India - Bombay Water Supply and Sewerage Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 5875 PROJECT PERFORMANCE AUDIT REPORT INDIA: FIRST BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (CREDIT 390-IN) October 4, 1985 Operations Evaluaton Department This documet has a restricted distributlem ad may be used by reciplets oNly in the Performanuce of their oeid duties. It coments may net otherwise be discosed without World Bank authorization. FOR OFFICIAL USE ONLY PROJECT PERFODRANCE AUDIT REPORT INDIA: BCKBAY WATER SUPPLY AND SEWERAGE PROJECT (CREDIT 390-IN) TABLE OF CONTENTS Page No. Preface .... .................................................. I Basic Data Sheet AI............. 1 aighlights ........................................................ IV PROJECT PERFOHMANCE AUDIT MEMORANDUM I. ect Sr to ........................................ 1 Background ................................ I Objectives ................................ 2 Project Description ....................... 3 Project Revision and Implementation ......................... 4 Procurement ............................................ Project Costs ............ 5 Performance of Consultants .................................. 6 Institutional and Financial Performance ..................... 6 II. SUPPLE4ENTARY COMENTS ...................................... 8 Performance of the Bank ..................................... 8 Revision of the Project ................................... 11 Financing Plan and on-lending of Credit .................... 11 Institutional Development ................................... 14 Use of Consultants ................. .................... 15 Sustainability of Benefits .... .............................. 16 Economic Evaluation ........... .......... ... .......... 16 III. CONCLUSIONS ... ............................. 17 Attachment - Comments from the Government .......................... 19 PROJECT COMPLETION REPORT I. Introduction ................. .. ....... ...... 21 II. Project Identification, Preparation and Appraisal ............ 23 III. Implementation ............................................... 27 IV. Operating Performance ....... .............................. 33 V. Financial Performance ..........*0...0.... ............... 34 VI. Institutional Performance and Development .................... 45 VII. Project Justification ........................................ 48 VIII. Bank Performance ............................*............ 49 IX. Conclusions ............................................... 51 This document has a reniced disrbution and maybe used by ripiaetsdonlyintmpueanneuceor their official duties. Its contents may not otherwise be disdosed without Wodd Bank authoriation. TABLE OF CONTENTS (Continued) ANNEXES I Schedule of Disbursements 2 Income Statement FYs 1975-81 3 Statement showing the details of training given to Officers MAP - IBRD No. 13372 PROJECT PERFORMANCE AUDIT REPORT INDIA: BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (CREDIT 390-IN) PREFACE This report presents the results of a performance audit of the Bombay Water Supply and Sewerage Project for which Credit 390-IN of US$55.0 million was approved in May 1973. The credit for this project was the first lending operation of the Bank Group for the community water supply and wastes disposal sector in India. It was made to the Government of India (GOI) to be relent to the Bombay Municipal Corporation (BMC) through the State Government of Maharashtra (GOM). The Development Credit Agreement was signed in January 1974 and became effective on March 13, 1974. Other legal documents comprised the Maharashtra Agreement between the Governor of the State of Maharashtra and IDA and the Project Agreement between IDA and BMC. The original Closing Date of December 31, 1978 was extended twice to June 30, 1981, and the final withdrawal was made in May 1981 when the account was closed, fully disbursed. The Project Performance Audit Report (PPAR) consists of a Project Performance Audit Memorandum (PPAM) prepared by the Operations Evaluation Department (OED) and a Project Completion Report (PCR) prepared by the South Asia Regional Office. Preparation of the PCR was based in part on a report provided by the Water Supply and Sewerage Department of BMC. OED has reviewed the PCR, the Appraisal and President's Reports, the legal documents and transcripts of the meeting of the Executive Directors when the credit was approved. Documents in the Bank Group file have been reviewed, including documents pertaining to the Second Bombay Water Supply and Sewerage Project (Credit 842-IN), and staff familiar with the project have been interviewed to the extent possible. Further, an OED mission visited India to discuss the project with officers and staff of BC, GOM and GOI and with representatives of the local engineering consulting firm involved with the project. The delay in issuing the PPAR resulted from a protracted review of the project's his- tory and subsequent developments on follow-on projects. The audit finds that in most respects, the PCR accurately describes the project experience in sufficient detail to support the lessons and conclusions which emerged. An exception is the PCR discussion of the project preparation, appraisal and negotiation stages, which, in the opinion of the audit, require more attention and a somewhat different treatment as particularly interesting and important aspects of the experience with this project. Otherwise, the PPAM summarizes and attempts not to repeat the details provided in the PCR and, in addition, provides Supplementary Comments on the performance of the Bank, revision of the project, financing plan and on-lending of the credit, institutional development, use of consultants, and sustainability of benefits. Following standard OED procedures, copies of the draft PPAR were sent to the Government and the Executing Agency for comments. Comments received from the Government have been reproduced as an Attachment to the report. PROJECT PERFORMANCE AUDIT BASIC DATA SHEET INDIA: BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (CREDIT 390-IN) KEY PROJECT DATA Appraisal Erpectation Revision (April 1973) (June 1975) Actual Total eroject Cost (USS million) 158.2 280.0 250.8 Overrun (Underrun) (%) - 58 /a Credit Amount (US$ million) 55.0 55.0 55.0 Disbursed - - 55.0 Date for Completion of Physical Components 06/30/78 06/30/80 /b 05/12/81 Proportion Completed by Appraisal Target Date () 100 100 59 Proportion of Time Overrun (Underrun)(Z) - - 60 Internal Financial Rate of Return (Z) 1% - 5Z-6Z Ic Financial Performance Satisfactory - Good Institutional Performance Satisfactory - Satisfactory Cumulative Estimated and Actual Disbursements (US$ 000's) Fiscal Year: 1974 1975 1976 1977 1978 1979 1980 1981 (i) Appraisal est. 13.5 29.2 40.1 47.5 55.0 55.0 55.0 55.0 (ii) Actual 0.8 3.6 10.8 17.2 31.4 43.7 50.9 55.0 (iii) As Z of (1) 6 12 27 36 57 79 93 100 OTHER PROJECT DATA Original Actual First Mention in Files or Timetable - 1964 Government's Application - 1972 Negotiations - 03-04/73 Board Approval - 05/15/73 Credit Agreement Date - 01/22/74 Id Effectiveness Date 10/09/73 03/13/74 7e Closing Date 12/31/78 06/30/81 Borrower Government of India Executing Agency Municipal Corporation of Greater Bombay Follow-on Project: Name Second Bombay Water Supply and Sewerage Project Number Credit 842-IN Amount (USS million) 196 Credit Agreement Date 11/13/78 /a Compared to appraisal estimate. 7- In June 1976, the completion date was amended (with project description) to December 31, 1980. /c The incremental financial rate of return for the project was not calculated because separation of the project's incremental benefits from benefits resulting from other development activities was judged to be impossible. The return shown Is for the program as a whole as calculated for the follow-on project (Credit 842-I). /d Agreements were signed originally on June 8, 1973, but due to a legal defect in the authorization for signing of the Maharashtra Agreement, new agreements, with related amendments, were signed on January 22. 1974. /e The latest date for effectiveness was extended four times, the last date being April 30, 1974. - 111 - MISSION DATA Month/ No. of No. of Man- Date of Year Weeks Persons weeks Report Reconnaisance 11/64 0.6 2 1.2 01/19/65 Preparation I 01/67 3.0 3 9.0 04/21/67 Preparation II 12/67 1.0 1 1.0 01/19/68 Preparation III 11/68 0.3 2 0.6 12/18/68 Preparation IV 02/69 1.0 3 3.0 03/14/69 Preparation V 09/69 0.6 2 1.2 10/16/69 Preparation VI 07/70 1.2 3 3.6 08/03/70 Preparation VII 11/70 0.6 2 1.2 12/04/70 Preparation VIII 05/71 1.0 3 3.0 05/17/71 Preparation IX 08/71 1.0 2 2.0 09/30/71 Preappraisai I 12/71 2.0 4 8.0 01/11/72 Preappraisal II 04/72 0.3 2 0.6 05/23/72 -Appraisal 06/72 4.0 4 16.0 08/09/72 Post-appraisal 11/72 1.0 1 1.0 - Appraisal Report 04/30/73 Total 1B.6 51.4 Supervision I 05/73 2.0 2 4.0 06/22/73 Supervision II 12/73 2.0 2 4.0 01/14/74 Supervision III 02/74 0.3 1 0.3 03/28/74 Supervision IV 10/74 0.6 4 2.4 11/14/74 Supervision V 02/75 4.0 2 8.0 03/26/75 Supervision VI 06/75 1.6 2 3.2 08/06/75 Supervision VII 09/75 1.6 3 4.8 10/10/75 Supervision VIII 11/75 0.1 1 0.1 12/31/75 Supervision IX 02/76 2.0 2 4.0 03/19/76 Supervision 1 12/76 1.0 1 1.0 01/11/77 Supervision XI 05/77 1.0 2 2.0 07/08/77 Supervision XII 11!77 3.0 2 6.0 12/14/77 Supervision XIII 05/78 1.0 2 2.0 06/09/78 Supervision XIV 06/79 2.0 1 2.0 07/20/79 Supervision XV 01/80 0.4 1 0.4 02/19/80 Supervision XVI 05/80 1.8 2 3.6 07/11/80 Supervision XVII 10/80 0.7 1 0.7 11/18/80 Supervision XVIII 03/81 3.0 2 6.0 04/17/81 Total 28.1 54.5 COUNTRY EXCHANGE RATES Name of Currency : Rupees (Rs) Exchange Rate: 1972 Appraisal Year Average : US$1 - 8.3 Intervening YearL Average US$1 = 8.372 1981 Completion Year Average: US$1 - 7.9 FISCAL YEAR April 1 - March 31 - iv - PROJECT PERFORMANCE AUDIT REPORT INDIA: FIRST BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (CREDIT 390-IN) HIGHLIGHTS The project was a critical part of the first stage of a program intended to relieve a severe water supply and sanitation situation in Greater Bombay and which resulted from a thirty-year period of neglect (PPAM, paras. 1-2; PCR, paras. 1.01 and 2.02). Preparation of a project mutually acceptable to the Government of India (GOI), the State Government of Maharashtra (GOM), the Bombay Municipal Corporation (BMC) and IDA extended over 8 years. The results of this arduous exercise were rewarding, however, in that the project objectives as finally established were well defined, understood and supported by GOI, COM, BMC and IDA (rPAM, paras. 3,4 and 31-36). The major project objectives were realized. The increase in bulk water supply of 30% and the provision, for the first time, of treatment for all water for Bombay were impressive accomplishments. The delay of about three years in completing the project, and the cost overrun of about 60%, postponed and reduced the potential benefits, however. Because of the delay and the population increase, BMC was unable to gain on the availability of water on a per capita basis. It did, however, halt the long trend in deteri- oration of water service (PPAM, paras. 20, 39, 64, and 66). Improvement in sewerage was a comparatively small part of the original project and was further reduced by a project revision made in 1976 to reduce costs. The reduction probably was premature and unnecessary, and the loss in impetus toward doing something significant about pollution con- trol was unfortunate. Water distribution improvements also suffered as a result of the project revision (PPAM, paras. 8, 39 and 66). Although some important problems remain to be corrected, institu- tional development and financial performance exceeded expectations and were impressive. Most unusual was that funds generated from operations were suf- ficient to finance about 70% of the capital investments from FY75 through FY81, due in part to the project delays (PPAM, paras. 23-30 and 49-51). The internal finaacial rate of return on the water supply and sew- erage investment program, of which the project was part, has been estimated at about 6% (PPAM, para. 61). The proceeds of the credit to GOI were intended to be relent to BMC through GOM. By comparison with credit disbursements, however, the release of the funds to BMC was delayed, and even three years after disbursements were completed, about 30% of the proceeds had yet to be passed on to BMC. -v - Because of BKC's success in generating funds, hardships to M1C because of the delayed relending would be difficult to demonstrate (PPAK, paras. 46-48 and 68). The follow-on Second Bombay Water Supply and Sewerage Project is a continuation of the first project and a third project is propased. Sustain- ing and enhancing the benefits of this program requires partiLular attention to water distribution improvements and to wastewater treatment and disposal; at present benefits from improved water supply are seriously diminished by the increasing pollution in metropolitan Bombay (PPAM, paras. 58 and 59). PROJECT PERFORMANCE AUDIT MENDRANDUM INDIA: BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (CREDIT 390-IN) I. PROJECT SUMARY Background 1. This project was a critical part of the first stage of a major long-range program prepared by the State Government of Maharashtra (GOM) and the Bombay Municipal Corporation (BMC) to correct a desperate water supply and sanitation situation in the Bombay metropolitan area. By 1972, when the project was appraised, the water supply and sanitation services in Greater Bombay had been deteriorating for 30 years during which time the population had increased by 200% to about sixmillion. In 1966, monsoon failures and resultant drought caused many industries to close and population evacuation was seriously considered. In 1972, the monsoon again failed over parts of Maharashtra State, reducing BMC's water supply while immigration by refugees from the State's drought-hit areas further increased water demand. Water service to domesticc customers averaged three to five hours daily, at best, and supply to industries was severely rationed. In addition, there was virtually no water treatment and distribution was inefficient. The history of water resource utilization in the metropolitan area-about 4,400 sq. km. comprising catchments of at least 12 rivers--was one of uncoordinated and somewhat random planning and development (PCR, para. 1.01; Staff Appraisal Report (SAR), paras. 3.03-3.08, 5.01 and 5.04; SAR for Second Bombay Water and Sewerage Projectl/, para. 1.10). 2. Sanitation services in the metropolitan area were in more critical condition. Where sewerage existed, it was overloaded and rundown. In the unsewered areas, most altermative facilities were either improperly designed or operated--including BMC's collection and disposal services--and pollution by human wastes was extremely serious (SAR, paras. 3.06-3.08). 3. IDA involvement with the project actually began in 1964, eight years before the project was appraised, when the Government of India (GOI) asked IDA to assist GOM with financing of the Upper Vaitarna scheme-two dams, a reservoir and transmission conduits--which would be used mainly as a water supply source for Bombay. When IDA found that the Upper Vaitarna project was already being implemented, another larger project to develop a water source on the Bhatsai River was proposed. Planning for the Bhatsai project was very preliminary, however, and, in 1965, IDA offered a technical assistance grant of USS0.5 million to engage consultants to complete feasibility studies and preliminary designs. The technical assistance deal 1/ Credit 842-IN. - 2- was never consummated because of resistance from GOM to the use of consul- tants and to the proposed scope of the studies. By the time that issue was resolved, Bank Group policy with respect to technical assistance grants had been changed (PCR, paras. 1.01 and 2.02; File Search). 4. Several years elapsed before a project mutually acceptable to GOI, GOM, BMC and IDA was identified. This was a very important period, during which project preparation was completed with considerable difficulty and with detailed involvement of IDA staff on all aspects. This involvement had an exceptional and positive impact on the relatively smooth way in which the project was eventually implemented (PPAM, paras. 34 and 35). 5. During the project preparation period, the local authorities considered action on the water supply situation to be too urgent (PPAM, para. 1) to delay dam and reservoir construction, and GOL, with its own resources, proceeded with construction of the Upper Vaitarna project and with design and tendering for the Bhatsai Dam. GOM also engaged engineering consultants to prepare a comprehensive water supply, sewerage and sewage disposal program and recommendations for a first stage project, including components to utilize the Upper Vaitarna and Bhatsai water resources. The same engineering consultants, in association with a management/financial consulting firm, were engaged again by the U.K. Overseas Development Ministry to prepare detailed project proposals for BMC--by this time the project was wholly a BMC operation--including the institutional, accounting and financial aspects (SAR; PCR, paras. 1.01 and 2.02-2.05). 6. The studies and reports were finally completed in May 1972. Field appraisal was in June/July 1972 with a follow-up mission in November 1972 (PCR, paras. 