Turkey - Izmir Water Supply and Sewerage Project

 Izmir water supply and sewerage project Report No: ; Type: Report/Evaluation Memorandum ; Country: Turkey; Region: Europe And Central Asia; Sector: Urban Water Supply; Major Sector: Water Supply & Sanitation; ProjectID: P008971 The Turkey Izmir Water Supply and Sewerage project, supported by Loan 2818-TU for US$184.0 million equivalent, was approved in FY87. The loan was closed in FY96. At the Borrower's request, the loan amount was reduced twice totaling US$79.2 million. An undisbursed amount of US$5.4 million remains to be canceled. The Implementation Completion Report (ICR) was prepared by the Europe and Central Asia Regional Office. The Borrower provided detailed comments which are attached to the ICR. This project followed several sector operations in Istanbul and Cukurova. Its objectives were: (i) to assist the newly established Izmir Water and Sewerage Administration (IZSU) to become an autonomous and financially viable entity; (ii) to improve water service and meet the growing demand; and (iii) to improve the aquatic environment in the Izmir Bay, which had been heavily polluted by the discharge of untreated sewage. The physical components included: (a) in water supply: the completion of the Tahtali storage (under construction since 1982), the construction of intake, treatment and transmission facilities, and, the expansion of the distribution network, and (b) in sewerage: the completion of interceptors within the city (under construction since 1983), the construction and rehabilitation of the collector network, and the construction of a treatment plant. On the institutional side, technical assistance was to be provided to conduct a tariff study, prepare plans and purchase equipment for leak detection, source metering and water quality control, and carry out training of IZSU's staff in operation and maintenance of facilities. The project was scaled down three times (in 1990, 1992, and 1994) to cope with escalating project costs, by dropping the construction of some major sewage interceptors and by downsizing the sewage treatment plant. The project failed to meet its physical and institutional objectives. The physical components were only partially completed by the closing date. The water distribution network is substantially complete, but only 65 percent of the new water connections have been installed. In 1996, the Tahtali storage was still not completed. Most of the new sewer network was constructed, but no new connections were installed and construction of the sewage treatment plant is yet to be initiated. There has been no abatement of the pollution in Izmir Bay. Few institutional objectives were met. The tariff study was completed, and water quality regulations covering the protection of the Tahtali Dam and industrial waste treatment and disposal were prepared and put into effect. Equipment for leak detection and repairs was purchased, but operational staff were not trained to use it. Water is available only intermittently to a large part of the population. Water losses (at about 60 percent) are higher than before the project, and the incomplete sewerage investments have not yet produced any environmental benefits. Water sales are about 50 percent of the level estimated at appraisal and, despite considerable tariff increases, IZSU is unable to cover its costs, and its financial position is weak. OED rates project outcome as highly unsatisfactory, institutional development as negligible and sustainability as unlikely. These ratings are consistent with those in the ICR. Bank performance is rated as unsatisfactory because of poor handling of project preparation support and appraisal. Bank performance improved considerably during supervision but this improvement was too late to fully correct serious implementation problems resulting from poor quality at entry. This project demonstrates the fallacy of supporting a complex project where the institutional structure is inadequate. It was unrealistic to expect a newly established entity to manage the existing facilities and simultaneously implement a complex new investment program. A gradual program aimed first at building up their management capacity and encouraging their efficient use of existing facilities, would have been a better approach.  The quality of the ICR is good. It provides a detailed analysis of project implementation problems and contains a candid discussion of the Bank's role in project preparation and appraisal. The ICR provides particularly good coverage of Bank performance and "quality at entry" issues. No audit is planned.