Afghanistan - Kabul Water Supply and Sanitation Project

Report No. 746-AF FIILE C:(]PY Appraisal of the Kabul Water Supply & Sanitation Project Afghanistan May 22, 1975 Projects Department Europe, Middle East and North Africa Regional Office Not for Public Use Document of the International Bank for Reconstruction and Development International Development Association This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.  CURRENCY EQUIVALENTS Currency Unit = Afghani (Af) Af 1 = US$ 0.01667 Afs 60 = US$ 1.00 kfs 1,000 = US$ 16.67 Afs 1,000,000 = IJS$ 16,666.67 WEIGHTS AND MEASURES 1 kilometer (km) = 0.621 miles 1 meter (m ) = 3.2808 feet 1 millimeter (mm) = 0.0394 inches 1 kilogram (kg) 2.2046 lb 1 liter (1 ) 0.2642 US gallons or 0.2200 Imperial gallons 1 liter per capita per day (1/cd) 1 liter per second (l/sec) 1 square meter (m2) = 10.7639 square feet 1 hectare (ha) = 2.4711 acres 1 cubic meter (m3) = 264 US gallons or 220 Imperial gallons 1 kilowatt-hour (kwh) GLOSSARY OF ABBREVIATIONS AWSSA m Afghan Water Supply and Sewerage Authority CAHTP = Central Authority for Housing and Town Planning (Afghanistan) CIDA = Canadian International Development Agency KfW - Kreditanstalt ftfr Wiederaufbau (Federal Republic of Germany) PRIL 5 Proctor & Redfern International Ltd (Canada) UN United Nations Organization UNDP 5 United Nations Development Program USSR 5 Union of Soviet Socialist Republics WHO World Health Organization FAO = Food & Agriculture Organization GOVERNMENT OF AFGHANISTAN AFGHAN WATER SUPPLY & SEWERAGE AUTHORITY FISCAL YEAR March 21 - March 20  APPRAISAL OF THE KABUL WATER SUPPLY AND SANITATION PROJECT AFGHANISTAN TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ............ .............. I. INTRODUCTION ........ ............................. 1 II. THE WATER SUPPLY AND SEWERAGE SECTOR ............. A. Water Resources ...... .......................1 B. Water Supply and Sewerage ..... .............. 2 III. THE PROJECT AREA ................................. 3 A. Background .................................. 3 B. Existing Water Supplies ................. 4 C. Municipal Water Organization ............... . 5 D. Sewerage and Sanitation ..... ........... 6 IV. THE PROJECT ...................................... 6 A. Objectives of the Project ..... .............. 6 B. Project Description ......................... 6 C. Status of Engineering ....................... 9 D. Cost Estimates .............................. 10 E. Financing ................................... 11 F. Implementation .............................. 13 G. Disbursements ............................... 15 H. Environmental and Health Impact .... ......... 16 V. THE PROJECT ENTITY ............................... 16 A. Establishment ....... ........................ 16 B. Organization and Management ..... ............ 17 C. Operations ......... ......................... 18 D. Accounts ......... ........................... 19 E. Project Entity for Sanitation Component 19 This report was prepared by Eric R. Williams (Senior Financial Analyst) and Robert G. MacWilliam (Sanitary Engineer).  TABLE OF CONTENTS (Cont'd) Page No. VI. FINANCE .......................................... 19 A. Background (Water Supply) .... ............... 19 B. Past Performance and Present Financial Position .................................. 20 C. Tariffs ..................................... 20 D. Future Performance .......................... 22 E. Audit ........................................ 24 F. Insurance ................................... 24 VII. JUSTIFICATION .................................... 24 A. Water Supply Component ..... ................. 24 B. Sanitation Component ...... .................. 26 VIII. AGREEMENTS REACHED AND RECOMMENDATION ............ 26 ANNEXES 1. Description of the Existing Supply Arrangements 2. Kabul Municipality - Background Information 3. Description of Project - Water Supply 4. Background and Development of Sanitation Component 5. Predicated Water Demand, Production and Population Growth in Project Area 6. Cost Estimates and IDA Allocations 7. Construction Sched6le 8. Estimated Schedule of Disbursements 9. AWSSA - Organization 10. Economic Analysis - Water Supply Component 11. AWSSA - Projected Income Statements, Kabul Water Supply 1354-61 (1975/83) 12. AWSSA - Projected Cash Flow Statements, Kabul Water Supply 1354-61 (1975/83) 13. AWSSA - Projected Balance Sheets, Kabul Water Supply 1354-61 (1976/83) 14. Assumptions for Financial Projections MAP IBRD 11449 Existing and Proposed Facilities  APPRAISAL OF THE KABUL WATER SUPPLY AND SANITATION PROJECT AFGHANISTAN SUMMARY AND CONCLUSIONS i. Water supply in Kabul, capital city of Afghanistan, is totally in- adequate for the community's requirements. Only about one in three of the urban population has access to the public supply, and only about one in eight has a private connection. Supply is intermittent for a few hours daily, and even when the water is flowing, the defective condition of the distribution network causes much of it to be wasted. When the water is not flowing, nega- tive pressure in the mains permits the ingress of pollutants; 80% of all sam- ples analyzed show contamination. Sanitary conditions are especially unsatis- factory in the crowded Old City. ii. To help alleviate this problem, a project is proposed for partial IDA financing, the first Bank Group assistance to Afghanistan in this sector. The main component of the project represents the first phase of works recom- mended under a Water Master Plan to the year 2004, prepared by consultants employed by WHO as executing agency for UNDP; and is scheduled for execution during the years 1976 through 1979. iii. Proposed works to improve water supply include the drilling of twenty deep wells, of which ten would be immediately equipped with pumps, and construction of related lransmission and storage facilities; over 200 km of distribution mains would also be laid. These works would be complemen- tary to another project financed with aid from the Federal Republic of Germany through its agency, Kreditanstalt fur Wiederaufbau, whereby a further well- field will be developed. Together, the projects and some additional remedial works should increase available supply from about 10,000 m3/day now to about 70,000 m3/day by the end of 1978; they will permit an uninterrupted supply, both to present consumers and to many new consumers -- more than half of them in the poorer areas -- and usher in the beginnings of an integrated and staged supply program to meet needs to the end of the century. iv. In addition, a further component of the proposed project would im- prove sanitation, by financing modifications to 8,000 household latrines and the purchase of vehicles and trailers to collect night soil on a regular basis. At present, night soil collection is haphazard and depends on private contractors. The provision of a safe and continuous water supply is, however, the first priority. As water consumption develops, the introduction of sewer- age in selected parts of the city will eventually be necessary and design of the first facility is already being commissioned. v. The project would be executed by the Afghan Water Supply and Sewer- age Authority (AWSSA), a new agency formed from an existing department in the Ministry of Public Works, as regards the water supply component, and by the Kabul Municipality as regards the small sanitation component. AWSSA is  - ii - to operate as an autonomous public utility enterprise, responsible under its charter for all water supply and sewerage services in Afghanistan; in prac- tice, however, the transfer of full operational responsibility will require time--probably until 1976, as regards the Kabul service, which is at present run by the Municipality. AWSSA will be assisted in project execution by consultants employed in accordance with "Bank Group Guidelines for Uses of Consultants". vi. Costs of the project which IDA would help finance are estimated at US$11.3 million equivalent for the water supply component (including US$8.7 million equivalent in foreign exchange) and US$0.4 million equivalent for the sanitation component (foreign exchange US$118,000 equivalent). A credit of US$9 million is proposed, representing basically the total foreign ex- change cost (excluding certain expenditure financed by the Canadian Interna- tional Development Agency--CIDA) plu~s a contribution (US$0.4 million equiv- alent) towards local costs. CIDA would finance part of the cost of engineering design, for a future sewerage project as well as for water supply, and some training expenditures. vii. Of the credit of US$9 million equivalent, US$300,000 equivalent would be passed on to the Municipality as a Government grant for the sanita- tion component. The balance of US$8.7 million equivalent would be passed on to AWSSA by the Government--60Z as an equity contribution and 40% as a loan, terms assumed being 25 years (including 5 years of grace) and interest in accordance with an amortization schedule acceptable to IDA. viii. Procurement would be under international competitive bidding, ex- cept for small civil works contracts for individual water connections and latrine improvements, which are more suited to local bidding in small pack- ages; and for the drilling of the wells, likely to be carried out by Govern- ment drilling crews. Total cost of these exceptions is not expected to ex- ceed US$250,000 equivalent. Domestic preferences of 15% or the applicable customs duty (whichever is lower) for equipment, and of 7-1/2% for civil works would be granted. ix. Tariffs for metered water in Kabul would be increased in 1976 from the almost negligible existing rate to Afs 7.50/m3 (US$0.48/1000 gals) in line with the average incremental cost of water, and to successively higher levels thereafter to keep pace with inflation. Since AWSSA will commence operations with a very small base of existing sales, which can grow only as fast as metered connections are installed, its financial position will be weak at first, but after project completion it should progressively improve. A condition of the proposed credit would be that AWSSA will maintain tariffs in Kabul at a level to produce a rate of return on net fixed assets of 2% in 1980/82, 6% in 1982/4, and 7% thereafter; by that time it should be generating about a quarter of investment needs from its own revenues. As a parallel condition, AWSSA would also be required to earn sufficient return on its overall opera- tions to ensure financing of all capital expenditure not otherwise provided for.  - iii - x. The water supply project will enable suppressed and current demand to be met, and enable many citizens to abandon the polluted private wells on which they now depend. Poorer inhabitants will receive a free, safe 24-hour supply through standpipes. The economic rate of return on the project is approximately 9%, measuring economic benefits only by revenues from paying customers, which do not reflect fully the health benefits from a safe water supply. The sanitation component is justified on health and amenity grounds, and, in the Old City particularly, represents an inexpensive interim improve- ment over the present unsatisfactory sanitary conditions. xi. Agreement having been reached on the principal issues, subject to certain conditions of effectiveness and disbursement, the project is suitable for an IDA credit of US$9 million on the usual terms.   