Mozambique - Supplemental Credit to the Second National Water Development Project (NWDP II)

Integrated Safeguards Data Sheet (ISDS) Section I - Basic Information Date ISDS Prepared/UJpdated: December 16, 2003 Report No.:AC506 A. Basic Project Data A. 1. Project Statistics Country: Mozambique Project ID: P083263 Project: Second National Water Development UTL: N. Jane Walker Project (NWDP IL>- Supplemental Credit _ _ Total prect cost (by component).- Appraisal Date: January 5, 2004 Loan/Credit amount($m): IDA: 15 Board Date: February 26, 2004 Other financing amounts by source: ($m.) Managing Unit: AFTUI Sector: Water supply (100%) Lending Instruments: Specific Investment Loan I _ Is this pro}ect processed under OP 8.50 (Emergency recovery? Yes? [ No? [X] Environmental Catego : B Safeguard Classification: S2 A.2. Project Objectives This is a supplemental credit for the ongoing Second National Water Development Project in Mozambique. The objective of the supplemental development credit of US$15 million equivalent is to assist with financing and to adequately support the revised lease and management contracts with the private operator, AdeM. Renegotiations, which resulted in the revised contracts, were precipitated as AdeM were unable to satisfactory perform their required responsibilities under the original contracts as its bid was not well priced. The situation was further aggravated by the devastating floods in Mozambique in early 2000 and the withdrawal of the lead partner in AdeM. Aguas de Portugal (AdP), became the lead partner in AdeM in December 2001 under an MoU which included revised rates, fees and costs that reflected more realistic market conditions. These new rates and fees are reflected in the revised contracts. These higher rates and associated operating costs are supported by the Supplemental Credit. The supplemental credit will not fund any new project activities; rather, it will support the original project objectives and activities. These original project objectives were to improve the quality, reliability and sustainability of water services for the cities of Maputo, Beira, Quelimane and Nampula, and Pemba through promoting greater private sector participation in the provision of these services. In particular, the project seeks to: * Commence institutional and regulatory reform within the urban water management of water services through the use of a private sector operator; * Accelerate capacity building and human resource development for the sector through training and demonstration effects within the context of the private operator contract; * Provide an institutional framework that improves the quality and sustainability of users services and acts as an operational model for water services, as these begin to be decentralized to municipal based management. Original Project Components: 1. Private Sector Management of water supply systems for S cities: Maputo, B'ira, Queliinane, Nampula and Pemba (US$37 million) 2. Water supply rehabilitation works in tbe five cities (US$76 million) 3. Urban Water Supply Policy and Strategy (US$4.8 million)  The supplemental credit of US$15 million equivalent is allocated to the Component 1 in the following categories: Consulting Services - US$ 8.5 m; Goods - US$ 3.27 m; and Operating Costs - US$ 3.23 m. A.3. Project Description The Government of Mozambique decided to improve the management and efficiency of water supply in the five cities by contracting out operations to a private operator. Oversight and control of the urban water sector and private operator are to be assured by the autonomous public body Fundo de Investimento e Patrimonio do Abastecimento de Agua (FIPAG) and the Independent Regulator (CRA). Both these institutions were created in 1998 under legislative arrangements and passed into law. The original project improves water supply coverage and service to comnrmunities of the five major cities of Mozambique or over 75% of the urban population in a sustainable way through providing increased investments in water supply infrastructure under private sector management. To date the Project has led to a safer and more reliable water supply services for consumers living in urban ancj peri-urban areas as well as provide increased supply to service industrial, institutional and commercial users. The Supplemental Project-will help assure this continued improvement. The safeguard issues within the original project are mainly associated with the large capital works program in the original project. The proposed Supplemental Project does not support the capital investment part of the project and will fund shortfalls in expenditures already incurred for small extensions, meters, and replacements, as well as operating costs of electricity and chemicals. A.4. Project Location and salient physical characteristics relevant to the safeguard analysis: The original project locations are in the S cities of Maputo, Beira, Nampula, Quelimane, and Pemba. The project includes rehabilitation of the water supply networks in the 5 cites including replacement of mains, connections and meters, as well as the provision of new connections and meters. Larger works include refurbishment of the water treatnent (WTW) and waste water treatment (WWT) works in Maputo, refurbishment of WTWs and new intake and pipeline in Beira; new treatment works and pipeline in Quelimane; repairs and rehabilitation of works in Nampula; and repairs to pipeline and small extensions at Pemba. B. Check Environmental Category A [],B [X], C [],FI [1  Comments: As part of the MTR, the original project was reviewed for compliance with the environmental and social safeguard policies, particularly on environmental assessment (OP/BP 4.01) and involuntary resettlement (OP/BP 4.12). The findings of the MTR in respect to safeguard compliance were satisfactory. The project has been rated as environmental assessment category B based on the limited adverse environmental impacts associated with rehabilitation, expansion and operation of water supply infrastructure (intakes, pumping stations, transmission mains, etc.) In compliance with OP 4.01 an environmental assessment (EA) including a preliminary environmental management plan (EMP) for the entire project was prepared in July 1996 and its second edition issued in August 1997. To reflect the modifications in project design and significant institutional and regulatory changes (e.g. Environmental Act, EIA regulations), the EMP was revised, updated and issued as a self standing document dated May 1999. No safeguard policies are triggered by the proposed Supplemental Credit. C:. La feurd Aolicies Twriggered__ _ . __ ~~~~ ~ ~ ~~~Yes _No Environmental Assessent (OP/aP3/QP 4.01) [ XI Natural Habitats (OP/BP 4.04) _ [ ] [XI Pest Manaaement (OP 4.09) [1 [XI CulturaI Propertv (draft OP 4.1 1 - OPN 1 1.03-) E ] __ [X] [nvotuntarv Resettlement (OP/U3P 4.12) [ ][Xi Indigenous Peooles (OD 4020) [_XI } <X] Forests (/BP 4.36) H [XI Safet of Dams (P/L3? 4.37) [XI Projects in Disouted Areas (OP/BP!GP 7.60) H l [XI Projects on International Waterways (OP/BPrGP 7.50) _[X__I W[ Section II - Key Safeguard Issues and Their Management D. Summary of Kfey Safeguard Issues. D.L. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts. The safeguard issues within the original project are mainly associated with the large capital works program in the original project. The proposed Supplemental Project does not support the capital investment part of the project and will fund shortfalls in expenditures already incurred for small extensions, meters, and replacements, as well as operating costs of electricity and chemicals. For the Original Project: Resettlement: Before appraisal, involuntary resettlement was only briefly discussed in the original EA as a possibility. It is now being planned for the two largest infrastructure schemes in Beira and Quelimane, and expected in Pemba. The FIPAG own capacity to handle resettlement is minimal, however, FIPAG engaged two separate consultancies to prepare Resettlement Action Plans (RAP) for the two sites according to the requirements of OP/BP 4.12. The RAP for Beira was reviewed by IDA and found of high quality, however, was returned to FIPAG for revisions because the new site proposed for resettlement is not a site preferred by the affected persons. The By supporting the proposed project, the Bank does not intend to prejudice thefinal determination of the parties' claims on the disputed areas  RAPs for Quelimane and Pemba are under preparation. FIPAG has agreed to continue to engage high quality technical advisory services to maintain adequate capacity for management of resettlement aspects. International Waters: The Pungue River, on which the new water intake for Beira will be constructed, enters Mozambique from Zimbabwe and flows into Zambezi. The Zimbabwe portion of the Pungue watershed is reported to have irrigated agriculture and water abstraction for drinking water supply, which may affect the performance of the project in Beira. FIPAG agreed to review the applicability of OP 7.50 on projects on international waterways, notify Zimbabwe of the Beira project, and monitor the total water abstraction from Pungue to ensure adequate flows for both water supply and environmental flows is secured - the latter in accordance with the recommendations of the ELA. D.2 Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area. For the Original Project: Sanitation. The environmental and health impacts of increasing water supply without adequately increasing sanitation have been explicitly excluded from consideration in the project design and the EA on the grounds that sanitation aspects are handled under another project. To minimize these negative environmental and health impacts in the generally poorly drained, lowland project sites (the five cities) with high water table, the following activities are on-going: (i) the IDA urban environment program includes, fuist, the Municipal Development Project (MDP) dealing with municipal capacity building, and sanitation, drainage and related issues, concentrating in the priority cities of Beira and Quelimane. This will be followed by subsequent more comprehensive operations; (ii) active leakage reduction programs are built into the lease and management contracts aimed at counterbalancing initial increases in water delivery for consumption. The level of unaccounted-for water will be a performance measure of water supply operations; (iii) EU is financing a