1.01 and 2.02; SAR, para. 1.02). The credit was approved in May 1973 and the agreements-the Credit Agreement, the Project Agreement with BMC and the Maharashtra Agreement between IDA and GOM-were signed in June 1973. The latest date for effectiveness was extended four times and the credit was declared effective on March 13, 1974. Effectiveness was delayed first by GOM legislative action required to establish the Water Supply and Sewerage Department (WSSD) in BMC and then by the need to resign all three of the agreements after GOM's Attorney General insisted that there was a legal defect (PCR, para. 1.02; File Search). Objectives 7. The overall objectives of the project, which were set out clearly in the appraisal and credit documents, were to improve public health condi- tions and relieve constraints on industrial and other development by revers- ing the trend of neglect of water supply and sewer services. All water would be treated (for the first time) and additional supplies would be conveyed to the metropolitan area. Water losses would be reduced and distribution would be improved. Some sewerage facilities would be rehabilitated and extension of service to new areas would begin. An effective water supply and sewerage agency would be developed within BMC and an authority established by GOI to control and allocate water resources in the Bombay metropolitan region (SAR, paras. iii, 1.01, 2.10, 2.11, 5.01 and 5.03-5.05). -3 - 8. Although ambitious, the project was not expected to resolve all of bombay's water supply and sewerage problems; this could not be expected even after a series of three or more projects. With respect to water supply, for example, the project would concentrate on the best possible utilization of sources of supply (existing or for which facilities were under construction already). It was not expected that 24-hour service would be achieved, but service would be increased from three to five hours daily in 1972 to seven or eight hours daily by 1978. It was recognized also that the sewerage components would not keep up with increasing wastewater production; extreme pollution in receiving waters probably would have increased even after the project was operational (SAR, paras. 5.01, 5.03-5.04 and Annex 4). 9. Absent from the stated objectives of this first project was any effort to improve sanitation for the hundreds of thousands of the total population which could never be expected to have access to a water-borne waste disposal system.2/ Project Description 10. The principal elements of the project as appraised are listed in the PCR (para. 2.10). They included facilities required to utilize water from the Bhatsai River scheme (PPAM, paras. 3 and 5) and a large treatment plant at Bhandup (Map) was to provide complete treatment of water from all sources used by Bombay. The treated water storage and distribution works included a large balancing reservoir and 11 service reservoirs required to improve and control distribution in the various distribution zones (SAR, para. 4.03 and Annex 4). 11. Sewerage facilities included construction of seven pumping stations and reconstruction of nine others, improvements to sewage treatment plants. new trunk and branch sewers, and feasibility studies and preliminary desig,is for a second stage project (SAR, para. 4.03 and Annex 4). 12. The project also provided for development of WSSD in all areas of planning, operations and management, with the assistance of consultants and training programs (SAR, para. 4.03 and Annex 4). 13. The project was supposed to be completed by June 30, 1978, at a cost of about US$158.2 million equivalent, including US$48.6 million equivalent in direct and indirect foreign exchange costs (PCR, para. 3.12; SAR, para. 4.04). 2/ It should be noted at this point that a sanitation program has evolved since then which addresses some of the needs of the low-income popula- tion. Components of this program were included in the Second Bombay Water Supply and Sewerage and the Bombay Urban Development Projects and more are intended for the Third Bombay Water Supply and Sewerage Proj- ect. -4- Project Revisions and Implementation 14. Project implementation started slowly due mainly to administrative delays and the need to redesign the water treatment facilities as the result of pilot plant tests (PCR, para. 3.01). The delays prompted an in-depth review of project timetables and cost estimates in 1975 whch revealed the probability of an overrun in total costs of about 140% (US$216.1 million equivalent). Also, construction of GOM's Bhatsai Da- had fallen far behind schedule. These developments led to a revision (1976) which was intended to bring total costs down to US$280 million equivalent, the perceived limit of BMC's financial resources, and also to reprogram some works to a more cost effective schedule in view of the two-year delay in obtaining additional water from Bhatsai. The estimated cost of USS280 million equivalent was still US$122 million (77%) above the original estimate (PCR, paras. 2.11, 3.12 and 8.04; and File Search). 15. The project revisions b_nerally postponed components to future stages of development. Sewerage elements hore the brunt of the revisions with a cut of about 70% in cost terms. In physical terms, the deferred sew- erage items (PPAM, para. 11; PCR, paras. 2.14 and 3.12) postponed the major effort to improve sanitation. The cost affect of the reduction in water supply components was minimal, but the result was further postponement of distribution improvements leading eventually to 24-hour service (PPAM, para. 10; PCR, paras. 2,.12, 2.13 and 3.12). The revised project was expected to be completed by mid-1980.3/ In the meantime, the first project was over- lapped by the Second Bombay Water Supply and Sewerage Project which was appraised in January 1978 and for which Credit 842-IN for US$196 million equivalent was made in November 1978. 16. Following redefinition of the project, project administration improved. Constructioa progress was reasonably good and the revised imple- mentation timetables probably would have been maintained except for shortages of essential construction materials and supplies--including the results of frustrating experiences on steel plate imports (PCR, para. 3.10)--strikes at manufacturing plants, migration of skilled labor to the Middle East and mal- function of some equipment purchased for the project. The project was com- pleted in May 1981. All of the above delaying factors were beyond BMC's and GOM's capacity to prevent, but action by them appears to have mitigated the effects (PCR, paras. 3.02 and 3.05-3.08). Procurement 17. One difficult issue during project preparation and credit negotia- tions concerned the extent to which international competitive bidding (ICB) 3/ When the project description in the Credit Agreement was changed offi- cially (by letter in June 1976), the date of expected completion was extended further to December 31, 1980. -5 - in accordance with the Bank's guidelines4/ would be used, and, following on that, the project components that would be eligible for financing from the credit. Eventually it was agreed that civil works contracts and a small amount of equipment and materials would not be subject to ICB and would not be financed from the credit. The bulk of the equipment and materials, includ- ing items such as steel plate for pipe manufacture which would be purchased for BMC by GOI purchasing agencies, plus expenditures on training and local and foreign consultants, was to be financed from the credit. Of the equip- ment and materials financed from the credit, about 80% was to be obtained through ICB and the balance, through local bidding. Local preference of 15% was given to domestic manufacturers in the evalution of bids for contracts on which there was foreign competition (SAR, paras. 4.12 and 4.13; President's Report, para. 27; Project Agreement, Schedule 1). 18. Procurement proceeded with notable problems. There were difficul- ties in awarding contracts to local suppliers in a manner acceptable to IDA (PCR, para. 3.09). Also, there were delays in the award decisions and proce- dures for some of the sever construction contracts (PCR, para. 3.01). BMC's problems with procurement efficiency have persisted to the present time--or may even have grown worse-as evidenced by the experience with the follow-on second project (File Search). 19. As a whole, the results of the procurement are rated as satisfac- tory. Most civil works were completed behind schedule, duxe in part to short- ages of construction materials and other factors beyond the control of the contractors (PPAM, para. 16). In terms of quality, the civil works were generally acceptable, with some works of high standard. The quality of goods supplied also was generally satisfactory. However, there were problems with some manufactured goods, which required correction (PCR, paras. 3.02, 3.26 and 3.27). Project Costs 20. Overall, more project contracts were won by local firms than had been expected, which contributed to foreign exchange expenditures being 75% less than had been estimated (PCR, para. 3.11). The actual total cost of the project as completed was US$250.8 million equivalent, or 59% more than the appraisal estimate of USS158.2 million equivalent for the original project (PCR, para. 3.12). These figures are not strictly comparable, however, because of the reductions that were made to the project (PPAM, paras. 14 and 15). Had it been carried out completely, the original project probably would have cost about USS375 million equivalent, representing an overrun of about 137%. 21. When the cost of the original project was re-estimated in 1975, a detailed analysis showed that the increased estimate was due to: (i) origi- nal under-estimation of unit cost (22%); (ii) redesign of certain components 4/ "Guidelines for Procurement under World Bank Loans and IDA credits", published by the Bank in April 1972, as revised in October 1972. - 6- (16%); and (iii) additional price escalation (62Z). Items (i) and (ii) resulted largely from project appraisal before detailed design and final cost estimates were completed. As for price escalation, the original cost esti- mate was made before there was any indication of the world-wide inflation that was to take place; the cost escalation figure of 5% per year compounded over the construction period, as used in the original estimates, was a fairly standard estimating figure in 1972. By the time of the revised estimate, how- ever, the cost-of-living index in Bombay and the cost of materials and of shipping and haulage rates had increased by about 50% to 70% since mid-1972. The cost estimating for the revised project in 1975 took advantage of that experience and the results were reasonably good; final costs of the revised project were about 10% below the revised estimates (PCR, paras. 3.12-3.16; File Search). Performance of Consultants 22. Most design, detailed engineering, construction supervision, spe- cial technical studies and management advisory services were carried out by foreign consultants, which in some cases were associated with local consult- ing firms (PCR, paras. 2.03 and 2.06). While there was considerable initial resistance to the use of consultants (File Search), their performance and the rapport established with BMC were eventually regarded highly by BMC, accord- ing to the PCR (paras. 3.19-3.21, 3.24, 3.25 and 3.27). This conclusion is supported generally by OED's field interviews. However, the audit has found some criticism by WSSD and IDA project staff about the foreign engineering consultants' preliminary designs for the water treatment plants where certain historical data on raw water quality were overlooked or incorrectly inter- preted. This resulted in the redesign and a consequent delay and increase in estimated costs (PPAM, paras. 14 and 21). In addition, unit costs used in the original cost estimates were too low. Institutional and Financial Performance 23. WSSD was established in 1973 as a step in the preparation of the project. Prior to that, responsibility for water supply and sewerage was divided among various technical and support units in BMC. Technical opera- tions with respect to planning and development were weak and poorly coordi- nated, and operation and maintenance of facilities were fair at best. Financ- ing and accounting for water supply and sewer services were part of BMC's consolidated municipal finance and accounting systems. Water service charges were generally sufficient to cover recurring cash expenditures and about one- third of the cost of limited capital investments. There was no system of charging for sewer service and waste disposal and costs of those were met from general municipal revenue. As a condition of credit effectiveness, legislation was enacted by GOM which permitted WSSD to become a separate financial accounting entity within BMC, with effect from April 1, 1974 (PCR, paras. 5.01, 5.02, 6.01-6.02; File Search). 24. During the course of the project, WSSD developed into a sound institution with good management and staff. WSSD's financial position is _7 - rated as sound, with a solid revenue base from which to further expand and improve service. Technical operations, under the direction of competent senior engineers, brought together in a unified WSSD, are generally very good, particularly on operation and maintenance of the water supply facilities and, to a lesser degree, sewerage. Execution of new works, after procurement, is also good, particularly considering the size and complexity of the works. Procurement efficiency, however, is low (PPAM, para. 18; File Search; field interviews). The OED audit mission noted that, for the most part, WSSD officers and staff exhibited an exceptional degree of pride in their work and their organization. 25. Financial performance of WSSD is well covered in the PCR (paras. 5.03-5.18), but it is important enough to summarize here and to expand with more recent data. WSSD's separate funds and accounts-on an accrual basis--were established in FY75 and beginning in FY79, WSSD has submitted accounts prepared along commercial lines along with a separate set of accounts prel.ared in the municipal format. Performance in establishment of the new accounting systems, including some computerization, was impressive over the first five years of the project, but recent progress in resolving a number of serious remaining problems has been slow (File Search and Audit Reports for FY75-FY84). 26. Audit reports on WSSD have been exceptionally comprehensive, covering all aspects of WSSD operations, and, although prepared by BMC's Municipal Chief Auditor, appear to have been completely impartial. Reports for FY79 through FY84 have been completed within the six-month period specified in the Credit Agreement; delays in receipt by IDA have been in the transmittal of the reports by :;NC (PCR, para. 5.09 and File Search). 27. For FY75, BMC approved new tariffs and taxes for WSSD services including benefit taxes based on property valuations and sewer service charges at 50% of the current water service charges. Further increases and adjustments to charges were made in FY77, FY83 and FY84. Tariffs for water supply and sewerage services have no designed relation to economic costs or efforts to conserve water. The tariff structure is designed, as a matter of policy, for a heavy cross subsidization from industrial/commercial users to domestic users, however, and from the wealthier domestic groups to the poor. The result is that the charges for service for domestic users are well below the limits of affordability, with the poor and slum dwellers receiving what service they get at little or no cost. During the project, a tariff study was made and the results were discussed with IDA (as agreed under the second project), but no significant changes in structure have been made (PCR, paras. 5.13 and 5.14; File Search). 28. Since FY75, water supply and sewerage services have been financially self-sufficient, regardless of the apparent lack of relation to economic pricing. In fact, the financial results, in toa:s of earnings and contributions to investment, have been exceptionally good. Under the Credit Agreement, WSSD was required to earn an annual surplus which, together with any internal funds available for investment, would provide at least 33% of - 8- capital expenditures in FY75 and FY76 and 40% thereafter. The 40% require- ment was repeated for the second project. Actual contributions to invest- ments exceeded these requirements every year, ranging from a low of 52% (FY76) to a high of 124% (FY80) and, most recently, amounted to 82% in FY84. These results are because of substantially higher revenues than projected, controlled operating costs and, most of all, substantial shortfalls in execution of the actual capital investment program--both for the first and second projects--compared to the financing plans on which annual budgets have been based (PCR, paras. 5.05 and 5.06; Files search; Audit Reports). 29. Similarly, the return on net fixed assets has been high compared to most water supply and sewerage operations. During the period FY75 through FY83, they ranged from a minimum of about 10% to a maximum of alm3st 19%. These return figures are deceptively high, however, because: (i) they are based on fixed assets valued at FY75 prices; and (ii) some new fixed assets resulting from the project were not transferred from "works-in-progress" to fixed assets on a timely basis. Revaluation of fixed assets has been recommended by the Auditor and requested by IDA for the last few years, but no action by BMC had been taken through FY84 (PCR, para. 5.07; Audit Reports). 30. Performance on metering, billing and collections was unsatisfactory throughout the project period, but some improvement has been shown since then. Accounts receivable have been as much as 81% of WSSD's current billings (FY80) and have never been below 40%. They were about 52% in FY84 as against a target of 20% agreed under the second project (PCR, paras. 5.04 and 5.08; Audit Reports). The high ratio of accounts receivable to revenues is indicative in part to a failure by BMC to adopt a write-off policy for doubtful or disputed accounts. Weakness in cut-off policies for non-payment of bills is another cause of the problem. Recent efficiency in collecting charges in the year due appears to have improved somewhat to 70% to 80%, but this still is not particularly good. II. SUPPLEMENTARY COMMENTS Performance of the Bank 31. The preparatory stage for this project up to the date of approval of the credit was particularly long (eight years) and so involved that the history defies attempts to arrive at an understandable summation. This may contribute to the fairly wideheld and more easily expressed notion, as reflected in the PCR (paras. 