Peru - Lima Water Supply and Sewerage Project

Document of The World Bank FOR OFFICIAL USE ONLY MICROFICHE COPY Report No. 10230 Report No. 10230-PE Type: (PCR) TWEDDLE, E/ X31707 / T9073/ OEDD3 PROJECT COMPLETION REPORT PERU LIMA WATER SUPPLY AND SEWERAGE PROJECT (LOAN 2139-PE) DECEMBER 24, 1991 Infrastructure Operations Division Country Department I Latin America and the Caribbean Regional Office This document has a restricted distribution and may be used bv recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  PERU PROJECT COMPLETION REPORT LIMA WATER SUPPLY AND SEWERAGE PROJECT (Loan 2139-PE) Currency Eguivalents Currency Unit: Inti (I) US$1.00 I = 0.698 (1982) US$1.00 I = 16.707 (1987) Weights and Measures Metric System Fiscal Year January 1 - December 31 Glossarv of Abbreviations ESAL Empresa de Saneamiento de Lima (Lima Water Company) GDP Gross Dcmestic Product PEU Project Executing Unit SEDAPAL Servicio de Agua Potable y Alcantarillado de Lima (Lima Water Company) SENAPA Servicio Nacional de Agua Potable y Alcantarillado (National Water Supply and Sewerage Service)  THE WORI.D BANK FOR OFCIAL USE ONLY Washington. D.C. 20433 U.S.A. 00k. of Direcuvltwal Opathfls Evakatao December 24, 1991 MEMORANDUM TO THE EXECKI.1VE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Peru Lima Water Supply and Sewerage Project (Loan 2139-PE) Attached, for information, is a copy of a report entitled "Project Completion Report on Peru - Lima Water Supply and Sewerage Project (Loar. 2139- PE)" prepared by the Latin America and the Caribbean Regional Office with Part __ contributed by the Borrower. No audit of this project has been uLade by the Operations Evaluation Department at this time. e' Attachment This document has a restricted distribution and may be used by recipients only In the perfotrmance of their ofcial duties. Its contents may not otherwise be disclosed without World Bank authoriation.  FOR OMCIAL USE ONLY PROJECT COMPLETION REPORT LIL TA.TER SUPPLY AND SEWERAGE PROJECT (LOAN 2139-PE) Table of Coutents Pate No. PRAFC E..... . .... .. i EVALUATION SY ii...... PART I: PROJECT REVIE FROM BANK'S PSPECTIVE . .......... .. A. Project Identity ............. ... . B. Project Background....... 1 C. Project Objectives and Descripti .. 2 D. Project Design and Organization . . 3 E. Project Implementation. ........................ 4 F. Project Results............. . .. 5 G. Project Sustainability.... . ... . .. 5 H. Bank Performance. ....................................... 5 I. Borrower Performance. . . .s. - .................. 6 J. Lessons Learned ................ ............ .............. 6 K. Project Relationship. ............ .............. . 7 L. Consulting Service .................. .7 M. Project Documentation and Data.......... 7 PART Is, BOEROWER'S PERSPECTIVE ON PROJECT .I.H....TION .. ... 8 PART III: STATISTICAL IRI ..... ....................... .......... 10 1. Related Bank Loans ..... ....................................... .. . 10 2 e Project Timetable ........ .***** ................ ................. ll 3. Loan Disbursements ........ . ................. .............. 12 4. Project Implementation ...................................... . 13 5. Project Fi ngncan gn.... . ....................... . 14 6. Allocation of Loan Proceed ...............ede........... 15 7. P=oject Costs .................................................. 16 8. SEDAiPAL Honitoring Indicators and Financial Statements ..... 17 9. Loan Covenants ................................... 20 10. Use of Bank Resources ................................. . ... 21 This document hs a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - 1 - PROJECT COMPLETION REPORT mu LIMA WATER SUPPLY AND SEWERAGE PROJECT (LOAN 2132-PE) This is the Project Completion Report (PCR) for the Lima Wator Supply and Sewerage Project (Loan 2139-PE). This loan, made to the Servicio de Agua Potable y Alcantarillado do Lima (SEDAPAL), with the guarantee of the Republic of Peru, was signed on June 4, 1982. Original cl*sing date was June 30, 1988. The original loan amount was US$40.6 million, later reduced, along with the project scope, to US$27.0 million at the roquest of both the Government and SEDAPAL. On November 6, 1986, the Bank suspended loan disbursement. The loan was closed effective June 27, 1989, after tho borrower submitted documentation supporting expenditures through the loan Special Account. The last disbursement was on December 11, 1986. Total loan disbursements amounted to US$S.2.4 million. The remaining US$14.6 was canceled. The PCR was prepared by the Infrastructure Division of the Latin America and the Caribbean Region, Country Department I (Preface, Evaluation Summary, Parts I and III) and is based inter alia, on the Staff Appraisal Report; the Loan and Guarantee Agreements; supervision reports; correspondence between the Bank and the Borrower; and internal Bank memoranda. Part II of the report was prepared by SEDAPAL after it had an opportunity to review the Parts I and III prepared by the Bank.  - ii - PROJECT COMPLETION REPORT PERU LIMA WATER SUPPLY AND SEWERAGE PROJECT (LOAN 2139-PE) EVALUATION SUMMARY I&JOStivs- 1. The overall project objective was to improve health and living conditions in the Lima Metropolitan area. Specific project objectives were to improve: (a) water and sewerage services, particularly to low-income families in highly populated areas; (b) the management of ground and surface water resources; and (c) the project executing agency's (SEDAPAL) managerial, technical, and financial capabilities (para. 6). IumlImentation ExIerience 2. The project implementation process was marred from the beginning by problems that led to reduction in the project scope and the loan amount and, subsequently, to the suspension of disbursements and loan closing without completing the project (para. 13). 3. The principal determinant of this unsatisfactory performance was the lack of Government commitment to institutional reform. This issue was compounded by adverse macroeconomic conditions during project implementation. Inflation, in particular, was beyond the Government and the Bank's expectations (it accelerated from 731 in 1982 to 158Z in 1985), making it more difficult for the Government to implement required tariff increases in a timely fashion. Because of the inadequate pricing policy, the pressure over SEDAPAL's scarce financial resources mounted, resulting in revenues insufficient to cover operating costs and to contribute to capital expenditures. SEDAPAL's poor performance was exacerbated by the pricing policies put in place by the new Government in 1985. Disbursements for this Loan were suspended in November 1986 because of non-compliance with Loan covenants. The overall policies of this Government eventually resulted in arrears to the Bank which led to suspension of disbursements for all the Bank loans to Peru in 1987 (paras. 