Philippines - Second Provincial Cities Water Supply Project

Documintof - Thie World Bank FOR OFFICki VSE ONLY -~ RqponNo.8937 1~~~~~~~~~~. j PROJECT COMPLFTION REPORT PHILIPPINES SECOND PROVINCIAL CITIES WATER SUPPLY PROJECT (LOAN 1710-PH AND CRT 920-PH) . - JULY 27-i199O .~~~~~~~~~ 1 In~frastruicture Division Country Departmnenti 1- : Asia Regional Office M&doesuen ha a resbieted sWBdnand ,pay be used by P ''I no #koffiefa duhtes I~s conteaft iuay Mt ohwvue be,ddscosed botWa - I  Currency Unit - I0sos (P) US $ 1 - P 21.40 (on completion) US $ 1 - P 7.40 (at appraisal) WEIGMD OmEAES 1 meter (m) - 39.37 inches (in) 1 square meter (m2) - 10.8 square feet (sq ft) 1 cubic meter (m3) - 35.3 cubic feet (cu ft) 1 kilometer (km) - 0.62 square mile (sq mi) 1 square kilometer (sq 1km) 0.386 square mile. (sq mi) 1 hectare (ha) - 10000 sq m or 2.47 acres (ac) AMBREVIATIONS AND ACRONYMS ADB - Asian Development Bank COA - Commission on Audit DANIDA - Danish International Development Agency DBN - Department of Budget and Management DO? - Department of Finance LWUA - Local Water Utilities-;Administration MLGCD - Ministry of Local Government and Community Development MIPWTC - Ministry of Public Works, Transportation and Communications NEDA - National Economic and Development Authority NWC - National Water Resources CouncilI ONAP - Operations and Maintenance Assistance Program RWDC - Rural Waterworks Development Corporation USAID - United States Agency for International Development WD - Water District EISALY I January 1 to December 31  MR OmCiAL USE ONLY T#U WOUlD BANK __ T~~~~S A^ luly 27,- 1990 MEMOEANDUN TO THE EXECyUMLE DIRECTORS AND THE PRESIDEWT SUBJECT: Project-Completion Report on Philippines Second Provincial Cities gater Supply Project (1&"~ 1710-??i and !HdiI20P Attached, for information, is a copy of a report' entitled "Project Completion Report on Philippines .- Second ProvWncial Cities Water Supply Project (Loan 1710-PR and Credit 920-PH)" prepared by the Asia Regional Office with Part 1I of the report contributed by the Borrower. No audit of this project has been made by the Operations EvaThition Departmant at this time. Attachment 1 I~~~~~~~~~~ -Tb dogum ha ot uumd 1 bwt9 mao op be and by twp os iin. Ie m of tAim ocial duias m gt oatme way as odtuwis be dastud withou Wes t ank au**IxW=lo.  OR OFFma USE ONLY SECOND PROVINCIAL CITIES WAlER SUPPLY PROJECT LOAN 171QICEDT 22L-M~ Table of Contents preface .................. (i) Evaluation summiry . . . . . . . . . . . I. PROJECT REVIEW FROM BANK'S PERSPECTIVE Project Identity . . . . . . . . . . . e . . . . . . . . . .1 Projject Backgronnd . . . . . . . . . . . . . . . . . . ...1 Project Objectives and Description . . . . . . . . .. 2 Project Design and Organization. . 2 . . . . . . . . . . . .2 Project Implementation .................. . 4 Project Results. 5 Project Costs. 8 Project Sustainability .. . 8 Bank Performance .8 Borrover's Perforsance . . . . . . . . . . . . . .... 9 Lessons Emerging from the Experience . . . . . . . . . . . .11 Project Relationships. . . . . . . . . . . . . . . . . . . .11 Consulting Services, Suppliers and Contractors . . . . . . . 12 Project Documentation and Data . . . . . . . . . . . . . . .12 -I. PROJECT REVIEW FROM BORROWER'S PWISPECTIVE Background . ............ .... ..... 13 Project Implementation . . ....... ...... . 13 Sub-Project Design and Implementation. . . . . . . . . . . .14 Mini-Loans . . . . . . . . . . . . . . . . . . 15 Training. . . . . . . . . . . . . . . . . 15 Vehicles and Equipment ........ ..... 16 Operation and Maintenance Assistance Prograz ..... 16 LWUA's Performance . . . . . . .. 17 Formation of Water Districts . .. .17 Viability of Water Districts . . . . . . . . . . . . . 17 Feasibility Studies/Design and Implementation. . . . . . . .18 Economic Conditions. . . . . . . . . . . . . . . . . . . . 18 Internal Cash aeneration and Billing and Collection Efficiency.. . . . . . 19 Organizational Stability ......... . .... 19 Internal Program and Project Management . . . . . . .20 Lessons Leatned ...... . 