Turkey - Marmaris Water Supply and Sewerage Project

Report No. PIC5012 Project Name Turkey-Marmaris Water Supply and Sewerage Project (+ Region Europe and Central Asia Sector Water Supply Project ID TRPA49072 Borrower ARMARIC Union (Union of Municipalities of Marmaris, Armutalan and Icmeler) Implementing Agency ATAK Project Management Unit Ministry of Tourism Ismet Inonu Bulvari No. 5 Bahcelievler-ANKARA, Turkey Tel: 90-312-212-8394 Fax: 90-312-212-7985 Environment Category B Date This PID Prepared April 18, 1997 Date Initial PID Prepared April 29, 1996 Projected Appraisal Date May 1997 Projected Board Date November 1997 Background 1. Turkey has currently a population of about 61 million which has grown at an average annual rate of about 2.3 percent during the last decade. About 60 percent of the total population lives in urban centers. The per capita income was about US$2,700 in 1995. Although there is little absolute poverty, inequality is high, with considerable differences in income between regions and between rural and urban areas. Overall unemployment remains slightly above 10 percent. Educational enrollment at all levels has increased considerably since the 1970s. Most health indicators including infant mortality rates have shown substantial improvement over the same period but regional disparities remain significant. 2. Tourism is an important element of Turkey's economy. According to Turkey's 1996-2000 Seventh Five-year Development Plan, the number of tourists increased from about 4.5 million in 1989 to about 6.5 million in 1994, generating a net tourism revenue of about US$3.5 billion, or about 19t of total merchandise exports (US$18.1 billion). Over the same period the tourism sector accounted for around 2.0w of total fixed capital investment, and total bed capacity increased from about 150,000 to about 300,000. Current plans call for a continuous expansion and the objective pursued is reach a total bed capacity of about 800,000, attract about 13 million visitors by the year 2000 and generate a net tourism revenue of about US$8.5 billion. However, as recognized by the Seventh Plan, achievement of these ambitious targets is put at risk by the persistence of severe insufficiencies in tourism related infrastructure and services. These, together with growing  deterioration of environmental conditions in the main tourism host areas risk, if not remedied shortly, the loss of Turkey's competitiveness vis-a-vis other Mediterranean countries. 3. The Marmaris area, a popular tourist destination with 36,000 beds in over 400 tourist facilities and a peak population of about 70,000, typifies the above situation. Water supply coverage is extensive (95w in 1996) but water quality is poor and service is unreliable in peak summer months. The recently completed sewerage network serves a relatively high percentage of the population and tourist facilities (estimated 85t in 1995) but material and construction quality is very poor and the system is already in need of major rehabilitation. The three Marmaris area municipalities (Marmaris, Armutalan and Icmeler) are relatively weak financially. They have formed a union for the provision of water and sewerage services to improve operational and financial performance of these systems. Objectives 4. The primary objectives of the project are to (a) ensure satisfactory provision of water supply and sewerage services through rehabilitation and upgrading of existing water and sewer infrastructure and new investment in these facilities; and (b) to establish an institutional framework for the efficient provision of water supply and sewerage services through a private operator Description 5. To achieve these objectives, the project would comprise the following components: (a) Improvement of Water Supply - through provision of opera- tional equipment and development of new water supply sources; (b) Rehabilitation of Sewerage System - through construction of new trunk sewer lines, rehabilitation and repair of the existing sewerage network, retrofitting of pumping stations, and installation of preliminary treatment equipment; and (c) Institutional Development - through provision of technical assistance to ARMARIC Union for (i) preparation and implemen tation of the contractual arrangements for hiring of a private operator for the water supply and sewerage services, and (ii) management and supervision of project execution. Financing 6. The cost of the above components and financing arrangements have not yet been finalized but a total project cost of about US$24 million is currently estimated with about half of the required financing expected from the Bank. -2-  Implementation 7. The project municipalities have formed a Union to undertake the project and to provide water supply and sewerage services. The Project Management Unit of the Ministry of Tourism will provide guidance and support to the Union during project preparation and implementation. Project financed civil works, equipment supply and other activities will be the responsibility of the Union which will engage private contractors and suppliers