14 and 22). 4. The inadequate capacity of the Government to direct and control SRDAPAL's operations was another negative factor in project execution. The entity was overburdened by regulations and restrictions that did not allow It to operate effectively and efficiently. Procurement procedures, tariff rates. budgets, personnel policies, and salary structures were tightly regulated by several agencies, including its parent company (SERAPA), reducing in practice the accountability of managers at all levels. This situation was aggravated by the inability of SENAPA and SEDAPAL's managements not only to carry out a constructive dialogue with Government authorities but also to withstand pressures to concentrate on actions leading to immediate political gains as opposed to a long-term perspective in policy design (para. 15).  - ii: - ieaulte 5. The project failed in achieving its objectives. There was little progress in improving the coverage and quality of services, and there was no progress in strengthening SEDAPAL's techniical and managerial capabilities. Water and sewerage service coverage by 1989 was estimated at 781 versus a targeted 90%. The quality of the services continued to deteriorate as water was not being provided on a continuous basis and rationing was on the increase. Water wastage continued as a result of SEDAPAL's inability to account for the water produced, and of the lack of price signals to encourage consumers to conserve water (tariffs were kept extremely low and water use was increasingly charged on a flat-rate basis). Bill collection was still highly unsatisfactory. Maintenance of existing assets continued at levels well below those needed to avert their rapid deterioration (para. 17). These problems were exacerbated by the populist approach of President Alan Garcia, which did not encourage the financial discipline to transform SEDAPAL into a business- like institution. Sustainability 6. The sustainability of the project's economic benefits is unlikely as the project investments were not fully carried out, nor were the managerial and operational reforms required for an efficient operation of the system (para. 18). Lessons Learned 7. One lesson of this project is that the Bank should take fully into consideration previous experiences with the proposed borrower or executing agency. The experience under the first project (Loan S-11-PE), which aimed at preparing SEDAPAL to undertake major investments, had not been satisfactory and, thus, the decision to go ahead with the second project involved substantial risks. In similar cases the Bank should request further evidence of both the Government and the project entity's commitment to implement reforms, before going ahead with a new project (para. 23). 8. A second lesson is that the Bank should increase its awareness of the complexities of institutional reform, and the need to have precise objectives and a clear strategy to meet them. The objectives of Loan 2139-PE were laudable, but when added together were too ambitious, without clear priorities, and not complemented by concrete action programs. The financial, operational and administrative measures required to improve SEDAPAL's performance in accordance with the agreed monitoring indicators were not clearly identified (para. 24). 9. A third lesson is that the Bank should be more rigorous in enforcing compliance with loan covenants when the borrowers or project executing agencies consistently fail to satisfactorily execute the project. Delays in applying remedies result in an inefficient use of the borrower's and Bank's financial and human resources (para. 25).  PROJECT COMPLETION REPORT PERU LIMA WATER SUPPLY AND SEWERAGE PROJECT (LOAN 21;3-PE) PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE A. Project Identity Project Name : Lima Water Supply and Sewerage Project Loan Number : 2139-PE RVP Unit : Latin America and the Caribbean Region Country Department I Infrastructure Division (LAlIN) Country : Peru Sector : Urban Subsector : Water Supply and Sewerage 'R. Project Background 1. The Project was the second step of a process initiated by the Government in 1978, with Bank support, to improve the coverage and quality of water and sewerage services in Metropolitan Lima. The first Bank-financed project in the sector, the Water Supply and Power Engineering Project (Loan S- 11-PE), assisted SEDAPAL' in the assessment of Lima's water resources, the preparation of a master plan for further system development, and the improvement of the entity's managerial and operational abilities. The second Bank-financed project in the sector (Loan 2139-PE), which is the subject of this report, aimed at satisfying short- to medium-term water supply and sewerage needs of Lima's population, with emphasis on low-income groups. It also aimed at continuing to improve SEDAPAL's managerial and technical capabilities. 2. The Lima Metropolitan area (Lima) includes the cities of Lima and El Callao, and a number of smaller communities within the jurisdiction of Lima and El Callao provinces. Its population was 4.6 million as of June 30 1981, and was expected to increase to about 9.1 million by the year 2000. The area contained about 26% of the country's population, and generated about 60% of GDP and 70Z of the country's industrial output. 3. Population. Service Levels and Quality. In 1981, only half of Peru's population had access to potable water and only 40% were connected to sewerage systems. Coverage in Lima was about 62Z for water supply and 56% for sewerage. About 40% of the residents of Lima belonged to low-income families, earning less than two minimum-wage salaries per family. The majority of the low-income population lived in high-density development located on the outskirts of the central urbanized areas and under extremely poor sanitary conditions. Conditions in rural areas were much worse: less than 20% of the population had access to potable water, and even less to sanitation services through a house discharge or latrine. v Ex-Lima Water and Sewerage Company (ESAL), reorganized and renamed in 1981. The PCR for Loan S-11-PE was issued on September 7, 1990.  -2- 4. Sector Development Obiectives. The main Government objective in the sector was to expand service coverage in urban and rural areas. Its strategy aimed at resolving the most urgent water supply and sewerage deficiencies, while strengthening the institutional, financial, and managerial capabilities of implementing agencies. To this effect, in September 1981, the Government reorganized the water supply and sewerage sector. A new institution, the National Water Supply and Sewerage Service (SENAPA), was created and entrusted with the following responsibilities: (a) sector planning; (b) formulation of financial and tariff policies; and (c) sector coordination and technical assistance. Water companies in the largest cities, including Lima, became subsidiaries of SENAPA. 5. Linkages Between Proiect. Sector. and Macro Policy Objectives. The project concept fit into the Government's strategy of strengthening public sector institutions and improving environmental, social, and health conditions of the lower-income segments of the population. It was also consistent with the Bank's strategy of helping the Government in this endeavor as well as in developing a sound physical and social infrastructure, with emphasis on izLsXitutior. building and provision of services to the urban poor. C. Proiect Obiectives and Description 6. Proiect Obiectives. The overall objective of the project was to improve health and living conditions in Lima. Specific project objectives were to improve: (a) water and sewerage services to low-income families in highly populated areas, as well as to families in several areas of Lima, under the framework of the existing master plan; (b) the managemant of Lima's ground and surface water resources; and (c) the project executing agency's (SEDAPAL) managerial, technical, and financial capabilities. 7. According to appraisal estimates, the overall service coverage level in Lima would increase from 622 for water and 56% for sewerage in 1981. to 86% and 79X, respectively, by project completion in 1986. Coverage would continue to increase beyond the completion date of the project to reach a targeted coverage of 902 and 85% in water supply and sewerage, respectively, by 199O.i 8. Prolect Description. The project had an estimated cost of US$92.8 million and included four major components: (a) Water Supply and Sewerage Works. The largest component of the project (46.72 of total cost) comprising: (i) water supply works, including distribution networks, storage capacity, house connections, water mains, and a pumping station; and (ii) sewerage works, including collectors and house connections. (b) Groundwater Development. (24.02 of total cost) comprisings (a) drilling and equipping wells; (b) repairing existing t Thirty-seven of total water supply beneficiaries, and 40 percent of sewerage beneficiaries were estimated to belong to the absolute poverty group.  wolls; and (c) building infiltration galleries along the Rimac River. and rehabilitating existing galleries. (c) Operation of the Distribution System and Reduction of Water Losses. (20.5% of total costs) comprising: (i) provision and installation of master meters in existing wells and in water mains; (ii) acquisition, installation, and rehabilitation of micrometers, and improvement of SEDAPAL's meter repair shop; and (iii) provision of water quality control laboratory equipment and purchase of vehicles. (d) Technical Assistance. (8.8% of project costs) comprising: (i) s. users' survey of water and sewerage connections; and (ii) the improvement of the management and control of water resources including groundwater recharge, and deep wells. D. Proiect DesiL#n and Organization 9. ESAL (reorganized and renamed SEDAPAL in late 1981) prepared the project with major inputs from consultants under Loan S-11-PE over a period of eight months (between January and September 1981). 10. The Banlk considered SEDAPAL as an institution strong enough to be responsible for project implementation, although institutional development was considered among the important aspects of the project. The most serious institutional difficulties identified at appraisal were: (a) inability to recruit and retain qualified managers and technical personnel as a consequence of inadequate salary levels; (b) overstaffing (unskilled and semi-skilled job categories); (c) deficiencies in technical and commercial operations which resulted in about half of the water produced not being accounted for; and (d) inadequacy of water tariffs to generate the financial resources necessary to maintain the system and undertake the most urgent investments. 11. The Bank considered, however, that SEDAPAL had made substantial progress in overcoming the above difficulties, particularly in strengthening its organization through the recruitment of qualified personnel (including a new general manager), and the completion of a water and sewerage master plan for the Lima Metropolitan area. Still, the most critical issue remained the low level of tariffs and the slow pace of the Government to take action on required increases. This weakness continued during the implementation -f the project and was a major reason for SEDAPAL's poor performance in project execution (paras. 13 tc 17). 12. The design of the loan was based on the notion that the Government was strongly committed to implement all the changes necessary for a successful completion of the project, and that Loan 2139-PE would sustain progress already made through Loan S-11-PE. The Bank was aware, however, that failure of Government authorities to support periodic tariff adjustments would jeopardize SEDAPAL's financial viability, and consequently hamper compliance with the project's objectives. At the time the Bank view was that close supervision and monitoring would substantially reduce the project's risks. As shown later, the Bank overestimated the extent to which its project supervision efforts could influence the Government's decisions aimed at improving SEDAPAL's performance. In other words, project design was based on  -. 4 unrealistic expectations in terms of both the borrower's commitment and Bank's ability to promote the implementation of sound financial and managerial practices. E. Project Implementation 13. The project implementation process was marred from the beginning by persistent problems that led to a reduction in the project scope and the loan amount and subsequently to the suspension of disbursements on November 6, 1986 due to lack of compliance with Loan covenants. 3 By then, only 46% (Us$12.4 million) of the reduced loan amount (US$27.0 million) had been disbursed. The loan was closed effective June 27, 1989. 