Morocco - National Water Supply Rehabilitation (Fourth Water Supply) Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 6087-MOR STAFF APPRAISAL REPORT KINGDOM OF MOROCCO NATIONAL WATER SUPPLY REHABILITATION PROJECT April 28, 1987 Regiona1 Projects Department Europe, Middle East and North Africa Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authoriatlion.  CURRENCY EQ%IVALENT (as of February 1987) Currency Unit - Moroccan Dirham (DH) - 100 centimes US$1.00 - DH8.40 DHI.O0 - US$0.119 DM1,000,000 - US$119,048 MEASURES AND EQUIVALENTS 1 millimeter (mm) - 0.04 inches I meter (m) - 3.28 feet 1 kilometer (km) - 0.62 miles 1 square meter (m2) - 10.8 square feet I hectare (ha) - 2.47 acres 1 square kilometer (km2) - 0.386 square miles 1 liter (1) - 0.264 US gallons 1 cubic meter (m3) - 264 US gallons I cubic meter per second (m3/sec) - 35.4 cubic feet per second liters per capita per day (Ipcd) - 0.264 US gallons per capita per day liters per second (1/sec.) - 0.035 cubic feet per second PRINCIPAL ABBREVIATIONS AND ACRONYMS USED AH - Administration de l'Hydraulique CIRF - Centre Inter-Regies de Formation cSE - Conseil Superieur de l'Eau DEPP - Direction des Entreprises Publiques et Participation DRSC - Direction des Regies et Services Conc6des FEC - Fonds d'Equipement Cowmunal ONEP - Office National de l'Eau Potable lAD - Regie Autonome Intercommunale de Distribution d'Eau et d'Electricite de Casablanca RADEEF - Regie Autonome de Distribution d'Eau et d'Electricite de Fez RADEEM - R6gie Autonome de Distribution d'Eaa et d'Electricite de Meknes RADEEMA - Regie Autonome de Distribution d'Eau et d'Electricite de Marrakech RADEEO - R6gie Autonome de Distribution d'Eau et d'Electricite d'Oujda RADEES - Regie Autonome Intercommunale de Distribution d'Eau et d'Electricit6 de Safi RADEETA - Regie Autonome de Distribution d'Eau et d'Electricit6 de Tara RADEEJ - Regie Autonome de Distribution d'Eau et d'Electricite de la Province de Jadida RADEEC - R6gie Autonome de Distribution d'Eau et d'glectricit6 de Chaouia RADEET - R6gie Autonome de Distribution d'Eau et d'Electricite. de Tadla RAID - Regie Autonome Intercommunale de Distribution d'Eau et f d'Electricite de la Province de Tanger RAK - Regie Autonome Intercommunale de Distribution d'Eau et d'Electricite de Kenitra RDE - Regie Autonome Intercommunale de Distribution d'Eau et d'Electricit6 de Tetouan RED - R6gie Autonome Intercommunale de Distribution d'Eau et d'Electricit6 de Rabat-Sale RADEEN - R4gie Intercommunale d'Eau et d'Electricite de Nador RAMSA - Regie Autonome Multiservices d'Agadir SIRTI - Societe Inter-Regie de Traitement Informatique FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY KINGDOM OF MOROCCO NATIONAL WATER SUPPLY REHABILITATION PROJECT STAFF APPRAISAL REPORT Table of Contents Page No. LOAN AND PROJECT SUMMARY . ............. ......... i T. THE WATER SUPPLY AND SEWERAGE SECTOR ................ Country Background..c k g...... ..* .... .***.... 1 Water Resources ,......... ........ . ... of*.* .... 2 Sector Organiz ation......a......ti 2 Water Supply ,... ............ . 3 Sewerage.................. 3 Sector Constraints .... .................. 4 Bank's Involvement in the sector............ 5 Bankts experience with Past Lending .........5 Sectoral Strategy............6. ...... ............. 6 II. THE PROJECT AREA ..................*.......... 7 Location - Special Features..............o.......... 7 Existing Water Supply Systems.................... . 8 Population Served and Levels of Services............ 8 Population Projection and Water Supply Demand d...... 9 III. THE PROJECTO.... ...... ......... .... o.. o. 9 Genesis ............. ..................... *.... 9 Project Objectives................................ 10 Project Description and Related Policy Measures..... 10 Status of Project Preparation ............. ....... 13 Cost Estm tes.......m a.... t es..... 0.. 14 Project Investment Financing Plan and Financing Arrangements............... . . *.........a .... 15 Project Implementationl..e... t.a... .o.n ..... .... 16 The R6gies - Sector Loan Component Implementation... 17 ONEP - Sub-Project Component Implementation......* 18 Institutional and Administrative Reforms ...... ...... 19 t ~~~~~Procuremeat ................ ........... 23 Disburs.ment.........*.* .... .....* 25 Land Acqqiisition . . .................... 28 Monitoring System ................................... 28 This report was prepared by Messrs Michel J.L. Pommier and Alexander X '.rman (EMPWS). Thi document has a restricted dribution and may be used by recipients oy in to p _rfbnauc of their ofcial duties. Its contents may not otherwise be discosed without Wofld Bnk -authodstion.  