable to those in other large Colombian cities. The proj- ect thus would include engineering services to prepare studies for this next phase.  - 11 - Project Description 4.05 The proposed project would include the following components (Annex 3): (a) Water Supply. Construction of transmission mains (about 11 Km), a storage tank (10,000 m3), reequipment of pumping sta- tions, repair and improvement of treatment plant facilities (leak detection and repair), rehabilitation and expansion of the water delivery system in the southwestern zone, includ- ing the construction of about 50 public standpipes, the pur- chase of about 40,000 and installation of about 70,000 water meters and of about 20,000 house connections; (b) Sewerage. Capacity expansion of three sewage collectors; (c) Solid Waste. Purchase of about 25 collection trucks, 3 street sweepers, 2 front loaders, 2 bulldozers, 3 lifting trucks and various containers and tools and spare parts for the repair shop; (d) Institutional Improvement. Purchase of vehicles and equip- ment, training of EPMB's staff and management, and technical assistance to improve existing or implement new systems and procedures in the following areas: Ci) management and organization; (ii) accounting and budgeting; (iii) personnel management and staff training; (iv) commercial activities; (v) metershop; (vi) purchasing and inventory management; (vii) maintenance and operation; (viii) rehabilitation transmission system, including leak detection and repair; (ix) water treatment plant operation; (x) unaccounted-for water control; and (xi) solid waste operation (increase in collection efficiency, more sanitary final disposal of waste, establishment of adequate equipment repair and maintenance capabilities); (e) Engineering Services. Supervision of construction, survey of existing network conditions and preparation of a rehabil- itation and service expansion plan in the southwestern zone, an update of existing feasibility studies and the prepara- tion of designs and bidding documents for the next stage of water and sewerage investments, and a solid waste study to define a cost-effective and environmentally acceptable long-term solution to the final disposal of solid waste; and (f) Incremental Working Capital. A contribution of US$2.5 mil- lion to be disbursed against chemicals and spare parts pur- chases between March 1, 1985 and December 31, 1987 to cover EPMB's needs for increased working capital resulting from the project.  - 12 - Project Cost and Financing 4.06 The total cost of the proposed project (including $4.4 million for interest during construction and US$6.2 million for incremental working capital) is estimated at US$41.6 million equivalent, of which 58% or $24.0 million is foreign exchange (Table 1). The local cost component of $17.6 million equivalent includes about US$2.0 million equivalent of taxes charged against the purchase of equipment and materials and foreign con- sultants' fees which the Bank would not finance. The base cost, expressed in June 1985 prices, is US$31.9 million. Physical contingencies are calcu- lated to be about 10%. Price and Col$ devaluation contingencies, equival- ent to about 8% of the sum of base cost and physical contingencies, were included assuming that local inflation varies from 22% in 1985 to 18% in 1990 and international inflation of 5% in 1985, 7.5% in 1986 and of 8% through 1991. 4.07 The project's financing plan is shown below: Amount Source of Financing US$Million X of Total EPMB 9.9 23.8 - for incremental working capital 3.7 8.9 - contribution to investment 6.2 14.9 FFDU 3.4 8.2 Department of Atlantico 4.3 10.3 IBRD 24.0 57.7 41.6 100.0 4.03 The Bank would provide US$24.0 million or about 58% of total financing required. It would support the foreign exchange cost of the pro- ject's investments totalling US$17.1 million, interest on its loan during the grace period up to a maximum of US$4.4 million, and US$2.5 million towards covering EPMB's incremental permanent working capital needs. The financing plan also includes a loan of US$3.4 million from FFDU, which has already been contracted, to support initial project costs during 1985 and 1986 and includes a grant from the Department of Atlantico totalling US$4.3 million equivalent from the proceeds of an FFDU loan which the Department is currently negotiating. At negotiations the Department of Atlantico presented a letter of intent which indicates that the grant funds referred to above would be made available in a timely manner. EPMB provided assurances at negotiations, that it would, by no later than January 31, 1986, enter into an agreement, satisfactory to the Bank, with the Department regarding the provision of these funds. EPMB would contribute a total of US$9.9 million from internal cash generation. Of these funds, about US$3.7 million would be needed to meet incremental working capital needs and about US$6.2 million would be for investments to be made available beginning in 1987 when EPMB's financial position is expected to have sufficiently improved. FFDU, at negotiations, provided EPHB and the Bank with a letter indicating its intent to cover any shortfalls of investment funds with an additional loan.  OXLtMIA PROFOSED BABRM MOR SPY PME Table 1: Project Cost Estlmtes Fbreigi Ibtal Foreigi Lcal Total Foreign Local Total as % of as % of Part t (Col$ uillions) (US$ mllions) Total a/ Base a/ A. Water Supply 1042 1076 2118 7.7 8.0 15.7 49.2 49.0 B. Sewerage 38 86 124 0.3 0.6 0.9 30.4 2.9 C. Solid Waste 481 59 540 3.6 0.4 4.0 89.0 12.5 D. Institutional Improvement 243 260 503 1.8 1.9 3.7 48.3 11.7 E. Studies/Engineering Services 22 174 196 0.1 1.3 1.4 11.0 4.5 F. Incresmntal Working Chpital b/ (chemicals and spare parts) 337 499 836 2.5 3.7 6.2 40.3 Base Cost (mid-1985 price snd exchange rate levels) 2163 2154 4317 16.0 15.9 31.9 50.2 100.0 Physical Qbmtingencies 181 166 347 1.3 1.2 2.5 52.0 8.0 Price Contingencies 1554 1070 2624 2.3 0.5 2.8 8.5 8.5 Total Project Cost 3898 3390 7288 19.6 17.6 37.2 52.7 116.6 al Based on project Cost in US$ b/ Includes all cntingencies  - 14 - Project Implementation 4.09 Project implementation would take place over six years with comr- pletion expected by mid-1991. Given the nature of the project and its advanced degree of preparation and bidding, six years is a reasonable time allotment. Project implementation has already started with EPMB having signed contracts for the FFDU-financed purchase of pipes and 20,000 water meters. Contracts for the two major civil works components covered under the project (the installation of transmission mains and the construction of the storage tank) have already been awarded. The timetable for project implementation (Annexes 5 and 6) calls for other important bidding (pumps, water meters, equipment) to be initiated in early 1986. In light of this contracting schedule and the financing of chemicals and spare parts, retroactive financing not to exceed US$2.0 million is recommended for project expenditures made after March 1, 1985. 4.10 Continuity of EPMB's management and of its policies is vital to the rehabilitation process and to the success of the project. To this end, assurances were obtained from EPMB during negotiations that it would main- tain continuity and a minimum of turnover in the management of the company and assure a satisfactory level of competence of its management staff. The government provided assurances that it would take actions required to maintain management continuity and competence. 4.11 During negotiations, draft terms of reference for the technical assistance program were reviewed and agreement was reached on the objec- tives and scope of the program and a plan of action for its implementation (Annex 7). The program would be executed mainly by local consultants who would bring in foreign expertise for specialized assignments. The program would be executed in three phases. Phase 1 would involve a comprehensive assessment of EPHB's organizational structure and its systems, procedures and practices. Based on the results of Phase 1, the consultants would, during Phase 2, develop a detailed plan of action for the institutional strengthening efforts to be carried out under the project. This plan would provide proposals on how individual systems would be improved and define the detailed level of effort required. After EPMB and Bank agreement on the plan of action, it would be implemented under intensive Bank supervi- sion during Phase 3. The following timeframe (Annex 7) was agreed to dur- ing negotiations: signing of contract with selected consultants by June 30, 1986; completion of phases 1 and 2 by no later than October 30, 1986 and February 28, 1987, respectively; and completion of the institutional strengthening program by no later than December 31, 1988. The signature of contracts with the technical assistance consultants would be a condition of disbursements for all Loan categories other than that for working capital. This condition would provide the Bank with the needed leverage to ensure the prompt hiring of consultants for technical assistance while helping EPMB in its efforts to improve its working capital position. Responsibil- ity for the administration of the institutional strengthening program would rest with EPMB's Planning Department under the direct supervision of the General Manager. Assurances were obtained from EPMB during negotiations that it would maintain a unit in its Planning Department, with staff and functions acceptable to the Bank, to coordinate the institutional develop- ment program. 