APPRAISAL OF THE KABUL WATER SUPPLY AND SANITATION PROJECT AFGHANISTAN I. INTRODUCTION 1.01 The Government of Afghanistan has requested an IDA credit to help finance a project to improve water supply and sanitation in Kabul, the capi- tal; this would be the first Bank Group lending to Afghanistan in this sector. The project is estimated to cost US$11.7 million of which US$8.8 million is in foreign exchange; and includes the establishment of a new water and sewerage authority which will be the beneficiary of the bulk of the proposed credit. 1.02 Feasibility studies for the project were prepared by Proctor and Redfern International Ltd. (PRIL) of Canada, subcontractors to WHO/UNDP, as part of a Master Plan for Water Supply, Sewerage, Drainage & Solid Waste for the city to the year 2004. 1.03 The Canadian International Development Agency (CIDA) is expected to finance certain consultancy services, namely engineering design, contract document preparation, and bid evaluation for the water supply project, as well as a training element with WHO acting as executing agency. CIDA would also finance final design for future sewer construction. 1.04 An associated project to increase the quantity of water available for Kabul is to be financed with the aid of a credit from Kreditanstalt fur Wiederaufbau (KfW), an agency of the Federal German Government. 1.05 An appraisal mission comprising Messrs. Williams and MacWilliam visited Toronto (Canada) and Kabul in November 1974, and was joined in Kabul by KfW and CIDA representatives. This report is based on the mission's find- ings and on information obtained from the Government and its consultants. II. THE WATER SUPPLY AND SEWERAGE SECTOR A. Water Resources 2.01 Afghanistan's topography ranges from-the mountainous Central High- lands of the Hindu Kush massif to desolate sandy deserts in the soulth-west. The country's landlocked location limits its rainfall and a semi-arid steppe climate is prevalent. In most districts average annual precipitation is be- low 350 mm, falling almost wholly between November and May. The Amu Darya river in the north, the Hari Rud in the west, the Helmand in the south-west and the Kabul river with their respective tributaries provide irrigation water, but in general river flows are seasonal, depending largely on snow- melt; and many rivers end either in shallow lakes or by disappearing into  -2- the ground. Surface water resources are therefore unreliable and in many areas irrigation and potable water supplies depend on groundwater, using shallow wells, "karez" (horizontal galleries) and, more recently, deep wells. 2.02 A Water Management Section has been established under the Gover- ment's Water & Power Department. With United Nations assistance, this section is undertaking the evaluation of 4fghanistan's total water resources, to make recommendations and establish priorities for all aspects of water usage, including irrigation, potable water and hydro-power potential. However, though basic data are being collected, little headway has been made as yet and the project is likely to require another 3-4 years. No legislation exists on water rights, though a draft Water Code, reflecting Islamic law, has been prepared. B. Water Supply and Sewerage Sector Development 2.03 Apart from the study mentioned above and the Master Plan for Kabul (paras 1.02 and 4.01) no overall development strategy has yet been formulated for the water supply sector. The five largest cities have limited piped water systems, and there are some "model towns" for specialized communities (e.g. industrial employees) with modern systems. Where no piped supply exists, private wells are the main source of potable water. 2.04 The Kabul water system is described in Section III. The four major provincial systems are at Kandahar, Herat, Mazar-i-Sharif and Jalalabad and are comparatively new; construction started in 1972 and was recently completed, with Japanese technical and financial aid. Each was designed to serve the bulk of the urban population, totalling about 270,000 people in the four cities. 2.05 Though some institutions and housing developments have wastewater systems, there are no comprehensive municipal sewerage systems in Afghanistan. Sector Organization 2.06 Responsibiliy for the potable water sector in Afghanistan has hitherto been somewhat blurred. Urban water systems have been administered by the municipalities; all aspects of the operations of these bodies are sub- ject to close supervision by the Ministry of the Interior and other Govern- ment departments. Until recently, however, survey, design and construction as well as operation of some localized systems were undertaken by the Central Authority for Housing and Town Planning (para 2.07) reporting to the Minister of Public Works. In addition, the Ministry of Public Health has its own Water and Sanitation Department which has provided some public standpipe systems in rural areas; this Ministry also monitors water quality.  -3- 2.07 The Central Authority for Housing and Town Planning (CAHTP) was established in 1967, to tackle a nationwide backlog in urban planning and housing. Besides land-use planning for Kabul and other centers, CAHT-P was responsible for constructing several housing developments around Kabul; in support of this activity it operated a concrete products factory and a con- struction enterprise, and established a Water Supply and Sanitation Depart- ment. The latter, in addition to implementing and operating water supply schemes for the CAHTP housing estates, acted as the Afghan counterpart agency for the Japanese-financed provincial water supply projects (para 2.04); for the UNDP/WHO Water Master Plan for Kabul, of which the proposed project forms part; and for the Afshar project for Kabul (para 4.05). As the repository of most of Afghanistan's technical expertise in this sector, it also assisted and advised the water departments of the municipalities, including Kabul. 2.08 In August 1974, following the change of Government, CAHTP was dis- solved and its Water Supply and Sanitation Department embodied into the Min- istry of Public Works; the Department continued its activities in the field of new construction and technical advice, but began transferring operational responsibilities for the water supply systems in CAHTP developments to Kabul Municipality. Subsequently, however, the decision was taken to convert the Department into an autonomous enterprise with wider responsibilities, en- titled the Afghan Water Supply and Sewerage Authority 1/ (AWSSA) and described in Section V of this report. III. THE PROJECT AREA A. Background 3.01 Kabul, the capital of Afghanistan and its largest city, is the main transportation, commercial and communication center in the country. Situated at the junction of the Kabul and Logar rivers, at an elevation of 1,800 meters, it contains a university, a polytechnic, major hospitals, gov- ernment institutions and important manufacturing facilities. The climate is dry with a mean annual precipitation of 326 mm, of which half may occur as snow. 3.02 The present population, believed to be in excess of 600,000, is expected to rise to 750,000 by 1979; future expansion is predicated on a 4% growth rate. Containing only 3%-4% of the country's population, the city 1/ The official Afghan title is "Da Afghanistan Da Obo Rasawalo Aow Canalization aoassasaa.  -4- accounts for 36% of all urban dwellers in Afghanistan. About 180,000 per- sons are accommodated in the Old City area (Map IBRD 11449) with its nar- row unpaved streets, mudbrick housing and insanitary living conditions. In sharp contrast the residential development to the north of Kabul river con- sists of substantial properties, at much lower densities, generally serviced by paved streets. 3.03 Under the auspices of the CAHTP, low cost housing has been developed at Khair Khana to the north of the city center, and at Sia Sung, to the east, but their continued development is severely hampered by lack of potable water. Another new housing project nearing completion at Mikro Royan, built with the assistance of the USSR, will house 10,000 persons. This development is fully serviced with paved roads, district heating, sewerage and a reliable water supply system. For various reasons, however, the services complex does not readily lend itself to integration with the rest of the city (Annex 1). 3.04 Several Development Plan reports on Kabul have been published during the last decade but, so far, none have received official approval. Some rec- ommendations, such as the demolition and reconstruction of the Old City, and the majority of future housing as multi-storied apartments, are ambitious and controversial. 3.05 Recently the boundary of the Municipality has been extended to in- clude the housing at Khair Khana and Sia Sung in an effort to unify service supply. This administrative arrangement has increased operational respon- sibilities of city officials without making any contribution to an already deficient water service. a 3.06 Fortunately Kabul sits near an accessible underground water-bearing stratum whose limited development had until recently barely managed to sustain the basic needs of the city. Development of this source has now fallen short of present demand and an integrated system for the whole city is overdue. B. Existing Water Supplies 3.07 The existing water supply system is described in Annex 1 and shown on Map IBRD 11449. The situation is summarized as follows. 3.08 The first piped water supply to the city, constructed over 60 years ago, and known as the "Old System" is based on a spring source at Kharga Lake. Water from Kharga no longer reaches the City, being consumed en route, and the "Old System" is now supplied from a well adjacent to the Kabul river. This distribution system has major leaks and defects and will be phased out of use.  - 5 - 3.09 As population and demand grew, the next major development was the Alaudin well-field constructed between 1954 and 1965 under a bilateral agree- ment between Japan and Afghanistan, which remains the city's principal source of piped water. This system, known as the "New City" supply, has a potential capacity of 12,500 m3/day, but output is limited to 10,000 m3 by inadequacies in pumping equipment. 3.10 Besides these municipal systems, CAHTP has recently developed a spring and well source for Khair Khana housing and made a temporary arrange- ment with a textile mill for a bulk supply for Sia Sung estate; in both areas supply is insufficient and water is available for only 3-4 hours per day. The Mikro Royan system is fully adequate and provides a 24 hour supply to that community. 