Sri Lanka - Water Supply and Sanitation Rehabilitation Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 6061-CE STAFF APPRAISAL REPORT SRI LANKA WATER SUPPLY AND SANITATION REHABILITATION PROJECT April 30, 1986 Urban and Water Supply Division South Asia Projects Department This document has a restricted distribution and mas be used he recipients only in the performance of thei- official ditties. Its contents mav not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALEMIS Currency Unit = Rupee (Rs) US$1.00 = 27.4 Rs 1.00 = 0.0365 MEASURES AND EQUIVALENTS mm = millimeter (1 millimeter - 0.039 inches) * = meter (1 meter = 3.28 feet) km = kilometer (1 kilometer = 0.62 miles) km2 = square kilometer ( lkm2 = 0.368 square miles) ha = hectare (1 hectare = 10,000 square meters = 2.47 acres) 1 = liter (0.22 Imperial gallons or 0.264 US gallons) lcd = Liters per capita per day m3 = cubic meters (220 Imperial gallons or 264.2 US gallons) ml = million liters or 1,000 cubic meters mld = million liters per day (0.220 million Imperial gallons per day or 0.264 million US gallons per day) mgd = milLion gallons per day (I mgd = 4,545 m3/day) ABBREVIATIONS AND ACRONYMS ADB - Asian Development Bank AIC - Average IncrementaL Cost CMC - Colombo Municipal Corporation CAB - Common Amenities Board DDC - District Development Council FRP - Financial Recovery Program (of WDB) CSL - Government of Sri Lanka IDWSSD - International Drinking Water Supply and Sanitation Decade JEDB - Janatha Esta es Development Board MDB - Mahaweli Dev!lopment Board MIP - Macro Investment Plan (of WDB) MLGHC - Ministry of Local Government, Housing and Construction MOH - Ministry of Health SLSPC - Sri Lanka State Plantation Corporation ULAs - Urban Local Authorities UNDP - United Nations Development Programme UNICEF - United Nations Children's Emergency Fund USAID - United States Agency for International Development WDB - National Water Supply and Drainage Board WHO - World Health Organization WRC - Water Resources Council Fiscal Year January I - Deccanber 31  FOR OFFICIL US ONLy SRI LANKA WATER SUPPLY AND SANITATION REHABILITATION PROJECT Table of Contents Page No. CREDIT AND PROJECT SUMMARY ................................... I. THE WATER SUPPLY AND SANITATION SECTOR ... ................... A. Sector Background ....................... I B. Sector Institutions ......................... 2 C. Sector Development Constraints ................ 2 D. Sector Development, Objectives and Strategy ............ 3 E. Performance in Previous IDA Operarions ............. . 5 F. Rationale tor Continued IDA Support ..................... . 9 C. The Urban Water Supply and Sani?atlon lnvestment Program . 9 H. Donor Support . ............................................ . 10 1. Finarcing ,ct the !nve,stmrnt Pr,ogram ...................... 10 II. THE PROJECT .................................................. 11 A. Plro ject Ob tect ives ........................ il B. Project Descri pt l)i ............................l.i C. Pro ect Cosr s anc Pi naric ng .............................. 13 D. WDB' z inance- s a7l+i Ooperat ;rri .n............................ 15 E'. FinanciaL Ub ec r.es ar d Pr1ncLpLes ., .. ...................... 18 F. Prcr ject pj S ,ment a0ior ............I. ...... 19 Stas --t P e~ nratl. ...................................... 19 ..anc Acquis twn ................,...,.............. 20 lTr, rI,rn r Ago-s-i s.20 Pr c,ur rr. en ........ 20 '.sbebursemnts .21 Operat i,,na, Ac .zn P,ar. 22 Project Reporting and Supervtsicr. 23 Acc,unts and Audits .................... 23 C. I'ro;ect Justit;cation ...........................,...23 Health BenefLts and Erv; ronmental Impact .23 Benefits for the lirbar P.or .23 Least Cost Solutions .24 Fconomic Analysi.. 24 Atitordab,1itv ...............25 Risks and Safeguards ................................. 25 This report is based c.n the findrngc of an InA appraasal rn:ssionC consisting of Mes-3rs. Ca..tarn Seng.pta (mission leader), Terry Hall an. David C. Jones, W!(o, ,.si? Pd Sri ;.n during Ncvemher-December, 1985. Mmes. Sylvia Alver., He'ena Reivuo-Yen and Marv k'eane as<!sted in the production uf t.h;U rep.rm washhingron, D.C. This document has a restricted distribution and may be used by recipients only in the performance of their omcial duties. Its contents may not otherwise be disclosed without World Bank authorization  Page No. III. AGREEMENTS REACHED AND RECOMMENDATIONS ............... .......... . 26 List of Annexes 1. Sector Organizations .*...*....*............***e*...... 27 2. Macro Investment Plan ..................................... 31 3. WDB's Urban Investment Program ................ ............ 32 4. Colombo Water Supply and Demand ................. O-* ..... 46 5. Schedule of Bank Financed Project Components and Costs ... 47 6. Consolidated Income and Expenditure Statement (1985-1995). 58 7. Statement of Sources and Application of Funds (1985-1995). 59 8. Major Assumptions underlying the Financial Projections ... 60 9. Present 1985 Tariff Levels ...... ......................... 63 10. Orginization Chart of WDB ...... .......................... 64 11. Amcunts and Method of Procurement ....................... 65 12. Local Procurement Procedures ...... ....................... 66 13. Implementation Schedule ...... ............................ 67 14. Estimaied Schedule of Disbursements .......... ............ 68 15. Disbursements by Category ...... .......................... 69 16. Operational Action Plan ..... ........... ................. 70 17. Monitoring Indicators .................................... 75 18. Economic Analysis Data ................................... 79 19. Related Documents in Project File . . ...................... 80 MAPS IBRD 19498 Greater Colombo Area Sew3rage Facilities IBRD 19499 Amparai Water Supply Rehabilitation IBRD 19500 Anuradhapura Water Supply Rehabilitation IBRD 19501 Greater Colombo Storm Water Drainage Schemes IBRD 19502 Greater Colombo Area Water Sources, Transmission and Treatment Facilities  SRI LANKA WATER SUPPLY AND SANITATION REHABILITATION PROJECT Credit and Project Summar Borrower: Democratic Socialist Republic of Sri Lanka Beneficiary: National Water Supply and Drainage Board (WDB) Amount: SDRs 32.1 million (US$37.0 million equivalent) Terms: Standard Relending Terms: The Covernment would relend US$21.4 million equivalent of the credit proceeds to WDB at a 12 percent interest rate, repayable over 24 years including 2 years of grace, while US$15.3 million equi,'alent would be made available as equity. The Coverment would bear the foreign exchange risk. (The Government would retain US$0.3 million equiv- alent to implement the low-cost sanitation component.) Project: Description: The project seeks to improve water supply and sanitation services, public health and sector management by rehabili- tating and augmenting water supply, sewerage, sanitation and drainage systems in the Amparai, Anuradhapura and Colombo areas, while strengthening WDB's financial management, and enhancing its operations and maintenance capacity. The primary benefits expected to accrue to the areas' popula- tions, about 40 percent of whom fall beLow the poverty threshold, are improved services, a decrease in waterborne diseases, savings in health care :osts, improved worker productivity, and a favorable enviro.nmental impact. The project faces no special risks, although achieving the objectives would depend upon a growing capacity for sound financial management by WDB.  Estimated Cos.-:: a/ Local Foreign Total