4.12 Construction activities financed under the project would be supervised by engineering consultants under the direction of EPMB's Con- struction Supervision Department. As with the above-mentioned technical  - 15 - assistant component, the signing of a contract for construction supervision with consultants satisfactory to the Bank would be a condition of disburse- ment from all Loan categories other than that for working capital. 4.13 The public standpipe network in the southwestern part of the city would be constructed in close coordination with neighborhood leadership organizations known as Junta de Accion Comunal (JAC). Many of the JACs have already indicated their desire to work with EPMB in selecting stand- pipe locations and help EPMB in maintaining and operating standpipes and collecting payments for water consumed. Each standpipe would be metered. Assurances were obtained during negotiations that, as a condition for pro- viding water through standpipes to a neighborhood, EPMB would enter into arrangements, satisfactory to the Bank, with JAC's assigning them respons- ibility for selection of locations for and proper maintenance of standpipes and establishing a mechanism for the collection of payment on EPMB's behalf for water consumed. Procurement 4.14 Procurement arrangements are detailed in Annex 8. Contracts awarded under the proposed project through international competitive bid- ding procedures would account for about 50% of total project costs. CoL- tracts for most equipment are expected to be won by foreign manufacturers while those for pipes, accessories and civil works are likely to be awarded to local firms. Qualifying domestic suppliers would be given a preference in bid evaluation of 15% of the c.i.f. bid price or the applicable import duty, whichever is lower. Consulting services under parts (d) and (e) of the project (para. 4.05) are estimated to require a total of about 500 man-months of professional services about 90% of which would be provided by local consultants. 4.15 Civil works contracts larger than US$1 million equivalent and goods contracts larger than US$50,000 equivalent would be procured through International Competitive Bidding (ICB). Local procedures, reviewed and accepted by the Bank, would be used to award contracts with estimated costs below these limits. Open bidding would be used for contracts between US$10,000 and US$50,000 and local shopping based on price quotations from at least three qualified local bidders for contracts of less than US$10,000. The installation of water meters and house connections would be contracted directly by work orders to pre-qualified contractors at unit prices established by EPMB. Individual work orders would be limited to a ceiling of US$20,000 equivalent. Spare parts and chemicals, financed under the working capital component, would be procured through local shopping procedures (quotation by at least three suppliers) and by directly nego- tiated purchase from one supplier for chlorine pro- ducts. The limits for prior review of bidding documents by the Bank (US$50,000 equivalent for equipment/material contracts and US$500,000 equivalent for civil works con- tracts) would result in a coverage of about 90% of the total estimated value of goods contracts and about 50% of civil works contracts. The Government provided assurances at negotiations that import licenses for Bank-financed and other goods purchased under the project would be issued promptly by the Instituto de Comercia Exterior (INCOMEX).  - 16 - Disbursements 4.16 The Bank loan would be disbursed against (Annex 9): (a) 100% of foreign expenditures for all direct imports; 40% of local expenditures for imported equipment and materials pro- cured locally and 40% of ex-factory cost of locally manu- factured goods; (b) 40% of total cost for expenditures for the purchase of spare parts and chemicals purchased after March 1, 1985 and before December 31, 1987 up to a maximum of US$2.5 million equiv- alent; (c) 40% of total expenditures for civil works; (d) 100% of total expenditures for consulting services and training under the institutional development component; (para 4.05(d)); Ce) 40% of total expenditures for consultants for engineering services (para 4.05(e)); and (f) amounts due for interest on the Bank's loan up to a maximum of US$4.4 million. 4.17 For contracts whose value is less than US$20,000 equivalent, dis- bursement would be against statement of expenditures certified by EPMB. Documentation for these e-penditures will not be submitted to the Bank, but would be retained by EPMB for periodic inspection by Bank staff. In order to expedite project execution, a Special Account would be opened in Colombia's Central Bank with an initial deposit of up to US$2.0 million made into it through one or more withdrawals. 4.18 The closing date of the loan would be December 31, 1991. The disbursement schedule for the project (Annex 10) is thus based on a 6.0 year disbursement period which is about 2.0 years shorter than the standard disbursement profile for sector projects in Colombia. The proposed dis- bursement period is reasonable, as the scope of the proposed project is different from those used to determine the historic profile. The project does not include large and complicated civil works, which have been the main reason for delays in the execution of past projects. More than 70% of the loan amount is reserved for the purchase of equipment and financing of chemicals and spare parts. These items will have to be acquired during the first two years of project execution, considering that the basic objective of the project is to prevent the imminent collapse of water and solid waste services in Barranquilla and to assist EPMB in its institutional and opera- tional rehabilitation. The most time-consuming activity to be financed under the project would be the technical assistance component, which given the high priority of this work, must be completed during the first four years, if the project's basic objective is to be met at all. Another  - 17 - feature setting the proposed project apart from water supply projects appraised in the 1970s is the advanced degree of project preparation. With few exceptions, bidding documents would be ready by negotiations and the majority of biddings would be well on its way by mid-1986 (Annex 5). Making the hiring of consultants for the technical assistance program a condition for the disbursement of about 90% of loan funds, is designed to get the most delay-prone project component underway promptly. EPMB's Financial Prospects 4.19 Measures taken since late 1984 under the recovery program (para. 4.01) in five main problem areas have markedly improved EPMB's financial prospects. Operating costs are being stabilized with the dismis- sal so far of some 150 personnel performing redundant tasks and through the strict control of overtime. An aggressive campaign has been mounted to con- nect and bill unregistered customers and to collect past due accounts, which, has to date, resulted in a 20% increase in monthly collections for water supply and sewerage services. Costs of the public markets have been brought within related revenues by cutting expenditures and collecting pay- ment arrears. Rescheduling by EPMB of past due debt owed to its major domestic creditors is being negotiated with the participation of the central government and is expected to be concluded in early 1986. And finally, EPMB obtained from the National Tariff Board in May 1985 and implemented in July 1985 an effective aggregate increase of about 10% in its water tariffs above the 1.8% increase per month already in effect and is the main beneficiary of a nearly 250% increase in municipal property taxes effected earlier by the ?-lunicipal Council of Barranquilla. 4.20 While these measures will help EPMB to attain a balanced cash flow in 1985, the company will have to continue to take stringent financial adjustment measures over the project implementation period, if it "s to consolidate its financial performance and to generate internal funds suffi- cient to cover a reasonable share of its investment needs. The most important measures would include a substantial increase in solid waste tariffs (a request for a 100% increase is being prepared for presentation to JNT before Jaauary 31, 1986); the continuation of tariff adjustments for water supply, sewerage, and solid waste services and increases in the allo- cation of municipal property taxes approximately in line with average domestic inflation rates; tight control over operating costs, especially for personnel; and strict limitations on capital expenditures for invest- ments outside of the project scope and the incurrence of long-term debt. To help ensure that these measures are achieved, assurances were obtained during negotiations from EPMB that it would: (a) for its water and sewerage operations, maintain tariffs and other charges sufficient to cover operating expenses, work- ing capital needs, debt service payments, including r2sched- uled payments to creditors, and contributions of not less than 10% of capital expenditures starting for 1987, increas- ing gradually to 30% for 1989 and remaining at this level thereafter;  - 18 - (b) for its consolidated operations, take all actions necessary including changes in tariffs and other ca-rges, and munici- pal property taxes, to obtain reven.,es sufficient to cover operating expenses, debt service charges, including resched- ule payments to creditors, working capital needs, and con- tributions not less than 1OZ of capital expenditures start- ing for 1987, increasing gradually to 30% for 1989 and remaining at this level thereafter; (c) obtain agreement from the Bank before incurring any addi- tional long-term debt or undertaking any capital expendi- tures in excess of US$200,000 equivalent per year (the maxi- mum levels of annual capital expenditures and related debt are expected to be increased in the latter years of project execution (1989-91) when EPMB's financial position has improved sufficiently to allow the company to undertake additional major investments for system expansion); and (d) refinance its overdue debt with -Aijor creditors and to that effect conclude, as a conditiojn of effectiveness of the loan, contractual arrangements satisfactory to the Bank with major creditors and thereafter pay its debt obligations as rescheduled. 