in accordance with World Bank procurement guidelines. A Project Implementation Unit will be established to assist the Union, which plans to engage a private company to operate the water supply and sewerage systems. Sustainability 8. Three features of the project will ensure sustainability. The three Marmaris area municipalities have pooled their efforts and resources into a special purpose union established for the development and management of their combined water supply and sewerage systems. The operation of the systems will be entrusted to an experienced private operator under lease and/or management contract. Financing availability for operations, maintenance, debt service and further investment will be protected by an automatic tariff adjustment mechanism. These institutional arrangements will be substantially in place before consideration of the Bank financing by the Bank's Board of Directors. Lessons learned from past operations in the country/sector 9. The 1995 OED Water Sector report notes that although projects have generally been successful in achieving their physical objectives, limited success has in general been obtained in improving the institutional performance of water and sewerage utilities. Among the reasons cited were inadequate linkage between institutional and physical objectives, lack of management and financial autonomy of utilities, and excessive complexity. More recently, the experience of the Antalya Project (Loan No. 3893-TU) has shown the importance of an early start on the arrangements for engaging a private operator. These lessons have been taken into account in the design of the project. Poverty Category 10. N/A Environmental Aspects 11. For the purpose of O.D. 4.01 on Environmental Impact Assessment, the Project has been classified as Category B, which requires a limited environmental review to determine potential negative environmental impacts and propose mitigation measures where needed, as well as to identify opportunities for environmental enhancement. This review will be carried out during project appraisal. The environmental assessment carried out as part of the feasibility study and has been approved by the Ministry of - 3 -  Environment. The project would have minor negative environmental effects and would not raise any resettlement or property rights issues since it focuses primarily on rehabilitation of existing networks and facilities. All works would be executed either within the premises of existing facilities or the rights of way of the public street network and no acquisition or expropriation of new land would be required. The project would not affect any known archeological or historical site. Contractors would be responsible, under the clauses of the bidding documents, for maintaining work sites pollution free, returning sites to their original condition, and minimizing dust, noise and other work-related nuisances. They would also be responsible for notification of the discovery of, or any problem related to, a previously unknown historical site. The proposed project would not deal with international waters and, therefore, does not require a notification for the purposes of O.D. 7.50. Program Objective Categories 12. The project would introduce private sector participation in the operation of water supply and sewerage services and would contribute to improving environmental conditions and reducing health hazards. The gender impact of the project is expected to be positive because improved access to and reliability of water supply tends to alleviate existing burdens on women. Care has been taken to ensure that water and sewer tariffs will not exceed 5% of monthly income of the lowest income groups, which is the Bank's rule of thumb for maximum level of water/sewer charges for poor households. Project Benefits 13. The proposed project would contribute to the improvement of the quality and reliability of water supply throughout the project area, particularly during the summer period when demand generated by tourism, the area's single most important economic activity, is at its peak. The project would allow per capita water consumption to increase from its current level of 80 l/d for residential users to 135 l/d and would secure the permanence of supply of water of acceptable quality to the area's tourism facilities throughout the next decade. The investments of the proposed project in the rehabilitation of the sewerage network and installation of preliminary treatment equipment would help prevent the occurrence of future public health and environmental hazards. Another benefit would be the change in the water pricing regime which, inter alia, would allow the establishment of a well-operated and financially viable water and sewerage system, managed by a private operator under a lease or management contract arrangement. Project Risks 14. The project faces three groups of risks: institutional/political, financial, and technical. The institutional/political risks relate primarily to the novelty of the proposed service union and the possibility of political - 4 -  interference in