14. The principal determinant of this unsatisfactory performance was the lack of Government commitment to implement institutional reform. This issue was compounded by adverse macroeconomic conditions during project implementation. Inflation, in particular, was beyond the Government's and the Bank's expectations (it accelerated from 73% in 1982 to 158% in 1985), making it more difficult for the Government to implement required tariff increases in a timely way. Because of the inadequate pricing policy, the pressure on SEDAPAL's scarce financial resources mounted, resulting in revenues insufficient to cover operating costs or to contribute to capital expenditures. 15. The inadequate capacity of the Government to direct and control SEDAPAL's operations was another negative factor in project execution. The entity was overburdened with regulations and restrictions which did not allow it to operate effectively and efficiently. Procurement procedures, tariff rates, budgets, personnel policies and salary structures were tightly regulated by several agencies, including its parent company (SENAPA), reducing In practice the accountability of managers at all levels. This situation was aggravated by the inability of SENAPA and SEDAPAL's managements not only to carry out a constructive dialogue with Government authorities but also to withstand pressures to concentrate in actions leading to immediate political gains as opposed to a long-term perspective in policy design. 16. The project also experienced other difficulties, similar to the ones confronted by its predecessor (Loan S-11-PE), namely: (a) inadequate technical management of the project due to lack of qualified personnel; (b) frequent changes in SEDAPAL's Board of Directors; (c) protracted procurement procedures; e and (d) delays in the production of final designs. > Suspension of disbursements was never lifted, since the Minister of Economy and Finance did not authorize the Plan of Action for SEDAPAL's financial recovery and for accelerating project execution, which SEDAPAL had prepared. Furthermore, due to arrears in debt service, a general suspension of disbursements for all Bank loans to Peru has been in effect since May 5, 1987. ' This was caused mainly by the existence of numerous bureaucratic regulations. The Bank, by correspondence and during supervision missions, advised SEDAPAL on procurement matters, but improvement only became apparent toward the end of 1986. By that time, loan disbursements had been suspended and later the undisbursed balance of the Loan was cancelled.  F. Prolect Results 17, The project failed to achiov21l nbjeur:ivon. There was little progress in improving the coverage &iid oiiKIi-i, oi soIco, and there was no progress in strengthening SEDAPAL's teoht,.Icul axid iauna,g.al capabilities. Water service coverage by 1989 was estimated at /8% verutio a targeted 90%. The quality of the services continued to deteriorate as water is currently not being provided on a continuous basis and rationing is on the increase. Water waste continues as a result of SEDAPAL's inability to account for the water produced, and due to the lack of price signals to encourage consumers to conserve water (water use is increasingJy charged on a flat--rate basis). Bill collection is still highly unsatisfactory. Maintenance of existing assets has been reduced to levels well below those needed to avert their rapid deterioration--from 1987 to 1989 only 3 km/year of water pipes were replaced in a system with over 6,200 kms of pipe, most of which has been poorly maintained over many years. G. Project Sustainability 18. The sustainability of project econuoic benefits is unlikely as the project investments were not fully carried out nor were the managerial and operational reforms that were required for an efficient operatior. of the system. H. Bank Performance 19. Bank performance was mixed, vwith the positive aspects of the performance offset by the negative. The positive aspects include the following. First, an extensive dialogue with the Government and sector authorities took place about SEDAPAL weaknesses and, most importantly, about specific policies and actions to improve the entity's performance. These policies and actions were reflected in several action plans agreed with the authorities. And second, an intensive supervision effort occurred, with the Bank undertaking 13 supervision missions during the loan disbursement period (1982 to 1986). 20. The negative aspects of the Bank's performance were significant both during project preparation and appraisal and during project implementation. First, the Bank was overoptimistic in its assessment of the ability of the Government and SEDAPAL's management to implement the institutional and financial reforms required for successful project execution (para 12). Most importantly, the Bank did not take fully into consideration SEDAPAL's unsatisfactory performance under Loan S-11-PE; even though, the project financed with this loan was substantially smaller and less complex than the second project (total project cost was US$6.1 million for the project under Loan S-Il-PE, and US$92.8 million for the project under Loan 2139-PE). Second, the Bank excessively delayed the application of remedies in response to the Government and SEDAPAL's lack of response to its timely and repeated recommendations to improve project implementation (para 19). Suspension of loan disbursements and loan cancellat.on were frequently considered between 1984 and most of 1986, but were always rejected following appeals by SEDAPAL for flexibility and understanding. It was not until the end of 1986 that the Bank decided to suspend disbursements. Third, the Bank readiness to agree with the Government request for a major reduction in project scope and in loan  amotnt (from US$40.6 to US$27.0 million) did not provide an adequate incentive to the Government and SEDAPAL to implement long overdue reforms. X. Borrower Performance 21. Several key issues affecting the overall public enterprise sector in Peru we-re among the main determinants of SEDAPAL poor performance in project execution. First, there were conflicting objectives, particularly in setting tariffs and in enforcing bill collection. Second, most important budgetary, personnel, salary, investment, procurement, and some operational decisions were made largely ignoring efficiency considerations. Third, a system of control of SEDAPAL's operations by the Government's leading management was oriented more towards fulfilling bureaucratic regulations (including procurement procedures) than efficient performance. 