4.21 In the past few years, its weak financial position has forced EPMB to pledge a portion of its collections from tariffs and municipal pro- perty taxes to commercial Banks to secure short- and long-term loans. Long-term loans secured by pledged collections would total about US$13 mil- lion. During project execution, the level of pledged collections required to repay these long-term borrowings is expected to decline gradually from about 20% of EPMBts total collections at present to less than 6% by 1990. Since this level is modest and will not jeopardize project execution and EPMB's ability to service the proposed Bank loan, the Bank should accept the existing pledges without requesting pari passu treatment. Daring negotiations EPMB agreed that long-term loans secured by pledges would be repaid as they become due and that no further pledges conflicting with the Bank's negative pledge clause would be made following loan signing. As to short-term debt secured by pledges, the proceeds from the working capital component of the Bank loan and additional revenues to be generated during project implementation are expected to permit EPMB to meet its future working capital requirements with a minimum of such pledging. EPMB agreed during negotiations that the proportion of collections pledged to repay short-term debt would not exceed 5% from 1986. 4.22 The success of the financial recovery of EPMB, as portrayed in the financial projections (Annex 11), is predicated on decisive improve- ments in EPMB's operational performLnce. To help meet projected revenues and cost levels, assurances were obtained from EPMB during negotiations that it would take all actions necessary to attain several key performance targets agreed upon with the Bank (Annex 12) and jointly to be revised from time to time as required. Among the most important of these targets are: increasing the number of new water connections from about 97,000 in 1985 to about 160,000 in 1990, improving the proportion of billings and property taxes collected from about 70% in 1985 to 90% in 1990; reducing the level of unaccounted-for water from the present 44% to 34% by 1990; reducing the employees' 1,000 water connections ratio from the present 8 to 6.7 by 1986; and increasing the proportion of connections equipped with working meters from a current 20% to about 55% by 1990.  - 19 - 4.23 In order to allow proper monitoring of its financial condition, investment program and performance targets by the Bank (Annex 12), EPMB provided assurances at negotiations that it would (a) furnish to the Bank before October 31 of each year for its review and comment, an investment plan, financial projections for the current year and the following three years; (b) propose measures, including adjustments to tariffs and other sources of revenues and operational measures, to maintain compliance with the financial covenants and to meet performance targets; and (c) conduct similar reviews following any event that would cause its total operating costs to increase at a rate in excess of the increase in the consumer price index for a corresponding period. Changes in Service Responsibility 4.24 In the past, EPMB's overall financial performance has suffered from deficits in services other than water and sewerage. On several occa- sions, EPMB has attempted unsuccessfully to divest itself of the zoo and public market services. The recent increase in property tax levels and EPMB's improved performance in collecting more user fees (the market is expected to pay for itself in 1985) have made the financial condition of these services less critical. At this time, the transfer of the zoo, mar- ket and park maintenance services is not vital to the success of the proj- ect, since the costs associated with these services are small compared to those with the water and sewerage operations. Nevertheless, EPMB should continue to explore the possibilities of divesting itself of these ser- vices. If EPMB is to continue to provide services other than water and sewerage, it must continue to receive an adequate allocation of municipal property taxes to cover operational deficit ir these services. Any deci- sion by Barranquilla's Municipal Council that would deny EPMB the use of prcperty tax revenues as needed would be an event for appropriate Bank action, including suspension of disbursements. 4.25 Any changes regarding the solid waste operation would have a decisive influence on EPMB's financial position. The transfer of this ser- vice from EPMB to a new municipal entity or the contracting out of waste collection in some parts of the city, which, at various times, has been proposed by some of Barranquilla's political groups, would have to be car- ried out under terms which would not jeopardize EPMB's overall financial position. Most importantly, any such decision would have to consider the future of the 600 workers currently on EPMB's solid waste service payroll. The technical assistance program financed under the project would inter alia analyze the institutional, financial, technical and legal implications of changes in i:,stitutional arrangements regarding solid waste. If EPMB decides on any changes of its responsibilities regarding solid waste or any other of its present services, terms and conditions of any such changes should be subject to the Bank's agreement. Assurances to this effect were obtained from EPMB during negotiations.  - 20 - Auditing 4.26 During negotiations assurances were obtained that EPHB would have its financial statements for water supply and sewerage operations, for other services and for consolidated operations, the Special Account, and statement of expenditures audited by independent auditors satisfactory to the Bank, and that the auditors' report would be sent to the Bank no later than six months after the close of FY1985 and 1986 and no later than 4 months after the close of subsequent years. Reporting 4.27 EPMB would submit to the Bank semi-annual reports (due February 28 and August 31 for preceding semesters ending December 31 .nd June 30, respectively) on the progress of project implementation and its operating and financial performance. A completion report would be prepared by EPMB and submitted to the Bank no later then six months after the closing date of the Bank Loan. Assurances to this effect were obtained from EPMB during negotiations. Project Justification, Benefits and Affordability 4.28 Most of the proposed investments (more than 80%) would be used to repair, rehabilitate and replace existing systems, facilities and equipment and to assist EPMB's efforts for institutional and financial reform. The proposed investments for system expansions are an integral part of the long-term, least-cost solution for expanding Barranquilla's water supply and sewerage systems. The benefits to be derived from the project are difficult to quantify realistically and therefore specific economic and financial rates of return have not been calculated. Nevertheless, the benefits of the project are believed to be substantial and would provide a high return on the investment. These benefits become apparent by examining the consequences of not doing the project: (a) failure to repair or replace important system components (pumps, valves, pipes, etc.) would lead to their continued and progres- sive deterioration and increase the probability of the occurrence of serious service interruptions like those that occurred in April and June 1985; (b) EPKB's financial performance and institutional strength would deteriorate further and not allow the company to maintain even present service levels and quality. Under these circumstances it would be impossible for EPMB to reach the institutional and financial strength required to carry out the medium- and long-term investments necessary to bring service levels and quality in Barranquilla up to the standards found in most other Colombian cities; (c) the irregular supply of water, now experienced to some degree by almost all of Barranquilla's inhabitants, would continue and pro- gressively become more prevalent throughout the city; (d) the collection of solid waste and its disposal would decline further and become an increasingly serious public health concern; and  - 21 - (e) an estimated 400,000 people, almost exclusively belonging to the urban poor, would have to continue to purchase water of sometimes uncertain quality from private vendors at high prices. 4.29 All of Barranquilla's population would benefit from the project. To those already connected to the water system, safe water would become available on a 24-hour basis. By 1991, a total of about 600,000 additional people would be served. About 400,000 of the beneficiaries would live in the southwestern zone which today has no piped water supply. To about 100,000 of them, regular service through house connections would be reestablished (the area had a functioning distribution system about 10-15 years ago) and 300,000 would receive a safer and less expensive supply through public standpipes. Of the 600,000 direct beneficiaries of the project, about 400,000 (65%), would belong to the urban poor. The invest- ments in solid waste would allow EPMB to reinstate regular door-to-door service to some 50% of Barranquilla's population, put in place a regular clean-up system around public markets, initiate solid waste removal in some of the city's poor neighborhoods and make final disposal practices more sanitary. These investments would remove the public health hazard now created by the indiscriminate dumping of waste in empty lots and bring about the sanitary disposal of waste. 