3.11 Water is supplied intermittently in the city center to consumers in two periods of the day, area by area; total availability is approximately 4-6 hours. As much as 30%-40% of all water produced may be lost by leakage or waste, part of which can be explained by the uncertainty of supplies. Public standpipes and faucets are not closed when the supply fails and many broken public faucets are left unrepaired. Another more serious aspect of intermittent operation is the "negative" pressure induced in the system by lack of water that permits intrusion of polluted groundwater into the dis- tribution system at various points; in a recent series of tests 80% of all public water samples collected were polluted, to some extent. 3.12 Municipal consumers are supplied through 3,663 service connections and over 360 public standpipes. There are about 2,800 metered consumers but over 60% of the meters are believed inoperative and billing, on a use basis, is therefore largely notional. Including the CAHTP systems, it is estimated that, in all, some 167,000 people receive by various means limited public water service which is supplemented by water obtained from shallow wells, ditches and open canals. 3.13 A feature of Kabul is the water vendor or "saquau", who delivers water in a goatskin bag. His source of supply is usually the public stand- pipe but when these fail other more questionable sources may be used. Where the public supply is lacking or insufficient, a great many inhabitants are forced to rely on water supplies from shallow wells which are frequently polluted. Embassies, hotels and other institutions have sunk their own deep boreholes in the absence of a safe, reliable, public water system. Piecemeal exploitation of water sources continues in a desperate attempt to meet the basic water needs of the population. C. Municipal Water Organization 3.14 The Water Supply Department is subordinate to the Municipal Presid- ent for Health Services. About 100 employees are engaged on water supply ac- tivities, none being professional engineers or accountants. Lack of staff,  -6- of funds and of effective management compound the operational difficulties of a system unable to meet demands greater than its resources; essential repairs are neglected, and water loss and wastage are accepted as inevitable. Details of the organization and its finances are given in Annex 2. D. Sewerage and Sanitation 3.15 Apart from the Mikro Royan system, there are no public sewerage facilities in Kabul. In general, dry closets are in use with night soil collection, the most striking and concentrated example of which is found in the Old City. The properties with piped water rely on septic tanks or cesspits disposing of effluent to the sub-soil. 3.16 The University, Institute of Technology, Polytechnic, Military College, and the 200-room Intercontinental Hotel have individual sewage treatment units. The standard of operation and maintenance of the treat- ment units is variable. IV. THE PROJECT A. Objectives of the Project 4.01 The project represents the first phase of a first stage of works recommended under a Water Master Plan prepared by consultants (PRIL) employed under an UNDP preinvestment study carried out by WHO. The project's water supply component, in conjunction with a bilaterally aided component (para 4.05), would increase the available supply from 10,000 m3/day to 70,000 m3/ day and would introduce a safe and reliable water supply system that would serve about 330,000 inhabitants on project completion (1979), compared with 167,000 now. About half the additional consumers would be the poorer citizens served by standpipe. Furthermore, another 140,000 inhabitants would be served by late 1981 when the combined project facilities would be used at full capacity. The project's sanitation component would benefit some 8,000 house- holds, and reduce health hazards in the poorest section of the city. B. Project Description 4.02 The major component of the project consists of works to improve, expand and extend the existing inadequate water supply system of Kabul. The project facilities are shown on Map IBRD 11449 and are described in greater detail in Annex 3. In addition, a sanitation component will assist in remov- ing human waste from the Old City (Annex 4).  -7- 4.03 The project works would include the following: Water Supply (i) Drilling of 20 deep boreholes in the Logar well-field. Ten of these wells would be immediately equipped with pumps; each well is expected to yield 40 1/sec, but if higher yields are obtained the number of wells may be reduced. (ii) A 2.5 km collector will convey the water to a high lift pump- ing station to be constructed and equipped complete with chlorination facilities. (iii) Supply and installation of a 9 km transmission line 700 mm and 800 mm in diameter. This line will convey up to 35,000 m3/day from the pumping station to the city and a storage reservoir in Sia Sung. (iv) Construction of two 5,000 m3 capacity additional storage reservoirs at Sia Sung and Khair Khana and installation of related equipment. (v) Expansion, renewal and improvement of the distribution system in the Old City and in the residential areas of Wazir Akbar Khan, Shashdruk (formerly called Karte Wali) and Khair Khana. These works include the supply and installation of some 225 km of pipes of varying diameter (37 mm to 300 mm) and 3.3 km of trunk main 600-700 mm in diameter. Cvi) Supply and installation of 20,000 metered connections and 1,040 public standpipes, the latter mainly in the Old City area. Sanitation (vii) Sanitation improvements comprising: (a) supply of vehicles and trailers to collect night soil; (b) execution of improvements to 8,000 existing latrine vaults in the Old City; and (c) installation of a composting site, where composting would be carried out manually, using domestic refuse and night- soil. A site has tentatively been identified, and prepara- tion includes fencing, construction of hard accesses and drainage. 4.04 The water supply component represents the priority works proposed by the consultants PRIL under the WHO/UNDP Master Plan. This phase of the  -8- works has been selected to resolve the most urgent existing problems while laying the foundation for an integrated water supply for Kabul. The works have been designed to meet the peak summer demand until about 1980 and the average demand until 1981 (see graph Annex 5). The capacity of the aquifer which will supply the system has been proven. The transmission lines are expected to have sufficient capacity to meet demand for 10-15 years after their completion. Afshar (KfW) Project 4.05 A component complementary to the IDA project is the Afshar project, proposed to be financed by the Federal Republic of Germany and technically administered by KfW. This scheme dovetails and is integrated with the long range development plans and will supply water for general needs and Khair Khana. The source of supply is the Paghman well-field; 5 wells are to be drilled in this field with a maximum output to the distribution system of 17,300 m3/day. Disinfection of the supply will be carried out before pumping to a new 10,000 m3 storage reservoir at Bagh-e-Bala. Supply from this tank will be fed into the cit.y system by a new 500 mm transmission line; another 400 mm line will feed the Khair Khana district. 4.06 Since Khair Khana will depend on the Afshar Scheme for its water, satisfactory arrangements must be made to ensure supply to Khair Khana by the time the distribution system has been completed in that development. Estab- lishment of these arrangements--e.g., the letting of a construction contract or contracts for the Afshar wells and pipeline-- by the Government is a condition of disbursement foi the Khair Khana distribution system. Existing System Remedial Works 4.07 Certain works of rehabilitation of the existing water supply system are required, as follows: (a) phase out the "Old System" distribution and transfer about 700 connections to the "New City" distribution; (b) at Alaudin pumping station: (i) install new chlorination and metering equipment; (ii) overhaul existing pumps to their full rating and; (iii) renew electrical wiring; (c) repair a defective outlet on the main storage tank at Demazang and (d) replace faulty house connections in a program of preven- tive maintenance.  -9- Agreement was reached with AWSSA that it will execute these works before completion of the project, and that a timetable for their execution will be submitted to IDA within nine months after credit signature. C. Status of Engineering 4.08 Agreement was reached that AWSSA will employ consultants acceptable to IDA for the project in accordance with the Bank Group's "Guidelines for the Uses of Consultants". The preliminary engineering study for an integrated water supply for Greater Kabul has already been completed and documented in 1973 by the consultants PRIL. This reviewed in detail the existing water supply situation and made comprehensive recommendations for future water supply development in the city in three main stages. The detailed engineering design, contract preparation and bid evaluation of the first phase water sup- ply works to be financed under the IDA project are likely also to be under- taken by PRIL beginning 1975 with funds provided by CIDA. AWSSA has under- taken to engage a consulting firm for supervision of construction, the foreign exchange cost of which has been provided for in the credit. An informal under- standing has been reached on the scope of this work. The total number of man-months of service to be provided by consultants will depend on the number of qualified AWSSA staff who can be assigned to assist. The engineering and implementation of the complementary Afshar project would be the subject of a separate agreement between KfW and the Government, probably providing for the employment of different consultants. 4.09 PRIL have already completed, within the original WHO/UNDP feasibil- ity study, the engineering design, drawings and bid documents for the Khair Khana distribution system and the supply of water meters and are expected to mobilize field and design staff, during the summer of 1975, for engineering the other major components of work, viz. Logar well-field development, asso- ciated storage, pumping stations, transmission lines and distribution systems in the Old City, Wazir Akbar Khan and Shashdruk. 4.10 On behalf of CIDA, WHO have prepared terms of reference for the engineering services to be undertaken by PRIL and will also be responsible for administering this contract. A further package of work to be aided by CIDA is the engineering preparation by PRIL of a suitable sewerage component for later construction. The execution of an agreement between CIDA, WHO and the Government for this aid, or the establishment of alternative arrangements acceptable to IDA for financing technical services, is a condition of effectiveness of the proposed IDA credit.  - 10 - D. Cost Estimates 4.11 The total project cost is estimated at US$11.7 million (Afs 700 million) including allowances for physical and price contingencies. The foreign exchange component is estimated at US$8.8 or about 75% of total costs. The estimated project costs are summarized in the table below and detailed in Annex 6. Total Expend- Item Local Foreign Total Local Foreign Total itures ---Afs (millions)-- ---US$ (millions)--- A. Water Supply - Khair Khana Distribution 16 74 90 0.3 1.2 1.5 13 Storage 6 3 9 0.1 0.1 0.2 1 Service connections 12 37 49 0.2 0.6 0.8 7 Land acquisition 3 - 3 - - - - Sub-total 37 114 151 0.6 1.9 2.5 21 B. Water Supply - General Well field development 8 34 42 0.1 0.6 0.7 6 Pumping station 3 17 20 0.1 0.2 0.3 3 Transmission lines 12 64 76 0.2 1.1 .1.3 11 Storage 3 2 5 0.1 - 0.1 1 Distribution 16 77 93 0.3 1.3 1.6 13 Service connections 7 20 27 0.1 0.3 0.4 4 Land acquisition 4 - 4 0.1 - 0.1 - Sub-total 53 214 267 1.0 3.5 4.5 38 C. Sanitation Component Latrine improvements 4 - 4 0.1 - 0.1 1 Composting site 2 - 2 - - - - Vehicles and equipment 2 5 7 - 0.1 0.1 1 Sub-total 8 5 13 0.1 0.1 0.2 2 D. Engineering Services 20 34 54 0.3 0.6 0.9 8 Base Cost Estimate 118 367 485 2.0 6.1 8.1 69 Physical Contingencies 14 50 64 0.3 0.8 1.1 9 Price Escalation 38 113 151 0.6 1.9 2.5 22 Total 170 530 700 2.9 8.8 11.7 100  - 11 - 4.12 The estimates for construction are based on preliminary tenders taken for pipes and equipment from abroad and labor and material supply in Afghanistan, on information obtained from the Public Works Department, the Kabul Prefab Factory and engineers working for CAHTP and the Municipality, and have been adjusted to June 1975 levels. Costs for pipelaying and other construction take account of varying soil conditions likely to be encountered in excavation and include pavement restoration charges. Pipe diameters have been selected on the basis of phased water demand, allowing for duplication where staging proves economic. Physical contingencies are calculated at 15% of works cost (20% for the sanitation component); price escalation for civil works and equipment supply during construction has been allowed for at the following annual percentages: Year Civil Works Equipment 1975 16 12 1976 14 10 1977-79 12 8 4.13 The basic estimates are reasonable and were consistent with tender prices submitted in late 1973 at the time of inconclusive earlier bidding for the Afshar project. This was originally bid in 1972 when five firms (all German, with and without Afghan partners) tendered; KfW and the Government disagreed on the award, and rebidding took place in 1973 when two bids were received (one foreign/local, one local), both of which were rejected as incomplete. Proposed Amount of IDA Credit 4.14 The project would be financed by an IDA credit of US$9 million equivalent which represents about 77% of total project costs. Out of that total US$8.7 million would be for water supply and US$300,000 for sanitation improvements. The remaining US$2.7 million of project cost would be financed by CIDA (US$0.3 million) and by the Government and internal resources of AWSSA and the Municipality (US$2.4 million). Foreign exchange costs of the project are estimated at US$8.8 million, of which the CIDA contribution would cover US$0.2 million; the proposed credit would finance the remaining foreign exchange cost of US$8.6 million and in addition US$0.4 million of local costs. E. Financing 4.15 The following table sets out the estimated total funds requirements for the project construction period, including both AWSSA's water supply com- ponent and the sanitation component, and the sources from which those require- ments are forecast to be met.  12 Funds Requirements and Sources Afghan Years 1354/58 (March 1975 - March 1980) Water Sanita- Water Sanita- Supply tion Total Supply tion Total % ------ Afs million ----- ------ US$ million ----- Requirements Project Expenditures 679 21 700 11.3 0.h 11.7 42 Interest during con- struction 27 - 27 0.4 - 0.4 2 Afshar Project 400 - 400 6.7 - 6.7 24 Other Capital Expenditure 513 - 513 8.6 - 8.6 31 Increase in Working Capital 14 - 14 0.2 - 0.2 1 Total Requirements 1,633 21 1,654 27.2 O.h 27.6 100 Sources Internal Resources Intermal Cash Generation 65 3 68 1.1 0.1 1.2 LESS: Debt Service 19 - 19 0.3 - 0.3 46 3 49 0.8 0.1 0.9 3 Consumer Contributions 26 - 26 0.4 _ 0.4 2 72 3 75 1.2 0.1 1.3 5 Borrowings: Proposed IDA Credit relent/a 200 _ 200 3.3 - 3.3 12 KfW 258 - 258 4.3 - h.3 15 Other Loans 225 225 3.8 - 3.8 14 683 _ 683 11.4 - 11.4 41 Other Contributions: Proposed IDA Credit trans- ferred as equity/a 300 18 318 5.0 0.3 5.3 19 Other Government Contributions 560 - 560 9.3 - 9.3 34 CIDA Grant 18 - 18 0.3 - 0.3 1 878 18 896 14.6 0.3 14.9 54 Total Sources 1,633 21 1,654 27.2 0.4 27.6 100 /a,, Excluding small residual disbursements in 1359.  - 13 - 4.16 Of the water supply component of the proposed IDA credit, 40% (US$3.48 million equivalent) would be on-lent to AWSSA by the Government, and 60% (USS5.22 million equivalent) contributed to the equity of that authority. On-lending terms would be for 25 years, including 5 years of grace, and repayment in accordance with an amortization schedule acceptable to IDA pro- viding for an average annual interest charge of not less than 8%; interest during the grace period would be waived by the Government and added to proj- ect costs. The period proposed is conventional for water supply projects and the grace period allows AWSSA time to expand its small initial revenue base. An acceptable on-lending agreement would be a condition of effectiveness. The sanitation component of the credit (US$300,000 equivalent) would be passed on as a grant to the Municipality, which would bear the small remaining cost of this component. 4.17 "Other Capital Expenditure" in the table refers principally to amounts forecast to be needed for the next phase of works under the Water Master Plan; and "Other Loans", assumed to be borrowed on similar terms to those outlined in the previous paragraph, likewise refer to these works. The KfW credit is expected to be on terms similar to those of IDA credits and to be relent to AWSSA on the same terms. The CIDA grant of US$0.3 mil- lion represents that part of consultant costs for the project which relates to design and bid evaluation, supervision of contractors being reflected in the IDA credit. Agreement was reached that the Government will make con- tributions as needed for the project, including any cost overruns. The total estimated Government contribution of US$9.3 million equivalent comprises rough- ly US$4.4 million for the IDA project and related minor works; US$2.5 million for the Afshar project; and US$2.4 million for future projects. F. Implementation 4.18 Tenders will be called in 1975 for pipes and equipment; civil works tenders will be called towards the end of 1976 for the well-field development and transmission lines, and for the distribution systems about one year later. Most civil works will be awarded during 1977 and the bulk of construction will take place during 1977-1978; the first sanitation improvement contract however would be let in 1976. Drilling and testing of boreholes by the Water and Power Department (para 4.22) would be carried out ahead of the main construc- tion. The project is expected to be completed in 1979; the construction schedule is shown graphically in Annex 7. Executing Agencies 4.19 Supported and guided by the project consultants, overall respon- sibility for water supply design, contract preparation, bidding, letting a"$ construction will rest with AWSSA under the Minister of Public Works. AWSSA will also form the focal point for the necessary cooperation between the two consultants working on the IDA and KfW projects.  - 14 - 4.20 The Kabul Municipal Health Department will be responsible for the preparation and execution of the sanitation improvements. The Municipality will extend its duties to include night-soil collection from the Old City and be responsible for its disposal by composting or other hygienic means. Procurement 4.21 All equipment supply and civil works contracts, except minor con- tracts for installation of house connections, for test and final drilling of boreholes and for latrine improvements (amounting in total to about US$250,000) would be awarded on the basis of international competitive bid- ding in accordance with the Association's Guidelines for Procurement. A margin of preference of 15%, or customs duties, whichever is less, would be allowed for domestic manufacturers and of 7-1/2% for domestic contractors. Almost all equipment is likely to be imported, but the civil works contracts may be won by local contractors, either alone or in partnership with foreign contractors. Majority ownership by Afghan nationals would be a prerequisite for any firm or combination seeking the civil works preference; in addition, in the event of an Afghan/foreign partnership the 7-1/2% preference would only apply if (a) the firm had been in existence and tendered domestically one year prior to prequalification or (b) it could be demonstrated that the domestic partner would not qualify on technical or financial grounds without foreign participation. 4.22 Because of their nature, which requires much familiarity with local construction methods and customs, the minor contracts for house connections and latrine improvements would be carried out by specialized contractors work- ing in close collaboration with AWSSA and the Municipality. The boreholes will be executed by the Water and Power Department on a negotiated force account basis; this Department has access to the equipment and possesses the expertise to carry out the work. Land Acquisition and Wayleaves 4.23 No difficulty is anticipated in acquiring at reasonable cost the areas of land required for construction of the storage reservoir and the pumping stations. Negotiated wayleaves for pipelaying will be arranged in accordance with established practice whereby it is agreed to make good damage caused by construction or reimburse actual loss. No delay in ac- quisition or wayleave negotiation is expected. 4.24 The protection of the groundwater infiltration zones requires that AWSSA establish control over the land areas affected and under its constitution (para 5.02) AWSSA possesses powers to protect surface or groundwater against contamination. AWSSA also has the right to establish priorities in use of water.  - 15 - G. Disbursements 4.25 The proposed IDA credit would be disbursed over approximately 4 years as follows: Part A - Water Supply (Khair Khana) Civil Works: 60% of total expenditure (US$400,000) Equipment and Materials: 100% of cif cost of imported (US$2,050,000) goods or of ex-factory cost of locally-manufactured goods Part B - Water Supply (General) Civil Works: 60% of total expenditure (US$800,000) Equipment and Materials: 100% of cif cost of imported (US$3,950,000) goods or of ex-factory cost of locally manufactured goods. Part C - Sanitation Civil Works: 75% of total expenditure. (US$100,000) Equipment and Materials: 100% of cif cost of imported (US$130,000) goods or of ex-factory cost of locally manufactured goods. Technical Services: The foreign exchange cost of (US$120,000) consultants for supervision of construction. Unallocated: Allowance for physical contin- (US$1,450,000) gencies and price escalation on this allowance. No disbursements would be made against the minor civil works contracts for providing water supply house connections; and disbursements under Part A would be subject to the condition referred to in para 4.06. A disbursement schedule is given in Annex 8.  - 16 - H. Environmental and Health Impact 4.26 The water component will bring about a significant improvement in health and living conditions for the majority of Kabul's citizens. A safe and dependable water supply, under pressure, will reach consumers on the existing and extended distribution system. The use of polluted wells as sources of potable water will be discontinued in these areas, thus removing one of the principal causes of the spread of enteric disorders. 4.27 The disposal of the increased supply of water under the first phase of the Master Plan should not create any problems in the permeable soils of Kabul. The phased introduction of a waterborne sewage system, planned to follow the water supply improvement, will anticipate and deal with areas of possible difficulty in wastewater disposal; however, a reliable 24-hour water supply is the first priority. A feasibility study already exists for sewerage (para 1.02) and final design in readiness for the first project thereunder would be financed by CIDA (para 4.10). 4.28 In the congested Old City, the proposed sanitation improvements would, by permitting the organized removal and proper disposal of human waste, reduce another potential source of disease in the gross pollution that presently pervades the fabric and life of the area. V. TIE PROJECT ENTITY A. Establishment 5.01 The water supply project will be executed by AWSSA, a newly-created Government agency. 5.02 The charter establishing AWSSA, based on a draft suggested by IDA, has been approved by the Cabinet on February 18, 1975. It states that AWSSA is a Government enterprise, with jurisdiction throughout Afghanistan. Formal promulgation of the Charter in the Official Gazette will take place during May 1975. 5.03 There is evidence of deep-seated reluctance in Afghanistan to en- trust decision-making to any but the highest central authorities unless ac- companied by a considerable degree of surveillance and cross-checks; this is understandable because of the need to impose a cohesive administrative struc- ture on a traditionally loose-ly-knit society. In addition (and perhaps in consequence), the Government's previous experience with public enterprises has been disappointing. For these reasons, it would be unrealistic to ex- pect that there will not continue to be a certain amount of detailed guidance imposed on AWSSA's management. Nevertheless, the creation of this  - 17 - agency marks an important step forward; the relaxation of detailed control, and hence the institution-building impact of the project, will largely hinge on the ability and authority of the chief officials. IDA will be kept informed of the qualifications and experience of the persons appointed (para 5.07). 5.04 AWSSA's functions may be broadly defined as the survey, development and protection of potable water resources; the planning and construction of water supply and wastewater disposal facilities; distribution of water to consumers; and devising and implementing revenue collection systems. In practice, it will assume these functions by stages (paras 5.10 to 5.12). B. Organization and Management 5.05 The initial basic organization structure of AWSSA is shown in Annex 9. The detailed organization of sections within the divisions shown will be finalized as AWSSA develops. 5.06 AWSSA has many problems to overcome, and not only those facing any new organization. As already indicated, some essential administrative con- cepts are not yet fully accepted or practiced in Afghanistan -- notably, effective delegation of authority and management by objectives. In addition, the legal system is not clearly defined or comprehensive, and there is a general lack of operating rules, regulations and manuals. Officials work in a climate of uncertainty and excessive caution; hence, administrative proce- dures tend to be cumbersomely protective, rather than productive. However, AWSSA's staff are young and dedicated, and there are good prospects that they will operate effectively despite this unfavorable heritage. 5.07 The existing staff of the Water Supply and Sanitation Department number 136, projected to increase to 195 in 1354 (1975/6) with its new re- sponsibilities. Of the present staff, 17 are graduates, including 13 en- gineers of various disciplines; there are also two economists, but no qual- ified accountants. Payscales are low, even compared with other developing countries, but since there are few alternatives to Government employment, this is not as serious a problem as it appears; it is also permissible to recruit staff on special contract terms. Agreement was reached with the Government that: (i) The positions of President, Vice-President (Technical), General Director of Accounting, and General Director for Kabul shall at all times be filled by qualified and experienced persons; IDA will be notified of the name, qualifications and experience of any person appointed to these positions and will inform the Government of its view as to whether the appointments comply with the requirements of good management;  - 18 - (ii) AWSSA will be staffed with qualified personnel in sufficient numbers. Initial appointments to the positions mentioned in (i) are a condition of effectiveness of the proposed credit. 5.08 As AWSSA expands its activities and takes over responsibility for operations and revenue collection (para 5.10) it will probably absorb some of the key water supply personnel from the Kabul Municipality, and possibly in due course from other cities also. Training 5.09 CIDA's assistance in financing engineering and advisory services includes a training component. As presently planned, four technical fellow- ships, totalling 60 manmonths, are to be provided, together with the second- ment of an adviser in administration, management, financial and accounting practices for a period of two years. On-the-job training will also be given by the consultants supervising the project execution. Beyond this, AWSSA has not yet formulated its training needs. Accordingly, agreement was reached with AWSSA that a Training Officer will be designated within two months of credit effectiveness, and that an assessment of training needs, with a related training program, will be drawn up and submitted to IDA for comment within a further five months. C. Operations 5.10 AWSSA's charter makes it responsible for urban water supplies and sewerage throughout the country. In practice, there will be a transitional period during which AWSSA will gradually take over operational responsibilities from the municipal authorities presently responsible. Agreement was reached with the Government that the transfer of assets of the Kabul system (excluding certain institutional supplies), together with the responsibility for opera- tion and revenue collection, will be completed by the beginning of 1355 (March 21, 1976)-. 5.11 In the intervening period, AWSSA will inventory the assets concerned, lay the foundation for sound accounting and billing, and prepare budgets and financial forecasts. 5.12 A timetable cannot yet be fixed for the assumption by AWSSA of practical operational responsibility for the water supply systems of other cities. This will depend on the speed and effectiveness with which the new authority's takeover of the Kabul system can be implemented.  - 19 - D. Accounts 5.13 Because of the lack of any large-scale private enterprise in Afghanistan, commercial-type accounting appears to be little practiced. The Municipality's accounting system is rudimentary (Annex 2), and CAHTP's accounting for its utility operations was likewise on a simple cash basis. The present financial staff of AWSSA have accordingly little accounting ex- perience beyond that necessary to keep track of receipts and payments in a Government-type accounting system. 5.14 PRIL, as part of the Water Master Plan, drew up detailed recommend- ations for a full commercial accounting system on an accrual basis, using equipment available in Afghanistan, and the services of an accounting adviser will be made available under CIDA's plan of assistance (para 5.09). However, it is likely that, initially at least, AWSSA's accounting system will have to be simple, evolving by degrees into a more sophisticated system appro- priate to a public utility agency. Agreement was reached that AWSSA will obtain the services of a qualified financial adviser within nine months of credit signature with terms of reference acceptable to IDA; and will complete the introduction of a full commercial accounting system within three years of credit effectiveness. 5.15 Agreement was also reached that AWSSA will keep its accounts for the Kabul water supply operation completely separate from those of other activities, with general expenses apportioned on a basis to be agreed with IDA. E. Project Entity for Sanitation Component 5.16 The sanitation component of the project would be executed by the Municipality of Kabul (Annex 2). The work is not technically difficult and the Municipality is capable of executing it satisfactorily. VI. FINANCE A. Background (Water Supply) 6.01 A meaningful assessment of the future finances of the principal project entity and the preparation of the normal public utility financial projections have been seriously constrained by the almost complete lack of basic data. The accounting system of the previous water authority, the Kabul Municipality, is inadequate; its Water Department has few staff and almost no technical records or measuring equipment; only a portion of the popula- tion is served, and of those served, few are effectively metered. Further- more, estimates of consumption can only be conjectural in a system which  - 20 - does not function for more than a few hours a day. Annex 2 contains some details of the Municipality's operations and financial position; the informa- tion is however of little value as a guide to the future. 6.02 Accordingly, the financial projections are based on the best efforts of the consultants and many assumptions; these will have to be tested as the project and the project entity develop. Correspondingly, the financial and tariff policies will require continual review and revision in the light of actual experience. B. Past Performance and Present Financial Position 6.03 Calculations made by consultants (Annex 2) suggest that the present Municipality water supply operation incurs substantial losses, though this is difficult to ascertain with precision in the absence of adequate accounts. Water revenues are derived from about 2,800 metered and 800 unmetered connec- tions, plus a contractual payment from the University. The metered supply charge is disproportionately low in relation to the fixed charge for un- metered connections (para 6.06); however, many meters are inoperative and in such cases the fixed charge is substituted. Billing and collection sys- tems are outdated and inadequate. No revenue is derived from public stand- pipes. 