22. SEDAPAL's poor performance was worsened by .he policies put in place by the new Government in 1985, by which it limited the tariff increases and did not supply adequate funds for maintenance, investment activities and debt service. These problems were exacerbated by the populist approach of the Government of President Alan Garcia, which did not encourage the financial discipline to become SEDAPAL into a business-like institution. The overall policies of the Government led to arrears to the Bank, which subsequently led to suspension of disbursements for all loans to Peru in 1987. J. Lessons Learned 23. One lesson is that the Bank should take fully into consideration previous experiences with the proposed borrower or executing agency. The experience with the first project (Loan S-11-PE), which aimed at preparing SEDAPAL to undertake major investments, had not been satisfactory enough; thus, the decision to go ahead with the 3econd project involved substantial and inherent risks. In similar cases the Bank should request further evidence of the Government's and the project entity's commitment to implement reform before going ahead with a new project. 24. A second lesson is that the Bank should increase its awareness of the complexities of institutional innovation and change, and of the need to have precise objectives and a clear strategy to meet them. The objectives of Loan 2139-PE were laudable, but when added together were too ambitious, without clear priorities, and were not complemented by concrete action programs. The financial, operational and administrative measures required to improve SEDAPAL's performance in accordance with the agreed monitoring indicators were not clearly identified. 25. A third lesson is that the Bank should be more rigorous in enforcing compliance with loan covenants when the borrowers or project executing agencies fail to satisfactorily execute the project. Delays in applying remedies result in an inefficient use of the borrower and Bank's financial and human resources.  7- X. PtRoJct Relationshin 26. The Bank's consistent and repeated efforts to improve project Implementation did not succeed because the political and economic environment in Peru was not conducive to substantial reform of public enterprises. LO. Conultina Service. 27. Protracted bureaucratic procedures within SEDAPAL created difficulties for the hiring of consultants. L The Bank's efforts to ensure more expeditious processing were not successful. 28. Satisfactory work was performed by consultants in technical assistance for groundwater management and the improvement in the operation of the water distribution system. M. Proiect Documentation and Data 29. The loan legal documents, the Staff Appraisal Report, aide memoires and supervision reports provided the basic information for the preparation of Part I and Part III of the PCR. The documents provided detailed information that made possible a critical evaluation of the constraints affecting project implementation, however gaps exist with respect to actual monitoring indicators because the information was not available. Also, information regarding actual completion of some project components was not available in the project files nor was this information furnished by SEDAPAL. L Problems similar to the ones for the procurement of goods (see footnote 4, page 4).  -8- PROJECT COMPLETION REPORT PERU LIMA WATER SUPPLY AND SEWERAGE PROJECT (LOAN 2139-PE) PART II. BORROWER'S PERSPECTIVE ON PROJECT IMPLEMENTATION L During project execution, SEDAPAL maintained the Bank informed on the various difficulties experienced in implementing each of the subprojects financed by the Loan --many of which are described in Part I of the Report-- but it is worth highlighting them since the Bank ascribes the poor results to SEDAPAL staff performance, while on the contrary it was almost impossible to achieve better project development under the prevailing conditions. 1. Lack of transparency in current legislation with respect to preference for Bank regulations concerning acquisitions and contracting of consultants, vis-a-vis local legal dispositions in effect during that period, such as those aimed at protection of domestic industry or to domestic consultancy business. In actual practice, this was the main cause of the grossly delayed process of competitive bidding for the acquisition of meters, whose installation should have generated the financial viability of the Project. It also entailed dealing with heavy red tape in obtaining tax-exemption status to all procurement of imported goods or equipment. 2. Restrictions on investment authorizations with excessive bureaucratic obstacles. Delays in approval of each annual budget by CONADE and for the amendments or expansions of the same by the Company. 3. Non-compliance on the part of SENAPA and the Government with their commitments as established in the Loan and Guarantee Agreements with respect to authorizing the necessary rate increases to finance investments and to cover operational and maintenance costs as well as long-term debt service. The limited own resources and income reduction in real terms due to the policy of non-authorization of rate increases, resulted in lack of resources required to finance the counterpart amounts of the projects. The latter, in turn, made it impossible to start many subprojects. although the real cause was often disguised as delays in the decision-making process, which should not be understood as the responsibility of SEDAPAL's executives but rather of the Presidents of SENAPA and SEDAPAL, which obviously are positions filled with political appointees working closely with the Government. To partially supplement the lack of counterpart funds to execute civil works, especially for water and sewerage networks in popular neighborhoods, SEDAPAL sought and obtained financing from the Banco de la Vivienda to carry out such works. As foreseen, the cost of a This part is an unofficial translation of the comments received from SEDAPAL, after it had an opportunity to review the Parts I and III prepared by the Bank.  - 9 - these credits was passed on to the beneficiaries. Without these credits, project execution would have been drastically reduced. 4. Legal dispositions on the creation of SEDAPAL explicitly established its autonomy. Unfortunately, in practical terms it has been affected by excessive interference from the Government, through the application of austerity measures --issued at the level of the Central Government-- restrictions on expenditures, investments, and indebtedness. 