4.30 The new tariff structure recently approved by JNT (Annex 13) pro- motes both social equity and water conservation. A family belonging to Barranquilla's lowest income group would pay about Col$100 for a life line supply of 10 m3/month. A family belonging to the higher category would pay Col$670 for the same volume of consumption. Even when a sewerage surcharge (50% of water billed) is added, these charges are well within the poor peo- ple's capacity to pay. At an estimated average monthly income of Col$10,000/family, a poor family would not spend more than 1% of its income for water and sewerage services. Likewise, a connection charge of Col$9,000 (about US$66 equivalent) for consumers belonging to the lowest- income group is affordable. 4.31 The new tariff provides incentives for water conservation, since the charge for consumption above 30 m3/month is quite progressive and charges for unmetered connections are 25% higher than those for metered connections. The public standpipe service to be provided in the city's southwestern part would significantly reduce the amount of family income spent on water. Today, water purchased from vendors can cost up to Col$1200/family/month and for many families account for more more than 10% of family income. Under the project, charges to be paid by public stand- pipe users would be about Col$50 per month and more consistent with a poor family's "inancial capacity to pay. 4.32 A simulation of billings shows that under the new tariff struc- ture the average water tariff would be around Col $18/m3. This rate is comparable to that charged in Colombia's other large cities. The lack of reliable investment program for the medium and long term makes a meaningful marginal cost analysis of water in Barranquilla difficult. Nevertheless, available data indicate that the long-term average incremental cost for water in Barranquilla is in the range of Col$20/m3-Col$25/m3. The average tariff under the new structure is thus close to marginal cost and charges for high consumption are considerably higher than marginal cost.  - 22 - Project Risks 4.33 Physical implementation of the proposed project carries little risk as the works themselves are simple and straightforward. Considerable risk exists, however, that the management continuity and political support needed to sustain the financial and institutional program cannot be main- tained. A sensitivity analysis on the project demonstrates that a short- fall of more than about 20% in reaching any of the performance targets for tariff and tax increases, collection efficiency, operating costs, and the number of new water connections would prevent EPMB from generating suffi- cient internal funds to finance its investment program. However, the sub- stantial measures already taken toward financial recovery as a condition of loan processing reflect considerable willingness of the authorities so far to take the difficult steps required to achieve EPMB's rehabilitation. Assumptions underlying the rate of rehabilitation of EPMB in coming years are also on the cautious side. The technical assistance in support of EPMB's rehabilitation, the regular joint reviews of agreed upon performance targets, and back-up arrangements to ensure availability of EPMB's project contribution (para. 4.08) should also help to yield an acceptable project risk level given the dangers of further deterioration in services in Barranquilla if the project were not undertaken. V. AGREEMENTS REACHED AND RECOMMENDATIONS 5.01 During negotiations, assurances were be obtained from EPMB that it would: (a) enter into agreement with the Department of Atlantico regarding the provision of grant funds for project-related investments (para 4.08); Cb) maintain management continuity and assure a high level of staff competence (para. 4.10); (c) maintain a competently staffed unit to coordinate the implementation of the institutional development program (para. 4.11); (d) enter into arrangements, satisfactory to the Bank. with community leadership organizations regarding the location and maintenance of public standpipes and the collection of charges for water consumed (para. 4.13); (e) maintain financial self-sufficiency of its water and sewerage services and its consolidated operations and generate adequate funds for investment (para. 4.20); (f) seek Bank agreement before incurring additional long-term debt and undertaking capital expenditures (para. 4.20);  - 23 - (g) pay its overdue debt in accordance with the repayment schedule as agreed with major creditvrs (para. 4.20); (h) reassess its financial and operational performance annually and in consultatior with the Bank, propose measures to meet financial covenants and performance targets (para. 4.23); (i) make the terms and conditions of any change in EPMBt service responsibilities subject to the 1ank's agreement (para. 4.25'. (j) have its accounts audited annually by independent auditors satisfactory to the Bank (para. 4.26); and (k) adhere to report requirements (para. 4.27). 5.02 Assurances were obtained from the Government that it would: (a) cause INCOMEX to grant impo-t licenses in a timely fashion (para. 4.15); and (b) take all actions necessary to enable EPMB to maintain at EPMB management continuity and competence. 5.03 A special condition of effectiveness would require EPMB to sign contract for the refinancing of its overdue debt with major creditors (para. 4.20). 5.04 A special condition of disbursement for all Loan categories other than for working capital would be the signing of contracts with consultants for the institutional development programs and for supervision of construction (paras. 4.11 and 4.12). 5.05 Retroactive financing totalling US$2.0 million is recommended for purchases, works and services procured in accordance with Bank guidelines after March 1, 1985 (para. 4.09). 5.06 With the above assurances, agreements and conditions, the pro- posed project would be suitable for a Bank loan of US$24.0 million to be repaid over a period of 17 years, including four years of grace.  - 24 - M I W WMU E9a XWr Pzulsctim af Srv TISm. SRI ad Ptabtim 1963 1/ 19 it 195 106 17 1968 1989 1990 11 OL pqul*t.on (00D) 2/ 1115 1157 L20i 1242 1216 1331 1377 1426 1476 hp-'ia -4m om 3/ prlbueiactgm (Z) 4/ 49 5D 53 59 66 73 77 78 71 per s.i-n (Z) - - - - 10 20 20 2D 20 per hams omsctl (000) 4J 5S9 579 641 737 8W8 966 1055 1107 1151 pera dpl l() - - - - 12 Z26 s 75 285 295 rm of am _cm (000) 5/ 79.1 83.2 91.6 104.6 119.6 16 147.6 154.6 166 wx mactiaw (000) 3.3 4.8 12.0 14.0 16.0 16.0 8.0 6.0 6.0 - sae p umctm W3/mAxth) 6/ 77.0 74.9 75.0 70. 6660 66.0 62.0 61.0 60.0 F copits e (1/day) 4/ 340 332 332 310 292 13 274 270 266 sta*de (.3/pem/maw) 7/ - - - 1 1 1 1 1 _NMI maw anim ( i3 aiU) 8/ 73.1 74.8 SL4 87.9 96.3 16.9 113.1 116.o 119.2 ;__a_ -fo _ (Z) 45 44 44 42 40 38 36 31 32 _sma m piudmcio 3 mLum) 8/ 132.9 133.6 147.1 151.6 160L5 172.4 176.7 176.7 175.3 ua1.Uad mapay (u3 mnia) / 132.4 13Z.4 166.0 2D4.8 2)6.8 2)L8 21.8 21%.8 2L.8 1/ Actual. remaining years projected. Z/ Kid-year. a/ Includes only the population served by regIstered connection; there ls a large number of people (about 250.000) receiving service through fraudulent connections. 4/ Assuming 7.4 persona/connection. 3 Includes co erciallindustrial connections (ahout 5300 In 1984 and projected to grow to about 6600 in 1991); projection of connections based on EPHB plan for registering Illegal and new connections. 6/ Current sale per connection information is based on deficient data slnce only few connectlons are actuafly metered; includes comuercial/industrial connections; reduc- tion in average sale per connection based on annual projection by socio-economic category; since future connections will predominantly be made to people belonging to loser income categories. unit sales are expected to drop; also increased level of metering and more progressive tariff structure will contribute to reduction in aver- age sales per connection. Projections are based on sketchy data and should be reviewed In 1987/88 Vaen better data will be available and vater consumption patterns will have adjusted to more regular service, increased level of metering and new tarlff structure. 7/ Assuming 30 1/c/day. 8/ Average annual.  I II If If II LI j1 i1 01,l,xl ,li., 11,1ll .lt Ii ! ,*,,'1 1 p }, [II i ||['| i 9 i  -~~~~~~~~~~la 2~ AMINX 2 Attachment I COLO1IA ARRAIWQUILA WATER SUPPLY PROJECT EIUP ExistlE Osanlzatlon Board of Dlrectors Ceneral SeerJcarT Inera C-enral Control ~ ~ ~ ~ ~ ~ ~ ndtra Yler onnel |Planning | Depart ;t Faceand Systems Administration Water Supply and Technical ISolid Waste and Accountig Dpt. arnartmsut Swerge Opertion Ia e Other Service  - 27 - ANNEX 3 Page 1 of 3 COLOMBIA BARRANQUILLA WATER SUPPI-Y PROJECT Project Description 1. The proposed project would include an investment program to expand and rehabilitate Barranquilla's water, sewerage, and solid waste services and provide financing for a program of institutional rehabilita- tion through consulting services, training of staff, and the purchase of equipment. 