Jordan - Water Supply Project

RESTRICTED f0v25 -- ,\f:, . YReport No. TO-356a This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION APPRAISAL OF THE ZARQA WATER SUPPLY PROJECT HASHEMITE KINGDOM OF JORDAN September 12, 1963 Department of Technical Operations  CURRENCY EQUIVALENTS U.S. $1.00 = JD 0.357 JD 1.00 = 1,000 Fils JD 1.00 = U.S. $Z.80 JD 1,000,000 = U.S. $2, 800, 000 Abbreviations M = cubic meter Cu M = m km = kilometer 1 cu m = 264 U.S. Gallons 100 Fils per cu m = U.S. $1.00/1,000 U.S. Gallons  APPRAISAL OF THE ZARQA WATER SUPPLY PROJECT THE HASHEMITE KINGDCMI OF JORDAN TABLE OF CONTENTS Paragraphs SUMNARY AND CONCLUSIONS . . . . . .. . . . . .. . i - ix I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . 1 - 2 II. THE PROPOSED BORROWER . . . . . . . . . ... . . . . . . 3 - 5 III. THE PRESENT WATER SYSTEM . .. . . . . . ..... . . . 6 - 30 Present Facilities..... . . .. . . . * . . 60-12 Metering . . . . . . . . . . . . . . . . 13 - 15 Water Quality .. . .. . . . . . . . . . . . 16 - 19 Health Statistics . . . .. . . . . . .0 . . . 20 - 21 Management and Organization . . . . . . . . . 22 - 28 Water Rates . . . . . . . . . . . . . . . . . 29 - 30 IV. WATER DEIAND . . . . . . . . . . . *. . . . . . . . . . 31- 44 Population Growth . . . . . .. . . . . . . .31 - 34 PresentWliater Use . . . . .a. . . . . . . . 35 - 40 Future Demand . . . . . . . . . . . . . . . .41 - 44 V. THE PROJECT . . . . . . . . . . . . . . . . . . . . . . . 45 - 70 The Project . . . . . . . . . 5. . 4 - 50 Booster Pumping Station . . ... . . 51 - 55 Distribution System .. .. .. . . . ....56 - 58 Project Planng . ... .. .. . .. .. . 59 Construction and Procurement . . * . . . 60 Project Management and Organization . . .-. . 61 - 63 Project Cost Estimate . . . . . . 0 . . . . . 64 - 70 VI. FINANCING PLANS AND FINANCIAL PROJECTIONS . . . . .. . . 71 - 78 Sources of Funds . . . . . . . . # o . . . . 71 - 75 Financial Projections .. . . . . .a . . . . . 76 - 78 VII. ECONCMIC JUSTIFICATION OF THE PROJECT . . . . . . . . . . 79 - 85 VIII. CONCLUSIONS AND RECONIENDATIONS . . . . . . . . . . . . . 86 - 90  TABLE OF CONTENTS (cont'd) AN1EXES 1 - Municipality Organization Chart 2 - Water Department Organization Chart 3 - Health Statistics 4 - Income Statements 1958 - 1962 - Municipality of Zarqa 5 - Pro Forma Income Statements 1958 - 1962 _ Zarqa Water Department 6 - Population 7 - Estimated Future Water Demand 8 - Construction Schedule 9 - Investment Schedule 10 - Pro Forma Income Statements 11 - Sources and Application of Funds 12 - Assumptions for Financial Projections MAPS 1 - I-ap of Jordan 2 - Existing Water System 3 - Proposed Water Supply System  APPRAISAL OF THE ZARQA WATER SUPPLY PROJECT THE HASEMvITE KINGDOM OF JORDAN SUMMARY AND CONCLUSIONS i. The Hashemite Kingdom of Jordans acting through the Jordan Development Board, has requested a development credit from the International Development Association to help finance a substantial expansion and improvement of the water supply system of the Municipality of Zarqa, the second city of Jordan with a population of 96,000 (paras. 1-5). ii. The present water system is inadequate, unreliable, and subject to pollution from sewage which enters the catchment area above the spring sources. Further expansion of the system is now restricted because present sources yield too little water during the dry season and require rationing to serve present customers. Such rationing has involved supply of water only every other day during the past two summers. At least two industries have been turned away because of the inability of the system to meet their water needs. Although there are water mains in most streets, these are undersized and result in interrupted service and low pressures to the 8,120 metered connections. An estimated 70 per cent of the population is served by these connections with the remainder dependent upon their neighbors for water. A refugee camp also takes water from the system (paras. 6-21). iii. The Zarqa Water Department is an integral part of the municipal government, responsible to the Mayor. Water accounts are not fully separated from municipal accounts. The Department rarely obtains engineering services and has practically no records. Staff now numbers 18 plus occasional laborers (paras. 22-25). iv. Capital improvements to the water system have been financed primarily out of water revenues and surpluses, on occasion, have been allotted for general municipal use. The water rate in effect since 1951 is 60 fils per cubic meter for the first 20 cubic meters per quarter, and 55 fils per cubic meter beyond this quantity. The proposed project could be financed on the basis of essentially the same rates provided that certain adjustments are made in regard to preferential rates to schools and other public institutions and provided that there will be no diversion of funds. Water rates can be changed by the municipal council (paras. 26-30). v. Year by year statistics on population growth for the city do not exist but based on 1952 and 1961 census data, an average growth rate of 13.2 per cent yearly is reflected and may be attributed to refugee migration, an army camp, and to industrial development. Population and water demand calculations for the project are made using a straight line population projection which provides for a 7.5 per cent near term increase declining progressively to 2.7 in 1985. The present 26 liters per capita per day water consumption is anticipated to be 30 liters in 1965 and 80 by 1985. Industrial water now estimated at but 3 per cent of the total can be expected to increase substantially since private wells are prohibited and no other source is available (paras. 31-44).  vi. The principal features of the project include the development of a new well supply at a site six kilometers north of Zarqa, a booster pumping station, transmission main to the city, and major improvements and extensions to the distribution system. The present spring supply and pumping facilities would be held in reserve as standby. Three wells have already been drilled, but mapping and study of the area must still be completed before the certainty of an adequate supply can be established. The Jordan Central Water Authority planned the original project. Consult- ants have been employed for the detailed project design and preparation. Zarqa is wsilling to employ additional needed staff. Separate accounts for the Water Department will be established wJith appropriate safeguards on the diversion of funds (paras. 