5. On November 6, 1986, the World Bank sent a letter to the President of SEDAPAL on which it expressed its concern that the Company was not generating enough profits to cover operational and maintenance costs nor the required funds for new investments; it further indicated that if an Action Plan was not adopted that included the necessary rates, along with other measures, the Bank would proceed to suspend loan disbursements effective that date. The Action Plan had already been prepared and approved by our Board of Directors and the Housing Ministry; however, the World Bank requested approval from the Ministry of Economy and Treasury, thus obtaining the Government's commitment to increase rates. This approva. never took place. 6. Consequently, on May 5, 1987, the World Bank sent a telex to the Ministry of Economy in which it informed that since Peru was in arrears with the payments on the amounts due on loans granted by it, it was suspending further disbursements on all the loans granted by the Bank to the Republic of Peru. 7. The World Bank's actions provoked the following inconveniences: * Delays in the disbursement process to suppliers or Consultants, which was later solved through the implementation of the Revolving Fund. 3 Delays in the review of bidding documents or competitive biddings. * Lack of understanding of local conditions and lack of flexibility in the application of contracting rules, when, for instance, because of political or social reasons it may be convenient to favor, for a given contract, the local work force. * High financial cost of the loan, maintaining its interest rate even when international rates for any new loan had been reduced. This situation generated doubts and dissenting opinions on the continuation of project execution, which thus resulted in poor project execution.  - 10 - PROJECT COPLETION REPORT LIM- WATER SUPLY MD SEWRAGE PROJECT PAmIIfls: ST*T18TIC*L HIZ&nMAON 1. Related Bank Loans Loan Purposs, Year of Status Comments Title Approval 1283-PE Provide for the 1976 Completed US$6.5 million extension of water Loan. Total supply and sewerage project cost services to low-income US$13.0 million. areas of southern Lime S-11-PE To help lay the basis 1978 Completed US$8.8 million f or long-term Loan. Effective solutions to Lima's June 1979. It was water supply and power close two and a sectors. half years behind schedule. Poor financial and administrative performance of implementation __,_,____ agency.  - 11 - 2. Prolect Timetable Item Date Date Date Comments and Planned Revised Actual Issues Raised - Identification 01/81 02/81 Originally planned to encompass a national component as well as one for Lima. Institutional and financial capability of ESAL was an important issue. - Preparation 4-5/81 4-5/81 - Appraisal 07/81 09/14/81 09/21/81 Only minor changes made to Mission project brief of 6/16/81. Significant progress on resolving outstanding issues made. Most critical step was Government action on tsriff increases. - Loan 03/82 03/23-30/82 Negotiations - Board Approval 05/82 05/11/82 - Loan Signature 06/82 06/04/82 - Loan 09/07/82 09/15/32 Effectiveness - Loan Closing 06/88 06/27/89 Closing data was extended due to implementation delays. - Loan Completion 11/25/86 Bank suspended disbursements in November 1986. Bank decided to close Loan accounts on 6/27/89. Comments: Issues raised at different stages: 1. In mid-1980, the Government first expressed its interest in Bank involvement and the Bank attached high priority to the Project. In January 1981, the Bank organized an identification mission. 2. A preparation mission followed in March 1981. At this stage, some main issues identified were: (a) weak management of SEDAPAL; (b) inadequacy of tariff levels; and (e) poor bill collection system. 3. Project preparation was carried out by two missions (March and April 1981). This allowed the Bank and the Borrower to agree on: (a) the final definition and scope of the project; (b) a comprehensive tariff study and timetable for implementation; (c) completion and approval of bylaws of SEDAPAL; and (d) retroactive financing for expenditures incurred up to US$0.5 million. 4. In June 1986 the scope of the project was reduced together with a reduction in loan amount by US$13.6 million.  - 12 - 3. Loan Disbursements Cumulative Estimated and Actual ExPenditures and Disbursements (US$ millions) FY 83 FY 84 FY 85 FY 86 FY 87 FY 88 FY 89 Appraisal Estimate 1' 1.8 9.0 16.5 21.7 26.0 27.0 27.0 Actual 1.2 4.2 7.8 10.8 12.4 12.4 12.4 Actual/Estimated (Z) 66.6 46.6 47.2 49.7 47.7 47.7 47.7 Date of Last 12/11 Disbursement /86 s/ Reduced proportionately reflecting reduction in loan amount from US$40.6 million to US$27.0 million.  - 13 - 4. Project Implementations __________r____________ Appraisal Actual Estimate Completion Project Components Improvement operation of Water Distribuiton System - Master meters (unists) 180 NA - Household water meters (units) 164000 104000 - Meter repair (units) 136000 NA - Operating vehicles (units) 190 90 Groundwater Development - Well construction (units) 51 NA - Well rehabilitation (units) 80 NA Water Supply Works - Water main (Km) 5 5 - Transmission pipelines (Km) 7.5 7.5 - Distribution networks (km) 450 NA - Water storage tanks (m3) 20000 NA - House connections (units) 43000 NA Sewerage Works - Sewage collectors (km) 430 18.7 - House connections 46000 914  - 14 - 5. Project Financing 1/ _________________ (USS million) Source Appraisal % Revised Actual IBRD 3/ 40.6 43% 27 12.4 SEDAPAL 45.1 48% NA 11.5 Paralel Financing 7.7 8% NA 5.5 Total 93.4 29.4 1/ Exclude IDCs. 2/ Preliminary data as of December 1989. 3/ Bank Loan includes a front-end fee of US$0.6 million. 4/ From Banco de Vivienda del Peru.  - 15 - 6. Allocation of Loan Proceeds (USS million) Appraisal Revised Actual Civil Works 17.0 14.0 6.2 Material and Equipment 15.0 4.5 4.2 Consultant Services 2.0 5.7 1.4 Front-end fee on Bank Loan 0.6 0.6 0.6 Unallocated 6.0 2.2 0.0 Total 40.6 27.0 1/ 12.4 2/ 1/ Project was amended in scope and therefore Bank loan was reduced to US$27 million. 2/ A total of US$14.6 million of the Loan was cancelled.  - 16 - 7. Total Project Costs (USs million) Appraisal Actual 1. Civil Works 65.2 22.3 2. Material and Equipment 3.8 4.5 3. Conr'zltant Services 5.8 1.9 4. Front-end fee on Bank Loan 0.6 0.6 5. Unallocated 18.0 0.0 total 93.4 29.3 Comments Project was reduced in scope. Bank loan was reduced from US$40.6 million to US$27 million. Due to implementation problems (para.13) only US$12.4 million of the Loan was disbursed. There was no information available to compare the components of the Project appraised and actually completed.  