6.04 The fixed assets of the Municipality water supply have been valued provisionally at Afs 146 million gross (Afs 91 million after depreciation) as of March 1975, based on an earlier valuation by consultants. This value excludes most of the "Old System," which is likely to be abandoned within a few years (para 3.08). Agreement was reached with AWSSA that these assets, together with the CAHTP systems, would be inventoried forthwith and properly valued within two years of takeover. 6.05 The "New City System" of the Municipality was financed with the aid of a foreign loan, but the Government has always borne the debt service (about US$50,000 equivalent a year); agreement was reached with the Government that the transfer of assets to AWSSA would be on a debt-free basis, as a contribution to the equity of that authority. C. Tariffs Existing Water Charges 6.06 The rate now charged by the Municipality for unmetered supply is Afs 60/month; that for metered supply, Af 1 for 800 Imperial gallons (equiv- alent to Afs 0.275/mr3, or US$0.02/1000 gals). The metered rate is insuffi- cient from any standpoint, and totally dispro ortionate to the unmetered flat-rate, which is equivalent to about 220 m monthly -- probably at least ten times basic household needs.  - 21 - 6.07 In provincial cities, water charges are typically Afs 6/m3, some- times with a minimum charge, equivalent to Afs 8/mr3, for a certain initial quantity; there are also alternative flat rates of up to Afs 120 per month for unmetered residential consumers. The rates may differ for commercial and industrial consumers (either higher or lower). In the one CAHTP devel- opment where separate water charges are levied (Sia Sung), these are at a fixed monthly rate of Afs 60 per connection. Connection Charges 6.08 The charge made for a new connection is typically Afs 1,000 in Kabul and Afs 1,000-4,000 (depending on service-pipe size) in the provinces. Future Tariffs - Kabul 6.09 The average incremental cost of water in Kabul, calculated on the foreseeable investments up to 1361 (1982/83)--representing the complete first stage of the Master Plan -- is between Afs 6.6 and Afs 9.2/m3, depending on the discount rate used (Annex 10). 6.10 An initial rate of Afs 7.50/m3 would be consistent with rates in force elsewhere in Afghanistan. The average annual per capita income in Kabul was estimated to be Afs 8,180 in 1968/69 1/. If this estimate re- mained valid, and assuming water consumption of 100 1/cd, the average annual bill per person at Afs 7.50/m3 would be about 3% of income (Afs 274). 6.11 Though averages cas be misleading, a rate of Afs 7.50/m3 (US$0.48/ 1,000 gals) would thus not appear to be unreasonable for persons able to afford a private connection, though over twenty-five times the present in- significant rate in Kabul. Agreement was reached with AWSSA and the Govern- ment that this rate (or a progressive tariff producing on average not less than this) will be introduced for metered supply from the year 1355 (1976/7). 6.12 The Water Master Plan envisages universal metering of consumers with private connections. Meters are effective in exerting some control over water demand and excess consumption; in the existing distribution system, the con- sultants observed numerous uncontrolled overflows from roof tanks. Moreover, Kabul is hot for six months of the year and there is virtually no precipitation during this period. Such conditions create a keen demand for water for garden watering by the better-off consumers, with the strong cultural affinity for lawns and gardens which prevails; the cost of supply, storage and transmission to meet a consequent upsurge in maximum day demand may outweigh the cost of meters. (Consultants estimate that, without metering, maximum demand would be 50% higher than if metered.) An unmetered supply can of course be limited by an orifice or valve but this may encourage the use of temporary storage vessels which can present hei.lth hazards, or of pump-fed roof cisterns which represent an added cost to the householder. Accordingly, agreement was reached with AWSSA, that steps will be taken to meter all consumers with private 1/ Survey by Department of Statistics, Ministry of Planning, Kabul.  - 22 - connections before the end of 1357 (March 20, 1979); this could be subject to review at a later date, if tests during system operation show that other methods of control of consumption can be substituted without danger to revenues or to health. Agreement was also reached with AWSSA that in the meantime all connected consumers not effectively metered will continue to be charged a fixed monthly rate of not less than Afs 60/month until water is available 24 hours a day, and thereafter (if any remain) at monthly rates to be fixed in consultation with IDA. 6.13 Since, for some years at least, it is likely that more than half the people served will have to rely on public standpipe supplies, it might be inequitable to require the cost of standpipe service to be entirely borne by the remaining consumers. The cost of providing and operating each stand- pipe (including an apportioned share of supply, transmission and storage in- stallations) is estimated to be some Afs 9,000-10,000 annually, and it was proposed that the bulk of this cost should be met by the Government. Agree- ment was reached with the Government that it will contribute Afs 7,500 annually for each standpipe in operation, commencing in 1355 (1976/7), and Afs 3,000 annually for each fire hydrant in service subject to the Government's right to cease these payments, if and when it enables AWSSA to finance the services from other resources, including higher tariffs. Future Connection Charges 6.14 Present connection charges in Kabul do not cover the full cost, which is estimated by consultants at Afs 5,400 (US$90) for a domestic con- nection and meter. To charge this in full would, however, be a serious deterrent to connection, and for projection purposes the present average charge of Afs 1,000 for a 1/2" connection is assumed to continue, with higher rates for larger connections. Consumer Contributions 6.15 Many water authorities require prospective consumers to eontribute to the capital cost of extending the mains. The initial phase of works in Kabul will however bring water mainly to existing development, whose occu- piers may justifiably claim to have incurred expense on providing wells, or to have contributed through taxes to the existing system. On the other hand, future works will increasingly benefit new development and for projection purposes it is assumed that a capital contribution will be required from all applicants for service after the completion of the present project. D. Future Performance 6.16 Projections of AWSSA's Income Statements, Cash Flow, and Balance Sheets for the Afghan years 1354-1362 (March 1975 to March 14), relative to the Kabul Water Supply, are shown in Annexes 11-13. They assume growth  - 23 - of water demand in accordance with the pattern outlined in paras 7.02-7.03 and revenues based on the rates, charges and contributions proposed in paras 6.10 to 6.15; the metered supply rate is assumed to be increased by approx- imately 15-20% every two years to keep pace with inflation and to generate a modest self-financing capacity for future investment. Other assumptions are outlined in Annex 14. 6.17 The projections cover only AWSSA's water supply operations and revenues for Kabul. They do not cover AWSSA's operations outside Kabul, nor activities other than water supply, for which additional funds will be required. Agreement was therefore reached: (i) with the Government that it will reimburse to AWSSA the cost of services provided by that authority outside Kabul city until it becomes fully responsible therefor, as well as the whole of its current expenditure during the Afghan year 1354 (1975/6); and (ii) with AWSSA that, in addition to complying with a specific rate of return covenant for the Kabul water supply (para 6.19), it will levy tariffs to produce overall revenues large enough to cover all its operating costs, as well as a surplus sufficient to meet debt charges and all capital expenditure not financed from loans or grants. 6.18 In Kabul, AWSSA faces a substantial investment program with a very small base of existing revenues, only about one-third of the urban population having limited access to water at present; moreover, less than half of these are paying customers. Even after 1978/79 when the quantity of water available permits new consumers to be connected in growing numbers, the new connections program will lag behind potential demand for some time. 6.19 Accordingly, AWSSA's rate of return on net fixed assets is forecast to be negative for the first three years of full operation and extremely modest, through positive, for the fourth year. Thereafter, however, the increasing number of consumers should generate a noticeable improvement in net revenues, with the rate of return projected to rise to 6% by 1361 (1982/3), three years after project completion (Annex 11). Agreement was reached with AWSSA that tariffs in Kabul will be set and maintained at a level to ensure a rate of return on net fixed assets of at least 2% in 1359 and 1360, 6% in 1361 and 1362, and 7% thereafter. 6.20 If projections are fulfilled, net cash generation after meeting debt service and working capital requirements should rise to about 25% of investment needs in 1361 (1982/3). Assuming borrowing of 70-80% of the cost of further major projects, Government contributions towards capital expenditure could taper off and cease in about 1359 (1980/81).  - 24 - 6.21 Though the borrowing program for Kabul appears substantial, imme- diate debt service requirements are covered by net cash generation from operations at least 1.7 times in each year of the period covered by projec- tions. However, initial debt service on any loan is usually much smaller than the ultimate annual charge, and agreement was reached with AWSSA that no loan debt will be incurred by it without IDA's agreement, unless net cash genera- tion for the year prior to incurrence is at least equal to the maximum future annual debt service on existing debt and the proposed loan. The debt/equity ratio for Kabul is high during most of the projections period, but should improve in later years. E. Audit 6.22 Audit of the accounts of public authorities and Government depart- ments is effected by the Ministry of Finance (pre-audit) and the Prime Min- ister's Office (post-audit, at irregular intervals). Agreement was reached that AWSSA's accounts will be certified by independent auditors acceptable to IDA; there are at least two audit firms practicing in Kabul. F. Insurance 6.23 Materials for the project will be insured. Since the authority is state-owned, other risks would be covered through self-insurance by the Government. VII. JUSTIFICATION A. Water Supply Component 7.01 The water supply component of the project is justified for the following reasons: (a) The psent water facilities serve only a portion of the population of Kabul, for only part of the time; the project, besides bringing water to many thousands of new consumers, will provide service 24 hours a day. Without it, the stand- ard of service would decline further as the population grows. (b) Because the supply is intermittent, negative pressures in the pipes encourage the infiltration of polluted groundwater. Water samples from the municipal system are nearly all pol- luted; and although statistics of infectious disease are deficient, health officials state that typhoid and dysentery  - 25 - are ever-present, and cholera always a danger. These hazards are accentuated by the prevalence of shallow wells in the ab- sence of a reliable piped supply. (c) While the project will provide a safe and continuous supply of water to the poorest section of the community, it will justify the introduction of a tariff sufficient to discourage waste and excessive consumption by the better-off. Moreover, the general tariff reflects the cost of expanding the supply of water (Annex 10). (d) The project will be the vehicle for important institutional improvements in the sector which may serve as a model for other Government enterprises. In order to achieve these results at least cost, all project components will be selected to permit the most economical phasing (para 4.12). 