its operations and finances. This risk is mitigated by the existence of precedents for the special purpose union in Turkey, the strong support of Central Government authorities for this institutional approach, design of the ARMARIC Union by-laws to specifically offset this risk and the creation of contractual arrangements for regular adjustment of tariffs. The financial risks arise from the possibility of a shortfall in counterpart financing and from the possibility of poor performance by ARMARIC Union due to its lack of experience. These risks are mitigated by the commitment to the project concept demonstrated by the Union's member municipalities thus far and their consciousness that any failure in resolving the water supply and sewerage problems would have a negative effect on the local economy. The technical risks are those inherent in the implementation of a first-time operation by a new beneficiary lacking familiarity with World Bank procedures. These risks are mitigated by the provision of technical support to ARMARIC Union for the duration of the project and the early completion of design and bidding documents for the first 2 years of project implementation. The possible effects of the above risks have been assessed in the sensitivity analyses for the economic evaluation. Contact Point: Mr. Henry Boldrick, Task Mananager The World Bank 1818 H Street N.W. Washington, D.C. 20433 Telephone No.: (202) 473-3572 Fax No.: (202) 477-1386 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by the Public Information Center week ending April 25, 1997. - 5 -  ANNEX ENVIRONMENTAL IMPACT AND MITIGATION EXISTING CONDITIONS 1. The present sewerage system was commissioned in 1990. Sewerage is collected and conveyed to a pumping station where it receives a pretreatment before being discharged through a sea outfall into the open sea. The system was designed to operate separately from the stormwater drainage, however, it shows severe infiltration of stormwater during the winter, which leads to excessive pumping cost and odor problems. It also presents a risk of exfiltration of sewerage into the groundwater during the summer with possible serious impacts on public health. The main reason for these problems is the poor quality of the construction of the network. 2. Water to the Project area is supplied mainly from wells operated by the municipalities; also, many hotel have private wells and some of them have their own water treatment plants. The aquifer is becoming affected by saline intrusion caused by over pumping, and pollution from the sewerage network. Water distribution meets current demand in quantity but not in quality. The quality problem is due to two reasons: inefficient disinfection and saline intrusion into the aquifer. Storage capacity is deficient. POTENTIAL IMPACT OF THE PROPOSED PROJECT 3. The proposed project would significantly improve the present arrangements for water supply, wastewater collection and disposal in the Municipalities of Marmaris, Armutalan, and Icmeler and bring a number of environmental benefits to the area such as: -- improve the quality of the water supply as a result of a new source, reduction of saline intrusion and more effective disinfection; -- improve the management and conservation of groundwater resources; -- limited effects on groundwater flows and marine water quality through a change in salinity; -- improve the quality of the effluent being discharged into the sea; -- reduce infiltration and overflows at pumping stations and in the network; -- reduce sewer exfiltration and consequently improve groundwater quality; -- increase life of the sewerage network; -- reduce odors emissions at pumping stations; and -- generate jobs for local people during construction. 4. The negative impacts of the project would generally be of low significance, relating mainly to short-term construction phase. They are: -6-  create temporary localized noise, dust emissions, traffic and visual impacts associated with construction of the boreholes, the transfer pumping station, the balance storage reservoir, the pipeline to Marmaris, and the storage tanks in the municipalities; create minor adverse impact in the ecology at the new water source and along the pipeline route to Marmaris. MITIGATION AND MONITORING ACTION PLAN 5. The mitigation measures to be adopted include the scheduling of construction work outside the summer tourist season; provision of odor control equipment at the main sewer pumping station; use of noise attenuation screens and ear defenders; undertaking aesthetic improvements and landscaping at visible sites; consultation with local residents; taking measures to avoid fuel and chemical spillages; minimizing tree felling and loss of agricultural land; implementing dust control measures. 6. The negative impact of the discharges into the sea would be mitigated through the preliminary treatment and the submarine outfall. Given the importance of tourism and associated bathing and water-based recreation in the area, the Project would include actions to systematically monitor the sea water quality. - 7 -