8.01 and 9.02), that the long preparation period was caused primarily by the Bank's insistence on feasibility studies to establish the proper order of development of water resources for the metropolitan area. And the question has been raised as to whether the Bank should have recognized earlier that the Bhatsai water source wold be used and, therefore, provided financial asistance more quickly (PCR, para. 9.02). In the opinion of the audit, the copious records indicate that this conclusion is an oversimplification which distorts the picture. -9 - 32. It is true that the first expression of concern by Bank staff was about the need for engineering feasibility studies, and perhaps there was an initial degree of overcaution in this respect. But there were many other issues of at least equal importance to be settled before the project could approach the state of preparation suitable to be the basis for a loan. On the physical side, there was the need to incorporate and integrate supporting works such as distribution improvements and means for disposal of additional wastewater. Other critical matters included jurisdictional problems, legis- lative action required by GOM, the establishment of an appropriate water supply and sewerage institution, cost recovery, the development of a financ- ing plan (particularly for counterpart funds), lending and on-lending arrangements, the use of consultants, and procurement and other implementa- tion procedures. None of these matters had been thought out when the Bank was first approached, and some remained as unresolved issues for so long that eventually actions were required as conditions for negotiations, Board pre- sentation or credit effectiveness. On the other hand, the decision that the Bhatsai scheme would proceed and be the source of water for the project was accepted by the Bank late in 1966, nearly six years before the project was appraised (File Search). 33. The project preparation period, although overly long and difficult, was of particular value. This was the first time that the Bank and GOI worked together on development of a project involving a revenue-producing municipal enterprise providing services which, in India, were not considered as likely to be financially self-supporting. The project also was one of the first water supply/wastes disposal projects which the Bank had considered, and it was the largest up to that time. At the beginning, the various cor.- cerned parties had widely dissident concepts about all aspects of the proj- ect. With considerable effort and perseverance (and compromise), these con- cepts gradually converged until finally there was a project to which GO, GOM, BMC and the Bank apparently were committed and able to support. 34. This was not an easy process for any of the agencies. Bank rec- ords, including correspondence from India, are replete with examples of the frustrations. There are expressions of dismay by the Bank on the number of seemingly arbitrary decisions by GOI, GOM and BMC on a number of basic tech- nical and -ther matters. At one time at least (1969) there was considerable pressure within the Bank to drop the project. But it is to the Bank's credit that projects and country program staff were allowed to prevail and project preparation crept ahead without too much erosion of the Bank standards of the time. There appeared to be no pressure within the Bank to lend before the project was ready. Had the Bank proceeded with lending at an earlier stage, it is probable that this would have been a "problem project" during much of the implementation period. 35. The audit is of the opinion also that the "trial by fire" during the preparation period, when most major issues were resolved, resulted in a healthy rapport, based on a considerable amount of understanding and mutual respect, between BMC and Bank staff in general, and that this carried over to the implementation phase in spite of two major potential problems. First, - 10 - some key Bank staff working on the project were changed when the Bank was abruptly reorganized while the appraisal report was being prepared. And, second, the absence of a direct link between the IDA credit disbursements and the performance of BMC, the implementing agency, because of the on-lending arrangements (PPAM, para. 35). 36. None of the above is intended to imply that the preparation period was not overly long and extremely costly, even considering the complicated decision-making processes of GOI and its agencies. However, there were bene- fits to the project from the experience and these should not be overlooked. 37. Bank attention to the project during implementation has been rated by staff of BMC and the local consulting firm as very professional and gener- ally thorough and helpful. The relationship with BMC was maintained at a very constructive level. Although there were a number of changes in the responsible Bank staff after appraisal, the quality and style of the staff were consistent, according to BMC. Review missions were of about the right frequency, provided beneficial technical assistance and were followed-up in a helpful mannter. There were some qualifications to the generally favorable rating, however, as follows: (i) there was relatively little communication from the Bank between missions and that at times additional Bank correspondence and reports could have helped in supporting attempts to get prompt attention by BMC's administration to necessary action proposed by WSSD; (ii) for a critical period of about 18 months the:e was no financial analyst on the review missions; (iii) missions should have included, at least occasionally, specialists in economic and social analysis; (iv) the Bank should have insisted on prequalification on all contracts, even when international competitive bidding was not required, as a means of reducing the considerable delays in award decisions which occurred; and (v) the Bank should have been more decisive on the award of a contract for the supply of butterfly valves, insisting on the award to the low (marginally) bidder in support of WSSD recommendations. Fail- ure to do so resulted in an awards committee decision to rebid and further delay. 38. The audit has noticed one other area in which Bank performance could have been more helpful. The annual reports of the Municipal Chief Auditor (PPAM, para. 26) have usually recommended practicable improvements in WSSD's operations, accounts and financial management. The files indicate that often these reports were discussed with WSSD during review missions. . - 11 - There is very little in the Bank's correspondence with BMC however, strongly urging action on the more important of the auditor's recommendations. And, in some cases, internal Bank reports have been inconsistent with the audit reports (File Search and audit reports). Revision of the Project 39. The PCR points out that the revision of the project in 1976 (PPAM, paras. 14 and 15) had a negative effect on improvement of water supply and sewe,. tge in Bombay and suggests that it may have been unnecessary (PCR, paras. 2.12, 8.04, 9.04, 9.05 and 9.07). The audit strongly supports these conclusions. There is no doubt that the rescheduling and re-estimating exer- cise in 1975 was necessary, considering the slow start on the project and the price escalation that was taking place at that time. But the action taken-- for water supply; deletion of five (of 11) service reservoirs, metering and distribution rehabilitation works; and for sewerage, deletion of almost all works (PCR, paras. 2.11-2.14)--was exactly contrary to some of the funda- mental project objectives, namely to make the most effective use of water sources and to help relieve some of the worst pollution. The deletions, classified as postponements to be taken up in a yet-to-be defined second project, had the effect of putting off for years the start of essential programs which the Bank had a hard time incorporating in the project in the first place, and which would take a very long time to finish, even without the delay. The audit considers, with the obvious benefit of hindsight, that it would have been better to find savings elsewhere and or finance for the apparent cost overrun than to make these particular deletions. In 1976, there already was evidence that BMC could generate finances well in excess of the requirements of a realistic investment program and, further, that the availability of water from the Bhatsai source probably would continue to fall behind schedule. 40. It should be noted here that some, but not all, of the deleted works, or their equivalent, were included in the second project which is running about three years behind schedule. In addition, Bank staff report that in recent years, WSSD has made a substantial effort to minimize water losses in the distribution system through leak detection and repair and waste control programs. On the other hand, some of the sewerage improvements included in the second project are being further postponed to a third project, mainly because of cost overruns, design delays and construction diffiCtLies. Financing Plan and On-lending of Credit 41. The financing plan, as spelled out in the Project Agreement, called for BMC to finance from internal funds available for investment, at least 33% of its capital expenditures (including for the project) during FY75 and FY76 and at least 40% during each fiscal year thereafter (Project Agreement, Section 4.03; PCR, para. 5.05). The balance of the funds required were to be obtained from loans (including the IDA credit), the sale of municipal bonds-on which BMC is quite successful--and a small grant from GOM (about - 12 - two percent of the investment program). The IDA credit of US$55.0 million equivalent was equal to about 35% of the estimated project cost and about 15% of the estimated cost of BMC's overall water supply and sewerage investment program for FY72-FY81 (SAR, paras. 7.10 and 7.11). The credit was expected to cover the estimated foreign exchange costs of the project plus about six percent of local currency costs (President's Report). 42. The PCR is silent on the matter of relending the proceeds of the IDA credit to BMC. Nor do the Presider,t's Report or SAR reflect the fact that during the project preparation period there was a major issue about relending. The main problem was about the -additionality- of the credit proceeds. GOT took the position that development of urban water supply and sewerage was a state responsibility. The size of GOI's support to the various states for development was based on GOI's anticipation of the overall volume of finances available to GOI, including foreign aid, and the needs of the individual states, and it was then up to each state to make the best use of whatever funds it obtained, regardless of the original source. Otherwise, according to GOI officials, undesirable interregional disparities in government assistance might result. Thus, any Bank Group lending would be to GO, and, regardless of the amount of this lending, COI's contribution to the state's plan (in this case, GOM's plan) would not change. The Bank records show that at one stage Bank staff reported GO officials as expressly indicating that GOI had no intention to pass on to BMC, in whatever form, the proceeds of any credit for the Bombay project (File Search). 43. The "additionality" issue eventually subsided, at least as far as this project was concerned. But Bank staff were still concerned about the absence of a direct link between a credit to GOI and BMC and its financing plan; the credit would not even appear in the financing plan because it would not be channeled directly to BMC. It was even uncertain that the credit pro- ceeds would filter down to BMC in an identifiable form. Furthermore, BMC might not perceive any benefit from the credit while it (BMC) would be expected to bear the "burden" of the various conditions of the credit. Therefore, there was concern about the probability of the credit conditions being carried out satisfactorily by BMC. (The Second Power Transmission Proj- ect for which Credit 242-IN was made--PPAR No. 3006--was an example of how IDA's influence on State Electricity Boards was limited by this -arm's length" relationship). 44. The final legal documents do not contain anything unusual with respect to on-leading. The Credit Agreement states (Section 3.01b) that, "The Borrower shall make the proceeds of the Credit available to Maharashtra for relending to BMC under Subsidiary Loan Arrangements to be entered into between Maharashtra and BMC--------". The Maharashtra Agreement states (Section 2.03) that, *Maharashtra shall relend the proceeds of the Credit made available by the Borrower, to BMC under appropriate arrangements to be entered into between Maharashtra and BMC". Also, (Section 2.05), "Maharashtra shall make available to BMC, sufficient funds to enable BMC to complete the project----------. And finally, the Project Agreement states that: GI has agreed to make the proceeds of the credit available to GOM; GOM - 13 - has agreed to assist BMC in carrying out the project; and the proceeds of the credit will be relent to BMC under subsidiary loan arrangements between GOM and BMC. 45. The actual financing of the project and the use of the credit proved to be quite different from what was expected. As described elsewhere (PPAM, para. 28; PCR, paras. 5.11 and 5.12), bMC's actual contribution to the investment program for the period FY75 through FY81 totalled about 71%, greatly exceeding the 40% target. An additional six percent came from invest- ments realized and only 23% (about IR 591 million) came from loans external to BMC and the sale of bonds, compared to the expected 54% or IR 1,500 mil- lion (SAR). 46. The concern about BMC's performance in satisfying the credil condi- tions, given the lack of a direct relationship between the credit and BMC, proved unnecessary; BMC was as consc.entious as if a loan had been made to it directly. On the other hand, the concern about the credit proceeds filtering down to BMC turned out to be realistic. Disbursements from the credit were passed on to BMC slowly and only in part and this was a continual matter of concern for BMC. Although disbursements began in BMC's FY74, none of the funds were relent to BMC until FY76, and even then, at the end of FY76, on- lent funds were less than 20% of disbursements. By the time the project was completed and the credit fully disbursed (May 1981), only 36% of the total amount of disbursements had been released to BMC; the amount not released was equivalent to almost US$35 million. As recently as July 1984, more than three years after the credit account was closed, BMC's auditors reported that 30% (about US$16.6 million equivalent) of the disbursed credit had still not been relent to BMC (BMC records; audit reports; File Search).5! 47- Bank review missions noted the relending situation from time to time and complained to GOI officials; the same sort of thing was happening with respect to on-lending the proceeds of Credit 842-IN for the Second Bombay project. But little was accomplished until FY84. Most recently (January '985), Bank staff involved with the second project, and preparation 5/ GOI has argued (see Attachment) that the proceeds of the Credit were to be regarded as part of the overall funds available for the implementa- tion of the Government's Five-Year Plan and that the question of pass- ing-on of the funds by GOI is an internal matter and should not be reflected in the PPAR. However, the credit was made for the purposes of a specific project and disbursements were made against applications for reimbursement for payments made by BMC for goods and services required for the project as identified in the relevant credit documents and in accordance with procurement and disbursement procedures set forth in these documents. Therefore, the audit considers it appropriate to report the substantial delays experienced by BMC in obtaining the reim- bursements. - 14 - of a third, reported that there was no more backlog in on-lending of the credit disbursements (File Search). 48. The general reason given for not making proceeds of the credit available to BMC was that there was no need for the funds because of BMC's high rate of cash generation and the continual long delays in the overall investment program. BMC, on the other hand claimed that lack of availability of the funds created hardships. The audit was unable to confirm or dispute BMC's claim of hardships. BMC's financial position, with respect to water supply and sewerage operations, has been good and service charges are noL too high. In fact, increases are required. Nevertheless, the audit con- cludes that the way in which the funds were released to BMC was contrary to the intent of the credit. Institutional Development 49. Since its establishment, WSSD has made impressive strides and has grown into a strong institution with capable managers, and staff. While a number of problems remain to be resolved, the Bombay water supply system is rated as one of the best managed in India (PCR, paras. 6.02 and 7.03; File Search). The audit looked briefly into the apparent reasons for this suc- cess, particularly since other water supply operations on which the Bp-.Lk has been involved in India have generally not been anywhere near as successful in achieving institutional and related objectives. 50. Perhaps the best reason for success was that BMC staff already had some of the basic ideas as to how the water supply and sewerage operations should be organized and managed. it appears that the advice and recommen- dations of the consultants and Bank staff were complementary to these general ideas and applicable to the local situation, and this helped in gaining and maintaining the necessary degree of support and cooperation from BMC/WSSD staff. 5t. WSSD has been successful in recruiting and retaining staff at all levels. Potential employees with the necessary basic educational background have been generally available locally. There is a very good training policy and program which is continually being improved and expanded to satisfy needs not only of WSSD but BMC as a whole. Training components included in the first water supply and sewerage project were well prepared and implemented and have been continued in the second and more will be done in the proposed third project. 52. According to BMC staff interviewed during the audit mission, some of the factors contributing to the success and stability of the institution, not in any order of importance, are: (i) the training program; (ii) a feeling of pride because of a reputation for high performance standards, particularly on the technical side; (iii) fairly competitive salaries and benefits; - 15 - (iv) a feeling of stability of the institution; (v) very little political interference; (vi) easy contact by lower and middle level staff with the officers at higher levels; (vii) for many areas of specialization, no particularly attractive alternative employment opportunities in the Middle East or in the private sector (although, this may be changing); and (viii) no problems of transfers to posts which are far from homes, contrary to the situation in state or national government agencies. Use of Consultants 53. When the Bank first entered the picture and tried to identify a project, the use of consultants was resisted strongly by BMC and GOM. GOI was against the use of foreign consultants because of the foreign exchange costs and the desire to develop the local consulting industry. 