45-63). vii. Direct total project costs will amount to JD 404,900 (U.S.$1,134,000) including engineering services, interest during construc- tion, and management services, as well as construction costs. Other costs associated with the project, such as additions to working capital and to inventories, would total JD 22,600 and be covered jointly by loan funds and by funds generated from operations. Approximately two-thirds of the project costs would be financed by the Association's credit in amount of JD 279,000 (U.S.$780,000) (Annex 9). The Association's credit funds would be relent to the municipality at 4 per cent, with a three-year grace period, and a twenty-year amortization period. The balance of the project costs would be covered by a local loan from the Municipal Loan Fund in an amount of JD 139,300 (U.S.$390,000). The present water rates will remain at 60 fils per cubic meter. These are expected to be adequate (paras. 64-78). viii. The proposed project is necessary if the city of Zarqa is to continue to grow and to meet the normal requirements of the people and of industry. Considerable public health hazard attends the continued use of water from the present sources and this coupled with the inevitable increase and prolongation of rationing periods suggests that the only solu- tion rests in the development of a new source with the other improvements included wJithin the project proposal (paras. 79-85). ix. On the basis of the agreements listed in paragraph 89, the project provides a suitable basis for an IDA credit of U.S.$780,000 (paras. 86-90).  I. INTRODUCTION 1. The Hashemite Kingdom of Jordan, acting through the Jordan Development Board, has requested a development credit from the Inter- national Development Association to help finance the exploitation of a new source of water supply and a substantial expansion and improvement of the water distribution system for the Municipality of Zarqa, a city with a population of 96,000 in 1961 (see Maps 1 and 2). An IDA credit of $780,000 would cover approximately two-thirds of the total for the project. The source of local contributions to cover the remainder of the cost will be a loan by the Municipal Loan Fund, an agency of the Jordan Government set up within the Jordan Development Board to operate a revolving fund established with initial grants from ICA. 2. This appraisal is based on information submitted by the pro- posed borrower; on a field investigation in September of 1962 by members of the staff of the Association; and an independent consultant retained by the Association. II, THE PROPOSED BORROWER 3. The borrower would be the Hashemite Kingdom of Jordan, which would relend the proceeds of the credit to the Central Water Authority (CWA) on terms acceptable to the Association. 4. The project would be constructed by the CWA, an autonomous agency of the government with country-wide authority for water resources and administration. CWA would transfer the completed works to Zarqa for operation, together with the financial obligations. 5. The water system for Zarqa is now a municipal function responsible to the Mayor and a municipal council as shown in the organization chart, Annex 1. No change is proposed. The organization of the water department is shown in Annex 2. III. THE PRESENT WATER SYSTEM Present Facilities 6. The present water system (shown on Map 2) consists of two springs located within the city, a pumping station, a 6-inch distribution-transmission main extending from the pumping station to a small elevated tank of 250 cubic meters capacity, a 12-inch transmission main extending from the pumping station to a covered concrete reservoir of 1,000 cubic meters capacity, and a distribution system which serves most of the developed residential area of the city. Limited information indicates that the 8,120 metered connections  serve about 70 per cent of the total population, although it is believed that almost 100 per cent of the population obtain their water from the system by one means or another. There are no public taps. 7. The two springs are located alongside Wadi Zarqa within the city limits and south (upstream) of the built-up area of the city. These springs are already insufficient for present needs during the dry season and cannot be further developed for increased future requirements. Both are liable to pollution and bacteriological tests have shown the presence of contamination. The continued use of these springs as a regular source would necessitate substantial treatment facilities. 8. The only treatment now provided is chlorination, begun in 1959. Chlorine is fed into the spring collection gallery by a chlorinator housed in the pumping station. 9. Available records of the distribution system, which are incomplete, indicate that it consists of about 50 kilometers of pipe varying in diameter from 1 inch to 6 inch. More than 60 per cent of the total length of pipes is of 2-inch diameter and smaller, Less than 10 per cent is larger than 4 inch. A small amount of existing pipe was laid in 1940, but approximately 95 per cent of the distribution system has been installed within the last ten years. All pipe is steel, and sizes 2 inch and smaller are galvanized. No fire hydrants are provided on the system. 10. Although there are water pipes in most of the streets within the heavily developed residential and commercial areas, pipe sizes are generally too small to provide satisfactory pressure. Water is available daily to the consumers much of the time, but there are many interruptions and restrictions, particularly in the dry summer season. From April to November in 1961 and 1962, water service was furnished on an average of only once in every two days in any given area. 11. A large refugee camp within the municipal limits is supplied by the municipal water system. An estimated 20 per cent of the camp residents are served by piped connections and the remainder obtain water from a camp tank via public taps. 12. An army camp adjoining the municipality pumps its water from another spring alongside Wadi Zarqa near the main municipal spring. They are expected to continue to use this independent supply because it is sufficient for their needs and will cost them less than to purchase project waters although its quality is also suspect. Metering 13. All water services are metered except those serving municipal offices and places of worship. Meters are purchased by individual customers from local dealers and are furnished to the municipality for installation, although they remain the property of the individual customers.  