Table of Contents j< Page No. IV. THE BORROWER ANM THE IMPLEMENTING AGENCIES .......... 28 ONEP - Organization and Management ...............`..0 28 The Regies - Organization and Management ...........e. 30 Personnel and Training** ... . 31 Accounting Systems ..... ........................... .. 32 Billing and Collection .................... * 33 Audit and Insurance. ......... ............ , .. 35 V. FINANCIAL ANALYSIS A.................. .... 35 Past Results and Present Situationuati....n......... 35 Financing Policies and Obj e ctives 36 Financing Plan of ONEP's Investment program....... 38 Future Financial Performance of ONEP..............E 39 Financing Plan of the R6gies' Investment Program.... 40 Future Financial Performance of the Regies.......... 41 VI. JUSTIFICATION ........................ ................ 41 Project Benefits.................................... 41 Least Cost Solution ...........,.. 42 Environmental Impact ............................... . 42 Economic Rate of Return (ERR) ....................... 43 Poverty Impact and Affordability.................... 43 Risks and Safeguards .................. . 44 VII. AGREEMENTS REACHED AND RECOMMENDATIONS .............. 45 AMNEXES Annex I - Policy Reforms Matrix Annex 2 - Regies' Statistical Data Annex 3 - Population in Project Area Annex 4 - Projected Average Water Consumption and Water Production in Project Area 4 Annex 5 - Summary of Project Cost Annex 6 - Project Implementation Schedule Annex 7 - Action Program Annex 8 - Sub-Projects Eligibility Criteria Annex 9 - Monitoring Criteria Annex 10 - Detailed Physical Components Annex 11 - ONEP's Organizational Structure Annex 12 - ONEP's Financial Statements Annex 13 - Financial Assumptions Annex 14 - Economic Rate of Return Annex 15 - Selected Documents in Project Files  KINGDOM OF MOROCCO NATIONAL WATER REHABILITATION PROJECT LOAN AND PROJECT SUMMARY Borrower: Kingdom of Morocco. Loan Amount: US$60 million equivalent. Terms: Twenty years, including five years of grace, at the standard variable interest rate. US$15.5 million and US$39.0 million would be onlent to ONEP and the Regies, respectively, under the same terms and conditions. ONEP and the Regies would assume the foreign exchange risk and the variable interest risk. Beneficiaries: The National Water Production Authority (ONEP) and the sixteen Water Supply Companies (RWgies), the Regies' Directorate (DRSC) of the Ministry of Interior and the Hydraulic Administration (AR) of the Ministry of Equipment. Project Description: The proposed project constitutes the least cost solution to rehabilitate water supply systems in Morocco. It would introduce long term policy reforms that would strengthen the overall development of the sector. The project would: (a) rehabilitate and improve the efficiency of the existing production and distribution systems; (b) strengthen the financial policies of the sector to gradually increase cost recovery of operating and investment expenditures; and (c) strengthen sector institutions through institutional and administrative reforms, training programs and investment planning. The proposed project includes (i) provision of leak detection equipment and pipe and valve locating equipment; (ii) rehabilitation of existing production facilities and distribution networks; (iii) acquisition of water meters; (iv) studies to develop and/or update water master plans, prepare systematic preventive maintenance programs and identify future investment programs; (v) introduction of new financial policies; (vi) studies of sector organization, cost accounting, management information systems and provision of related computer equipment; (vii) training and technical assistance to ONEP, the R6gies and Ministry of Interior; (viii) development and implementation of an appropriate system to develop and coordinate water resource management; and (ix) development of a program to improve the procurement process in the R4gies. The project would directly benefit about 8.6 million people by the year 1992. The risks associated with the project are low due to the commitment of the implementing agencies to the project and the relative simplicity of the works to be carried out. Timely implementation of institutional, administrative and financial reforms would be a function of the political feasibility of those reforms. Given the fact that Government has initiated actions and expressed its full commitment to the implementation of these reforms, the risk of delays in their implementation would be minimal.  - ii - Estimated Project Cost: Component Local Foreign Total