117 118 119 120 (Fili:Honitor) 121 24-Nay91 122 02:41 PR 124 B.A SEDAPAL NMnitoring Indicators 125-- - - - - - - - - - - - - - 126 127 128 .......1982------ ------1903-----. ------- 1964 ------ -------1g 5------- -------986------ -------1987------ 129 Aprai ActUal Appraisal Actual Appraisat Actuat Appraisal Actual Appraisal Actual Appraisal Actual 131 Poputatlon 132 ---------- 133 Population (000) 4775.00 5008.00 4957.00 5195.00 5145.00 5392.00 5341.00 5594.00 5544.00 5781.00 5744.00 5964.00 134 X Served wter 67;50 67.40 74.10 68.00 80.0? 64.60 83.30 70.00 85.60 73.10 87.00 76.40 135 % Served sewwrg 61.70 56.10 68.40 61.30 74.60 60.30 78.00 VA 79.00 MA 82.30 MA 136 137 Vater Prodwction wd Sales 138 -------------------------- 139 Vater Produced (million o3) 2/ 517.00 532.90 543.00 s8s.80 565.00 561.50 573.00 558.10 597.00 590.30 627.00 639.30 140 Vater sold (sillion d3) 295.00 224.80 331.00 215.10 368.00 213.40 396.00 241.80 418.00 293.30 439.00 330.80 141 tMwacunted-for water (X) 21 43X 58x 39X 63X 35X 623 31X 57X 30X 50X 303 483 142 Indstrial sewerae (i llIon a3) 25.00 MA 25.00 MA 25.00 IA 24.00 IA 24.00 MA 24.00 30.00 143 Water usage through private ells asub- 14 I Ct to SEDIAAI charg (million 25.00 MA 40.00 MA 50.00 KA 50.00 MA 50.00 MA 50.00 S0.00 145 14 Ieration 147------ 148 Total cametiara (000) 149 bater 430.00 41.00 487.00 478.00 545.00 505.00 S58.00 537.00 629.00 556.00 661.00 579.00 150 Sewerag 393.00 MA 450.00 IA 508.00 IA 551.00 IA 592.00 IA 624.00 NA 151 152 Of shich. Domestic: 153 Vater 403.00 430.00 459.00 442.00 513.00 466.00 556.00 494.00 595.00 509.00 626.00 517.00 _ 154 Sewrage 368.00 IA 424.00 IA 480.00 IA 521.00 IA 560.00 IA 591.00 IA 155 156 Notered conn ction (000) 155.00 NA 219.00 NA 300.00 IA 382.00 A 446.00 MA 476.00 219.00 IS7 Netered connections (C) 36.00 IA 45.00 MA 55.00 IA 65.00 NA 71.00 MA 72.00 42.40 158 Consuption/cmwction (m3 month) 57.17 40.64 56.64 37.50 56.27 35.21 56.12 37.52 55.38 43.96 55.35 47.61 159 Epvoyee per O1 connections 7.00 7.20 6.60 6.80 6.20 6.80 6.10 6.40 5.70 6.30 5.50 6.30 160 161 Finrafal 162 . 163 Water wd sewea tariff (S/mi sold- 164 1961 priesn) 53.00 S1.00 56.00 47.00 57.00 58.00 59.00 59.00 165 Insitrfal smwer tariff (Sm3- 166 1961 prices) 176.00 118.00 185.00 143.00 189.00 193.00 196.00 196.00 167 Private well tariffs (SAmO -1961 p 57.00 73.00 60.00 60.00 61.00 63.00 64.00 64.00 168 Vter and sewra average revae 169 per ml sold bv SEDAPAL and conrstd 170 throushprivate wells (1981) 70.00 60.00 71.00 56.00 72.00 60.00 73.00 74.00 74.00 171 Cpraetin ratio (3) 67 76 63 68 57 74 56 75 55 69 53 S7 172 Dvot-srice ratio 13.60 13.90 10.00 8.90 3.00 10.00 5.50 4.60 173 174 Rwem Cova nnt Target 2.00 -3.20 3.50 -2.30 4.00 1.50 4.00 4.00 4.00 175 Rate of Return (3) 2.00 3.00 5.50 6.00 6.00 6.50 176 r of Debt (Db/ADgebt4equ9 ity) 9.40 11.00 19.40 11.00 29.50 13.00 33.00 34.80 32.50 177 Water and Sewerage Accounts 178 Receiveble (moths sales) 3.S0 4.90 2.50 5.41 2.50 5.19 2.50 4.48 2.50 4.70 2.50 3.56 179 IN0 ----------- ................... -._------_-__----------. 181 1/ Assing a 3X rate of population growth 162 2/ Flguros suJect to large ergiins of error becous of Inadequatr metering. 183  I (FIle:FinSte) 2 24-Nay-91 3 02:41 PM 4 5 8.B SEDAPAL Balance Sheets 6 .. 7 (Current SWOOD willion) 9 -------1982------ -------1983------ -------1984------ -------1965------ -------1986------ ----1------ 10 Appraisal Actual Appraisal Actual Appraisal Actual Appraisal Actual Appraisal Actual Appraisal Actual 12 ASSETS 13 -- 14 Property Plant and Equipaent 290.00 421.49 VS.70 1135.78 753.72 5874.15 955.36 1235.99 16131.00 15 Less: Accumulated DepreciatIon 69.03 103.86 147.90 269.42 201.86 1577.82 267.87 354.31 4932.00 16 . - - .. ...... .... 17 Net fixed Assets 220.97 134.46 317.63 369.14 427.80 866.36 551.86 4296.33 687.49 6172.00 881.68 11199.00 18 Ilrk In Progress 8.75 11.06 37.86 38.58 48.66 153.37 50.47 263.00 24.57 615.00 19 20 Cash 1.19 0.96 1.37 2.55 1.94 5.04 2.58 19.77 3.25 117.00 28.88 438.00 21 Account Receivable 9.43 12.76 11.23 29.09 16.38 59.24 21.98 123.23 27.89 269.00 34.78 430.00 22 inventories/other 1.60 1.21 2.06 1.92 2.63 3.19 3.33 24.56 4.11 31.00 5.05 68.00 23 . . . ....... .. . ... 24 Total Current Assets 12.22 14.93 14.66 33.56 20.95 67.47 27.89 167.56 35.25 417.00 68.71 936.00 25 26 llntaro Trinsfer Inwestmnt 2.11 46.74 123.39 237.11 349.43 419.32 27 Other 0.94 4.01 3.34 1.84 7.77 1.70 16.95 9.23 23.43 29.00 23.73 75.00 28 29 Total Assets 244.99 153.40 393.43 404.54 617.77 974.11 882.47 4626.49 1146.07 6881.00 1418.01 12825.00 30 wZ=%=ww 3= ==Z= M== __- a32ZM3 == Z = .=*3= ==== = = 31 LIABILITIES 32 ------ 33 Current LIabIlities 3.47 4.97 5.40 14.89 7.00 34.71 7.24 67.68 7.92 97.00 10.29 196.00 34 Current MaturitIes 0.87 2.44 2.18 5.35 2.67 11.67 6.70 50.19 10.03 100.00 11.32 427.00 35- - . . . 36 Total Current Liabilftles 4.34 7.41 7.58 20.24 9.67 46.38 13.94 117.87 17.95 197.00 21.61 623.00 37 38 Provision for Social Benefits 5.48 6.82 7.76 19.55 10.99 33.41 15.29 112.90 20.70 219.00 25.88 489.00 39 Loam-Ter- Debt 17.19 26.17 22.73 54.67 47.64 130.69 75.84 449.83 99.64 517.00 102.04 1181.00 40 Long-Term Debt for Mantaro 41 investment 44.37 120.19 203.29 271.97 326.36 42 Met Worth 217.96 113.02 310.99 310.11 429.28 763.63 574.11 3945.90 735.81 5948.00 942.12 10532.00 43 44 Total Provision. Long-Term Debt 45 and Met Yorth 240.65 146.01 385.85 384.33 608.10 927.73 868.53 4508.63 1128.12 6684.00 1396.40 12202.00 46 47 Total Liabilities and Met worth 244.99 153.42 393.43 404.57 617.77 974.11 882.47 4626.50 1146.07 6881.00 1418.01 12825.00 48 3f *= = * U = . _= = _ _  j74 55 8.C SEDAPAL Enreme Statments 56 .- -, 5T (Current sWOOD milLion) 58 59 -------1982------ -------1983------ -------1984------ -------19M5------ -------19b6------ -------1987------ 60 Appraisal Actual Appraisal Actual Appraisal Actual Appraisal Actust Appraisal Actual Appraisal Actual 61 - 62 Mater prodaced (63 ilttion) 1/ 517.00 533.00 543.00 582.00 565.00 562.00 573.00 558.00 597.00 590.00 627.00 639.00 63 Vater sold (S3 million) I/ 64 ESAL 295.00 225.00 331.00 215.00 368.00 213.00 396.00 242.00 411.00 293.00 439.00 330.00 65 Industrlal sewerage 25.00 MA 25.00 MA 25.00 MA 24.00 NA 24.00 MA 24.00 NA 66 Private wells 25.00 KA 40.00 KA 50.00 MA 50.00 KA 50.00 KA 50.00 60.00 6? 