14. The meters currently in use in Zarqa are of relatively low cost, averaging about JD 3.6. Although records are non-existent, meters have a reported average service life of 10 years before they must be scrapped. Maintenance is generally required three to five years after installation. 15. The water department in the past has not followed a planned program of meter maintenance. When a faulty meter is detected, the owner is required to have it repaired at his own expense in a privately- owned repair shop. The water department then checks the meter to see that it operates before re-installing it. Water Quality 16. Bacteriological analyses of samples of untreated water collected from the main spring and the upper spring in 1959 usually indicated an unsafe water, but the real degree of pollution cannot be determined from the test results. Samples of the spring water collected after chlorina- tion and samples collected from various points in the distribution system showed that the treated water was of highly variable bacteriological quality. WJhether this variation in quality was due to the variable character of the spring water, inadequacy of chlorination, contamination in the distribution system, or poor sampling and analysis procedures is not known. 17. Water samples are collected by the local public health officer for routine analysis in the Government Laboratory at intervals reported as varying between twice weekly to once every three months. No evidence exists to indicate that any action is undertaken to correct unsatisfactory conditions suggested by test results. 18. Chemical analysis made in November and December of 1958 on samples collected from the main spring supply show that the water is relatively hard and indicate that it is slightly scale-forming. 19. Zarqa has no sewerage system. Sanitary sewage is discharged to individual cesspools and percolation pits. Other waste water is handled either in the same way or discharged into open gutters. The main spring is so located with respect to inhabited areas of the city that it is possible for sewage from these areas to percolate into the aquifer feeding the spring. Both the main spring and the upper spring may at times receive pollution from Wadi Zarqa. Health Statistics 20. The best available indication of the incidence of typical water- borne disease in Zaiza is the statistical data reported for the Amman District, which includes Z&rqa, shown in Table 1 of Annex 3. It is evident from a review of the number of cases of typhoid fever (the best indication of water quality and probably the most accurate for the waterborne diseases in terms of reporting) that the disease was at an all time high in 1961.  Because of the difficulty in recording of dysentiery cases, the figures shown are too unreliable to permit interpretation. 21. Table 2 of Annex 3 compares Amman District rates with other areas of the world. The number of cases of typhoid and paratyphoid can be noted as high in relation to most other areas. Moreover, these rates are only the more measurable indications; inadequate water supplies are known to have a direct bearing on many diseases related to personal. cleanliness such as trachoma, parasitosis, skin disorders, eta., all of which are prevalent in Jordan. Management and Organization 22. The water department of Zarqa, established in 1938, is an integral part of the municipal organization. Its director, who manages all the affairs of the water department, is, in common with other depart- ment heads, responsible to the Mayor. Under authority of the National Municipal Ordinance, the Municipal Council issues necessary administrative regulations and has responsibility for the water rates (see Annexes 1 & 2). 23. The water department has a present staff of 18 and employs add- itional daily labor when required. The municipal accountant keeps water department accounts as well as municipal accounts. Water department employees are subject to municipal civil service regulations. No specific training is required for appointment. 24. No engineering records of the water system are maintained and only fragmentary data are available concerning existing installations. The only available map of the existing distribution system is one which was prepared from memory in connection with the current project. As a result, the department lacks detailed engineering records which are essential for the efficient operation and maintenance of the system and for the keeping of good accounting records with respect to existing fixed assets. 25. The water department has no separate budget and no separate system of accounts. Balance sheets are not available for either the water department or the municipality. 26. Based upon schedules of receipts and expenditures for the municipality as a whole (Annex W), pro forma income statements for the water department have been constructed (Annex 5) which show that, during each of the past five fiscal years, the municipality has financed sub- stantial capital improvements to the water system from water revenues while at the same time covering the operational costs of the system. Of the present estimated value of existing fixed assets of JD 61,000, more than three-quarters have been added during the past five years. A large portion of the municipal revenues, exclusive of water, consist of payments by the govemment to the municipality for its share of import  duties and other taxes and fines collected by the central government. Although accounting records do not provide a clear separation between capital improvement expenditures and operational expenditures, it appears that in recent years the operating expenditures for the municipality as a whole have increased more rapidly than those for the water department alone. Revenues of the water department have been high in relation to the value of fixed assets, and substantial surpluses have been generated (see Annex 5). Since water revenues have been the only substantial source of funds under the control of the municipal officials, such surpluses as have been available have been diverted for general municipal use at the discretion of the council. 