20 This document has a restricted distribution and may be used by recipients only in the performance of their offcial duties. Its contents may not otherwise be disclosed without World Bank authodation.  V., III. 8TATISTIL IWORW ,IO b1l.ed 5ankLoans and/or Credits. ... . . . 23 Project Timtable and IssuesRaised. . . . . . . . . . . . 23 lon/Cro.-t Dis .me.O. . ...... . . . . 26 Project Iuple tu .ntion . .................. 28 Project Costs an F nng . ... . . ... . .. 30 Status of Major Cavw na tsts . ........ ..... . . 31 Use of Bank Resources. 34 A Description of the Project .36 B* Operation and Haintenance Assistane Program .- . . . 37 C Summary of Supervision Reports Conclusios . . . . . 39  -I-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SEGOND PROVINCIAL CITIES WATER SUIsAY PROJECT Loan l7lO/Credit~ 920 PROJCT COMPLETIN REpORT This Project Completion Report (PCR) summrizes the experience of the Second Provincial Cities Water Supply Project for which Loan 1710-PH for US$ 16 million equivalent and Credit 920-PH for US$ 22 million equivalent were approved on Nay 29, 1979. The Loan and Credit were made to the Government of the Republic of the Philippines and became effective on November 30, 1979. The bulk of the project was to be carried out by the Local Water Utilities Administration (LWUA) with the assistance of the Government. As part of that assistance, the Government would te-lend the proceeds of the Loan and part of the proceeds of the Credit, expected to total about US$ 30 million, -.o LWUA, with the balance being implemented by the Government. To the extent practicable, the proceeds of the Credit were to be disbursed before any disbursements from the Loan. The original closing date for both the Loan and Credit was December 31, 1985. This was extended once to December 31, 1986 for both the Loan and Credit, and the Loan further extended to December 31, 1987. The final disbursement from the Credit was made on July 15, 1987 when US$ 2.78 million was cancelled. A total of US$ 10.25 million of the Loan could not be utilized and was cancelled; US$ -9.0 on December 19, 1986 and US$ 1.25 million on October 20, 1988. The final disbursement from the Loan was made on October 19, 1988. Of the total amount of US$ 38 million of the Loan and Credit, US$ 24.97 million (66%) was actually utilized. Bank supervision of the project has been, successively, by: the Energy and Water Supply Division, East Asia and Pacific Regional Office (EAP); the Urban and Water Supply Division of EAP; and, since July 1987, by th-, Infrastructure Operations Division, Country Department II, Asia Regional Office (AS2IN). Parts I and III of the PCR have been prepared by AS2IN. Part II is based on a report prepared by consultants for LWUA and comprises an abridged analysis of key issues and a retrospective assessment of project implementation from the Borrower's perspective.  l s t) - - ii , \. PH~~ZILUIPPNE SECOND PRONtIhL CITIER WATER SINPPY PRCJECT Loan 1710/Credit 92Q-P1 2gQECT ICPRlN =RPE 1. The objective of the Second Prqvincial Cities Water. Spply Project was primarily to support physical'and institutional water, supply development in- provincial cities and towns and provide a start to rural water supply and sanltation. The major components of the project were: i. Water supply- development in one large and about 50 small Water Districts (MD) with-served populations between 10,000 ant 30,000; ii. Technical assistance, training, equipment -and vehicles. 1it. - Provision - of wells and related works to some 1,000 3N--ral commuities; and i'vt- Pilot sanitation study for about eight rural communities. 2. The Second Provincial Cities Water -Supply Project was appraised in November 1978 and the credit and loan became effective in-November 1979. The IDA Credit was for US$ 22.00 million and the Loan for US$ 16.00 pillion, totalling US,$ A8.00. An amount of US$ 9.00 million of the loan was cancelled in -1987 (para. 1.18). The aluoupta of US$ 2.78 million-pnd US$ 1.25 million of the Credit and Loan, respectively, were undisbursed at closing and cancelled an'cordingly. The net amounts utilized were US$ 19.22 mllion and US$ 5.75 million for the Credit and Loan, respectively, or a total of US$ 24.97 million equivalent. 