54. In spite of the objections, and after much difficulty and long delays, foreign engineering consultants were engaged to work on the project. Local consultants was used also, however, both in association with the foreign consultants (something of a subcontracting role) and separately to be responsible for certain parts of the project, including institutional development aspects. 55. The relationship between the foreign and local consultants proved to be unusually constructive, according to staff of WSSD and of the local consulting firm, and the firms cooperated with and complemented each other very well. This is notable because it is comparatively rare and because it proved to be an important contribution to development of the local consulting industry. 56. In the Second Bombay Water Supply and Sewerage Project, the roles of the local and foreign consultants have been reversed. The local consulting engineering firm has prime responsibility while the foreign firm provides specialized technical assistance to the local firm. From all outward appearances, this change in position has been made gracefully, a compliment to both firms and to the client. 57. Partially as a result of this experience, the local consulting firm has been able to develop its competence and expand its services on water supply and sewerage projects. It now has offices in other cities to handle work in this sector and it also has begun to get work in other countries. The audit considers that this development in the local consulting industry has been a secondary but important benefir which can be credited in part to this project. At the same time, the credit has to be given with the understanding that the assignment of the individual staff by both the foreign and local firms was a very important factor. Whether this was good fortune - 16 - or planned is impossible to determine, but, had the personalities clashed, the results could have been quite different. Sustainability of Benefits 58. Continued improvement in WSSD's performance and in the benefits derived from its operations and investments, including on this project, require particular attention to making better use of the water which is delivered to the distribution system. Since the 1960's when BMC began its drive to make up for 30 years of neglect, the major thrust of the decision makers in GOM and BMC has been to increase the bulk supply of water to the metropolitan area. There should be no doubt that this deserved top priority, particularly since the lead time for water source development, treatment and transmission facilities is long. By comparison, however, efforts to improve the quality and reliability of distribution were given too much of a secon- dary role, in the opinion of the audit. This is evidenced by the rather hasty deletion of distribution works when the project was revised in 1976 in order to reduce c3sts (PPAM, paras. 39 and 40). The Second Bombay Water and Sewerage Project has gone further toward distribution improvements than the first project, but the principal focus was still on increasing bulk supply (about 60% of the cost of the water supply component), and even on the dis- tribution side there was very little specifically in the project for rehabil- itation of old distribution facilities. It should be noted, however, that such efforts are not, and need not be, restricted to project components. WSSD's operation and maintenance activities should be directed to repairs and replacements of mains and service connections as necessary. According to Bank staff, these activities have been substantial in recent years (PPAM, para. 40); it appears vital that they continue to be given the very high priority that they deserve in planning and budgeting by WSSD in comparison to development of new water sources. 59. Bombay has a history of gross inadequacy in the collection, treat- ment and disposal of wastewater, and any increased benefits from improved water supply (health, for example) are negated to some extent if capacity for safe disposal of wastewater falls further behind. This was expected to be the case for the first Bombay project (PPAM, para. 8), but at least there was to be a significant start toward catching up with sewerage. Then, much of the already small sewerage component was deleted when the project was revised. Therefore, it became increasingly important to concentrate more on wastewater disposal. The second project started in this direction (about 45% of the total cost of the physical components was for sewerage) and much will have been accomplished by the time the project is completed in 1987. It is important that the proposed third project continues this progress if the potential benefits of the water supply and sewerage development program on which the Bank is involved in Bombay are to be realized and sustained. Economic Evaluation 60. In the SAR, the incremental financial rate of return (IFRR) on the project investments, used as a proxy for an economic rate of return, was - 17 - estimated at only about 1%. This was explained as being evidence that tariffs were too low and out of line with economic costs, and in no way reflected the potential economic benefits of the project. Neither the SAR nor the project files show the basis for the IFRR estimate. The PCR does not provide a re-estimate of the IFRR on grounds that tariffs were still low and an IFRR would still be meaningless (SAR; PCR, para. 7.04). 61. The audit reviewed the situation and available information and con- cluded that a new calculation of the IFRR for the project would be of very limited value, and, more important, would be virtually impossible. The actual data necessary, or even reasonable estimates, required to determine the incremental revenue specifically attributable to the project simply do not exist. The project was part of a program which is being continued through the overlapping second project. Benefits initiated by the first pro- ject require the second and perhaps subsequent projects to be fully realized, as in the case of water transmission and distribution capacity, for example. Tariff increases (to the extent that they have been the result of the lending conditions) can be credited as much to the second project as the first. Therefore, the IFRR for the project is, for all practical purposes, the IFRR of the overall program which has been calculated to be about 6% (SAR for the Second Bombay Water Supply and Sewerage Project). 62. No practicable method has yet been developed by which the true rate of return for the Bombay project to the economy could be determined quanti- tively. There appears to be no question, however, that the project was essential and that it was actually, or very close to, the least cost solu- tion. Without the project, the economy of Bombay, and, therefore, of much of West India would have suffered. Take water supply and industry, for exam- ple. Almost all the industries in the project area rely entirely on water supplied by BMC and directly account for about 20% of demand. But because of the inadequacies of the supply, water to industrial establishments is pro- vided on a quota basis and is shut off when the quota has been delivered. This is particularly detrimental to industries such as textiles and chemicals which are important to Bombay's economy, and where there is a fairly direct relationship between water supply, industrial output and employment. Water supply restrictions were not eliminated by the project, but they were at least 30% less than they would have been without the project. It seems reasonable to assume, therefore, that the return on the investment, in terms of industrial output, for that part of the project which benefited such industries was at least equal to the opportunity cost of capital. In terms of employment, the return must have been much higher. III. CONCLUSIONS 63. The prime cause of the exceptionally long project preparation period probably was not a lack of feasibility studies. Other equally, if not more, important and complex issues also had to be resolved before the project could start. Given the local decision making processes of that time, it is doubtful if the project could have started earlier without soon becoming a - 18 - major problem project. And while the delay appears to have been unneces- sarily long and costly, there were 6enefits; by the time the credit was made, there was a well conceived project to which GOI, GOM, BMC and the Bank appa- rently were committed and able to support, and a very good working relation- ship between the implementing agencies and the Bank had been established (PPAM, paras. 31-35). 64. Most of the major project objectives were achieved, but with a delay of about three years and a cost overrun of about 60%. Therefore, potential benefits were postponed and reduced. The achievement of an abso- lute increase of 30% in bulk water supply delivered to Bombay, and the provi- sion of treatment for all of Bombay's water supply for the first time, were impressive accomplishments. But instead of gaining on the amount of water available per capita, and increasing the hours of service, BMC, because of the delay and the population growth rate, was barely able to maintain the status quo. On the positive side, the project at least halted a 30-year trend of deteriorating service (PCR, paras. 7.01, 7.04 and 9.01). 65. Institutional development and financial performance during the pro- ject period exceeded expectations (PPAM, paras. 23-30 and 49-52). Operation and maintenance standards are high. The training policies and programs are excellent. Outstanding problems on such things as project monitoring, man- agement information and billing and collection systems are being addressed in the second project and this attention is expected to continue under the pro- posed third project. Revaluation of WSSD assets is long overdue and is an area where BMC has failed to live up to its responsibilities in recent years (PPAM, para. 29); it is intended that an action plan with respect to revalua- tion of assets would be included under the proposed third project. 66. Revaluation and reestimation of the project costs in 1975 was obvi- ously necessary. The resulting project revision in 1976, in which critical water distribution and, particularly, sewerage components were deleted, appears to have been premature, however, and, as it turned out, probably unnecessary. The consequence was that important steps toward improvement of the quality and reliability of water distribution and toward starting a major effort to reduce the spread of serious pollution problems were delayed for years. 67. There appears to be no cause for doubt that the project was essen- tial. Without it, the economy of Bombay would have suffered. There is no practicable method for calculating the economic rate of return. The internal financial rate of return of the program of which the project is a part has been estimated at 6%, and probably would be higher except that service charges are not yet based on the economic cost of the services. 68. The proceeds of the credit were intended for relending to BMC for use on the project. While disbursements from the credit were passed on to BMC slowly and only in part, the audit is unable to determine whether or not this actually created hardships for BMC, (PPAM, paras. 46-48). - 19 - ATnACMEN SI C.. ~ .Page 1 of 2 COMMENS FROM THE GOVERMENT. ae1o OED Cousntsm PION SHRI C.i. RAKACHADRAN. DY SECY. ECOFAIRS, NEW DELHI, INDIA 'TO: MR. C.M. VASUDEV ADVISER TO ED (BANK) INDEMBASSY WASHINGTON. WE HAD RECEIVED FROM UATANABE DIRECTOR, OED THE DRAFT PPAR OF FIRST SCHBAY WATER SUPPLT PROJECT FOR OUR COMNENTS C.) THE LAST DATE FOR CWNICATING OUR CIENTS IS 15TH JULY (.) OUR COMMENIS GIVEN BELOW MAY BE COMMUNICATED TO WATAMABE (.) QUOTE(.) REFERENCE YOUR LETTER DATED 24TH APRIL 1985 ENCLOSING DRAFT PPAR nF FIRST BOMBAY WATER SUPPLY PROJECT AND ALSO YOUR TELEX DATED 5TH JUNE 1985 CONVEYING EITENSION OF LAST DATE FOR RECEIPT OF OUR COMMENTS UP TO JULY 15(.) KINDLY RECALL THAT A STAFF MEMBER 11 OF OED HAD VISITED US ON MARCH 28 1983 TO DISCUSS THE DRAFT PPAR (.) IN HIS MEETING WITH US HE HAD RAISED CERTAIN INTERNAL ISSUES LIKE PASSING ON OF THE PROCEEDS OF THE CREDIT TO IC WHICH WE HAD EXPLAINED TO tIN ADEQUATELY (.) INSPITE OF THIS WE REGRET TO NOTE THAT THE SANE MISCONCEPTIONS RAVE BEEN REPEATED IN THE DRAFT PPAN PARAGRAPHS 41 TO 48 AND 68(.) THE qTATEHENTS MADE REGARDING ON LENDING OF THE PROCEEDS OF THE CREDIT IN Pars vi amended. PARA VI OF PPAR AND FURTHER IN THE ABOVE NOTED PARAS OF PPAM REFLECT AN INSUFFICIENT UNDERSTANDING OF THE MECHANICS OF PASSING ON CREDIT AND ALSO A SUPERFICIAL READING OF STAFF APPRAISAL REPORT (.) YOUR ATTENTION IS INVITED TO PARA 2.03 OF THE SAR WHICH CLEARLY MENTIONS THE MECHANISM OF ON LENDING OF FUNDS THAT EXISTED THEN (.) FURTHER PARA 6.08 OF SAR MAKES IT ABUNDANTLT CLEAR THAT THE PROCEEDS OF THE CREDIT WILL BF INCLUDED IN THE 001 FOURTH AND Neither SAR paras. 2.03 FIFTH FIVE YEAR PLAN ALLOCATIGNS TO COM (.) IT IS A MATTER OF REGRET THAT IN and 4.08 nor any of the other documents and Bank SPITE OF THIS AND OUR EFFORTS TO CLARIFY THE MATTERS TO THE OED STAFF files and records per- taining to the project MEMBER 1/TRE FACTUAL INACCURACY STILL PERSISTS IN THE DRAFT AND WHAT IS MORE suggest that on-lending of disbursed proceeds of UNFORTUNATE THAT ON THE BASIS OF INSUFFICIENT UNDERSTANDING A STATEMENT HAS the credit would not be prompt. See also PPAM, BEEN MADE IN PARA 48 OF THE PPAM THAT SUBOPOTE BECAUSE OF BMC'S FINANCIAL para. 44. POSITION 001 WAS ABLE TO USE SUSSTANTIAL PORTIONS OF THE PROCEEDS OF THE The quote is not com- CREDIT FOR PURPOSES OTHER THAN THE PROJECT.. .SUBUNOUOTE (.) WHEN THE STAFF plete. The sentence continued ......for APPRAISAL REPORT CATEGORICALLY ACKNOWLEDGES THAT THE PROCEEDS OF THE CREDIT at least several years". Neverthe- ARE TO BE PASSED ON AS PART OF FIVE YEAR PLAN ALLOCATIONS TO GOM AND WHEN less, the statement was suppositonal THERE DOES NOT EXIST ANY DIRECT RELATIONSHIP BETWEEN BMC AND 001 SUCH A and has been deleted. STATEMENT IS NOT ONLY INACCURATE BUT ALSO MISLEADING (.) 1/ NAME DELZTED - 20 - ATTACHMENT Page 2 of 2 OED Cousnents WE WOULD REQUEST YOU TO REVIEW THE ENTIRE PORTION RELATING TO ON LENDING IN THE PPAM SO THAT FACTUAL INACCURACIES D0 NT PEISIST () WE STILL MAINTAIN AS WE HAD CONVEYED TO THE OED STAFF MEMBER 1/ IN 1983 THAT Footnote added to PPAM, para. 46 THE QUESTION OF PASSING ON OF FUNDS BY G0I TO THE STATES IS AN INTERNA. MATTER AND ONE TOUCHING ON THE FEDERAL STRUCTURE OF THE COUNTRY AND REQUEST THAT THIS KAY NOT BE REFLECTED IN THE PPAR (.) WHEN THE PPAR ACKNOWLEDGES IN PARAS 45 AND 46 THAT BMC RAS BEEN ABLE TO MEET 71 PERCENT OF INVESTMENT PROGRAMME OUT OF ITS OWN RESOURCES AND WHEN IT IS ACKNOWLEDGED IN THE REPORT THAT RESOURCES WAS NEVER A CONSTRAINT IN IMPLE- MENTING THE PROJECT REFERENCES TO ON LENDING ARE TO OUR UNDERSTANDING UNNECESSARY (.) FURTHER THE REFERENCE IN PARA 47 OF THE PPAM TO THE EFFECT PPAM, para. 47 amended. THAT SUBQUOTE THE PROBLEM HAS BEEN SOLVED AT LAST SUBUNQUOTE REPRESENTS AGAIN AN INSUFFICIENT UNDERSTANDING OF THE FINANCIAL RELATIONSHIP INVOLVED AND WE WOULD REQUEST THAT SUCH JUDGEMENTS HAY BE AVOIDED IN THE PPAR (.) MESSAGE NO. 3821 DATED 11/7/1985. KEWAL I/ NAE DELETED - 21 - INDIA THE FIRST BOMBAY WATER SUPPLY AND SEWERAGE PROJECT Project Completion Report I INTRODUCTION 1.01 The project was the first Bank Group assisted water supply and sewerage project in India. It evolved from a request made by the Govern- ment of India (GOI) to IDA in 1964 to assist the Government of Maharashtra (GOM) in financing the Upper Vaitarna and Bhatsai dams. Subsequently GOM withdrew the request and constructed these dams from its own resources. However, IDA's association with these projects continued. Consultants were appointed by GOI and the Municipal Corporation of Greater Bombay (BMC) in 1970 to prepare the 1972-1981 BMC Development Program for water supply and sewerage including components to utilize the Upper Vaitarna and Bhatsai supplies. The feasibility report was first presented in 1971, with a sup- plementary report adde- in May 1972. This 1972-1981 Development Program, provisionally estimated co cost US$547 million equivalent, was the first major attempt to improve water supply and sewerage services in Greater Bombay for 30 years, during which time the population had increased from 1.8 million to 6 million and the services had seriously deteriorated. 1.02 The appraisal report -Appraisal of Bombay Water Supply and Sewerage Project- (No. 88a-IN) is dated April 30, 1973. The Development Credit Agree- ment, the Project Agreement and the Maharashtra Agreement (IDA Credit 390-IN) were signed on January 22, 1974. The Credit amount was US$55 million equiv- alent. The borrower was GOI, the beneficiary BMC. The project as redefined in 1975, was completed and the Credit was closed on June 30, 1981. 1.03 While GOI exercises some influence in the sector, State Governments in India have primary responsibility for development of water supply and sewerage facilities. They execute their responsibilities through various departments of government and agencies which, in turn, may delegate part or all of their duties to local authorities. In certain cases, legislation has been enacted to permit municipal authorities or other agencies to assume the entire responsibility for planning, design, construction, operation and maintenance of water supply and sewerage services within their jurisdictions. i-o4 Since the early 1950-s, State Governments have endeavored to meet the increasing sector demands caused by rapidly expanding populations and unprecedented rates of urban growth. However, competing demands for resour- ces by other sectors, lack of management and planning skills, shortages of key materials and equipment, as well as foreign exchange constraints, resulted in only 1 to 2% of public expenditures being invested in the sector. This has led to inadequate levels of water supply and sewerage services. - 22 - In 1975, it was estimatedl/ that in India only 193 million people, or 31% of the total population of 620 million, had access to reasonably safe drinking water and that only 125 million (20%) had acceptable means of disposing of sewage. These levels were lower than average levels for all developing countries, in which water and waste disposal services reached 38% and 33% of the population, respectively. While some improvement in water supply service has been achieved, the percentage of the population receiving waste disposal services has actually declined. 