27. Customers are normally allowed two weeks in which to pay water bills. If the bill is not paid, service may then be discontinued, although leniency is practiced if the customer has a good past record or a good reason for his delinquency. It is reported that about 10 per cent of the bills are not paid promptly. No bill is considered uncollectible and collection reoords are said to be good. However, the water revenue per cubic meter of water sold (shown in Annex 4) for each of the last five years is substantially less than would result from the water rate schedule if payment had been received for all metered consumption. The Mayor of Zarq has recently formed a committee which is charged with assuring that all overdue water bills are collected within each quarter. 28. As of March 31, 1962, total outstanding long-term borrowings by the municipality amounted to about JD 53,000, of which about one-half was for loans from the Development Board for water system improvements, to be serviced by water revenues. The municipality borrowed an additional JD 15,000 in May 1962 for a new municipal building. Water Rates 29. The present water rate schedule, in effect since 1951, provides for a charge of 60 fils per cubic meter for the first 20 cubic meters used in a three-month period and a charge of 55 fils per cubic meter for all consumption over 20 cubic meters in the same period, whether for domestic, commercial, industrial, military, or governmental consumption. A 50 per cent reduction applies to consumption by schools and hospitals and no charge is made for water used by municipal buildings and places of worship. There is a minimum charge of 720 fils for a three-month period, equivalent to 4-cubic-meters-minimum monthly, for all consumption other than free water. Water rates can be changed by the Municipal Council upon recommenda- tion of the water department. Current rates are comparable with those in Amman but lower than those of cities in west Jordan (see para. 75).  - 6 - 30. Other water service charges are as follows: Subscriber application fee 10 fils Connection fee 750 fils Deposit 750 fils Reconnection fee 250 fils Installation of service connections (customer provides materials) 1 inch diameter 40 fils per meter length 2 inch diameter 10 fils per meter length Installation of service connections, including materials 1 inch diameter 440 fils per meter length - inch diameter 210 fils per meter length IV. WATER DEMAND Population Growth 31. Zarqa has grown rapidly from a small village before the 1948 war to a city second in population to the capital city of Amman. More than two- thirds of the growth has taken place within the last ten years. Factors which have contributed to the growth and importance of the community in- clude the migration to Zarqa of many Palestinian refugees, the establishment of industries, and the presence of a neighboring Army camp. 32. The first census of population and housing in Jordan was con- ducted in November 1961. A 1952 housing census provides the only signific- ant information regarding population prior to 1961. In the nine years from 1952 to 1961, the total population of Zarqa municipality increased from an indicated 31,496 to 96,055. The population of a refugee camp with- in the municipality, included in these figures and consisting of both refugees and military dependents, has also increased greatly during these years but at a somewhat lesser rate than the total population. The Zarqa Army camp lies outside the municipality and is not included in the popula- tions given above. 33. The shape of the past growth curve is uncertain. If growth occurred at a uniform annual percentage increase, the average rate would be 13.2 per cent per year. The over-all growth of the country from 1952 to 1961 corresponds to an average annual increase of 3 per cent, which is considered to represent approximately the rate of natural increase without immigration. It therefore appears that migration into Zarqa from other parts of the country has averaged nearly 6,000 persons per year during these nine years.  - 7- - 34. With such limited data regarding past population growth, prediction of future population increases is highly uncertain. In a report prepared by the Central Water Authority, it is assumed that the population will increase 2.3 per cent each year. This figure appears to be unrealistically low. In the light of the expected continuation of urbanization, which will attract people to Zarqa, the future estimates of water demand used for this appraisal are based on a growth of total population, including refugees, corresponding to a projection of the 1952 to 1961 increase a straight line as indicated in Annex 6. Such a growth pattern provides for the continuation of immigration, but less than is indicated for the recent past and decreasing year by year. This straight- line projection corresponds to a population increase which declines pro- gressively from 7.5 per cent in 1962 to 2.7 per cent in 1985. Present Water Use 35. Table 3 gives available data as to the number of service con- nections at the end of each of the last five calendar years. Only 18 connections were unmetered. The total number of connections(8,120) was less than one-half of the 17,419 structures in Zarqa at the time of the 1961 census, No information is currently available as to the number of instances in which a single connection serves more than one structure. The Municipality reports that there is a waiting list of those who wish connections, if only to be able to have piped water service in the winter when the water is more available. TABLE 1 Service Connections 1957-1962 Year Service Connections 1957 4,PO45 1958 4.616 1959 6,088 1960 7,9O48 1961 7,938 1962 (April 1) 8,120 36. Accurate information qoncerning the population served directly by the water system is lacking. A small sampling survey recently of 32 connections located in various sections considered representative of different economic groups showed an average of 8.6 persons served by each connection. If this average were true for the entire city, the population Served by the 7,938 connections in service in December 1961 would be 68,300 or 71 per cent of the total population. 