2. The following presents a list of main project components: PART A: Water SupplY A.1. Construction of transmission mains with a total length of about 11 km, including the connection between the existing treatment plant and storage tank Ciudadela 20 de Julio; A.2. Purchase and installation of pumping equipment for the following pumping stations: Raw Water, Treated Water, Ciudadela 20 de Julio, El Recreo and Las Delicias; A.3. Construction of storage tank Ciudadela 20 de julio with a capaci- ty of about lO,O00m3; A.4. Purchase of about 40,000 water meters and meter shop equipment and the installation of about 70,000 water meters; A.5. Installation of about 20,000 house connections; A.6 Rehabilitation, repair and expansion of water distribution in the southwestern part of the city, including the construction of about 50 pub- lic stand pipes; A.7. Execution of a leak detection and repair, pressure zoning improvement and transmission facility rehabilitation program, including the purchase of materials and equipment and their installation; A.8. Improvement/rehabilitation of the existing water treatment plants, including the purchase of materials and equipment and their IS-ntllation.  - 28 - ANNEX 3 Page 2 of 3 PART B: Sewerage B.1. Construction of three sewage collectors (Zona 2A, Country Club and Calle 79) with a total length of about 6 km. PART C: Solid Waste C.1. Purchase of solid waste collection equipment, including about: 25 compacting trucks, 3 street sweepers, 2 front loaders, 2 bulldozers, 3 lifting trucks, 50 containers of various sizes; and C.2. Purchase of equipment and spare parts for the reorganization and reequipment of the repair shop. PART D: Institutional Rehabilitation D.1. Purchase of vehicles and equipment, including about: 12 trucks, 10 pickup trucks, 6 passenger cars, 1 crane, and 1 floating dredge; and D.2. Technical assistance (Draft Terms of Reference, Annex 7), train- ing of EPMB's staff and the purchase of materials and miscellaneous equip- ment for improving EPMB's managerial and operational performance and capa- bilities by improving existing or, if necessary, introduce and implement new systems and procedures related to: (i) management and organization (planning, reporting, internal control, strategic study on organization and service responsibilities); (ii) accounting and budgeting (new systems to allow preparation of financial statements by service); (iii) personnel man- agement (job profiles and classification, renumeration, career development, systematic training); (iv) commercial activities (billing and collection, meter reading, overdue accounts); (v) metershop reorganization; (vi) pur- chasing and inventory management and control; (vii) maintenance and opera- tion (preventive maintenance, equipment repair); (viii) water transmission system (survey state of repair pipes, valves, etc., pitometric study, pres- sure zoning); (ix) water treatment plants (improve quality of water pro- duced and more efficient operation); (x) solid waste (reestablishment effi- cient door-to-door service, pilot projects poor neighborhoods, clean up public markets, more sanitary disposal, equipment repair shop, study future disposal). PART E: Studies and Engineering Services E.1. Supervision of construction; E.2. Survey of the existing water supply infrastructure and the pre- paration of a plan, designs and bidding documents for the rehabilitation and expansion of water distribution in the southwestern part of the city in preparation of Part A.6 of the project; and  - 29 - ANNEX 3 Page 3 of 3 E.3. Update of water and sewerage feasibility studies and the prepara- tion of studies, designs and bidding documents for the next phase for the expansion of EPMB's water and sewerage system. E.4. Solid waste feasibility study to dertmine the most cost-effective and sanitary solid waste collection and disposal option for the city of Barranquilla, including the design of a sanitary land fill operation. Part F: Incremental Working Capital F.1. Purchase of chemicals and spare parts between March 1, 1985 and December 31, 1987.  COIMIA RAEWUMJflA WaM ShLFY FJEC Ietailed Pro1 t cst EstLo (Us$ )LIM 1935 1986 1987 1988 1989 1990 1991 Fomeig Lbte Fbreg te FooeR re1w Foteton loca FmW redg Fomiial Pwe4gy tOf FogW Lccl Yrelgn waa7 Part ~ A. Water 9xlv 7,72 7.97 15.69 0.24 0.50 1.83 2.66 2.63 1.35 1.42 1.47 1.08 1.35 0.28 0.38 0.22 0.25 A. ITutallation of Mlnm 0.59 1.38 1.97 0.10 0.30 0.49 1.18 A. 2 RalUbilitation]Eniun Pfting Stations 1.93 0.37 2.30 Parchasm 1.8s 0.22 2,10 0.75 0.09 1.13 0.13 Installation 0.05 0.15 0.20 0.05 0.15 A.3 Cbatruxtlon Storape Tk 0.44 1.03 1.47 0.07 0.15 0.37 0. 88c A.4 Water Haters 1.32 1.08 2.40 Purh 0.93 0T.17 1.1O 0.70 0.13 0.23 0.04 butallation 0.39 0.91 1.30 0.0Q 0.05 0.12 0.26 0.11 0.26 0.11 0.26 0.03 0.08 AL5 He a tiais 0.45 1.10 1.55 Puwd_mm 0.32 0.32 6 0.04 0.04 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 !mtallation 0.13 0.78 0.91 0.01 0.06 0603 0.18 0.03 ri. IS 0.03 0.18 0,03 0.18 A.6 Fhal/Ef.Zo aSmith Whet 0.62 0.98 1.60 ParchurdZ._35 0T.35 0.70 0.03 0.04 0.17 0.18 0.14 0.14 Civil WIoks 0.27 0.63 0.90 0.11 0.21 0.11 0629 0.05 0.13 Ah7 bhabo T'wmd. Syptz 1.13 1.27 2.40 0Pt 0._ ni 0.50 0.16 0.10 0.16 0.10 0.16 0.10 0.16 0.10 0.16 0.0 Inztallntao 0.33 0.77 1.10 0.06 0.15 0.07 0. 15 0.06 0.,13 0.07 0.1O 0.06 0.15 A.8 Rehab Thant Plat 1.24 0.76 2.00 Ekirchess =1.12 O.U 7; 0.28 0.12 0.42 0.18 0.42 0. 18 Inutatuin 0.12 0.6Z 0.40 0.01 0.02 0.05 0.10 0.06 0.16  - 31 - .o 2 d 2 125 M -w i 1985 1911 19U? 1931 359J 30 131 s_ oa0.3 0." 0.92 1.1 a dt act= 0.39 0. 0.92 l49 myIN rii 33 0.06 0.14 0.06 0.13 evu us* 0.18 0.42 0.W0 0.31 0.25 0.07 0.17 C sad___ 3.56 0." 4.00 C.l 3.26 0.31 3.60 L3 0.14 1.9 0.20 C.2 _ APr 0.30 0.10 0.60 0.30 0.10 IL 1ztlt1mml TOM. 1.0 1.93 3.73 I 3dt= of mm L10 0.13 1.23 044 0.0a 0.66 0.1 0.2 StJmeil. 0.70 I.1 2.50 CMddZmvIm 0D . 50 1.10 0.01 0.3 0.060 .42 o06 0.42 0.01 0.2 Mbftft9 O.1 0.20 0.3D L03 0.090.0 0.12 0.0 0.0 hh d 0.0 0.10 o.30 0.16 0.06 0.24 0.06 =m l0.16 L2D 1.5 LI Squinwou1ind. 0.0C 0.3c 0.0 0.0 0.a11 0.01 0..16 0.01 0.17 0.01 0.11 L2 SI/Dp 7- Sm4= 0.0a 0.25 0.30D . o10. 0.0 0.15 3.3 ?aam omi - obw A a 0.06 0.36 0.0 0.10.22 a0.00.14 3.4 Sa b11d st 0.01 0.13 0.15 O.z 0.13 F. l.Ima VdK uimpm)y g 2.5 3.7 6.2 0.61 1.11 Lll 14 0.75 Lll 7a c 3t 15.3 t5.96 31.91 OJ 1.61 4.75 4.82 &.W 3.03 1.79 Z* 1.35 2.36 0.39 0.A 0.22 0.25 Hy.11wfqnd 1.3 1.23 L?57 0.06 09 0.35 0.30 0.90.270.18010M 5. .0.a32. O. OA* OAROA 0 Y Z30D O.4" 2.74 - (O.01) 0.26 (0.13) 0.77 (0.0a) 0.47 0.11 01 0.31 0. 19 0.14 0.13 OBa3 1h1X 19.42 t 7.637 0.92 1.66 5.36 4.9 1 7.96 4.05 2M 2. 1lO . 91 0.62 OJl OX 0.36 1 Ja 1395 _ m -on - folm pt1u.ti Taw ~~195 193 1967 193 1969 1930 1991 1inu1Ti1adm(Z Cp 5.0 7.5 8.0 &O 6. 8.0 8.0 TAni JE tin (2) Z.O mo0 .LO 18.0 U.O 18.0 .ILO CdantofS (fd-+ ) 15.0 170.0 19B. 230.0 21L0 263.0 26o0  -32- manr 5 A. S aAo LW IMA. S X ptmmeS dhb for iblo OC ~u'ctm ~ 0.9 Siply 1 12 4/8 mu86 NM 8 38 A1 lb.. i .6 S 2.0 SpeIu 3 t t a/ 3/85 30/8 11/85 - 3J/6 A.2 11bbd 0 1.7 Supply 3 D / 1 8 U 1/85 5186 121 116 8JB7 A.3 * atal l.S I 0lJ. 15 is 3/85 1 187 /85 - 3/86 A.4 1- IzWm 0.9 Wu1y 1 1/u 4/86 6/186 120/86 347 - Luz am i 0.2 SPlPy 3 Lp B 4c6 b/ 6 M 12/87 -35/77 lm o tarin 1.3 h aat. lle Othr d 8/8S 10/5 tE85 - 11185 A.5 _FlM 1.6 Spply5t. ple ath e l 8/8S 10/85 112/875 7 - A.6 RA o. .m . 9 t4b lautvdJu0.7 03LY 3 1lJ m6 g! Z/86 8/87 1/8 _ n 0.9 S4p ta 2/8' b 4 5/8 11/83 - l/SD A.7 NOWr t _mdoc q .3 SPPly 23 11= 4186 6 6/86 4/87 - C.2 Fqdttq rul'0.6 Sudtpl 3 l1Od.w / 68/86 8/86 2/87 - 5/87 A.8 Roh ob. PlAm R ec.o L2 Suply 3,5 mmOM 1816 2/86 2/11 6/87 - C..khr" 0.3 SrI 3-5 0d e 118/8j 10/8 6 5/87 - 6/8T B. sm n o 0.9 Supply/81ot. 3 Rs 12/86 4/88 10/87 - 1179 C. Sold Wminli .~ L2 i ih e - p it 3.3 SApply 3 lI a/ 1/86 2/6b 8/86 126166 C32 Ptuai VP . 0.4 9dMly 3 Idm I/ 1876 8/86 1/87 4/87 1 D.1 Pacd_ af NhLcl L2 SWAY 3-4 IM3 a/ 1/86 ZtE6 8186 12/86 L2 Inlutolstm.!a amga Lwim6 r WL 3 Odow d/ 11/85 12/85 6/E6 - 8/86 RgCd_e of G*-m 0.5 SM1il 8-12 lQl=i 121 1187 6/87 lel87 - E. _ e Sriam E.1 awndSm amtuci 0.6 9ei I Other d/ 11/85 12/85 5/86 - 6/86 EL2 SarvW/doo le Slut}bt 0.3 Smvc I Odr d/ 11/85 am 2 /85 06 _ 6/86i L.3 Pt mlm sawd wtp po 0.4 Sera I Odv d/ 1187 4/8 7 10187 - 1/88 L4 Solid V- Stbl 0.2 Sozvfc I OdthErd 11/86 12/86 7/87 - 3/87 ./ aw. bl wth IwIevW gmm& / TaWet dw. car to frc.t r. c/ d bM diractly b tk to p,.qulifid ctra in m ut exnolhx IE .0O quAlent:t; tnp d tefer to pm~uUfi- . aid p1 of fizt *k ordw. dlk qdd2Jz for fmultmt .e.tioi. ef S9ly t to be lot i tedcml in..tm pz  aUlMIA MUAUMR A Wm SnLY From Pnwfsct rltati d l. - Omulatiw COnstion 19_5 1986 1987 . _ _ 1989 1990 1991 Part ac t Udt 1 2 3 4 T 2 3 4 T 2 3 1 4 1 23 4 I 2 3 4 T 2 3 4 1 2 3 4 A. later Su91y_ A.L I Intalattimn mains VI 5 10 12 A.2 Fahabiltatitn pl1rg stations X 20 50 80 100 I AJ3 ozttwtcin stornia tar Z 40 80 100 A.4 Ikwery rters/alcries (000) 10_ 2_ 25 30 35 40 A.4 Installatin of eters (OOD) 6 12 19 25 30 35 40 45 50 55 606 666 70 A.5 ImtalIat1m of hIm .amecth (O0) 2 4 6 8 10 t 13i 14 6 17 19 _ 22 24 26 A.6 blubiLtAticr/e2uic Zm Si 2 10 20 30 40 50 60 70 _ 90 100 AL7 ehbillttatn tri.1isomn yatem_ 2 8 14 20 25 30 35 40 45 50 55 6065 70 75 SD 90 ltl A.8 Rubhllltatim trsatbt plaitX 2 10 20 30 45 60 s0 90 100 B _ero B.1 Gatniction coUector 2 _ 15 30 45 60 90 100_ I C SoUd mte C. I 1uwery collectlio equlpent _ 20 40 60 90 100 C.2 livery rqmir dipeqiimprnt _ 100  ale w,januA warn x iw fmhct lwZut"fmi Idujal - Oinzladw 1.Lu irni INS IN?198 iE Igo 190 99 hirt _ T T 4 _ 2 3 _ _ 2 5 13 jTT T 2 3 _ _ 2 3_ 2 3 _ _ 2T T3 . ItitutmuIRd ___M_tatim_ hI Iuwiw ic1as 20 50 So0100 D,2 Izubtttul utuwp1wu tinkm Z 10 20 3 0 50 WI 0 10 W _ I LI Saulu axtmietai X _ 30 40 _ _ _ As 70 7! OD _ X0ff __85 90 95 100 L2 lwy . Zcaw X 10 25081- 0 l 0 _ L3 pNcrziwuicn a dstappr~oject Z101 20 80 60 80 90 100 5.4 SoUd Ite Study x 2 60 100 ______________ _ii____ 1 _ ____, , ==_ __ __ __ __I_ __ _ _ _ _ _ __ _,  - 35 - ANNEX 7 Page 1 of 2 COLOMBIA BARRANQUILLA WATER SUPPLY PROJECT Plan of Action for the Implementation of the Institutional Strengthening Program 1. The institutional strengthening program will be carried out by a consortium of consulting firms with special expertise and experience in the execution of technical assistance programs aimed at upgrading the manage- ment and the administrative, financial and operational systems and proce- dures of water utilities. 