1.05 It is estimated2/ that investments in developing countries in the order of four times the 1971 to 1975 levels will be necessary if the goals of the Drinking Water Decade3/ are to be achieved by 1990. For urbaa water supply and sewerage in India, the investment in the Fifth Five-year plan for the period 1974 to 1979 averaged some Rs 1,100 million (US$131 million) per year, about 1.5% of the total plan investment; annual investment in the rural water sector in the same period was Rs 750 million (US$89 million) which was 1.0% of the total plan investment. Much higher investment levels will be necessary if significant progress towards Decade targets is to be seriously attempted. GOI is committed to the objectives of the Drinking Water Decade and in its Sixth Five-year plan 1980-85 it has allocated 4% of the total plan provision to the sector. The rural water sector under the plan will receive an average of Rs 4,300 million (US$537 million) per year, about 2.2% of the plan, while the urban water supply and sanitation sector will receive an average of Rs 3,500 million (US$437 million) about 1.8% of the plan. These figures represent approximately four times and three times, respectively, the investments made in the individual sector under the previous plan, and reflect the importance which GOI attaches to the Decade program. Moreover, GOI appreciates that the financial demands of the program can only be met by the use of low-cost techniques both in water supply and in sanitation, and has consequently urged State Governments to adopt these techniques where appropriate. The efficient operation and effective maintenance of water and sewerage systems has always presented a serious challenge to central and local government institutions, and it is imperative that the increase in capital works occasioned by the Decade program be accompanied by an intensive training of personnel in the sector in order that a compatible standard of operational competence is achieved. 1/ World Health Organization, Community Supply and Wastewater Disposal, Mid-Decade Progress Report, May 1976. 2/ Report on Community Water Supplies, United Nations Water Conference. Mar del Plata, Argentina, March 1977. 3/ The goals are: Urban and Rural Water Supply - 100% coverage. Urban Wastes disposal - 80% coverage. Rural Sanitation - 25% coverage. - 23 - II PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL Origin 2.01 The need for the project arose from the rapid population growth of Bombay from 4.3 million in 1961 to 5.9 million in 1971 (and over eight mil- lion in 1981) and BMC-s need to maintain adequate per capita supplies by developing new sources, improving its distribution arrangements and reducing leakage and waste of its valuable supplies. From the same growth in popula- tion and the increasing quantities of water arriving in the city to meet the needs of the population arose the necessity for improved sewerage arrange- ments. 2.02 The project evolved slowly and GOM, which was the responsible entity for the Upper Vaitarna and Bhatsai dams, hoped that IDA would participate in both projects; in 1969, however, GOM decided against asking for IDA assis- tance because it would have meant re-bidding the construction contract for Bhatsai as well as a possible change in design. Also there were a number of rivers which could be exploited and for which IDA wanted to institute a feasibility study in order to be satisfied that Upper Vaitarna and Bhatsai offered the most economical answer to Bombay's problems. BMC felt, however, that the need for water was too great to spend extra time on such a study. BMC with their consultants, GOM and IDA all contributed to the formulation of the project with which IDA finally became involved (-sra. 2.11). BC was responsible for producing the feasibility study but their consultants carried a substantial part of this load and GM had a continuing interest because of their ownership of major source works. IDA made a significant contribution to the development of the project and took the initiative in directing the activities of the engineering consultants and in enrolling the aid of other consultants for financial, operational and managerial improvements within the Water Supply and Sewerage Department (WSSD) of BMC. The project as finally selected was based on the feasibility report prepared by BMC-s consultants. Prepaiation, Appraisal, Negotiation and Approval 2.03 The project was prepared by the WSSD with the assistance of a foreign consulting engineering firm whose services for the preparation work were financed by the UK Government. They subsequently became WSSD's con- sultants and were directly involved in detailed design and supervision of construction for major elements of the project. - 24 - 2.04 The feasibility studies were well conducted although there was a serious interruption in 1971/72 when the consultants stopped operations while nego- tiating an extension of their contract. Also, the long period of identifica- tion/preparation has resulted from the wide variance in the project percep- tions of WSSD and IDA. 2.05 For a city like Bombay, where population is expanding rapidly, aug- mentation of water supplies is a continuing undertaking. Development of new sources takes anything up to ten years and calls for a long term plan which can be executed to a time-bound program bearing in mind constraints such as shortage of funds. On the other hand the urgent demand for water by the populace tends to force the authorities towards pragmatic action. In this particular case BHC elected to solve its immediate problem by developing new sources as quickly as possible while IDA waited for the results of a thorough investigation. In the end the position was reached where development of Upper Vaitarna and Bhatsai was no longer a choice but a reality and the project, at least on the water supply side, became a follow-up on these major impoundment schemes. 2.06 Consultants were appointed by BMC for a number of purposes. The foreign consulting engineering firm for water supply; an Indian engineering firm in association with the foreign firm in support of BMC's sewerage division for sewerage; the Indian engineering firm in association with an Indian manage- ment consulting firm for project planning and control; and a second foreign consulting engineering firm for sewerage and sewage disposal studies. The Indian management consultants in association with USSD was responsible for the transfer of water supply/sewerage accounting from the B1C central accoun- ting system to WSSD which was accomplished by April 1, 1974. Targets and Goals 2.07 BMC-s long term development program is supported by GOM and is an extension of its historical policy which, starting in 1860, resulted in the development of a succession of surface water sources by constructing dams (Map 13372). The most recent, Bhatsai Dam, is expected to yield 1800 mld when fully developed; 1300 mld would be available for water supply and 450 mld for irrigation. Possible future impoundments at Middle Vaitarna, Shabi and Kalu (2) have been earmarked for feasibility studies. 2.08 The project has played an important part in the first stage of Bhat- sal exploitation (450 m1d) and the follow-up project continues to pursue the long term plan and will produce a further 450 mld on completion. WSSD is already giving serious consideration to the third stage (450 m1d) develop- ment. - 25 - 2.09 These additional supplies provided through the project are vital to Greater Bombay in view of the serious water shortage from which the area suffers. Even with the augmentation newly completed, the domestic service still remains at less than 130 lcd and is available for only limited periods each day. No Improvement is foreseeable in this respect despite further supplies that will be provided after completion of current works. Project Description 2.10 The project is part of BMC's development plan for water supply and sewerage services covering the originally estimated period from 1973 through 1978 and consisted of the following parts: (a) Water Supply and Distribution System Construction of an intake and pumping station at Pise, a water treatment plant of about 5.3 m3/sec capacity at Panjrapur and a water treatment plant of about 22 m3/sec capacity at Bhandup; a pumping station, a master balancing reservoir, and service reservoirs and provision of transmission mains and distribution systems; electrical and mechanical equipment, leak detect.'oo equipment, instrumentation and control systems, vehicles and water meters, and spare parts for plant and machinery. (b) Sewerage, Sewage Treatment and Disposal Works Improvement and extension of the sewerage system by laying about 130 km of sewers and sewage pumping mains; construction of seven pumping stations; rebuilding of nine existing pumping stations; the provision of mechanical and electrical equipment and improvements to existing sewage treatment works; the provision of sewer maintenance equipment, vehicles and spares; and investigations for sewage treatment and disposal. (c) Consulting Services and Training Strengthening of BMC's water supply and sewerage organizatiun and improvement of related technical and financial operations through technical assistance and training. The project was expected to be completed by June 30, 1978. Project Redefinition 2.11 The project cost estimate was revised in February 1975 from Rs 1,217 million (US$ 158.2 million equivalent) to Rs 2,880 million (US$ 374.4 million equivalent). As it was perceived at that time BMC, GOM, and GOI did not have - 26 - the necessary financial resources to complete the total project. The project was therefore redefined and the estimate revised to Rs 2,155 million (US$ 280 million equivalent). To accommodate this reduction the scope of the sewerage works was reduced and Part (b) of the foregoing project description was altered as follows: Improvement and extension of the sewerage system by laying about 50 km of severs and sewage pumping mains; construction of eight pumping stations; rebuilding of one existing pumping station; the provision of mechanical and electrical equipment and improvements to existing sewage treatment works; the provision of sewer maintenance equipment, vehicles and spares; and investigations for sewage treatment and disposal. The date for project completion was changed from June 30, 1978 to December 31, 1980. Even this extended deadline was overshot by six months. 2.12 The water supply project as defined at appraisal constituted an integrated unit. The only significant component that could be deferred was the construction of service reservoirs. For convenient operation, especially in circumstances of intermittent supply, each distribution zone should be provided with a service reservoir. Elimination of such a reservoir implies a more vulnerable supply and a more cumbersome operation. However, BMC weighed the risks against the need for economies and decided to defer the construction of five reservoirs where contracts had not already been awarded. Other water supply components which WSSD decided to change were: deferment of the installation of a telemetry system; change from electrical to manual operation for a number of butterfly valves; a reduction in the number of sluice gates at the Bhandup treatment plant; and a reduction in the scope of instrumentation. 2.13 The redefinition of the water distribution system was mainly post- ponement of the supply of water meters and of the execution of certain rehabilitation works, which would not affect the distribution of water nor affect revenues to an unacceptable extent. 2.14 The redefinition of the sewerage system resulted in a major reduction in the scope of the works as originally proposed. The original project included, for various drainage zones, a number of independent sub-projects for construction of sewers, force mains, and pumping stations and for supply of related material and equipment. WSSD adopted the following considerations in the selection of project components to be deferred to a later stage: (i) all works to be executed under the current project should be self-sufficient units for immediate commissioning; and (ii) all works scheduled for 1978/79 or later which did not fall under (i) would he postponed. The changes in the original project reduced the length of sewers and sewage pumping mains from 130 to 50 km and the rebuilding of existing pumping stations from nine to one; improvements to existing sewage treatment works were omitted. - 27 - II. IMPLEMENTATION 3.01 Start-up was slow and delays occurred for a variety of reasons. For example, negotiations with consultants were prolonged and their appointment was consequently later than scheduled; the time required for administrative procedures between BMC and GOM/GOI was unexpectedly long; as a result of information obtained from pilot studies the design of Bhandup treatment plant was changed from single to double stage, resulting in a delay of a year; and there were early delays in letting the early contracts for sever construc- tion. By November 1974 a supervision mission was reporting that implementa- tion was 24 months behind schedule. 3.02 Once the early delays had been overcome progress was kept reasonably well on the revised schedule. The 24 month slippage would probably not have increased but for some problems that developed at Bhandup. While the Bhandup plant was being commissioned, a malfunction of non-return valves on the delivery lines from the main pumping station resulted in extensive damage to two sluice valves. The pumping station was flooded and there was a delay of six months while new valves were obtained and installed and electrical gear dried out. 3.03 The treatment facilities at Bhandup and Panjrapur have had some teething problems affecting the settling tanks in both cases. Panjrapur is now satisfactory and modifications to design details of the Bhandup tanks are in progress. 3.04 The revisions to the scope of the project affected the sewerage element of the project as explained in para 2.11. Implementation Schedule 3.05 At appraisal the completion date for the project was fixed as June 1978. GOM had given an assurance that the Bhatsai Dam would be completed by June 1977 to enable BMC to draw 455 mId released from the Bhatsai source. Neither GOM nor the Municipal contractors completed the project works on schedule because of the delays which occurred due to shortages of certain essential construction materials. When a critical review of the works was taken in December 1977 it was still considered possible to complete the works by December 1978 but the unfortunate occurrences explaned in paragraph 3.06 made observance of this date impossible. 3.06 The delays occurred on account of several factors which are elaborated below: - 28 Material (i) Cement: Whereas the quota of the cement given to the Bombay Municipal Corporation was far below its annual requirements, efforts were made within the municipality to see that the Water Supply Project works did not suffer. However, at times, there were shortages throughout the construc- tion of the Project. (ii) Steel: Occasionally there was difficulty in procuring steel, even though tenders for the purchase of steel were invited in time. In fact, the Corporation also purchased billets for conversion into mild steel rounds and cold twisted bars. Due to a busy general construction activity in the Bombay area proper during this period, the contractors also found it dif- ficult to purchase steel on the open market. (iii) Sand: There was an acute shortage of sand during the period from October 1978 to about April 1979 due to a strike and in spite of GOI-s intervention, adequate quantities of sand were not available during this period. (iv) Diesel: There was an acute shortage of diesel fuel. Strikes Prolonged strikes in the factory of a local manufacturer delayed supply of the electrical equipment for Pise, Panjrapur and Bhandup. This, however, did not add to the delay in completion of the project, because civil works were also delayed. There were also strikes in the factories manufac- turing steel pipes and some delay resulted. Increase in volume of rock excavation 3.07 In spite of WSSD having made trial bore holes and trial pits to ascertain rock quantities, the volume of rock cutting was substantially greater than expected, especially on the civil works for the settling tanks at Bhandup and the pumping station at Pise. Labor: 3.08 One of the most important factors which contributed to the delay in the execution of this project was the migration of skilled workers such *s carpenters, welders, fitters and drivers to the Middle East. Contractors found it extremely difficult to find replacements and the works suffered in consequence. - 29 - Procurement 3.09 WSSD followed the Bank guidelines for ICB contracts. Where it experienced difficulty was in awarding coniracts in a manner consistent with the guidelines for the supply of materials to local firms. For example, in the supply of large quantities of pipe% BMC-s procurement department is concerned to ensure a steady supply to the construction sites. Because of the frequency of strikes, or other industrial action which affects produc- tion, WSSD generally splits awards between two or three suppliers. This has little effect on costs since manufacturers frequently quote identical or nearly identical prices. 3.10 WSSD have experienced difficulties when importing the steel plates needed for forming pipe sections. BMC has to import through the Steel Authority of India Ltd. but the Directorate General of Technical Development (New Delhi) and the Customs Authorities also are involved. Communications between the parties are not always effective and frustrating delays occur. Bank missions have sometimes helped by involving GOI's Department of Economic Affairs (DEA) but there has been no permanent improvement. 