37. Little use is made of private water supplies except for in- dustrial use. In general, residents who are not supplied with water directly from the public system must depend upon their neighbors for their water supply since the only alternative is to incur the expense of hauling water from distant sources.  - 8 - 38. It appears that nearly the entire population derives its water supply from the public system in one way or another. Since there are no public fountains, using the estimates made by the Zarqa Water Department on water sold through metered connections for each of the last five years (shown in Annex 5), an average per capita consumption of 26.3 liters per day is indicated in the calendar year 1961. In other words, it has been assumed that the volume of water distributed through metered connections, serves the entire population for purposes of calculating the estimated per capita consumption. On the assumption that the population growth from 1952 to 1961 was a straight-line increase, the per capita consumption has increased progressively from 23.3 to 26.3 liters per day during the period 1957 to 1961 (Annexes 6 and 7). The Zarqa Water Department estimates that roughly 20 per cent of the inhabitants of the refugee camp have direct water connections to the public system. The other 80 per cent, supplied by public taps, use an average of about 10 liters per capita per day. 390 No breakdown between domestic, commercial, and institutional consumption is available. Industrial use, reported separately, is presently less than 3 per cent of the total consumption. This small amount of industrial consumption is due to the present inability of Zarqa to supply industries with needed water and the resulting necessity for industries to drill wells for their own supplies. Industrial expansion is currently being hampered or prevented by lack of adequate water supply as evidenced by the recent inability of Zerqa to supply the water needs of at least two proposed industries. To prevent possible overdraft of groundwater, there is at present a prohibition against the drilling of any new wells in the Zarqa area for private use. 40. Water production estimates of doubtful accuracy for calendar year 1961 indicate that unaccounted-for water, including free water, may be of the order of 35 per cent of the total production. In the absence of any evidence of large-scale leakage and because of the lack of routine meter testing, it appears likely that this high percentage may be due in part to considerable under-registration of consumer meters. Future Demand 41. Appraisal of the project is based on the assumptions that the per capita consumption, applied to the total population including refugees, will increase only gradually from 26 liters per day in 1961 to 30 liters per day in 1965, the year of project completion, then at a greater rate to 60 liters in 1975, and thereafter at a somewhat reduced rate to 80 liters per day in 1985. The maximum day water demand has been assumed, in the absence of local data, to be 130 per cent of the average day demand, a figure considered reasonable for Zarqa. These assumptions are believed to be reasonable for design and suitably conservative for revenue projections. 42. Total future water production requirements (see Annex 7) are estimated on the basis of reducing unaccounted-for water from 35 per cent at present to 20 per cent by 1970. Such a drastic reduction will be possible only with the prompt initiation of a vigorous and essential pro- gram of meter testing and maintenance, and leak detection with correction.  - 9 - 43. Building construction in general is of such types as to present no great fire hazard. Therefore, no special provision is made for facilities to control fires. 44. Should consumption be more than the estimates, future exten- sions would be moved forward and the finances improved through increased sales of water. If consumption is less, distribution system extensions and improvements would have to proceed at a restricted rate. V. THE PROJECT 45. The principal features of the project (shown on Maps 2 and 3) include the development of a new well supply at a site six kilometers north of Zarqa, a booster pumping station and transmission main to deliver this supply to the city, increased storage capacity, and major improvements and extensions of the distribution system. 46. The present spring supplies and related pumping facilities will be held in reserve and should be maintained for immediate standby use. Any permanent diversion or other use of these facilities should be made only if suitable alternate standby facilities are provided, inasmuch as the new source will not have standby facilities initially. 47. Three wells have been drilled in Wadi Siyah which have an estimated total yield of 220 cubic meters per hour. The dependable yield of the aquifers tapped by these wells is not known at this time, since the area has never been mapped and the actual size of the recharge area has not been determined. Mapping of the entire area has begun and hydro- logical studies are being initiated so that rainfall-runoff relationships can be ascertained and safe yield studies can be made for all well fields in the Zarqa area. A geological report states that the Wadi Siyah well field is in one of a series of parallel synclines which extend northward from Zarqa for about 25 kilometers and that a11 wells drilled along these synclines have produced water without any known overdraft. It is the geologists' opinion that if the need should arise, additional supplies could be obtained by drilling additional wells in these nearby areas. 48. Chemical and bacteriological analyses of water from the new wells indicate that it i8 of good quality. The wells are in an uninhabited area and it is expected that no treatment other than chlorination will be required. 49. Provision has been made in the cost estimate for a total of seven wells and related facilities to provide a capacity sufficient for the estimated maximum day demand in 1970. 