2. The objectives of the program, the scope of work and details about the nature of the technical assistance program to be executed are summarized in the Attachment. The program will be carried out in the following three phases. Phase I - Diagnosis/Assessment During this phase, the consultants will review and assess the adequacy of EPMB's existing organization, systems and procedures. It ends with an inception report sumarizing the main findings of the evaluation including the identification of major deficiencies and present a detailed assessment of EPHB's performance. It will propose improvement measures which could be implemented immediately by EPMB. Phase II - Plan of Action Based on the institutional and operational assessment, and taking into account the resources available to EPMB, the consultants will outline over- all targets for institutional improvements which they would expect to achieve under the institutional improvemert program. For each of the sys- tems and procedures identified as deficient and for EPMB as a whole, the consultants will develop specific recommendations for improvement and pro- pose a detailed plan of action to reach the previously defined targets. This plan of action will be worked out in close cooperation with EPMB and reviewed by the Bank and provide the blueprint for carrying out specific institutional/operational strengthening subprojects during the implementa- tion phase. For each of the systems and procedures t be improved, modified or newly introduced, the consultants will be asked to provide: (i) proposals for changes in systems and procedures including an evaluation of alternative solutions in terms of costs, benefits, practicality and adaptability at EPNB; (ii) comprehensive description of proposed system and procedure;  -36- ANNEX 7 Page 2 of 2 (lli) tentative or definite statement of hard and software needs for implementing the system; (iv) based on the assessment of the personnel qualifications estalbished during the evaluation phase, a statement on personnel needs and if necessary a program for in-house and/or outside training for staff and management; and (v) a detailed work program including level of effort needed by the consultant and a timetable Identifying all acions to be taken by consultant and EPHN. Work on individual systems should be coordinated with others taking into account relative priority and interdependency. Phase III - Implementation During this Phase, the plan of action developed under Phase II will be implemented as a cooperative effort of EPMB staff and the consultants. Training of EPHB's stafff and management and purchase of equipment as required would take place in this phase. 3. The contractual arrangement to be negotiated with the consultants selected will cover all three phases. The scope of work and level of effort of Phase III of the consultants will be defined in detail after the completion of the plan of action agreed to by EPMB and the Bank. 4. The following time frame is foreseen for hiring of the technical assistance consultants and carrying out of the institutional development program. Target Activity Completion Date Submission of draft terms of reference, budget and short list of consultants to the Bank. 11/20/85 Invitation of proposals lt101/85 Receipt proposals by invited consultants 01/3''86 Evaluation of proposals and recommendations of award submitted to Bank 03/15/86 Negotiation with consultants completed submission of draft agreement to the Bank 04/30/86 Signature of contract 06/30/86 Consultants begin work 08/01/86 End Phase I 10/30/86 End Phase II 02/28/87 Completion of Program 12/31/88  - 37 - ANNEX 7 Attachment I Page 1 of 3 COLOMBIA BARRANQUILLA WATER SUPPLY PROJECT Summary Scope of Work for Institutional Strengthening Program 1. The program will cover, but not be limited to, the development and implementation of improvements in the following areas: (a) Management and Administration - with the main objective to provide EPMB management with more efficient tools for the administration and control of the company. Special consid- eration should be given to the appropriateness of EPMB's current organizational structure and management subsystems such as management reporting, planning and internal control; (b) Accounting and Budgeting - including: the implementation of an appropriate financial and cost accounting system allowing the timely preparation of financial and cost statements on a consolidated and by-service basis; and the introduction of a budgeting system which, integrated with the accounting sys- tem, would permit effective control of expenditures and be compatible with financial planning; Cc) Personnel Management - including a detailed analysis of EPMB's current staff and staffing needs and the impl.menta- tion of more efficient policies and procedures for recruit- ment, job classifications, remuneration, performance evalua- tion, career development and training; Cd) Commercial System - needing complete overhaul to enable EPMB to register, and bill all connections and to improve collec- tions. Special attention should be given to: updating of customer file, census of customers, meter reading, bill pre- paration and distribution, collection of accounts, dealing with overdue accounts and customer complaints, and public relations; (e) Purchasing and Inventory - including: the introduction of more efficient and controlled procedures for the purchase of goods and materials and better warehouse and stores organi- zation and the preparation of an inventory of spare parts and materials including the identification and disposal of obsolete items;  - 38 - ANNEX 7 Attachment 1 Page 2 of 3 (f) Maintenance and Operation - including: the Introduction of an inventory of all equipment vital to EPMB's operation; the preparation of a short-, medirm-, and long-term equipment and vehicle replacement program for all Items found in sub- standard conditions; introduction of an appropriate system of preventive maintenance for key equipment; reorganization and reequlpment of repair and maintenance facilities; improved procedures for. the repair/replacement of defective equipment and vehicles; (g) Metershop - establishment of a program to repair, calibrate and replace defective water meters; (h) Water Transmission System - organization of systematic pro- gram for rehabilitating and operating more efficiently the existing system including: survey of state of repair of pipes, valves and hydrants; leak detection; systematic leak repair program; pitometric studies to improve the configura- tion of pressure zones and the implementation of measures to obtain better pressure zoning; development of program for the purchase and installation of equipment and the construc- tion of related structures; (j) Water Treatment Plant Operation - development, design and execution of a program to improve quality of treated water for Plants 1, 2 and 3 and integrate the operation of EPHBI's five treatment plants in a most cost-effective manner. This work would include structural improvements to the plants and the repair and replacement of equipment; and (k) Solid Waste Collectt n and Disposal - the implementation of the recoinendations contained in a 1983 solid waste study prepared by S. Cointreau,1/ including (i) the reestablish- ment of an efficient door-to-door solid waste collection program making best use of the collection equipment to be purchased under the proJect; (ii) the execution of pilot projects to identify the most efficient and cost-effective way to extend solid waste service to the poor neighborhoods; (iii) implementing more sanitary disposal practices at the dump; (iv) implementing a system for the regular cleanup of waste around public markets; tv) identifying future equip- ment needs; (vi) reorganization and reequipping the repair workshop; (vii) preparing a study on Barranquilla's future waste disposal options which should focus on the establish- ment of more sanitary and efficient practices and consider future disposal sites and transfer stations. 1/ S. Cointreau, Barranquilla, Colombia, Solid Waste Management, Preappraisal Mission Report to the World Bank, August 1983.  - 39 - ANNEX 7 Attachment 1 Page 3 of 3 2. In carrying out the program, it will be considered that: (a) any of the systems and procedures to be introduced should be appropriate to the environment of Barranquilla and, with adequate training, can be handled with the human resources available to EPNB and that any system or procedure be tested before its full implementation; (b) the introduction of new or improved systems and procedures will require comprehensive assistance, i.e., the consultant will be responsible for all aspects of the assistance, from diagnosis through final implementation, including training (on-the-job or formal practical training outside) and the identification and acquisition of appropriate hardware and software; (c) to the extent possible, consultants should make use of existing and proven systems and procedures like those already being utilized by water utilities in Colombia or elsewhere or being applied by INSFOPAL under the program for institutional strengthening of executing companies (FOREC); (d) the design of the technical assistance program as a whole should be integrated, coordinated and balanced; i.e., it should look at all facets of EPNB, recognize and establish priorities among the systems and procedures to be implemented, and take into account constraints to EPMB's capacity for absorbing new systems and procedures; (e) the priority of any improvement measures should be judged on its impact on the quality of service to EPMB's customers and EPMB's financial condition; and (f) wherever feasible, the possibility of contracting out of EPMB's systems (meter reading, billing, meter repair, repair of equipment, for example) to the private sector should be investigated.  - 40 - ANNEX 8 Page 1 of 2 COLONEBIA BARRANQUILLA WATER SUPPLY PROJECT Limits on Typj of Procurement and Prior Review Threshold US$ (000) Prior Review Contract Aggregate Type of Limit Value Limit Procurement Goods a/ 50 > 50 - ICB 10-50 400 LCB with foreign bid- ders having the opportunity to parti- cipate < 10 100 Price quotation from at least three quali- fied local bidders Spare Parts and Chemicals 2500 Price quotation from at least three quali- fied local bidders Civil Works 500 > 1000 - ICB 100-1000 3000 LCB with foreign bid- ders having the opportunity to parti- cipate a0-100 500 Price quotation from at least three quali- fied local bidders < 20 3500 Work order with pre- established prices to prequalified contrac- tors a/ Purchases of chemicals and spare parts financed under the working capital component would be procured on the basis of prudent shopping from local suppliers.  - 41 - ANNEX 8 Page 2 of 2 COLOMBIA BARRANQUILLA WATER SUPPLY PROJECT Project Cost by Procurement Method a/ Procurement Method Project Element ICB LCB Other Total Equipment/materials 14.9 0.4 0.7 b/ 16.0 (10.0) (0.1) (0.5) (10.6) Chemicals and spare parts - 6.2 c/ 6.2 - - (2.5) (2.5) Civil works/installation 3.2 3.8 3.8 d/ 10.8 (1.1) (1.3) (1.3) (3.7) Consulting services and - 4.2 e/ 4.2 training - (2.8) (2.8) TOTAL 18.1 4.2 14.9 37.2 (11.1) (1.4) (7.1) (19.6) a Figures in parenthesis are the respective amounts financed by the Bank. b/ Local shopping of small purchases (less than US$10,000) and, on an emergency basis for the immediate purchase of equipment and materials (valves, electrical equipment, vehicles) with a total value of up to US$400,000. c/ Local shopping. d/ Installation/repair of meters, house connections, valves and small pipe segments by work order. e/ Selected on the basis of proposals from short-list of consultants.  - 42 - ANNEX 9 COLOMBIA BARRANQUILLA WATER SUPPLY PROJECT Allocation of Loan Proceeds The proposed disbursement categories, the allocation of Loan funds and the disbursement percentages are as follows: Amount of Loan Allocation (Expressed in Dollar % Expenditure Category Equivalent) to be Financed (1) Equipment, vehicles, 8.5 100l of foreign pipes expenditures and 40% of local expen- ditures (2) Civil works 2.6 40% of total expen- ditures (3) Chemicals and spare 2.5 402 of total expen- parts ditures (4) Consulting services 2 3 100% of total and training and expenditures scholarships under Part D of the project (5) Consulting services 0.5 40Z of total expen- under Part E of the itures project (6) Interest and other 4.4 Amount due charges on the loan (7) Unallocated 3.5 TOTAL 24.0 --mm--  - 43 - ANNEX 10 COLOMBIA PROPOSED BARRANQUILLA WATER SUPPLY PROJECT Loan Disbursement Schedule Bank Fiscal Year Quarterly and Quarter Ending Disbursement Cumulative Disbursement (US$ Million) US$ Million Z of Total FY 1986 March 31, 1986 1.0 1.0 4.2 June 30, 1986 0.5 1.5 6.2 FY 1987 September 30, 1986 2.0 3.5 14.6 December 31, 1986 2.6 6.1 25.4 March 31, 1987 2.1 8.2 34.2 *June 30, 1987 2.0 10.2 42.5 F'Y 1988 September 30, 1987 1.6 11.8 49.2 December 31, 1987 1.6 13.4 55.8 March 31, 1988 1.6 15.0 62.5 June 30, 1988 1.6 16.6 69.2 F'! 1989 September 30, 1988 idi 17.7 73.8 December 31, 1988 1.1 18.8 78.3 March 31, 1989 1.0 19.8 82.5 June 30, 1989 1.0 20.8 86.7 FY 1990 September 30, 1989 0.6 21.4 89.2 December 31, 1989 0.6 22.0 91.7 March 31, 1990 0.6 22.6 94.2 June 30, 1990 0.5 23.1 96.3 FY 1991 September 30, 1990 0.3 23.4 97.5 December 31, 1990 0.2 23.6 98.3 March 31, 1991 0.2 23.8 99.2 June 30, 1991 0.2 24.0 100.0  - 44 - ANNEX 11 Page 1 of 6 COLOMBIA BARRANQUILLA WATER SUPPLY PROJECT Empresas Publicas Municipales de Barranquilla (EPMB) Notes to the Financial Statements General EPMB's financial statements of 1983 and 1984 are audited. In many instances, however, data had to be estimated since EPMB's existing accounting system, although adequate to record project-related transactions and expenditures, is not sufficient to provide a detailed breakdown of revenues, operating costs and balances by service. In addition to the assumptions specified for water demand and production, population growth, inflation, exchange rates, etc., the projected financial statements of 1985-91 are based on the assuMptions summarized below. Revenues l. Water and Sewerage Revenues. The average water tariff for 1985 is based on previous tariff for the first six montihs of the year and implementation on July 1, 1985 of the revised tariff structure approved as a condition for negotiation of IBRO loan by the National Tariff Board. Average water tariff for 1986 reflect a continuatioi of the 1.8 monthly increases currently being granted to most municipality water companies in Colombia. From 1987-91 water tariffs are projected to increase in line with domestic inflation. Sewerage tariffs during 1985-91 are assumed to remain at 50X of water billed. 2. Other Revenues (Water and Sewerage). Projected in line with number of new water and sewerage connections per year, assuming average charges per connection remains constant in real terms. 3. Solid Waste Services. Projected on the basis that solid waste tariffs will remain essentially unchanged in 1985. But, following the completion of a tariff study now being prepared by EPMB and to be presented to the Junta Nacional de larifas by end-December 1985 (as documented in minutes of negotiations),  - 45 - ANNEX 11 Page 2 of 6 such tariffs will be increased by 100X for 1986. From 1987 through 1991, solid waste revenues are assumed to increase in line with inflation. 4. Municipal Property Taxes. Revenues for 1985 reflect the 2501 increase in property taxes approved by the Municipal Council of Barranquilla at the beginning of the year. From 1986-91, property taxes are projected to increase in line with inflation. S. Other (Third Party) Revenues. Includes revenues from street cleaning and paving taxes, drainage charges, and gold stamp and miscellaneous taxes. They are projected to increase, in line with municipal property taxes. Operating Costs 6. Personnel. Projected costs for 1985 reflect EPMB's recent success in reducing the si:e of its staff and the 20Z salary increase already agreed to with unions. In subsequent years, personnel costs for water and sewerage operations are projected to increase with the number of water/sewerage connections, adjusted for inflation and for reduction in the staff per thousand connections ratio. For EPMB's other services, personnel costs are projected to increase with inflation keeping constant the total number of employees. 7. Chemical. Projected to increase with water production and inflation. 8. Power and Fuel. Assumes EPMB will resume paying electricity c:sts in 1986 at rate agreed to previously with Electricity Company and that this rate will be adjusted annually to remain constant in real terms. The volume of electricity consumed is projected to increase in line with the volume of water produced. Fuel costs for operations other than water and sewerage are projected to increase with inflation until mid-1986 when, as a result of the acquisition of vehicles and equipment financed under the project, these costs are expected to double and remain constant in real terms thereafter. 9. Materials. For water and sewerage operations, projected in line with number of new water connections per year, assuming average cost per connection remains constant in real terms. For other services, projected to increase with inflation. 10. General and Other. Consists mainly of benefits and compensation paid to retired workers. Projected as a fixed percentage of personnel costs for each service. 11. Depreciation. For water and sewerage operations, annual charges based on 31 depreciation rate applied to total fixed assets minus depreciation charges related to assets for  - 46 - ANNEX 11 Page 3 of 6 operations other than water and sewerage. Gross fixed assets and accumulated depreciation are revalued in line with inflation. For other services (i.e. solid waste), annual charges are based on a 10% depreciation rate applied to equipment ard vehicle purchases financed under the project. Working Capital and Other Assets Needs 12. Accounts Receivable. Projected on the basis of targeted anr.ual collections-to-billings ratio for each service; other targets such as months of sales in accounts receivable were not used because of EPMB's current high level of accounts receivable, much of which is more than two years overdue. During project execution, these accounts will be analyzed with the help of consultants and, if possible, written off. However, for purpose of projections, no write off is assumed pending clarification of the legal status of writing off of public assets. Projections assume a gradual improvement in the annual collections-to-billings ratio as follows: for water supply and sewerage services, from 75% in 1984 to 85% in 1990 and thereafter; and for solid waste services, from 55% in 1984 to 85% in 1990 and thereafter. For municipal property taxes and third-party payments, the collection/billing ratio is expected to drop to 60% in 1985, reflecting anticipated collection problems associated with the recent large increase in property taxes, and then to increase gradually to 85% in 1990 and thereafter. The above ratios differ from those which appear in the key performance indicators since such indicators represent targets of improvement for EPMB. 13. Inventory and Material in Transit. Projected to be equivalent to about 6 months of chemical and materials costs. 