7.02 Projections of population and water demand are shown in Annexes 5 and 11. These are based on a 1971 update, by CAHTP with UN assistance, of a 1964 Development Plan prepared by Russian experts; the revised plan fore- casts population and land development through 1994/5, assuming a population growth (natural increase plus migration) of 4% annually. The consultants based their Water Master Plan on these forecasts, though the Development Plan has never been officially adopted by Government. For the first stage, of which the project is a part, the estimated increase in population was as- sumed capable of accommodation in current development projects initiated by CAHTP; needs of already inhabited areas were evaluated on population densities for each district, estimated by CAHTP. It must be emphasized that all demographic estimates for Afghanistan are somewhat conjectural, since an official national census has not yet been taken. 7.03 In addition, the extent of the demand for connections where there exist only standpipes now cannot be assessed with certainty. For projection purposes, it is assumed that standpipe service will continue in the Old City, but that private connections will be requested elsewhere -- even if only to supply a courtyard faucet in some types of development. (All distribution mains are however designed for private connections.) Per capita consumption is estimated at 100 1/cd initially, rising slowly thereafter, for private connections; and at 30 1/cd for the people supplied through standpipes. The populations served by standpipes and private connections are forecast to rise from 100,000 and 67,000 respectively now, to 180,000 and 150,000 respectively in 1358 (1979/80) following project completion; and to 180,000 and 390,000 in 1361 (1982/3) after completion of the remainder of the first stage works under the Master Plan. 7.04 Measuring economic benefits only by the value of the incremental water sales made possible by the project and related works (including the Afshar scheme, whose benefits are inter-related with the project's), and  - 26 - using the proposed initial price of Afs 7.50/m3, the economic rate of re- turn is 8.9% (Annex 10). This moderate rate of return does not imply that metered consumers would pay less than the economic cost of water; rather, it reflects the fact that no value has been attributed to water supplied through standpipes, the cost of which would be financed predominantly from general taxation. Moreover, revenues alone do not fully reflect the health bene- fits from a safe water supply. 7.05 The calculation of rate of return values the Afghani at 60 to the dollar. At 50 to the dollar (and with a similar change in relation to other currencies), the rate of return would be 10%; at 70 to the dollar, only 7.9%. It would fall to 7% if revenues proved to be over-estimated by 20%, or to 7.4% if project costs were under-estimated by 20%. B. Sanitation Component 7.06 The modest expenditure foreseen under the sanitation component of the project is justified on health and amenity grounds as well as from prac- tical considerations. In the Old City especially, the present sanitary ar- rangements are unsightly and a health hazard; householders' own efforts to dispose of human waste often mean that this is mixed with normal domestic refuse, with the result that garbage crews decline to handle the mixture at all, thus compounding the problem. Moreover, the Old City with its primitive housing and with its future redevelopment undecided, will likely be the last area to receive a water-borne sewer system; the proposed outlay represents the cheapest and most effective interim solution. VIII - AGREEMENTS REACHED AND RECOMMENDATION 8.01 During negotiations, agreement was reached on the following principal issues: (i) execution of remedial works to the present water supply system (para 4.07); (ii) employment of consultants for the project (para 4.08); (iii) provision of funds for project completion, including any cost overruns (para 4.17); (iv) staffing AWSSA with sufficient qualified personnel, in particular in four key positions and keeping IDA informed of appointments to these positions (para 5.07); (v) designation of a Training Officer and establishment of a training program for AWSSA (para 5.09);  - 27 - (vi) transfer of the Kabul water supply system, debt free, with full operational responsibility to AWSSA (paras 5.10 and 6.05); (vii) engagement of a financial adviser by AWSSA and introduction of a comprehensive accounting system (para 5.14) with separate accounts for Kabul Water Supply (para 5.15); (viii) the inventory and valuation of fixed assets transferred to AWSSA (para 6.04); (ix) imposition of a metered supply rate of Afs 7.50/m3 in Kabul (para 6.11), introduction of universal metering by 1979 and maintenance meanwhile of agreed flat rates for unmetered con- sumers (para 6.12); (x) payment by Government to AWSSA of fixed annual sums for stand- pipes and fire hydrants (para 6.13) and of AWSSA's costs in respect of services outside Kabul until it becomes fully responsible (para 6.17); (xi) levying of tariffs by AWSSA to provide an adequate rate of return on its overall operations (para 6.17) and a rate of return on its Kabul water supply service of at least 2% on net fixed assets in 1359 and 1360, 6% in 1361 and 1362 and 7% there- after, (para 6.19); (xii) observance of a debt service limitation by AWSSA (para 6.21); and (xiii) audit of AWSSA's accounts (para 6.22). 8.02 Subject to the conditions of effectiveness described in paras 4.10, 4.16 and 5.07, and to the condition of disbursement referred to in para 4.06, the project is suitable for an IDA credit of US$9 million on the usual terms, of which US$3.48 million equivalent would be onlent to AWSSA.   ANNEX 1 Page 1 of 4 pages APPRAISAL OF THE KABUL WATER SUPPLY AND SANITATION PROJECT AFGHANISTAN Description of the Existing Supply Arrangements A. Background 1, Urban development in Greater Kabul obtains its water supply partly from any one of the five public systems in existence and partly from private wells. The public supply is generally inadequate providing consumers with water anywhere between 3-6 hours per day. The individual systems from deep wells in some cases provide adequately but where the reliance is on shallow wells the situation is highly unsatisfactory as these sources are often pol- luted. 2. Water supplies have been developed in an uncoordinated manner in attempts to meet the needs of the central city area and to provide water in the new housing expansion areas such as Khair Khana and Sia Sung. The effort to provide sufficiently for consumers has failed, for many reasons. It is believed that 30%-40% of all *ater produced is lost through system leaks and waste by consumers; the latter may be explained by intermittent system opera- tion and an unrealistic level of water charges. About 167,000 persons--less than 30% of the population--are supplied from public sources either by pri- vate connection or standpipe. 3. The only public supply giving a 24-hour service is that operating in the housing estate built with Russian assistance at Mikro Royan. This system draws from deep wells adjacent to the housing development. 4. Kabul's first piped gravity water supply was constructed with British assistance between 1910 and 1920. The next major improvement was the development of the upper Kabul well-field at Alaudin with Japanese assis- tance between 1954 and 1965. The Alaudin supply today remains the principal source of water for Kabul and the system is suitable for integration with the proposed IDA project and the associated KfW scheme. While the gap between water demand and availability widens, the ad-hoc development of water sup- plies by the Municipality and the Government Ministries continues.  ANNEX 1 Page 2 of 4 B. City Systems Old System 5. Kabul's original supply--the Old System--is still in use although much of its distribution is defective and leaks are numerous. Supply for the system was at one time obtained from a Karez (a gallery fed spring) at Kharga Lake but leaks in the 5 inch diameter transmission line and draw-off by con- sumers along its length prevented water reaching the main distribution area. The main source of supply is now a deep well adjacent to Kabul river with an output of 2,500 m3/day. These sources will be phased out of use as the new treated supplies become available. 6. This supply is balanced on a 1,200 m capacity reservoir at an elevation of 1,834 m, a relic of the early construction. The tank leaks badly and the surrounding slums pose a health threat. 7. A transmission link between the deep-well source and the Alaudin system exists making integration of the two sources possible after modifica- tion of the pumping equipment. The old service reservoir and the defective mains, however will be taken out of service at the earliest possible moment. 8. Meanwhile further development of the Kharga source is being con- sidered which involves laying a 200 mm transmission line to a small existing reservoir above Karte Parwan. The Kharga source currently produces about 900 m3 per day; even a three fold increase from this source will make little impact on the city's total requirement. Alaudin System 9. What is locally known as the "New City System" was completed in 1965. The source is 34 deep wells in the Kabul river aquifer with a rated capacity of 12,500 m /day but restricted to about 75% of output by deficien- cies in the high lift pumping equipment at Alaudin. Disinfection of the supply is not practiced. 10. Supply is pumped to a storage reservoir at Demazang; at an eleva- tion of 1,857 m, this tank holds 7,500 m , part of which cannot be withdrawn owing to a defective valve on the outlet. A few consumers are supplied directly from the 350 mm pumping main but others, and the University, obtain water under gravity from the storage reservoir. The distribution and trunk mains, laid as part of the Alaudin scheme form the mainstay of the whole sys- tem in central urban Kabul. The piping is generally of asbestos cement and is reported in good condition. 