50. At present, three wells have been drilled in the new well field and subjected to limited tests which indicate a probable average yield of about 70 cubic meters per hour per well. Based on the population and water  - 10 - consumption projections, the total yield of the present wells will be inadequate to meet the 1965 demand and the immediate construction of additional units is required. Because the additional wells and the functioning of the entire project are dependent on the water obtained from the well field, the wells should be pumped over a period of time sufficient to establish a stable drawdown condition at the rated capacity of each well, At least two wells should be pumped simultaneously during these tests. Should these tests prove satisfactory, funds would be re- leased and construction on two or more of the other wells could be immediately undertaken. CWA is providing the test pumps and testing the existing wells. Booster Pumping Station 51. Individual well pumps would discharge to a 1,000-cubic meter reservoir to be built near the well field. A booster pumping station adjacent to the reservoir would force the water through a transmission main to distribution storage reservoirs at the edge of the city. 52. The cost estimate provides for pumping and ttansainssion main capacity of 16,000 cubic meters per day, equal to the estimated maximum day demand in about 1974. An additional standby pump is included. 53. The pumping station can be designed to permit the installation of additional booster pumps when required. Chlorination facilities would be housed in the booster pumping station. Pumps would be driven by electric motors, supplied with power from an overhead 9-kilometer transmission line to be extended to the station by the power company. The Water Department and the power company would share the cost of this transmission line. An amount of JD 12,000 is included in the project cost estimate as the part to be paid by the Water Department. 54. In the event of lengthy power interruptions, it would become necessary to resort temporarily to the existing water supply since no standby facilities are contemplated for driving the pumps at the wells or booster station. 55. The transmission main would be approximately 6.5 kilometers in length and of 16-inch steel pipe. It may be possible to use salvaged pipe from an unused petroleum pipeline. The matter is still under study by the government. Distribution System 56. Proposed distribution system improvements would add about 21 kilometers of 6-, 8-, and 10-inch diameter steel mains. Data regarding population density and distribution within the service area, which would be required for a detailed analysis, have not yet been obtained. However, the reinforcements proposed appear to be reasonable. Minor modifications may be found desirable during the course of detail design in the light of further data on population distribution.  - 11 - 57. The cost estimate includes provision for additional storage of 5s000 cubic meters. Such storage will care for peak demands and pro- vide a reserve for use during repairs to the transmission main and during brief power interruptions. The total storage would thus be increased to 6,250 cubic meters, equivalent to about nine hours of the estimated maximum day demand in 1974, an amount considered reasonable. 58, It is to be expected that further reinforcements and extensions of the distribution system will continue to be required as the city grows. These could be financed largely from funds generated by the water system operations. There will be need for a large feeder main from the distribu- tion reservoirs to the southerly part of the city when substantial develop- ment in that area occurs. Whether this can be financed from surplus funds will depend on how soon such works will be required. Project Planning 59. Project planning has been carried out by the Central Water Authority, an autonomous agency of the government with country-wide authority over water resources and administration. The project now under consideration replaces a proposal made two years ago by a consulting engineering firm to continue use of the present sources of supply and to build extensive water treatment facilities, a solution which would be inadequate and expensive. A consulting firm has been employed by the Jordan Development Board to prepare construction drawings, specifications and other contract documents, and to supervise construction. Construction and Procurement 60. CWA will be responsible for the construction, turning over the project to Zarqa for operation upon completion of the works. All contracts for major items of materials, equipment and civil works would be awarded on the basis of international competitive bidding. Project construction could begin about October 1963 and be completed about March 1965, as shown in Annex 8. Project Management and Organization 61. The municipal authorities of Zarqa have indicated a desire to improve the management and administration of the water works and have expressed a willingness to employ additional staff, including an accountant, for the Water Department and such other staff as may be required to meet the needs of the expanded operations. 62. It has been agreed that the Zarqa Water Department will have separation of accounts and funds, outside auditing, and safeguards against diversion of funds. This is particularly important in view of past practices of using a part of the Water Departmentts funds for other municipal purposes. Because of the need for funds to cover new water system expansion as dis- cussed in paragraph 58, diversion of accumulated funds would be unacceptable.  - 12 - Moreover, it is not until 1969 that cash surpluses beyond immediate needs begin to be generated. 63. Assistance to the project for management and to train local personnel in efficient operation and sound administrative practices has been anticipated. Provision is made in the cost estimates for an amount of JD 25,Ooo, equivalent to $70,000, to provide such assistance. This amount will be utilized by CWA in cornbination with like items in other water supply projects, to employ management consultants and to give adequate, continuing management assistance. Project Cost Estimate 64. The total direct cost of the project is estimated at JD 404,900 (US$l,134,000), including interest during construction, c9 summarized in Table 4 and as shown in further detail in the year by year investment schedule included as Annex 9. TABLE 2 Summary of Estimated Project Costs (In Thousands) Foreign a-change Local Costs Costs Total Item US$ JD Equiv. JD JD Total Construction Costs 624h4 223.0 112.9 335.9 Engineering Services 70.0 25.o - 25.0 Management Services 70.0 25.0 -250 Subtotal 764.4 273.0 112e9 385.9 Interest During Construction - - 19o0 19o0 Total Direct Project Costs 764.4 273.0 131.9 404.9 65. Foreign exchange costs are estimated at JD 273,000 (US$764,000), representing approximately 65 per cent of the total costs associated with the project. 