3.11 The appraisal report indicates a total foreign exchange equivalent of US$ 48.6 million but in effect only US$ 12.1 million materialized. However it has to be borne in mind that the appraisal estimate not only included the estimated value of direct imports but also the foreign exchange component of locally procured goods and the costs of imported materials and equipment used in civil works. The appraisal also allowed for a larger participation of foreign firms whereas more contracts than anticipated were won by local firms. Costs 3.12 Although the need for revised cost estimates was quickly noted there were difficulties in coordinating the estimating systems of the various concerned WSSD divisions and it was not until 1975 that the revision was completed. The project was estimated to cost US$ 158.2 million equivalent. The revised estimate of cost of the same project made in 1975 amounted to US$ 374.4 million equivalent. The project was redefined in 1975 at an estimated cost of US$ 280 million equivalent. The actual cost of completed work amounted to US$ 250.8 million equivalent. The following table shows the breakdown between water supply and sewerage costs. 30 - Project Costs (Rs millions) At revision At revision of 1975 of 1975 At (Original Revised Appraisal project) Project Complete Water Supply 856 1,879 1,870 1,747 Sewerage 361 1,001 285 353 Total 1 2,880 2 2,100 US$ million equivalent 158.2 374.4 280.0 250.8 3.13 There were three principal reasons for these large increases in the cost of the project as appraised: (i) cost overruns caused by inflation; (ii) treatment plant redesign; and (iii) underestimating of costs at the time of preparation of the feasibility study in 1970 and 1971. Inflation 3.14 From mid-1972 through December 1974 the Bombay cost of living index rose by about 50%. Material costs, such as steel, have risen by 602-70%, and shipping and haulage rates showed similar increases. These high rates of inflation declined later, but after examination of escalation clauses of major contracts being awarded, and taking into account the number of fixed price contracts, inflation rates of 10%-15% for 1975-76 and 7 1/2% to 12 1/2% for the following years, were applied to all project components in the revised cost estimates. The effect of rates of inflation, on the 1972 basic project costs, including physical contingencies of Rs 1090 million, was an increase of about Rs 860 million (+80%). Project Redesign 3.15 The original water supply elements of the project recommended single-stage treatment at Bhandup, but further studies indicated the need for two-stage treatment. WSSD also made design changes in the Panjrapur plant to be able to incorporate future extensions expeditiously and economically. These modifications had the effect of adding about Rs 150 million at 1972 prices. Under-Estimation at Feasibility Stage 3.16 The revised estimate for water supply elements, including physical and price contingencies, was Ra 1873 million - implying a revision due to under-estimating at the time of project preparation of Rs 210 million or, at 1972 prices, about Rs 120 million. The total sewerage program was - 31 - re-estimated, using 1972 prices, at about Rs 375 million, an under-estimation of about Rs 60 million in 1972. Disbursements 3.17 Disbursements, as expected at appraisal, as revised in 1975 and actual are at Annex 1. They are shown in graphical form below. Disbursements 60 , - - 60 50 50 Appraisal Revisi .o w 40 Forecast , 40 0/ o S30 30 / .-I 20 . 20 ~30 10 . 10 I I ,I I I FISCAL YEAR 74 75 76 77 78 79 80 81 The actual disbursements follow the pattern envisaged at appraisal reasonably closely after the initial slippage has been allowed for (para. 3.01). 3.18 The project as redefined has been realised with the exception of three minor sewage pumping stations which are now being completed. .Performance of Consultants, Contractors, Suppliers and Borrower 3.19 The design, detailed engineering and construction supervision services rendered by the consultants (para. 2.06) were highly regarded by BMC. The sewers were engineered departmentally and the Indian engineering consultants were appointed only for design, estimates, tendering and - 32 -- advisory supervision for the work of constructing new sewage pumping stations. 3.20 The rapport maintained by the consultants with officials of the entity was excellent. There were differences of opinion on a number of issues but this was to be expected on a difficult project of such a size. 3.21 Regarding site supervision for water supply works, both the foreign and the local consulting firms provided excellent engineers.. The progress of the various subprojects benefitted from the close supervision provided. 3.22 Though many important national contractors were appointed they found it difficult to mobilize sufficient finance. In some cases these problems were solved by WSSD making special advances and ad-hoc payments. 3.23 Some contract periods prescribed were not realized. The construction of Bhandup Pumping Station was required to be completed within 15 working months and that of the settling tanks within 24 working months. These were large civil structures by any standards and though contractors with reputa- tion were appointed they were unable to complete within the contract periods. 3.24 On the sewerage element of the project,supervision was in the hands of BMC except for civil, electrical and mechanical work for the sewage pump- ing stations. Responsibility for this part of the sewerage component was satisfactorily discharged by the consultants. 3.25 The project included a sewage treatment and sewage disposal study. A second foreign consulting firm, engaged for the purpose, discharged its obligations satisfactorily. Their report was submitted in July 1977 and their work became the basis for a sewerage and sewage disposal element included in the follow-up project. 3.26 Contractors' performance was variable but generally of acceptable standard and in some cases very high. Most works were completed behind schedule but in view of the materials shortages this was not entirely due to the contractors' shortcomings. 3.27 Supply of goods was adequate and generally of satisfactory quality. There were a few exceptions. The raw water pumps supplied for the Pise Pumping Station failed to deliver the specified quantities of water. The consultant- exercised great diligence on behalf of BMC in having the pumps removed by the supplier and brought up to specifications. At Bhandup the settling tanks have not performed as intended. Here again, the consultants have been effective in solving the problem. They brought a scientist (from their own staff) to study the operation of the tanks and, when he had made his recommendations, brought in the equipment supplier to consider modifications which would aim at quicker removal of sludge. - 33 - IV OPERATING PERFORMANCE 4.01 For the major elements of the project, Bhandup and Panjrapur Treat- ment Plants, it is too early to make a judgment on the operational perfor- mance of WSSD. On other elements, such as Pise Pumping Station, the Yewai injection point, Panjrapur Pumping Station, Shandup Pumping Station and Bhandup Master Balancing Reservoir, operational standards are adequate. WSSD show considerable pride in the project and present indications are that the installations will be looked after carefully and will be well maintained. 4.02 The project is impressive by any standard and the overall design of the project reflects the current state of proven technology. - 34 - FINANCIAL PERFORMANCE Background 5.01 Prior to the establishment of WSSD as a separate department of BMC the financing of and accounting for water supply and sewerage servics in Greater Bombay was part of BMC-s consolidated municipal finance and account- ing system. Accounting was on a cash basis. While water supply charges and taxes were broadly sufficient to cover cash outgoings and provide a contribu- tion to investment of about one-third, BMC had no system of direct charging for sewerage and sewage disposal, the costs of which were borne from general municipal taxation. 5.02 The BMC (Second Amendment) Act 1973, which came into force on April 30, 1973, made provision, inter alia, for: a) the establishment of a separate Water and Sewage Fund, together with a Consolidated Loans Fund (CLF); b) the appointment of an Additional Municipal Chief Accountant responsible for the accounting of the above funds; c) accounting for the above funds to be on an accruals basis; d) a separate budget for water supply and sewerage services; e) the introduction of i) water and sewerage benefit taxes (as a percentage of the property value) to meet the whol: ar a part of the cost of capital works to improve, and thereafter maintain and operate, the water supply and sewerage services, and (ii) 4ewerage charges related to the quantity of water consumed. 5.03 WSSD-s separate funds and accounting system were established from April 1, 1974, on the ines recommended by local consultants (para 6.06). BHC approved a separate budget (Budget G) for WSSD for FY 1975 which included additional revenues from the levying of the benefit taxes (at 7% and 3 1/2% of property values respectively) and the sewerage charge based on 50% of the current water charges. Since then water supply and sewerage has been operated as an integrated, self-sufficient service. A separate balance sheet at April 1, 1974, was prepared and indicated a satisfactory position: cur- rent assets included cash amounting to Rs 147 million and accounts receivable of Rs 68 million, equivalent to about 43% of billings in FY 1974. Cash amounting to Rs 106.6 million, due to WSSD, was not handed over by BMC until much later. The first Rs 50 million was paid in FY 1978. During nego- tiations for the Second Bombay Water Supply and Sewerage Project, BKC agreed - 35 - a) to pay the balance (Rs 56.6 million) in two equal instalments in FY's 1979 and 1980. This was done. From FY 1978 BMC has also paid interest on any amounts not immediately paid to WSSD's fund and b) to take action to reduce WSSD's accounts receivable to no more than 20% of billings by March 31, 1984 (paras 5.15-16). Financial results (FY-s 1975 - 1981) (Annex 2). 5.04 WSSD's financial reaults, measured in terms of earnings and contribu- tion to investment, have been highly satisfactery. Key financial indicators for WSSD, comparing performance projected at appraisal and that actually achieved in the period FY's 1975 through 1981, are set out in the following table. TABLE 5.11 WSSD KEY FINANCIAL INDICATORS Tear ending March 31, 1975 1976 1977 1978 1979 1980 1981 1982 PROJ ACT PROJ ACT PROJ ACT PROJ ACT PROJ ACT 'PROJ ACT ROJ ACT EST Water sunlied (mill. 1 1Otres) 490 490 490 490 490 490 530 570 Revenues (Re million) 258 263 268 298 344 469 380 539 408 577 428 595 439 591 662 Average revenue/1000 litres 0.54 0.61 1.02 1.10 1.18 1.21 1.12 1.16 Operating income before interest (Ra million) 146 174 146 182 197 340 201 347 210 366 216 364 211 278 291 Operating Ratio (Z) . (after depreciation) 43 34 46 39 43 28 47 36 49 37 50 39 52 53 56 Rate of return on average net fixed assetal/(Z) 12.3 14.6 10.6 11.3 11.0 16.9 8.8 17.4 8.3 18.7 6.8 18.8 6.3 13.8 10.0 Capital Investment (Re million) 385 116 428 222 340 322 335 415 297 3J 237 318 268 332 555 Contribution to investment (2) 32 72 30 52 43 89 46 79 50 111 51 124 53 84 51 Debt Service coverage 3.5 2,0 3,5 2.2 2,6 4.6 2.5 5.4 2.2 5.9 1.7 6.5 1.9 5.3 4.0 Current Ratio 1.2 2.7 0.8 1.6 0.8 2.0 0.9 1.8 0.8 2.5 0.8 2.6 0.8 2.2 2.4 Debt/Equity Ratio 54/46 58/42 57/43 38/62 56/44 38/62 57/43 34/66 56/44 30/70 54/46 26/74 52/48 23/77 25/75 Consumer accounts receiv- able as X of billinge 25 47 25 54 25 42 25 46 25 73 25 81 25 76 49 l/ Fixed Assets were revalued with effect from IT 1975. - 37 - Contribution to Investment 5.05 Under the project WSSD agreed to earn an annual surplus which, together with any internal funds available for investment, would be suffi- clent to finance at least 33% of capital expenditure in FY's 1975 and 1976 and 40% thereafter. WSSD has far exceeded this requirement in each fiscal year and the actual percentage contribution to investment has ranged from 52% to 124%. It is estimated to exceed 50% in FY 1982. While WSSD-s cash gener- ation has been substantially greater than projected - revenues were higher and operating costs were controlled (WSSD's operating ratio was generally lower than projected at appraisal) - the major reason for WSSDs very high percentage contribution to investment was the delay in executing the project and starting the second IDA assisted project (Credit 842-IN) leading to a continuing shortfall in annual capital expenditure. 5.06 The cash generation covenant was particularly suited to WSSD-s situation at the time of appraisal as WSSD-s fixed asset base was small (depreciation was not charged and fixed asset records were inadequate) in relation to the large investment program through FY 1981. The requirement tu contribute 40% to WSSD's investment program was retained under the second project, in preference to a rate of return covenant, in view of the success- ful results in the meantime and the ease with which it was understood and accepted in India. Rate of Return on Net Fixed Assets 5.07 Following a complete inventory by WSSD's engineers, fixed assets were revalued on the basis of prices prevailing in FY 1975. Provision was made for accumulated depreciation in accordance with the life of assets. The rate of return on net fixed assets has been high, ranging from about 11% to 19%. No subsequent adjustment of fixed asset values has been made although WSSD officials intend to carry out a further revaluation following full commis- sioning of assets created under the project in FY 1982. Other Financial Indicators 5.08 Generally financial indicators have been satisfactory. The debt/ equity ratio was lower than projected, reflecting the high level of internal cash generation. Debt service was well covered, being between 5 and 6 times in recent years. The current ratio has remained around 2 to 2.5 reflecting WSSD-s high level of liquidity; surplus cash is invested in short-term deposits. However, the accounts receivable position has been unsatisfac- tory: expressed as a percentage of WSSD-s billings it has risen substan- tially since FY 1978. A target of 20% of billings to be achieved by March 31, 1984 was agreed under the second project but progress in tackling this problem has been very slow (paras 5.16). - 38 - Submission of Annual Accounts and Audit Report 5.09 WSSD agreed to submit audited accounts within six months of the year end. The audit is conducted by the BMC's Municipal Chief Auditor, a statutory office, independent of the BMC administration. In the early years it was not possible to achieve this deadline as WSSD's accounting was insuf- ficiently organized. Recent performance has improved and submission is now being made on time or shortly thereafter. An audit covenant requiring sub- misson of accounts within nine months of the year end would have been more appropriate 1/. A large part of the difficulty in meeting the deadline arises from the common system 2/ of billing and collection of BMC revenues and the problem of reconciliation at the year end. The presentation of annual accounts is in the municipal format, although, since FY 1979, WSSD has also submitted accounts presented along commercial lines. The auditor-s report is comprehensive. Efforts are continuing under the second project, under which the audit covenant was repeated, to improve the presentation of annual accounts and the audit report. Consolidated Loans Fund (CLF) 5.10 The CLF, as widely used in municipal authorities in U.K., was designed to enable WSSD to avoid setting-up a Sinking Fund to amortize loans repayable in full on maturity rather than by instalments, and to utilize all available cash for project purposes. However, the Municipal Chief Auditor has raised objection to the proposed operation of the CLF, as not being in consonence with the principles set out in the amended BC Act. The matter was referred to GOM-s Advocate General who has advised that further statutory amendment is needed to operate the CLF in accordance with WSSD-s intentions. In practice, WSSD is able to manage its finances satisfactorily without recourse to the CLF. Financing Plan ?Y's 1975 through 1981 5.11 At appraisal, a financing plan was prepared for the project and a second phase of davelopment, all of which was planned to be Implemented in the period FY 1973 through FY 1981. As a consequence of project re-definition (pare 2.12) a revised financing plan was subsequently agreed 1/ Such a covenant was agreed in respect of the Bombay Urban Transport Project (LN 1335-IN). 