3. The start of the project implementation was s$f,iificantly- delayed as the Local Water Utilities Administration (LWUA) experienced problems with the utilization of a previously raised USAID loan. After usual start-up problems,, feasibility studies and designs progressed reasonably well, and following the initial delays, contracting for the larger cities and towns progressed well. However, it was found that the smaller cities and towns could generally- not, meet LWUA'Is full cost recovery criteria. Grants for these ins.ller cities and towns, estimated at appraisal to atmt to Up to twenty percent of construction cost, were not provided by-the goverAmeat due to the 1'. c  - iii -. .. - .. severe economic depresslon which started to affect the Philippines in the early 1980s (para. 1.17). 4. LWJA, like other newly established organizations, focused on achievement of physical objectives, that is, water supply system development and immediate improvements. Some years through the project implementation period it started to pay more attention to the institutional development of WDs and, when financial conditions became difficult, LWUA finally attempted to come to grips with its role as an intermediate development bank (para. 1.26). When it pin-pointed some of the major problems at the WDs as inadequate operations and maintenance, it embarked, with the Bank's concurrence, on an ambitious and successful Operations and Maintenance Assistance Program (OMAP). 5. All during this period, economic conditions further deteriovated, with the Government unable or unwilling to provide LVUA with adequate counterpart funds necessary for timely utilization of, firstly, the proceeds of the Credit and then those of the Loan. The revolution in the Philippines culminated, as far as LWUA is concerned, in the removal of generally dedicated and, by then, well-experienced management (para. 1.17). Despite Bank cautioning, when it became apparent that counterpart funding was- not available, it took the government a long time to instruct LWUA to scale down its opetations and cancel part of the Credit and Loan. 6. The new management, did not always relate well to the old staff and serious management/staff problems arose. LWUA's problems were added to when the government deeded in 1986 to assign it the role of the, by then, defunct Rural Waterworks Development Corporation (RWDC). LWUA was operating at a slow pace for several years and occasionally stopped altogether. Supervision' Aissions found it next to impossible to perform their tasks fully; record keeping by LWUA was poor and could often not be found (para 1.19). During this troublesome period the Bank-assisted project was eventually completed, but the programs of other financing and aid donor-agencies did not proceed as planned. All in all, the period during which implementation took place proved to be more than usually difficult and turbulent, and the actual results achieved, albeit short of the targets, therefore reflects LWUA's technical- strengths and commitment (para 1.25). Resultsi 7. It stands to the credit of the dedication of LWUA staff that the Bank-assisted project was eventually completed, meeting an estimated 60% of the original objectives (para 1.20) , utilizing about 67% of the combined Credit and Loan, 87.4% of the Credit and 36.0% of the Loan. Works have generally been of an acceptable standard; the physical improvements will serve present and future generations. The training component of the project was small and with the deterioration in the economy and thc standard of LWUA's training center, only limited formal training was undertaken (para 1.23). However, and possibly more importantly, project planning, design, construction and supervision skills were developed and a Bank mission in early 1989 determined  that thoee skills were still available within LJUA at the middle management level.