66. Costs associated with the project in the three year pre-construction and construction period but not included in project costs include JD 5,800 for meter installation and service connections, and JD 16,800 for additions to working capital. The amounts required for meter installation and service connections would be charged to the customers, the- amounts required for work- ing capital purposes would be available from the small excess of loan funds over direct project costs and from funds generated by operations during the construction period.  - 13 - 67. Contingencies are provided in amounts of 18 per cent on all construction items. Included in contingencies is a factor of 3 per cent for possible price increases. 68. Engineering costs are intended to cover design, general super- vision, and resident inspection of construction. 69. Interest during construction has been treated entirely as a local cost. The service charge of 3/4 per cent on IDA credit would be a foreign exchange cost for government but has not been so considered for Zarqa Muiicipality. Interest has been taken at 4 per cent on both the IDA credit and the local loan. This rate is the same as used for relend- ing of the Association's credit, lqo. 18-JO, to Amman and is the rate cur- rently charged for Development Board loans. 70. The project costs also include an allowance for management ser- vices (see para. 63). VI. FINANCING PLAN AND FINANCIAL PROJECTIONS Sources of Funds 71. The following tables summarize the total financial and cash surplus needs during the construction period as well as the sources from which the required funds are to come: TABLE 3 Summary of Total Financing Needs Item JD Thousands Total Direct Project Costs (As summarized by Table 2) 404.9 Meter Installation and Service Connections 5.8 Additions to W4orking Capital 16.8 Capital Improvements not a part of Project 63.6 Debt Service excluding Interest during Construction: Amortization - New Loan 7.5 Armortization - Existing Loan 1h.4 Interest - Existing Loan 2.7 Total 515.7  TABLE 4 Proposed Financing Sources JD Thousands IDA Credit 278.6 Neew Local Loan 139.3 Charged to customers for MIeter Installations and Service Connections 5.8 Funds Generated from Operations 92.0 Total Sources 515.7 72. The IDA credit would amount to two-thirds of the debt financing to be made available to the project. Other loan funds for the project will be made available by the government through the Miunicipal Loan Fund of the Jordan Development Board. 73. The government will relend the IDA credit to the CWA at 4 per cent interest for a period of 23 years, including a three-year grace period, with repayment of principal and interest in 40 equal semiannual payments. The local loan would also be lent at 4 per cent interest with a one-year grace period and eight equal annual capital repayments. These ob'ligations would be transferred to the municipality of Zarqa with the physical works upon completion of the construction. 74. A continuation of the water rate of 60 fils per cubic meter (roughly US$0.60/1,OOO gals.) should afford sufficient revenue for this project. It has been assumed that the average amount per cu m collected would increase from 48 fils in 1963 to 57 fils by 1966 throu-h appli- cation of better collection procedures. A discontinuance of preferential rates no'-* given to schools and hospitals with elimination of free water to the lMunicipality would further improve the average collection rate. 75. The present water rate of 60 fils per cubic meter is less than those now in effect in Amman (65 fils per cubic meter), Jerusalem (120 fils), and Ramallah (150 fils) as well as in some other Jordan cities. At esti- mated per capita consumption rates of 30 liters per day in 1965 and 60 in 1975, the annual cost of water for an average family of 5.6 persons would be JD 3.7 and JD 7.4 respectively. These costs represent 1.5 and 3.1 per cent, respectively, of the average annual family income of JD 240 reported unofficially for Zarqa. Such costs are reasonable for a water-scarce area.  - 15 - Financial Projections 76. Pro Forma Income projections (Annex 10) indicate that the present water rates should yield a good return. This would be better than 5 per cent in 1966, the first year after project completion and increase rapidly thereafter. The ratio of operating costs to water revenues should not exceed 69 per cent and after five years of project operation would be less than 50 per cent. Rates should be maintained to reflect approximately these ratios, 77. The schedule of Sources and Application of Funds in Annex 11 shows that a substantial cash balance is generated during the construction period. However, there are appreciable cash drawdowns in the next three years. Debt coverage in the first year following project completion is less than unity but quickly increases to 1.41 in 1968 and continues to improve markedly thereafter. Should the cash position prove less optimistic than projected, the extensions and improvements expenditures can be postponed. In any event, new debt would be restricted so as to maintain adequate coverage. 78. Information on salaries, power, supplies, maintenance costs, and service connections is shown in Annex 12. VII. JUSTIFICATION OF THE PROJECT 79. As the fastest growing city of substantial size in Jordan, Zarqa has undergone a very rapid increase in population accompanied by a good growth of industry in the last decade. One factor which has con- tributed significantly to this unusual growth has been the relatively good availability of water. 80. Substantial investments in its water system have been made in recent years. Nevertheless, the present source is adequate for neither present needs nor the ever-increasing requirements imposed by the continu- ing high growth potential of the city. There have been many interruptions and restrictions of water service and for long periods during each of the last two years. 