2/ Separation of WSSD-s billing and collection procedures would be uneconomical and would not overcome the difficulties of recovery of outstanding bills, especially those in respect of water/sewerage taxes. (para 5.18) - 39 - based on a revised project cost of Rs 2,155 million. The project has taken longer to complete than forecast in 1975 and the actual project cost was somewhat lower at Rs 2100 million. A substantial part of the work-in-progress under the project had not been commissioned by end FY 1981. This transfer should be made in WSSD's accounts in FY 1982 when all works, other than a few sewage pumping stations, were brought into service. WSSD-s financing plan for the period FY-s 1975 through 1981 at appraisal, as redefined in 1975 and actually achieved are compared in the following table. Table 5.2 : WSSD FINANCING PLAN FYs 1975-81 (Ru million) Projected at Redefinition Appraisal in FY 1975 Actual Requirements: Capital expenditure 2290 2844 2066 Deferred expenditure - - 33 Working Capital (99) 38 512 2191 2882 2611 Sources of Funds: Internal Cash Generation 17U1 1873 2410 Less Debt Service 739 802 547 Contribution to Investment 962 44 1071 37 1863 71 Consumer Contributions 5 - 11 ) - - ) 2 Investments realized - - 50 ) 157 6 967 44 1132 39 2020 77 Loans a/ 1224 56 1750 61 591 23 2191 100 2882 100 2611 100 a/ including onlending IDA Credit 390-IN. - 40 - 5.12 Capital expenditure fell well below the targetted level as a result of delays in undertaking both the project and subsequent works included in the second IDA-assisted project Credit (842-IN). On the other hand, as a result of action to raise tariffs and introduce water and sewerage benefit taxes, WSSD's internal cash available to finance the program was much higher, thereby reducing dependence upon loan finance. Whereas loans, including the US$55 million IDA Credit 390-IN, were expected to cover about 60% of the cost of the program (the balance coming from WSSD-s own resources), loans received by WSSD financed only 23% of the program with WSSD covering 77%. Tariffs 5.13 WSSD-s tariff structure is summarized in the following table. Tariffs were increased in FY 1975 and again in FY 1977 but no structural changes were made other than the introduction of benefit taxes payable on all property. No further tariff increase was made until April 1, 1982, as WSSD's financial position was satisfactory in the intervening years. - 41 - Table 5.3: WSSD TARIFFS 1/. Approx. Percentage FY FY's FY-s of Revenue 1974 1975-76 1977-81 Yield Water Supply (a) Metered Premises: Domestic (Ra/10,000 litres) 2.50 2.50 2.50 14 Non-domestic (Rs/10,000 litres) 8.00 10.00 20.00 40 Meter Rentals (monthly) (according to meter size) 2 (b) Unuetered Premises: Water Tax, as % of property value 7% 7% 7% 4 (c) All premises: Water Benefit Tax, as Z of property value - 32 3% 13 Sub-Total: Water Supply Sewerage (d) Sewered and metered 3 1/2% 50% 50% 13 premises property water water value charge charge (e) Unsevered or unmetered premises, Sewerage Tax as 2 of property value 3 1/2% 3 1/2% 4% 6 (f) All premises: Sewerage Benefit Tax as % of property value 2% 2% 8 Sub-total: Sewerage 27 Total 100 1/. From April 1, 1982, a further increase of non-domestic charges was introduced. - 42 - 5.14 The present tariff structure discriminates in favor of the domestic consumer and is not related to the economic cost of system expansion (LRMC) or to ability to pay 2/. WSSD engaged a local social sciences institute to undertake a socio-economic study and to formulate alternative tariff structures for consideration by BMC. Their comprehensive report was published in late 1977 and provided much valuable information for tariff restructuring. The results of the study were reviewed with the Association (as agreed under Credit 842-IN). However, to date no structural modifica- tions have been introduced largely because of the lack of improvement in the supply of service to the domestic consumer. Billin, and Collection 5.15 WSSD-s accounts receivable as a percentage of billings have risen appreciably since FY 1975 when WSSD-s activities were separated from other munizipal services. The major reasons are: a) WSSD inherited many doubtful debts at the outset; consumer records were not satisfactorily reconciled and analyzed prior to the formation of WSSD as a separate financial entity. BMC, however, through the office of Assessor and Collector, continues to provide a common billing and collection service for all municipal departments, including WSSD. While this arrangement is sensible from the point of view of economy of administration of BMC's taxes and charges, the arrangement does not always guarantee WSSD the priority it requires, particularly in providing timely and reliable year-end data and in pursuing outstanding accounts. b) Following the setting-up of WSSD, an early decision was taken to computerize BMC-s billing arrangements. This task was underestimated and was entrusted to consultants whose efforts were not successful initially because of the complexity of BMC'S taxing arrangements and procedures. Billing delays occurred and reconciliation with existing manual records proved difficult. Following a change of computer agency, many of these problems have been overcome but the backlog of receivables remains largely unresolved. 2/. This extreme cross-subsidization is only possible because most non- domestic users have no alternative water source (e.g. no ground water) and water/sewerage costs are not significant in relation to industry-s production costs. - 43 - c) water and sewerage taxes and benefit taxes are billed semi-annually together with other municipal taxes; recovery proceedings in cases of non-payment are by way of "distress" which involves seizure of property by Court proceedings which are generally protracted. WSSD has no other redress in such cases e.g. (by disconnection). The disconnection of supply and writing off bad debts requires the sanction of BMC-s Standing Committee which may not always be forthcoming for various reasons. The delegation of this authority to the Municipal Commissioner has been discussed on several occasions but would require statutory amendment. 5.16 WSSD acknowledges that the billing and collection arrangements require considerable attention and efforts are being made to clear the back- log of receivables. BMC agreed under the Second Project that WSSD would reduce receivables to no more than 20% of billings by March 31, 1984. WSSD has, however, for the last five years (FY-s 1977 through 1981) succeeded in collecting each year about 75% of the accounts billed in the same year and efforts are continuing to recover old receivables and to identify bad debts and take appropriate write-off actions. A special task force was established in 1980 and identified substantial doubtful debts but generally progress has been disappointing. The 20% target will be very difficult to achieve and thereafter to maintain without a considerable improvement both in the present arrangements and efforts for the recovery of outstanding bills. Present Financial Position 5.17 WSSD-s present financial position is satisfactory and the 40% cash generation covenant is expected to be met in FY 1982 and succeeding years following a recent tariff increase. The delay in implementing the project was unfortunate from the point of view of the citizens of Bombay, but for- tunately, WSSD-s finances have not been adversely affected. The project cost was less than projected in FY 1975 and WSSD's revenues were largely unaf- fected as a substantial part of the additional water supplied under the project will be consumed by domestic consumers in unmetered areas and slum dwellers who are not presently paying for water. WSSD-s latest audited balance sheet, together with an estimated position at end FY 1982 and end FY 1987, following full commissioning of assets created under both the first and second projects respectively, is summarized in the following table. Both zurrent and debt/equity ratios are highly satisfactory. However, whereas the total estimated net fixed assets in service at March 31, 1982, is similar to the figure projected in FY 1975 when the project was redefined, the composi- tion is very different. The FY 1975 projection did not reflect the revalua- tion of fixed assets, which increased WSSD's net fixed assets by about Rs 850 mUllion, but included Rs 1000 million in respect of further developments in addition to the project, which have not yet been undertaken. - 44- Table 5.4: NSSD BALANCE SHEETS (Rs million) - - - - March 31, 1981 - - - - - Estimated Projected (Projected (Redefined March 31, March 31, at Appraisal) in FY 1975 (Actual) 1982 1987 ASSETS: Net Fixed Assets 3085 3613 2104 3736 9445 Work in Progress 143 24 1641 489 - Deferred Expenses - - 24 16 3 3228 3637 3769 4241 V Current Assets 220 415 1363 1231 1103 Less current liabilities 278 (58) 209 206 616 747 523 708 609 494 3170 3843 4516 - 494 Represented by: Equity 1577 1491 3471 3721 6884 Long-term debt 1593 2352 1045 1228 3058 3170 3843 4516 4949 9942 Current Ratio 0.8 2.0 2.2 2.4 1.8 Debt/Equity Ratio 50/50 61/39 23/77 25/75 31/69 5.18 As a result of delays in implementing the Second Project a major cost escalation has occurred. In view of the critical nature of the works, including sewerage and sewage disposal works carried over following the redefinition of the first project, it is intended to proceed with the entire project. HMC has already taken action by raising non-domestic tariffs from April 1, 1982 to ensure that it will continue to generate its agreed 40% contribution. There remains, however, a financing gap, of about Rs 1120 million to be covered over the next five years (FY-s 1983-87). The Indian Authorities have undertaken to consider the manner of ensuring the availability of sufficient funds to complete the project and future supervi- sion missions will be reviewing this aspect most carefully. - 45 - VI. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT Organization Structure 6.01 BMC was established under the Bombay Municipal Corporation Act 1888. The Council consists of 140 elected representatives and is responsible for providing many local services including water supply and sewerage. The Council employs some 122,000 persons and serves a population of 8.3 million. The Municipal Commissioner, an officer appointed by GOM, is the principal officer and is responsible for the overall management of services including water supply and sewerage. 6.02 Following the report of the foreign engineering consultants, BMC established WSSD in 1973 headed by a Deputy Municipal Commissioner, Special Engineering (DHC(SE)) and reporting to the Council's Standing Committee. From April 1, 1974, WSSD became a separate financial entity with its own finance wing responsible for budgetting and accounting and headed by an Additional Municipal Chief Accountant, a statutory post enacted in 1973 (para 5:02). The DMC (SE) is assisted by a competent and experienced team of senior engineers in both the execution of projects and the operation of existing water supply and sewerage facilities. 6.03 BMC has recently appointed a Director of Engineering as head of all engineering services but with particular responsibility for WSSD. This move followed the retirersent of the DHC(SE) and indicates BMC-s concern to ensure improved performance of WSSD under the second project when WSSD-s level of investment will more than double the highest achieved under the first project. A successor to the DMC(SE) will be appointed to manage day-to-day business of the department, including the operation of the considerable facilities now commissioned under the first project. This is a satisfactory arrangement. - 46 - STAFFING AND TRAINING 6.04 WSSD's staff numbers some 19,000. Its engineering staff was drawn from existing BMC departments and, generally, provide an experienced and competent service. Adequate training programs were designed to improve technical skills and knowledge both in India and overseas. To date 22 persons have benefitted from such training (Annex 3). Despite a higher turnover of younger engineers, given the attractive opportunities in the Middle East, WSSD's engineering and technical staffing remains adequate. 6.05 WSSD has had to build up its finance wing by outside recruitment as few BMC staff had skills in commercial accounting. While some delay occurred in formally appointing the Additional Municipal Chief Accountant, the person appointed has demonstrated considerable drive and initiative in helping to develop WSSD as a strong financial entity with generally sound financial systems. Under his direction, WSSD has succeeded in recruiting and training a competent finance staff. Particular emphasis was placed on recruiting accounting graduates, in view of WSSD-s inability to offer competitive salaries to chartered accountants. This program has been successful, although turnover has been high at lower levels. The success of this policy can be measured from the recent transfer of WSSD finance staff to senior finance posts within BMC-s other services. A successful staff training program in computer auditing techniques was arranged in Bombay with ODA assistance. Subsequently a team of four senior BMC finance staff, including the Additional Municipal Chief Accountant and the Municipal Chief Auditor, visited U.K. for familiarization in computerized accounting systems. Management Systems 6.06 A local management consulting firm, was appointed in 1973 to develop management systems appropriate to a public utility, rather than the municipal systems adopted previously in managing water supply and sewerage services. The assignment lasted three years and generally appears to have been successful. The primary tasks included the preparation of an account- ing system and a project monitoring system. From April 1, 1974, the account- ing system was introduced satisfactorily following trial runs in the previous year. It operates on a decentralized basis and is supported by a series of financial sub-systems, several of which - billing and collection, stores accounting and inventory control and payroll - were computerized using outside agencies. Major difficulties were experienced with the billing and collection system. There was insufficient time for its development, given the volume of work involved and the impact of such change upon staff. Sub- sequently, in 1977 WSSD terminated the arrangements for bill processing and entrusted the task to another agency. Considerable improvements have since been made to the billing and collection system to ensure its reliability. BMC has recently installed its own computer to which existing WSSD systems are being transferred. A development program has been prepared to extend - 47 - computerization to numerous municipal activities. This is a significant development and much of the credit reflects upon the drive and enthusiasm of WSSD staff. 6.07 While WSSD-s accounting system has developed satisfactorily, the management information and project monitoring systems were not so success- fully implemented. This is reflected in the quality of information submitted to the Association and the continuing difficulty experienced by missions in obtaining reliable and timely project and financial management data other than WSSD-s annual budget and audited accounts. Forecasting of the phasing of project expenditure is particularly unreliable, as indicated by the very large deviation from the level included in WSSD's annual budget. It reflects in particular a lack of realism by project staff. WSSD is conscious of the difficulties and is striving to secure improvements. Supervision missions will continue to work with WSSD officials to make improvements in this area. WSSD has made commendable progress since its full establishment in 1974. - 48 - VII PROJECT JUSTIFICATION Achievements 7.01 At appraisal it was expected that Bombay's population of about six million would increase by about 30% by 1981, that is to 7.8 million. In fact it reach-d 8.2 million, a 37% increase. The supplies of water to be provided through the project became available later than scheduled so that in terms of litres per capita daily the project has not provided greatly increased sup- plies and the supply is still intermittent. However, the project brought about an absolute increase of 450 ald (30%) in water supplies and moreover provided, for the first time, treatment for the whole of Bombay-s water, nearly 2000 mld. This is a substantial achievement. It has also provided the means to convey the increased supplies to over eight million consumers. 7.02 The achievements in sewerage construction are perhaps less spec- tacular but are none-the-less valuable. The project hAs added some fifty kilometers of severs to the existing systems and some 50% of the BNC area is now served. 7.03 WSSD has grown into a strong institution with capable managers and staff. Its finances are sound and it has a strong revenue base from which to expand and improve its service. Return on Investment 7.04 The project represented, at appraisal, the least cost solution to meet the declared objectives. The benefits of the project, while evident in the context of the Bombay economy, were not quantified and the incremental financial rate of return based on revenues was estimated to be barely posi- tive (about 1%) because of the low level of charges, particularly for domes- tic consumers. This position still prevails and, as a financial rate of return would be meaningless in this context, no attempt has been made to calculate one. During appraisal of the second project in 1978 LRMC was estimated at Rs 1.75/1000 litres as against an average tariff of Rs 0.85/1000 litres. Non-domestic charges exceed substantially LRMC. While higher domes- tic charges may be justified on economic grounds to offset inflation in recent years, and to reflect the present and future cost of providing and expanding the service, the standard of service has not generally improved following completion of the project, given the unforeseen increase in Bom- bay-s population. However, the project has enabled WSSD to maintain the status quo to its consumers. - 49 - VIII BANK PERFORMANCE 8.01 The project had a very long preparatory period and, before appraisal, there were twelve missions over a period of eight and a half years. However this was the Bank's first water supply project in India and no doubt con- siderable pains were taken to ensure that the project was well engineered and financially souW . There was resistance to the Bank-s suggestion that there should be feasioility studies and the Bank missions had to persuade GOI, CO and WSSD of the need for such studies. In this they were successful and while workin,- together with WSSD established an excellent relationship which has been carried forward to the present time. 8.02 Following appraisal there were 18 supervision missions over a period of eight years. These were well received by WSSD which has expressed appreciation of the advice and support it received from Bank staff. When two years after appraisal virtually no physical progress on the ground had been made supervision missions insisted that the project cost was re-estimated. It was because of this effort that the revised cost was established and that it was recognized that the new financial requirements were beyond the resour- ces of BMC. As a consequence, the project was appropriately modified. Two and a half years after appraisal, project monitoring, which had been vir- tually non-existent, was brought up to a satisfactory level through Bank persistance. 8.03 Supervision missions experienced difficulties in the early years of the project in obtaining satisfactory data and explanations on the revised forecasts of project costs; in addition the different divisions of WSSD were not coordinated in their estimating systems. These difficulties were even- tually resolved but it was not until 1975 that revised estimar-s of cost were developed. 