68 UhMccoimted-for water CX) 1/ 0.43 0.58 0.39 0.63 0.35 0.62 0.31 0.57 0.30 0.50 0.30 0.48 69 Vater coniections (000) 2/ 430;00 461.00 487.00 478.00 545.00 505.00 588.00 537.00 629.00 556.00 661.00 579.00 70 Sewer cmections (000) 2/ 393.00 MA 450.00 MA 508.00 YA 551.00 MA 592.00 NA 624.00 MA 71 Consumption/corwection (33/month) 57 41 57 37 56 35 56 38 55 44 55 47 72 73 Revemies 74 ----- 75 hater"Sewerage 23.58 19.20 39.08 48.22 57.34 108.00 78.73 275.00 101.50 578.00 12.08 1211.00 76 IrKustrial sewerage 6.61 6.34 9.72 8.60 12.84 15.00 16.03 25.00 19.23 52,00 23.08 112.00 77 Private well charges 2.15 5.08 8.45 10.75 13.15 57.00 15.80 78 Other 5.73 7.71 14.00 30.00 128.00 79 80 Total Revemes 32.34 31.27 53.88 64.53 78.63 137.00 105.51 330.00 133.88 687.00 166.96 1451.00 81 82 Expenses 83 ---- 84 Operation and mintenamce 13.10 23.87 19.50 43.89 26.22 101.00 34.48 248.00 43.10 474.00 52.21 a34.00 85 Adcinistrmtion/couiercial 8.66 14.61 18.60 24.80 31.08 36.80 86 Depreciation 4/ 7.19 7.15 10.67 Z8.36 14.96 31.00 19.94 167.00 25.64 285.00 32.87 899.00 88 Total Expenses 28.95 31.02 44.78 72.25 59.78 132.00 79.22 415.00 99.82 759.00 121.88 1733.00 89 90 Operating Income 3.39 0.25 9.10 -7.72 18.85 5.00 26.29 -85.00 34.06 72.00 45.08 -2c2.00 91 92 Other inceme (expenses) net 0.00 0.28 0.00 -4.94 0.42 4.00 1.56 28.00 1.81 47.00 1.81 82.00 93 Interest paid 0.33 0.47 0.67 3.42 2.24 22.00 2.45 82.00 5.43 65.00 8.90 282.00 94 95 Net Incme 3.06 0.06 8.43 -16.08 17.03 -13.00 25.40 -139.00 30.44 -90.00 37.99 -482.00 96 97 Operating ratio 0.67 0.76 0.63 0.68 0.57 0.74 0.56 0.75 0.55 0.69 0.53 0.57 98 Water/sewerage tariff (S/m3) 79.93 85.33 118.07 224.28 155.82 507.04 198.81 1136.36 242.82 1972.70 291.75 3669.70 99 lndekstrial sewerage tariff (S/33) 264.40 NA 388.80 NA 513.60 NA 667.92 NA 801.25 NA 961.67 NA 100 Private welts tariff (M/O3) 86.00 NA 127.00 NA 169.00 NA 215.00 NA 263.00 MA 316.00 0.00 101 102 Service isprovment fees 1.08 2.16 1.83 2.68 3.73 5.25 6.30 103 Average rate base SJ 175.96 203.95 252.20 444.35 341.99 986.50 439.76 546.87 686.69 104 Average net fixed assets for 105 revenue covenant 6/ 191.75 217.40 303.64 444.30 482.25 1017.64 713.34 962.52 7206.69 106 Rate of return (I) 1.90 -3.50 3.00 -2.30 5.50 1.50 6.00 6.20 6.60 107 Revenue covenant results (1) 2.30 -3.20 3.60 -2.30 4.40 1.40 4.?0 4.10 4.20 106 -.--.-- - - - -- 109 110 1/ SEDAPAL estimates subject to large margin of error because of inadequate metering. 111 2/ Mid-year figures. 112 3/ Required revenues to generate enough fuids to cover debt-service requirements, working capital needs, and required investment fuarls. 113 4/ On fixed assets revalued in accordance with Loan Agreement. Include other provisions. 114 5/ Average net fixed assets less revalued customer contributions in 1981 and thereafter. 115 6/ Average net fixed assets arx work in progress less revalued customer contribution in 1981 ad thereafter. 116  M) 9. Status of Loan Covenauts Covenant STbiect Deadline for Status _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Compliance __ Loan Agreement _ _ 3.01(b) The Borrower shall obtain foreign Complied loans to meet the expenditures required for the design, drilling. construction, and equiping of about 50 v118. 3.02 The Borrower shall employ Complied consultants under terms and conditions satisfactory to the Bank. 3.05 The Borrower shall employ Complied consultants under terms and conditions satisfactory to the Bank. 4.03(b) The Borrower shall prepare and December 31, Not complied furnish to the Bank an insurance 1982 program. 5.04(a) The Borrower shall generate Yearly Not complied revenues sufficient to cover the sum of: (a) operating and maintenance cost; (b) taxes; (c) the greater of depreciation or debt-service requirements; and (d) contribution to Investment requirements of a certain ______,__ . percentage. ____.. ._ 5.04(d) The Borrower shall file with SENAPA August 31 Not complied and furnish to the Bank a proposed schedule of rate adjustments for the following fiscal year and to exchange views with the Bank on the investment plan for the next five years. 5.05 The Borrower shall conduct a study March 31, 1983 The study was on rates and on other sources of done but its revenue and propose a timetable for recoumendatiLons the implementation of the were not recommendations of the study. implemented 5.06(a) The Borrower shall maintain a debt- Not complied service ratio of no less than 1.5. 5.07(a) The Borrower shall maintain a ratio Not complied between accounts receivable and monthly sales not exceeding 3.5 by the end of 1982 and 2.5 in 1983 and thereafter. 6.03(a) The Borrower will transfer its Comnlied surpluses to SENAPA only after having covered SEDAPAL's five-year investment program.  10. Use of Bank Resources B. Missions Stage of month/ no. of Days in Specialization Performance Types of Project Cycle Year Persons Field Represented Rating Problems Through Appraisal 12/80 1 5 EGR N/A _- 01/81 3 21 ECN. EGR, FNA N/A Financial capacity of ESAL. 04/81 4 14 ECR. EGR. FNA Adv. N/A Tax exemption. 05/81 1 1 Asat. Dir. N/A ESAL frequent Personne' changes. Institutional development. Appraisal thraugh 09/81 3 21 ECN (2) FNA N/A Water tariffs. Board Presentation Financial situation Board Approval througb Effectiveness Supervislon 10/82 5 14 ECU (2) EGR FKA 2 Fiuancial: SEDAPAL's 1982 performance was poor. tariffs not increased; frequent changes in Board of Directors; poor management. 01/83 2 16 EGR FNA 2 Frenquent changes in Board of Directors; tariff increases fell short of that needed; procurement slow. 10/83 3 14 ZGR (2) FNA 3 Slow project execution, especially slov procurement; accounts receivable poor. 11/83 2 8 EGR FNA 2 Accounts receivable poor; poor system operation and __________________ __ _______________ ___ _____________ m aintenance. 02/84 1 2 PEA Lack of tariff increases; project reorganization and execution problems. Supervision 03/84 2 12 EGR FNA 2 Lack of compliance with revenue covenants; reduced ______ ______ ______ _____ ____ _ ______ _ ____ ____________ ______ investm ent program . 07/84 1 7 WCR (2) FPA 3 Tariff increases delayed; poor collection of accounts receivable; vater consumption metering insufficient; political interference in company operations. _____________________ ___________ ~~~~~~~~~especially proc-urement. 05/85 1 2 PRA 09/85 2 10 KGR PNA 3 Lack of compliance with Loan Covenants; poor commercial practices. maintenance and operation.; financial constraints. 11/85 2 3 CER PNA _ 02/86 2 14 ECR PEA 3 Financial situation. 10/86 2 7 EGR (2) 4 Unsatisfactory plan of action to improve project execution; insufficient tariff increases. Specialties: EGR - Engineer; ECN * Economist; FNA - Financial Analyst.