comprehensive sanitation program for Beira of about US$ 20 million; the AfDB and Dutch Aid (the co financing donors) have included allocations for sanitation and drainage with water supply investments; (iv) preparation of the MDP will be assisted by a study funded under the NWDP I, to prepare a strategic sanitation strategy and master plan for the five cities. Data gathered under this study will also assist decision making by GoM and, donors on donor-funded sanitation and drainage options; (v) decisions on service choices and combinations (standpipes and standpipe management options, yard taps. house connections, drainage, sanitation options) have been made with the aid of community consultation, integrally with the planning process. D.3. Describe the treatment of alternatives (if relevant) No new alternatives are considered in connection with the proposed supplemental credit. The consideration of various alternatives to minimize negative environmental and social impacts of project activities was carried out for individual project locations during project preparation. It is discussed in the original project EA. A.4. Describe measures taken by the borrower to address safeguard issues. Provide anissessment of borrower capacity to plan and implement the measures described. FTPAG has advanced substantially in preparation activities for proper handling of the project's environmental aspects. FIPAG has recruited a full time Environmental Engineer, procured considerable technical assistance on environmental management, issued guidelines on preparation  of site-specific EAs of individual infrastructure schemes, prepared generic EMP for individual infrastructure schemes including detailed checklists, and developed a first version of an Environmental Management System (EMS). Effective handling of impacts associated with the project depends on FIPAG's capacity to translate these preparatory activities into practical environmental management when the project's major works begin. To assure compliance, the following activities were agreed with FIPAG during the supervision mission: (i) FIPAG senior management will provide thorough oversight and active support for managing the environmental aspect of the project; (ii) FIPAG will continue to engage high quality technical advisory services to maintain adequate capacity for environmental management; and (iii) FIPAG, with support of environmental advisors, will review the plans for supervision and monitoring of EMP implementation during construction works and identify where supervision regime needs strengthening (e.g. by improving FIPAGs supervision capacity by engaging in supervision FIPAG environmental advisors or local FIPAG representatives). With regard to other safeguard issues, the main focus is on resettlement.-There are three discrete resettlement operations, one each for Beira, Quelimaine and Pemba. As for the project's involuntary resettlement aspects, FIPAG will continue to ensure compliance by engaging technical advisoryservices for maintaining adequate capacity and providing oversight and active support for managing this aspect of the project. D.5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. Persons potentially affected by the project in connection with involuntary resettlement have been extensively consulted by FIPAG staff, consultants and local government prior to preparation of location-specific resettlement action plans (RAP). The RAPs for the three project sites (Beira, Quelimaine, and Pemba) document the resettlement process that will be undertaken to physically resettle affected households in each sites and to recoup and develop their livelihoods. Monitoring information of project progress through assessment of the achievement of critical benchmarks and the evaluation of impact in the community will all be compiled and presented in six monthly and annual reports to donors and other stakeholders. All monitoring will be undertaken in-house, but evaluations will require the additional services of external specialists. Monitoring will cover process and impact assessment. Monitoring the implementation process will cover the physical progress of resettlement and rehabilitation activities, and compensation payments. Impact monitoring carried out with community participation would assess the effectiveness of public consultation and participation activities, the use of compensation payments and the sustainability of income restoration and development efforts. The RAPs when finalized and approved, will be disclosed publicly in Mozambique, both at the project site and in the Bank's information office, and at the Infoshop in Washington, DC. These documents will be available in Portuguese and English. Pb~~~~~~~~~~~~~~~~~~~~~  F. Disclosure Requirements Date Environmental AssessmentA udit/Management Plan/Other: Date of receipt by the Bank 05/10/1997 (EA of the original NWDP I & II) Date of "in-country" disclosure 05/20/1997 (EA of the original NWDP I & II) Date of submission to InfoShop (Updated EA of the original NWDP I &c II) 08/15/1997 (Updated EA of the NWDP re- stand-alone project) 02/10/1999 For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors Date of submisn te./... ... or Not Applicable ReseItlemeno PconPlensevlment