8.04 The fact that the project had to be redefined in 1975 suggests that the original package was beyond BMC-s capabilities. In fact this is only partly true. BKC, with the support of its consultants, was capable of tack- ling and completing the appraisal package. Redefinition became necessary as a result of a period of rapid inflation coinciding with a delay in start- ing construction operations. The delay in turn had two root causes; HNC was tardy in appointing consultants and the Bhandup treatment plant had to be redesigned. It was a perceived financial constraint which brought about redefinition. In retrospect this was an unfortunate decision which has retarded much needed improvements to the sewerage systems. In fact, WSSD-s financial resources were probably sufficient to meet the cost of the earlier proposals as actual costs were lower than those forecast in 1975 when the project was redefined. Any pressure to reduce the scope of the second project, the cost of which has escalated since appraisal by about 80% should be resisted. The works as completed constitute an Impressive demonstration of BC-s capability. - 50 - 8.05 Start up delays retarded the implementation schedule by two years which gives the impression that the borrower's implementation capacity had been overestimated. But once construction had begun the pace was only mar- ginally slower than had been envisaged at appraisal as can be seen from the slopes of the curves representing original forecast and actual disbursements as displayed graphically in paragraph 3.17. - 51 - IX CONCLUSIONS 9.01 The principal objectives of the project were to provide facilities for treating Bombay-s water supply and to provide more water. The project succeeded in this and it also increased the area of Bombay which is served by water borne sewerage systems. 9.02 The additional supply of water comes from sources developed by GOM, Upper Vitarna and Bhatai Reservoirs. These are the two reservoirs for which in 1964 GOI and BMC asked the Bank to provide financial aid. The Bank did not do so but was instrumental in having feasibility studies carried out inter alia to decide on economic and technical bases which sources should properly be developed first and in what order the others should follow. When a project eventually emerged from the feasibility studies it was one which depended for its supplies on Upper Vaitarna and more particularly Bhatsai. There is no evidence that GOM made an error in developing Upper Vaitarna and Bhatsai first and in that order, but even if it was, when the project crys- talised, the Bank was faced with a fait accompli. Slow progress at Bhatsai meant that the project was ready in time to utilise water being released from that dam. However, the question remains; should we have recognised that the project was bound to have to usq Bhatsai water and should we have provided financial help eight or so years earlier than we did? No clear cut answer can be given. 9.03 The supervision mission of 1975 performed extremely well in reviewing the situation, re-estimating project costs and remodelling the project to take account of BMC-s financial capacity as it was perceived at the time. 9.04 Reducing the size of the project may have been unnecessary. The reduced scope did not have the effect of allowing the project to be completed by the target date. The work took longer than envisaged at redefinition in 1975 and cost less despite continuing inflation. 9.05 The sewerage element suffered more at redefinition, and the unfor- tunate effect was that impetus was lost in developing and improving the management of the sewerage staff of WSSD. This was in any case the weaker side of WSSB-s staff. In addition the sewerage service was greatly hand- icapped by postponement of part of the program. 9.06 The financial weakness perceived at the time of redefinition did not in fact materialise. WSSD had an internal cash surplus of Rs 600 million and loans not taken up of Rs 1150 million; all this would have been sufficient to allow completion. In addition, the final cost, instead of the Rs 2880 mil- lion estimated in 1975, was Rs 2100 million, Rs 780 million less. - 52 - 9.07 The second (follow-up) project is not proceeding quickly either and similar circumstances to those that led to redefinition may be developing. Any pressure for a second redefinition should be very carefully evaluated and, if not justified, resisted. 5e3 1a of 2 3 AY WATER SUPIPY AND SEonACE PRJ=CT CrIT 390-N Seadule of DiAbursaent ACCUNLATED DISBURSEMNTS Actual am miin) Disbursements As Revised as a Percentage IDA Fiscal Apprats1l at Project of Appraisal Tear and Estimte Redefinition Batimate q.arter (April 1973) (June 30, 1975) Actual z 1974 December 31 7.2 - - 0 March 31 10.1 - 0.3 3 June 30 13.5 - 0.8 6 1975 September 30 17.4 - 4.9 5 December 31 21.4 - 1.0 5 arch 31 25.5 - 1.5 6 June 30 29.2 3.6 12 1976 September 30 32.4 4.0 3.7 12 December 31 35.8 4.7 8.8 24 March 31 38.5 9.7 9.1 24 Jme 30 40.1 14.9 10.8 27 1977 September 30 42.2 22.6 11.0 26 December 31 43.9 26.5 11.3 26 March 31 45.7 34.2 12.6 28 June 30 47.5 42.7 17.2 36 1978 September JO 49.8 52.8 21.0 42 December 31 52.5 55.0 23.0 44 March 31 53.7 - 29.7 55 June 30 55.0 - 31.4 57 1979 September 30 - - 36.9 67 Decepoer 31 - - 39.0 71 arch 31 - - 41.6 76 June 30 - - 43.7 79 1980 September 30 - - 45.1 82 December 31 - - 45.7 83 arch 31 - - 48.9 89 June 30 - 50.9 93 1981 September 30 - 51.5 94 December 31 - 52.5 95 Pay 5 - 55.0 100 Closing Date 12/31/78 - 5/1/81 ANNEX 1 - 54 - -- Page 2 of 2 INDIA -. BOMBAY WATER SUPPLY AND SEWERAGE PROJECT CREDIT 390-IN Allocation of the Credit AMUNT OF THE CREDIT ALLOCATED (Expressed in Dollar Equivalent) At Reallocation Actual Appraisal July 29, 1980 Disbursement I. Equipment and materials procured by international competition 35,300,000 41,700,000 41,342,459.82 II. Locally manufactured equipment and materials procured by local bidding: (a) Vehicles 900,000 1,134,000 1,153,067.53 (b) Supply of concrete and stoneware pipes 2,400,000 1,781,000 2,036,989.87 (c) Manufacturing costs of steel pipes 2,000,000 4,491,000 4,527,181.72 (d) Pumping, electrical, treat- ment and maintenance equip- ment and materials 2,300,000 194,000 113,499.88 III. Consultants' services, training program and related equipment 5,700,000 5,700,000 5,826,801.18 Unallocated 6,400,000 - TOTAL 55,000,000 55,000,000 55,00.0,000.00 FIRsT scNBAt..WATr IU9PLT_App_m_WME P?DJEC? (dRED12830-InO M4UNICWAL WDORATION op mRA ~BT (ØD) ImoSstemat rya t975-1981 (prolheJion ind atual) (b. in ailuoe) lroje3ionAcual P.rojRcti.i Actn1 Pjtioctun Pr'jeWti o u 5et A-m rt. -ter .eveines. 161.0 187.3 167.0 215.8 221.0 332.'> 245.0 368.2 263.0 398.5 275.0 408.6 251.0 552.6 r..:e -.cveu.es 9".0 74.4 101.0 70.8 123.0 129.7 13f1.0 124.5 145.0 137.5 153.0 144.2 158.0 156.1 :3t3i "teaue 259.0 263.0 269.0 297.9 344.0 469.9 390.0 538.6 408.0 576.6 425.0 595.4 439.0 530.5 es 21.0 22.6 23.0 22.6 2!,.0 2?.2 25.0 34.0 28.0 37.0 29.C 37.2 33.0 4!.3 2.0 - 2.0 - 4.0 - r.o - 11.0 0.1 12.0 0.1 13.0 C.3 !.0 1.2 4.0 4.5 Q.0 5.9 15.0 8.7 16.0 9.1 17.0 13.5 19.0 26.1 '- 3rt. 2.0 0.9 2.0 2.5 2.0 4.1 2,0 4.1 2.0 3.6 2.0 5.4 3.1) 9.1 2 r.:71y ch3rseø 1.0 1.2 1.0 0.6 10.0 0.6 10.0 0.6 10,0 0.8 10.0 0.8 10.0 0.7 11.0 10.0 14.0 7.9 14.0 11.3 15.0 14.5 15.0 13.6 16.0 16.5 16.0 27.5 - ----- ------- ----- ----- ------------------------- --------------- - .------- - - ------ ' s r 40.0 35.9 46.0 39.1 64.0 44.1 77.0 61.Cj 82.0 64.2 86.0 73.5 !3.0 113.1 ----------------------------------------- ------------------------------- ---------------- ----------------- 31.0 25.- 29.0 24.0 29.0 23.8 23.0 26.0 29.0 28.3 30.0 26.1 29.0 !., e-i s 1.0 2.7 2.0 3.5 2.0 3.9 3.0 7.2 4.0 4.7 5.0 8.9 5.0 15.0 :,.cr c',tea!!lg 3.0 3.9 4.0 6.8 5.0 8.3 6.0 5.4 9.0 d-.5 9.0 7.8 1. 9.9 -n - . rt other 2.0 0.1 2.0 0.6 2.0 0.8 2.0 1.2 2.0 1.4 .0 1.7 1.0 . - - --2--.-------32.------------------.....------------------ - ---- ------.-----t-------------- -------------L ---- ----. i'reet e'st Stwerate----32Q----l----- 21----- 14&. -- 3L-....3§- . - - 1~ 1 _2--- 22--fig---- I2L2. ---- J§2--- f2----- jM---AIL- 21t2. 'iect eoet. _---2 9----f0----3- U .212 -- -19i---2!- 1162---Q172.-2 - 2d- ----d -.1 -12 .nia...ratiab. 7.0 20.8 7.0 19.2 7.0 24,7 7.0 34.2 7.0 38.9 8.0 42.6 9.* 61.2 .d . . .. - - - - - - 7.7 - 10.6 - 11.4 n :acrcnees. - - - - - " - - .2 -.2 - 2.9 - 3.1 7al ct 84.0 89.2 90.0 92.2 109.0 105.6 123.0 137.1 133.0 153.9 140.0 173.5 145.0 242.) -- ------------------------- --- --- --.-- --......- -- 3-o:c 1?Iore 174.0 173.8 179.0 205.7/ 235.0 363.2 / 257.0 401.5 275.0 422.1 29e.0 421.9 294.0 341.5 :,-ree 28.0 - 32.0 23.9 38.0 23. 56.0 54.5 65.0 56.6 72.0 57.6 - 3.0 61.6 .!.c=c Mtore intere9t 141.0 173.8 146.0 181.8 197.0 . 33q.6 201.0 347.0 210.0 366.1 216.0 364.3 211.0 279.8 en ohnrred to .Lo. 33.0 53.5 37.0 54.5 63.0 43.0 76.0 42.0 81.0 40.9 94.0 38.4 - 95.0 34.0 .'t 5. t lus 113.0 120.0 10.0 127,3 134.0 296.6 125.0 305.0 129.0 325.2 122.0 325.9 116.0 244.9 1/ Staft Appralsal geport 88a-"1. Aprt1 30. 1913 Source i WSSD) 'MRIa N AO M m n g Ua7 T (Tas ~m MUnrCUra o@ueAurros or casIUa anU&o mes plau Teal 1974-75 1975-76 1976-77 1977-78 1978-79 1979-80 ¶980.81 roJ. Actuale Pro. Actuala ProJ. Altuale proj. Actuale ProS. AotaaU ftøj. Actalø l'S. ft*uls 80URm8 CI JUl@ 1. Internal Caah Generation Incems bafore Depreciation 174.0 173:8 178.0 205.7 235.0 363.2 57.0 401.5 275.0 450.6'" 268.00 464,22/ 294.01 341.5 llon-agh expengen - - - - - - - 1.2 2. - 28 -i tol$ 174.0 173.8 178.0 205.7 235.0 363.2 257.0 402.7 275.0 452.8 280.0 467.0 294.0 344.6 2, insutItiebt Ser,ie.es .Aortleataon 17.0 35.6 14.0 5.7 27.0 35.7 26.0 32.2 46.0 35.6 74.0 33.1 56.0 31.2 Interest 33.0 53.8 37.0 54.5 63.0 43.0 76.0 42.0 81.0 40.9 94.0 38.4 95.0 34.0 total 0.bt Servic. 50.0 89.4 51.0 91.2 90.0 78.7 102.0 74.2 127.9 76.5 168.0 71.5 151.0 65.2 3. Contiutions to Invetmnt 124.0 84.4 127.0 114.5 145.0 284.5 155.0 328.5 148.0 376.3 120.0 595.5 143.0 279.4 3å Conaumors ContrLbtione 1.0 - - - 1.0 - - - 1.0 - 1.0 - 1.0 - 4. Inwatmt rnallsation - - - - - 8.7 - 59.4 - 38.3 - 38.9 - 11.3 5. loanas- I.D..(39011)Credit 50.0 - 160.0 - 156.5 - 20.0 - - - - - - - 0.0.6x. 50.0 90.5 60.0 135.0 56.5 129.5 20.0 14.2 - 43.6 - - - - ther. 105.0 - 135.0 25.7 81.0 88.5 164.0 14.2 155.0 50.0 105.0 - 106.0 - %otal L.o.n 205.0 90.5 255.0 160.7 194.0 211.0 204.0 28.4 155.0 93.6 105.0 - 106.0 - 9%tal Soure 330.0 174.9 382.0 275.2 540.0 511.2 359.0 416.3 304.0 50e.2 2k6.0 434.4 250.0 .290.7 Pr*-IM horka 7.0 1.0 firet ProJOct 357.0 115.9 335.0 213.2 158.0 300.5 16.0 313.4 - 28.7 - 205.8 - 174.9 Socond Yroject 7.0 - 68.0 - 172.0 - 308.0 - 284.0 - 233.0 34.2 263.0 74.3 Interest daing Const. 14.0 . 24, 8.4 10.0 21.8 9.0 41.8 13.0 59.3 4.0 . 78.9 5.0 82.9 >oai35>.0 115.9 425.0 221.6 3 40.0 - 22.3 3.0 -415.2 vZ97.0 - 40";0 .• 237.0 315.9 . 268.0 32.1- 7. 4turred ans- ¯¯ - T. - -9- ¯¯¯ 5 - 8, VorklAg Carital Iner0a80 (. ore age (M.01 59.0 (46.0) 53.6 . - 178.4 24.0 (8.2) 7.0 162.7 (11.0) 113.0 rAI.01 (46.4) Total Applications 330.0 174.9 382.0 75.2 340.0 511.2 359.0 416.3 304.0 508.2 2.6.0 43A.4 !n.2. 2907 1/ Staff Appralgt ROport 88å-IN, April 30. 1973. 2/ Inelude surplut on Coneolidated Leanm Pumdaounting to Re 27.9 million In PT 1978-79 amd Ra 42.3 million in Ty 1979-80). 1SSD INDIA FIRST DOHBAT VATER SUPPLY AND SIERAG PROJECT (CREDIT 39O*IM MINECIPAL CRPORATION OF GEATEIR 0stAY (wsso) Balance Sheat rye L975-1981 (projection and actual) he in 31l1103 Piscal Tear 1974-75 1975-76 97U-77 1977-78 1978-79 1979-80 1980-81 Projection Actuala Projection Actualo ProjectionAetuala Projection Actual PrjectioActual Projection Actual rojection Actuale lised Assete in Operation 1554.0 - 1805.0 3115.4 2472.0 3137.5 2854.0 3221.3 3116.0 3237.2 3528.0 3295.5 3730.0 3531.3 lans Acoun. Depreciation. 299.0 - 331.0 1102.6 369.0 1126.2 425.0 1245.3 490,0 1303,9 562.0 1363.0 645,0 1426.9 Net Fized Assets 1255.0 1194.7 1474.0 2012.8 2103.0 2011.3 249.0 1976.0 2626.0 1933.3 2966.0 1932.5 3085.0 2104.4 htdi in progress 414.0 93.4 591.0 315.1 !64.0 637.4 217.0 960.0 252.0 1284.8 77.0 1544.8 143.0 1641.1 1nveataento - 50.1 - 156.7 - 140.0 - 88.6 - 50.3 - 11.4 - Deferred Expenditure - - - - - 10.5 - 18.6 - 21.9 - 21.6 - 23.5 Totall 1669.0 1338.2 2065.0 2484.6 2367.0 2807.2 2646.0 3043.2 2878.0 3290.3 3043.0 3510.3 3228.0 3769.0 Current Aastal Cads Cloc.dhort term deposs) 95.0 155.4 63.0 89.6 65.0 260.8 102.0 344.8 117.0 519.2 111.0 629.5 103.0 631.9 Accountd Raceivuble 65.0 120.6 67.0 153.8 85.0 186.3 95.0 228.2 104.0 386.2 107.0 439.7 109.0 4C0.4 Contract Receivable - 2.9 - 51.1 - 80.9 - 93.9 - 67.0 - 37.9 - 145.5 Invintaries 4.0 52.7 4.0 98.0 6.0 96.9 6.0 54.0 6.0 67.8 6.0 63.1 8.0 91.9 Miecellam ous - 8.4 - 4.0 - 2.0 - 92.2 - 50.8 - 89.7 - 93.2 I Totals 164.0 340.0 134.0 396.5 156.0 626.9 203.0 813.1 227.0 1091.0 226.0 1259.9 22.0** 162.9 UZSEs CURSENT LAAILIIIES Accounts payable 47.0 55.5 58.0 134.0 74.0 196.8 91.0 313.6 101.0 261.3 104.0 260.6 109.0 321.5 uroalta 75.0 36.3 80.0 53.9 36.0 63.1 92.0 77.3 99.0 103.0 106.0 111.4 113.0 1A7.2 interest Accrued - 14.2 - 17.0 - 19.1 - 16.5 - ln.2 - 15.4 - 13.9 Current Maturities 140 19.1 27.0 35.7 25.0 32.2 46.0 31.7 74.0 55.2 56.0 66.0 56.0 73.9 Hic. Accrued Liabilties - 3.0 - - - - - 3.9 - 4.4 - 27.6 - 59,0 Totale 136.0 128.1 165.0 240.6 185.0 311.2 2W9.0 443.0 274.0 440.1 266.0 481.0 276.0 6:5.5 lt Current Asseta 28.0 211.9 (31.0) 155.9 (29.0) 315.7 (26.0) 370.1 (47.0) 650.9 (40.0) 778.9 (5S.0) 747.4 Total Auadtal 1697.0 1550.1 2034.0 2640.5 2338.0 312:.9 2820.0 3413.3 2831.0 3941.2 3003.0 4ke9.2 317.0 451E.4 B-aity (ronta 758.0 394.9 867.0 397.6 10O2.0 397.6 1127.0 510.3 1257.0 551.0 1360.0 617.4 1497.0 675.4 Eviuation surplus - - - 855,0 - 855.8 - 792.4 - 792.4 - 792.1 - 791.3 Oyerational Surplue 252.0 - 379.3 - 675.9 - 92:.B - 1353.9 - 1706.4 - 1936.2 Misoc. tiabilitide under Spl.fufi§ 0 6 l - 62g 0 10.0 4192 ,Total Bquti 1 4., 1 - T)~ '.U1 1/ Staff Appraisal Report 88a-IN, April 30, 1973 2/ Fixed assets are revalued from Fy 1975/716 -58- ANMEK 3 NzCI1A: COWOILLTZON Or ca.ik=a BPMAT Page 1 of 2 Statument *hoving the detaila o traLning given to the Offismre. sr. Nme of the Otfaera D..aig~a- Plane of 2eriad at Detaile at training Cant et tr%ting_r Ramar Mo. tion. training training 14r.er of eren:itre Indian Far~ign Exohance. 2 3 4 5 6 7 1. Shri t.D. Mulekor B.E. Sing-pur, 1/8/76 Training in advenoe 97909.85 U 3130 27825.70 - .akong, to courne ~ %mnage- r. 3315 5252.75 chikaa.o 21/1/77 ment of Water & Vshingto. Waste *ater resouroaes. Baringh~m in U.E. 2. Shri T.J. Møtry Dr.EE U.x.. Frent. 11/5/77 i)Deign principle 117317.96 *10160 91377ý96 - S~evrex eau (opt.) & Wet Grm y. to & manacturø at Stri T.. Rene AE(uv) 31/8/77 ~lon metere(Oft!e plate. & Drl. ~hort Inert)]N2 Cowmander ale& intr~naata Dettapi. Trane- mittera et*. ii)Trining in inatalls- tion & oafisioning . & msintananae of the equiat with 1CNTO staff at varioua varke mit in U.E. iii)ault indi ng,teating of oircuitary and repairing proaeduze for the abave eWip- ment. 3. Shri X.X. Gokhale EE VW U.x. å »rana. 10/8/77 Training at o£ ineer. 69606.82 * 6000 53393.44 - Shri S.D. Totade E3 W to in -ngement & opera- 26/9/77. tion of the proposed treattent planta & Manter Contral C-ntre. 4. Shri 1.A. Rlalua As VW U.S.A. U.K. 8 wetke Overneas training - 75342.36 - Shri P.K. Ch-rankar AB wW and Prance. froa lat Training in opera- vek of tinn and meintenenoe Sept.1979 of Tralant Plnte. to let veek at Nov. 1979. 5. shri B.R. Gale nr.re Vsohingtn, 21/3/74 Courae an water nmtcp 297.68 (ca) U.S.A. to and weste vater di~- + 27/5/74. posal canducted by Eonomt Institute of the World Baet. 6. Shri T.K. r-mawalla England,Prance 17/6/73 VisItt to ljwar pump- 95760.00 7.Italy. Swit- ta ing stat:long, vater 7. Stri B.V. Jaw<loar. meri.nd. Geran:r 0/8/73. treatment plan~. 8. Shri T.V. Borake. Netherlande. lerge Donetuatin 9. Stri D.S. Deahpande vark in progreee for vater zetaining atruatures. tilta to %nufaturing plnte far luiie* val"ee. butterfly navea, large eine pumpe senwage main- tenaM qquidpate. TieLte to inatitutiane & arganiatione deaUng in eater oupp7 and flwerage hold diaua~lon. and study in detaila varking and WOintenane Of learga pLate in operation. 10. Stri J.¥. Vednoker. U.C..Franoe, 5/6/76 Ta study general 85786.00 Hole. ta deein and peiag 11. Shri V.N. Rharker. 9/8,76. praotioe. Ta atudy madern trende in d eaOin and c aet. of eater epP7 etruatv~re . To study amthodio protea- tion of pipeline~, ua £o computere. m!-ure for enti-floatatian of pipelinen. 12. Shri 1.C. ~bndhi Poreign 5/9/76 ,tmpe-D-eign,sleo- 35554.00 aountrie. to tion. ineta'lation. 31/10/76 testing. operataoc,plarnd U. K and bzes,-davn of maintenmaee. -59- ANNEX 3 Page 2 of 2 1- . 2 3 4 5 6 7 B B 13. sri A.B. aduka, A.C.A. U.K. .7./2/7., ror oampter.td 53566.96 te tral=ing. 14. sart X.V. antar .. ..Gob. 15. Shæt K.V. Oha4... ».1.0. . 16. Sart 2.0. obho.. X.C.A. 17. S A... .abolm B.. V.S.A. 11/8/77 ]a.pmot.on vi.e -I 17500.00 » 3000 to aiffrønt un*gu ploat. 10/10/77 nsdy construated aad In oporation. a.v 5*w.~ a& effl~t pa. atatson. arady aomotruatod outfall. & amrated .goon. . shri 7.P. ømotbei S.. U.S.A. -do- -do- 17500.00 * 3000 1 9. Sart 7.S. ~a. -o -do. -do- 17500.00 I 3000 TIAI% Tan2a D Agrce Road Ycrd Coneral Volvo Compla pumm-9 stao We Bhwan& - ffi-wandi ro o t-53~ ~p.g sta PCtofflaon fl- Shil BOMBA THIS MAP HAS BEEN BROUGHT UP TO DATE FOR THE PROJECT COMPLETION REPORT FOR THE SECOND BOMBAY WATEO SUPPLY AND SEWERAGE PROJECT. IT IS BASED ON IBRD 13372. MARCH 1978 IBRD 13372 (PCR ANE 112 PO.r Station INDIA SECOND BOMBAY WATER SUPPLY AND SEWERAGE PROJECT REGIONAL WATER RESOURCES AND BMC TREATMENT AND TRANSMISSION FACILITIES EXISTING BOMBAY i BOMBAY H PROJECT PROJECT o * Reservoirs nt Treatment Works and Pumping Stations Treatment Works and Pumping Stations Expansion -Man Pipelines - -3, a Tunnels .. V^irs ] Zone ser ved by Bar vi Project(MIDC) E)Il! Zone served by Trans-Tana Wnter Supply Scheme(MIDC) F Zone served by Shahad Water Supply Scherne (GOM) s [ Zoni served by Ronsan Woter Supply Scheme (MIDC) -E ]BMC Supply Area Bhatsai Irrigation Command Area , Stage I MIDC Industrial Are CIDCO Area Reservars Planned far Future Developmenr Existing Reservo~rs and Dams Roads Railways - Limit of Grea ter Bombay - li-- m* of Bombay Metropolitan Region - International Boundar es 0 5 10 15 25 30 l toMETERS Poliv3 I N D I A /Stotii p a.ra .pAAAMR WoMB en A VshliTretrg ..r 1' k _ __ .Works .________________________________ Vuhu,Tveurräim Truo t<or <.c ,a To Pouna R&sn r SrA rli c lnation R1 LANKA Rcsrcrs ont