81. As development has spread, the present sources of supply have become increasingly subject to pollution. Water delivered to the system, even after chlorination, is of questionable safety. Available rates for typhoid and paratyphoid are high in the area; at 76.1 per 100,000, they are two to three times Central and South America rates. The danger of an epidemic is real, 82. The proposed investments to the Zarqa water supply system can be expected to produce significant benefits to the health of the community, These benefits will be due to the provision of a safe, uncontaminated supply and also to a higher order of personal and general hygiene due to a greater availability of water.  - 16 - 83. The project now proposed will provide a new source of supply of good quality water requiring a minimum of treatment. While it is in- tended to maintain the present sources for standby use, at least initially, water from these sources would be available most of the time for meeting the increasing needs of industry and could also be used for agriculture. Distribution system reinforcements would assure more nearly uniform pressures and thereby reduce the danger of contamination entering the distribution system, 84. Although the additions to the distribution system included in the project do not extend the service area, they do provide a sound frame- work from which to extend the system by normal annual additions. Density of housing outside the service area is low. Due to the present backlog of applications for service connections, it is expected that, with more depend- able service available, many new connections will be made within the present service area. As the percentage of residents having their own service con- nections increases, individual water use can be expected to increase, result- ing in the generation of larger funds for further system extensions. 85. The project is essential for meeting the present and continually increasing needs of Zarqa for an adequate, continuously dependable, and safe water supply. While the cost is large in relation to the investment in the present system, it is reasonable for a city with such a good growth potential as Zarqa. VIII. CONCLUSIONS AND RECOMMENDATIONS 86. In spite of substantial capital investments in the Zarqa water system within the past five years, there is now an urgent need for a much larger expansion of the system to increase the supply and to improve water quality and dependability of service. This need arises in large measure from the rapid increase in population from about 31,000 in 1952 to 96,000 in 1961. 87. The project provides a new source of good quality water, pump- ing facilities sufficient for nine years, a transmission main, and reinforce- ments of the distribution system. Pumping and distribution can be expanded as the need arises. 88. Unsatisfied present water demand and potential future demand for domestic, commercial, and especially industrial use, &ogether with the health benefits that are expected to accrue, provide ample justification for this project. 89. The Borrower has agreed to the followi.ag conditions: a) Funds will not be released until the three existing wells have been tested and the yields are, in the opinion of the Association, satisfactory for development of the field;  - 17 - b) Local loan funds will be made available to Zarqa at an interest rate of 4 per cent and eight equal annual re- payments after one year of grace; c) The Zarqa Water Department will have such functions and staff as are necessary for diligent and efficient opera- tion and maintenance, as well as separation of accounts and funds, and safeguards against diversion of funds; d) The accounts of the Water Departrnent wvill be audited by an outside accountant; e) Water rates will be maintained so as to cover operating expenses, including taxes, if any, interest, maintenance, depreciation, debt repayments in excess of depreciation, normal extensions, and a reasonable part of future expan- sion. To this end, the water rate will be maintained at 60 fils per cubic meter initially and a 50 per cent oper- ating ratio attained after five years follouing project completion; f) Zarqa will not incur any long-term indebtedness in respect of its water operations, unless net revenues from water supply operations in any 12 consecutive months in the pre- ceding 15, exceed 1.5 times total projected debt service requirements; g) CWA will employ satisfactory consultants in the construc- tion of the project; h) Zarqa will utilize in the operation of its IrWater Department the assistance of management consultants provided through COA; and i) The existing sources and related facilities will be main- tained for standby use. 90. The project provides a suitable basis for an IDA credit of U.S.$78o,ooo to the Hashemite Kingdom of Jordan to be relent to the Municipality of Zarqa. Relending terms would be at 4 per cent interest, a three-year grace period, and a 20-year amortization period. September 12, 1963  ZARQA MUNICIPALITY ORGANIZATION CHART Municipal M ayor Council Engineer Municipal o Sanito. ertary trDp Chief Police and Engineer court Depi. Accountant Fire Dept. (See Annex 2) Tech.Assistants Judge Market Inspectors Mechnic Account. (2) ~~~~~~~~~~~~~~(2) DriverAsit Clerk a Employee Meat Inspector Clerk Account. Clerks (5) -E(2) Malaria Inspector Typist Sonitorians (4)> z = ~~~~~~~~~~~~~~~~~~~~~~~~~71 m JUNE 1963 IBRD-1203  ZARQA WATER DEPARTMENT ORGANIZATION CHART M ayor LEGEND = Future Key Positions Director | MunicipalI Accoun tant F- L~~~~~~~- PUMPING DISTRIBUTION METERS IENGINEERING' BILLING F >1 I Superintendent I ServiceanonEngineer I Accountant I Foreman Mechanics A ssis Clerk z z Assistant Collectors Mechanics Assistants N) IJUNE 1963 IBRD- 1202  ANNEX 3 ZARQA WATER SUPPLY PROJECT HEALTH STATISTICS Table 1. Morbidity Data for Azmman District Para- Popula- Cases per Year Typhoid typhoid Dysentery Total tion* 1,000 population 1953 215 52 333 600 1954 187 40 626 853 1955 287 15 487 789 1956 301 22 300 623 1957 309 54 222 585 1958 76 19 320 415 1959 179 8 104 291 1960 251 13 210 474 1961 310 26 38 374 441,541 0.85 *Reliable population data are available only for 1961. Source: Statistical Yearbook, Jordan Government Department of Statistics, 1959 and 1961. Table 2. Comparative Disease Rates Disease Rate Cases per 1,000 Persons Area Year Typhoid and Dysenteries Paratyphoid Alone Both Puerto Rico* 1958 ,O09 0.005 00014 Taipei, Taiwan 1960 0