Plan/Frameworkocess: Date of receipt by the Bank Not Applicable Date of "in-country" disclosure Not Applicable Date of submission to InfoShop Not Applicable Indigenous Peoples Development PlanaFramework: Date of receipt by the Bank Not Applicable Date of "in-country" disclosure Not Applicable Date of submission t InfoShop Not Applicable Pesr Management Plan: Date of receipt by the Bank Not Applicable Date of "in-country" disclosure Not Applicable Date of submission to InfoShop Not Applicable Dam SaJrty Management Plan: Date of receipt by the Bank Not Applicable Date of "in-country" disclosure Not Applicable Date of submission to InfoShop Not Applicable If in-country disclosure of any of the above documents is not expected, please: explain why. Section nII - Compliance Monitoring Indicators at the Corporate Level (To be filled in when the ISBS is finalized by the project decision meeting) OPBP 4. 01 - EnvtronmentAssessment: Yes No Does the project require a stand-alone EA (including EMP) report? X* If yes, then did the Regional Environment Unit review and approve the EA report? Are the cost and the accountabilities for the EMP incoiorated in the credittloan? OPDRP 4.04 - Na 1.ral HabiCats: Yes No Would the project result in any significant conversion or degradation of critical X* natural habitats? If the project would result in significant conversion or degradation of other (non- critical) natural habitats does the project include mitigation measures acceptable to the Bank? OP 4.09 - PestIManagement: Yes No Does the EA adequately address the pest management issues? X* Is a separate PMP required? If yes, are PMP requiregents included in project designew a a t Draft OP 4. 11 (OPN 11. 03) - Cultural Property: Yes No Does the EA include adequate measures? X* Does the credit/loan incorporate mechanisms to mitigate the potential adverse impacts on physical cultural resourcesi D o Unt OD 4.20 - Indigenous Peoples: Yes No Has a separate indigenous people deveiopment plan been prepared in consultation X* with the Indigenous People? ff yes, then did the Regional Social Development Unit review and approve thie plan? If the whole project is designed to benefit IP, has the design been reviewed and approved by the Regional Social Developmnent Unit?  I OPIBP 4.12- Involuntary Resettlement: Yes No Has a resettlement action plan, policy framework or policy process been prepared? X* If yes, then did the Regional Social Development Unit review and approve the plan / policy framework / policy process? OP/ISP 4.36 - Forests: Yes No Has the sector-wide analysis of policy and institutional issues and constraints been X carried out? Does the project design include satisfactory measures to overcome these constraints? Does the project finance commercial harvesting, and if so, does it include provisions for certification system? OPIBP 4.37 - Safety of Dams: Yes No Have dam safety plans been prepared? X Have the TORs as well as composition for the independent Panel of Experts (POE) been reviewed and approved by the Bank? Has an Emergency Preparedness Plan (EPP) been prepared and arrangements been made for public awareness and training? OP 7.50- Projects on International Waterways: Yes No Have the other riparians been notified of the project? X* If the project falls under one of the exceptions to the notification requirement, then has this been cleared with the Legal Department, and the memo to the RVP prepared and sent? What are the reasons for the exception? Please explain: Has the RVP approved such an exception? OP 7.60 - Projects in Disputed Areas: Yes No Has the memo conveying all pertinent information on the international aspects of the project, including the procedures to be followed, and the recommendations for dealing X* with the issue, been prepared, cleared with the Legal Department and sent to the RVP? Does the PAD/MOP include the standard disclaimer referred to in the OP? BP 17.50 - Public Disclosure: Yes No Have relevant safeguard policies documents been sent to the World Bank's Infoshop? X* Have relevant documents been disclosed in-country in a public place in a form and language that are understandable and accessible to project-affected groups and local NGOs? All Safeguard Policies: Yes No Have satisfactory calendar, budget and clear institutional responsibilities been X* prepared for the implementation of the safeguard measures? Have safeguard measures costs been included in project cost? Will the safeguard measures costs be funded as part of project implementation? Does the Monitoring and Evaluation system of the project include the monitoring of safeguard impacts and measures? Have satisfactory implementation arrangements been agreed with the borrower and the same been adequately reflected in the project legal documents? Signed and submitted by: Nam D Date Task Team Leader: N. Jane Walker A 12118/2003 Project Safeguards Specialist 1: Martin Fodor Project Safeguards Specialist 2: Roxanne Hakim 4 /9n, 340 Project Safeguards Specialist 3: Approved by: ( Date Regional Safeguards Coordinator: Thomas E. Walton T$ $ %/qa 12/18/2003 Comments: - Sector Manager: Jaime M. Biderman 12/18/2003 Comments:9 Not applicable for the proposed Supplemental Credit (noAsfeguards policies are trigered).