14. Accounts Payable. Includes payable to suppliers as well as accumulated past due liabilities such as prinicipal and interest owed on short-term debt. They are projected to decline gradually as a percentage of operating costs (excluding personnel costs) and take into account EPMB's improving working capital position particularly during the early years of project execution. 1S. Other Current Liabilities. Mainly deposits and collections for third parties. Projected to increase in line with revenues from third parties. 16. Long-Term Debt Due in One Year. Projected on the basis of EPMB's existing and future debt service requirements. 17. Other Assets. Miscellaneous a%sets ureojected to remain constant in real terms. 18. Long-Term Debt. Broken down into long-term debt secured by pledged collections, which is projected to decline gradually  - 47 - AM= 11 Page 4 of 6 overtime in accordance with the established amortization schedule for these loans, and other long-term debt, which includes the IBRD loan as well as yet-to-be identified loans contracted to finance investments in 1989-91. Cash and Repayment of Arrears to Major Creditors 19. Cash and Other Liabilities. Minimum level of cash is assumed to be about one month of total consolidated operating costs. As the below analysis shows, once EPMB's financial recovery takes hold and as the loan's working capital component is disbursed, EPMB is expected to generate substantial levels of excess ca5h which could be used to reduce overdue debt to majors creditors such as the Electric Company (CSBZ5 nn.), Social Security (CS250 mn.), I.C.B. (C$66 mn.),and SENA (CSSO nn.). Year 1986 1987 1988 1989 1990 1991 (Pesos Millions) EPMB Net Internal Cash 6enerat'n 224 597 1110 1506 1898 2278 Less: IBRO Counterp't Funding Req. 0 79 374 675 237 115 Inc.Cash to Mlaint.Min.Cash Balance 95 a 0 O 0 a Excess Cash Avail.to Repay Creditors 129 518 736 831 1661 2463 At negotiations, agreement was reached that EPMB would sign contracts for the rescheduling of overdue debt with the above-mentioned creditors as a condition of Loan effectiveness. While the specifics terms and conditions for repayment of this overdue debt still remains to be defined, the above projections indicate that EPM3 should have in the future the resouces available to enter into meaningful rescheduling agreements with major creditors. Investment5 20. Total Investments. Includes the expenditures under the IBRD/FFDU financed project; expenditures for the completion in 1985 of a new water treatment plant; and other major yet-to-be  - 48 - ANNME 11 Page 5 of 6 identified water supply, sewerage and solid waste investments to be undertaken beginning in 1989. These latter investments are assumed to be financed in part by external loans and, as there is a Loan covenant which limits EPMB's annual investments and related debt, will only be permitted if EPMB demonstrates that the investments and debt are economically justified and that the company has the financial and technical resources to undertake such investments. 21. Capitalized Interest. Mainly capitalized interest on IBRO loan during the grace period from 1985 to 1989. Debt Service 22. Projected debt service requirements reflect interest and principal payments on existing and future borrowings as described in the financial projections. All external debt is revalued annually to reflect anticipated devaluation of the Colombian Pesos vis-a-vis the US Dollar. Interest payments on short-term debt is assumed to remain constant in real terms. Summarized below are the key features of the major new long-term debt to be contracted by EPMB. 23. IBRO Loan. USS24.0 million equivalent; 17 year term which includes four years of grace; 9.29% average interest rate; and 0.75% annual commitment fee. 24. FFDU Loan. C$931 million, of which CS554 million will be used as counterpart funds for the IBRD project and the remaining CS377 million for the completion of the new water treatment plant; 9 year term which includes one year of grace; and 25% annual interest rate. 25. Banco de Paris Loan. FF16 million (USS1.45 million equivalent) for completion of the new treatment plant; 7 year term; and average interest rate of 8.25%. Contributions 26. Department of Atlantico. C$600 million (USS4.3 million equivalent) to be provided by the Department Government in 1985-87 toward IBRO project financing. This committment is expressed in a letter of intention signed by the Governor of Atlantico and presented to the Bank during negotiations. At negotiations EPMB also informed the Bank that additional contributions of CS300 million from the Municipality and CS500 million from the Department of Atlantico are expected in 1986-88 to support capital investments, including a portion destined for the IBRO project. For purpose of the financial projections, however, only the Departmento's contribution of CS600 million for project counterpart funding is considered.  - 49 - ANNME 11 Page 6 of 6 Cash Flow Covenants 27. In addition to the above, several other assumptions were made for purposes of calculating EPMB's cash flow covenants. Working capital needs were allocated approximately as follows: 4SZ for water and sewerage operations and 55% for other services. Under the IBRD loan, all debt service requirements and investments were assigned to water and sewerage operations with the exception of US$3.1 million equivalent which was assumed to be disbursed in 1986 for solid waste services. As mentioned previously, EFMB is assumed to undertake sizable yet-to-be identified investments beginning in 1989 which will be financed in part with external borrowings. The denominator in the contribution-to-investment covenant is calculated on the basis of average investments for the preceding year, the current year and the following year.  - 50 - ANNEX 11 Attachment 1 COLOMBIKA BARRANQUILLA WATER SUPPLY PROJECT Empresas Publicas Municipales de Barranquilla (ElMB) Basic Information for Financial Statements (ColS Millions) Ritualcktud ----Pojected--------------------- 1953 191 1935 1996 117 1915 95 159 1991 Popuation ('U) 1115.25 1157.C NUDOO 1242.10 1295A 1331.19 1377.47 1125.68 1.53 Ettr lccmtsYe rEnd ('U) 80.71 95.0 97.6u 111.6u 12u.68 1f.0 151.6C1 157.60 1w60 MIt scue vg&.U) 7.13 93.19 91.60 1014.68 119.68 135.60 147.60 15.60 160.60 Na Viter lOu-s ('U) 3.3 4.8Z 12.tO 1.A 16.00 16.A 8.00 6.E 6.80 Fop ati Saud Viter-Per Cun.(OU) 549.56 578.61 6N1.84 737.09 819.04 966.1 155.4 1107.0 1151.4 Pation Save Vtr-Per St.lpe ('000) 125.59 266.18 275.45 255.35 321.0 FopulatinServedll-Pr Coi.(m ) 451 5C 531 591 66r 731 m 7M 7a op.laton SeriWn lite-Per St*pe CD in 20 Z0 20S z1S m lamp Rbout Yr End ('UN) 73.83 78.43 7. 95.70 I.30 113A 115.9A 1201.8 129.0 lam bouts l.('0U) 72.53 7613 82.72 91.35 180.0 10.65 116A 121.50 126.I 0 Is, Seaw omnts ('U) 2.68 4.60 8.57 9.70 8.60 1.70 6.80 5.80 '.0 Popuation Saurd-Swa ('0) 0.3 520.78 m7. 635.45 692.55 758.32 79016 123.36 1.52 Fopuati.mSuud-Samg (Z) 361 45? 1 511 S41 56! 57Z 56 591 Capecity fSst" 013 m) 132.10 132.18 166.A0 2MA. z2.90 294.80 201.8934.80 29.I9 Iald UV Prudoction (13am) 132.2Z 132.34 145.51 151.15 160.1 173.12 176.75 177.59 176.12 ibter tonsuptim- ctiu as 113 m) 73.12 74.77 92.11 97.96 .7Z 1414 109.91 113.17 115.3 Uitar C_nuption- St _*e as3 m) 1.5t 3.15 3.31 3.59 3.50 Total VMr Cunpt im a3 ) 73.12 71.77 92.14 87.06 6.27 117.33 113.12 116.76 119.53 I hmcm -rter 151 "51 III 42Z MOS 3t9 36? 341 32Z hou.Cos.couectiuZ n OM1.) 77.0 74.3 75.00 70.80 66.00 6t. 62.80 U.K 60J0 lq.g.CosAaStdipe (ilui/r .) 1.00 I.A 1.80 1.80 1.E lb Ug. Ta'iffil (CS) 12.65 13.78 15.30 23.0 28.08 33.11 39.10 4614 54.45 lgObbt Tariff Inme (a) 15.6? 9.95 11.1Z 55.6 11.91 19.5 19.5 18.9 19.3 Rug- UBIbe Tnffif ('85 C) 15.30 19.93 19.93 19.83 19.03 19.93 19.9 BIta Saip ter Tariff 9.50 O.58 O.S 0.50 0.50 0.50 0.50 8.50 0958 kg. Sunp Tofrfru' 1313 in ge 6.33 6.89 7.65 11.90 14.01 16.57 19.55 23.07 Z7.22 lRmver Eo qplopeeViterl Sa.Servlces 065 965 '75 71 8953 lIO 1061 1103 1145 tudberf op4 er O-therServices .ii 94 SO 751 75D 759 1!5 750 759 11_ eufE ple- Tot 1706 1785 1&T 1531 1613 1755 1911 153 1955 h*berU S EDypesrOU lUter Cu. 10.7 10.1 7.9 ?.5 7.0 7.0 7 .. 7.0 7.0 hmalJIS PFnmead Cost per Perm 5931 697619 93712 1809571 1195353 1356761 1650512 1547639 229214i Tota IRS Pmud Cot (m) SOt.57 693.4 69.79 791.77 1059.79 116.01 1751.55 21N.64 2631.91 Total Othe r Sev eess P o l Cost (a) 513.60 56A 665.7 753.43 U.S 1094.17 1237.91 1460. 17M.6 Inflatim te- Loal 20.01 28.1 22.01 20.5 19.0 15.01 19.01 18.5 19.5 Inflation bte- latntetl 6.91 3.5 S.O 7.51 O.01 9.1S 1.9 8.01 8.09 Yr EndECcgRte (CR4) 0.A 113.73 i56.217 13.73 212.27 227.73 251.27 1.73 309.27 lvg.Exclpe ite ( ) 79.58 11.25 135.8 170.U0 MSAD 221.80 21.80 263.A0 2995 kmaelu atim 1.0 1.22 1.46 1.73 Z.O1 2.41 2.Bt 3.35 Loca Odelar 1.00 .0 0.05 1.72 0.61 9.52 8."  - 51 - ANNEX 11 Attachment 2 COLOMBIA BARRANQULLLA WATER SUPPLY PROJECT Empresas Publicas Municipales de Barranquilla (EPMB) Water Supply and Sewerage Services Income Statement (Col$ Millions) Actal ctwl ----- Year 1993 193 1905 1996 1987 1996 1909 1990 1991 Uater Tariffs 925.00 1030.00 1261.43 2091.16 2660.1 345113 429.20 SM2.6 6216.0 Smierae Tariffs 398.00 t15.00 562.1? 896.61 1007.22 1357J.6 1605.39 2051.29 2M6.99 Others 175.00 294.00 311.37 433.04 S1.2 617.01 426.90 385.51 436.71 TOTRL 1190.00 1765.90 2134.88 3120.81 1328.71 S96.U1 696.49 7661.66 9195.70 F.!rsonneh 504.57 603.41 648.79 784.77 IQ50.79 1406.04 1751.55 2140.64 2631.91 Chemicals 118.90 162.00 217.91 771.4 339.29 432.00 520.15 619.43 724.9 PO a