11. Pumping is carried out 24 hours per day, but even so, quantities are insufficient to keep the public mains fully charged. To ration the limited supply the system--in conjunction with the Old System-- is operated  ANNEX 1 Page 3 of 4 pages by closing valves thus providing 4-6 hours/day to the whole supply area. The University of Kabul is supplied from the main storage by a separate 300 mm delivery and estimates of consumption on this line vary from 500-5,000 m3/day; the city is supplied through a cross-connection of the rising main with the 600 mm outlet. 12. The New City system is considered basically sound and suitable for integration with the Master Plan water proposals. Urgent repairs to the pumps and replacement of electrical wiring in the pumphouse are necessary, together with modifications at the Demazang reservoir. 13. In an effort to increase supplies two measures have recently been undertaken by the Municipality and the Water Department of the Ministry of Works. One nearing completion is the construction of a deep well and pump- house adjacent to the Kabul river, near the zoo, and the other is the sinking of 3 deep wells in the grounds of the University. The latest Municipal well supply will deliver water to the Demazang tank through a ventilator shaft where contamination could occur. Should the wells in the University yield satisfactorily the aim is to release the institute's consumption for general use. Khair Khana 14. This district is supplied from two separate sources, a well and a karez, with a total daily output of only 700 m3. This is equivalent to 35 1/cd for the present population of 20,000. Sources and distribution were developed as a temporary measure and only intended to last until the imple- mentation of permanent works using Afshar as the source of supply. The planned growth for this housing area has been suppressed by lack of water. 15, The detailed engineering design of a complete distribution system for Khair Khana has been completed by PRIL on the assumption that the link with the Afshar component will be effected to provide adequate supply for this area. Sia Sy 16. The Sia Sung district with some 30,000 inhabitants depends for its public supply on water obtained through an arrangement made between the CAHTP and the Bagram, Textile Mill, which developed a source for its own needs. Only 1,000 m /day can be spared to the supply authority and there is a danger that even this amount is not secure. Supply is delivered to a storage reservoir which will be integrated with future capacity. All sup- ply is delivered to consumers through unmetered connections. 17. The Bagrami supply is drawing water from the edge of the Logar wellfield and recently the AWSSA has sunk wells in the area and is now lay- ing an 8 inch transmission line to the storage reservoir at Sia Sung. This development is explained by the constant demand for improved water supply and to some extent anticipates a possible cut-down in the private supply..  ANNEX 1 Page 4 of 4 pages Mikro Royan 18. The Mikro Royan system is the only effective public supply which delivers satisfactorily 24 hours/day. 3The source is in the lower Kabul3 river wellfield. A maximum of 5,880 m /day can be delivered to 2,000 m of storage situated at elevation 1,831 m i.e.; a lower general level than that set for future reservoirs in the integrated network. Consumption is urunetered, and excessive possibly for this reason. Charges for water are included in the rent structures. The housing estate is designed to accom- modate 10,000 persons in walk-up apartments and is of prefabricated con- struction. 19. The incompatibility of the elevated storage, high water use, and the interdependence of other estate facilities has led to the recommendation that this water system be independently managed meanwhile.  ANNEX 2 Page 1 of 3 pages APPRAISAL OF TIE KABUL WATER SUPPLY AND SANITATION PROJECT AFGHANISTAN Kabul Municipality - Background Information A. Status & Functions 1. The Municipality originally functioned under general legislation establishing municipal councils, but this was revoked some years ago; a new enactment was drafted, but it does not appear that this was ever passed. The legal status of the Municipality is therefore uncertain. 2. Under the old law, a mayor and councilors were elected. At present, the mayor is appointed and there is no longer an elective council; the mayor, deputy mayor, and chief officials function as the city's management, subject to close control and supervision by the Government. 3. Municipality services have hitherto included: (a) road and drainage construction and maintenance; (b) a limited water supply operation; (c) solid waste collection and disposal; (d) some cesspool-emptying activities; (e) certain recreational facilities (parks, cinemas and a newspaper); (f) inspection services (health, weights and measures, price control); (g) property tax assessment and collection. B. Finance 4. The Municipality's accounts are kept on a cash basis, and therefore do not accurately reflect true expenditure incurred or revenue earned. Re- ceipts and payments are classified under only a few major headings, and the  ANNEX 2 Page 2 of 3 pages net cost of any service is difficult to ascertain. Actual receipts and pay- ments invariably differ considerably from the budgeted amounts. There was until recently a regular annual deficit; how this was met is not clear. The following table summarizes recent years' operations: KABUL MUNICIPALITY RECEIPTS & PAYMENTS (ACTUAL & BUDGETED) Afghan Years Item 1348 1349 1350 1351 1352 1353(1974/75) -------- Million Afs ------------------------ Receipts Taxes (incl. Water) 22.06 26.34 25.63 29.25 39.91 35.99 Licences, Rents and Misc. 23.03 25.18 27.79 28.28 56.85 19.02 45.09 51.52 53.42 57.53 96.76 55.01 /a (Budgeted) (71.97) (79.80) (101.77) (108.37) (176.08) (248.76) Expenses Personnel 27.88 30.70 26.36 26.62 34.80 20.45 Purchases 9.35 14.41 11.96 1.70 4.94 7.51 Land Acquisi- tion 34.03 30.39 28.00 6.72 4.23 8.57 Other 0.36 0.96 1.68 0.29 0.10 7.10 71.62 76.46 68.00 35.33 44.07 43.63 /a (Budgeted) (89.60) (118.49) (102.18) (107.72) (176.00) (187.25) /a Six months. C. Municipal Water Supply Organization & Finance 5. The Water Supply Department is subordinate to the Municipal Presi- dent for Health Services. However, some water activities are also carried out by "district teams" (Kabul is divided into 13 districts), and these fall under the control of the Administrative President. About 100 employees are engaged on water supply activities, none being professional engineers or accountants (by comparison, Damascus, with double Kabul's population, needs about 800 water staff). Lack of staff, of funds, and of effective management compound the operational difficulties of a system unable to meet demands greater than its resources; essential repairs are neglected, and water loss and wastage are accepted as inevitable.  ANNEX 2 Page 3 of 3 pages 6. The water tariff for metered consumers (about three-quarters of total private connections) is Af 1 for 800 Imperial gallons. This is dispro- portionally low compared with the unmetered rate of Afs 60/month. However, many meters (possibly 60%) are inoperative; in such cases the consumers are billed at the unmetered flat rate. 7. Meter-reading is carried out by teams of three persons -- an example of the protective "committee" systems common in Afghanistan. Bills are ren- dered only twice a year, and there are indications that some consumers never receive a bill. Collection is not very effective; recorded arrears at the end of 1352 were Afs. 5.22 million -- about four times the collections for that year (see following table). KABUL MlUICIPALITY - WATER COLLECTION Afghan Year No. of Connections Collections (Afs.) 1347 3,094 1,368,842 1348 3,164 1,165,878 1349 3,224 1,567,538 1350 3,424 2,409,278 1351 3,590 1,545,218 1352 3,663 1,310,147 1353 (6 mths) 3,663 951,825 8. The collections shown above include flat rate charges, metered charges, arrears recovered, and connection charges; no breakdown is available, nor any details of water expenses. However, consultants drew up an estimated income statement for the year 1350 (1971/2), as follows: KABUL MUNICIPAL WATER SUPPLY - ESTIMATED INCOME STATEMENT Afghan Year 1350 (Million Afs) Expenditure Revenues Personnel 0.87 Water receipts 2.41 Power 2.00 Depreciation /a 2.58 Deficit 3.04 Interest lb - 5.45 5.45 /a Depreciation is not in fact recorded; the Municipality has no capital accounting. /b Debt service for the "New City System" (approx. Afs. 3 million annually) is met by the Government. 9. It is apparent that low tariffs, ineffective billing and collection, and inadequate accounting systems have combined to produce an unsatisfactory financial situation for the municipal water service.  ANNEX 3 Page 1 of 6 pages APPRAISAL OF KABUL WATER SUPPLY AND SANITATION PROJECT AFGITANI STAN Descri tion of Project - Water Supplly Sources 1. The underground resources in the area have been extensively researched by foreign experts who have generally agreed on adequacy, water quality and their general suitability for use as a public water supply. The present public supplies to the Central City core, Mikro Roya3 and Sia Sung are already based on two of the sources, with about 16,000 m withdrawn daily. 2. Details of the 4 main well-fields are as follows: Assessed Wetted Maximum Yield Yield Field Area Depth m/sec. m3/7day c. Paghman (Afshar) 18 61 .50 43,200 0.5 Upper Kabul 20 50 .92 79,500 0.5 Lower Kabul 7 27 .35 30,240 0.2 Logar 30 60 2.41 208,200 1.5 Total 4.18 361,140 2.7 3. The two well-fields proposed for immediate development, Logar by IDA and Paghman by KfW, respectively represent 56% and 18% of the assessed underground resources. The full development of all these aquifers will pro- vide 233,300 m3/day which is more than sufficient to meet the current esti- mate of the 1985 demand at 140,000 m3/day. 4. The full worth of an underground well-field is never completely certain and the monitoring of borehole yields and the measurement of aquifer draw-down and seasonal recovery will, therefore, be an important feature of the design process. Some existing wells in the Logar well-fields are known to be capable of yielding 60-80 1/sec but the consultant has prudently decided to base the design on 40 1/sec until more prolonged tests have been carried out. Project costs are based on drilling 20 boreholes but if higher yields are confirmed by prolonged testing, the total requirement will be modified accordingly.  ANNEX 3 Page 2 of 6 pages 5. The average transmissibility of the Logar field is 1,800 m /day with an hydraulic conductivity of 30 m/day; in Paghman the respective figures are 547 mL/day and 9 m/day. These fields are fed by precipitation accretion (rainfall and snow melt) and river infiltration. 6. In view of the importance of protecting the well-fields from the adverse affects of urban development, AWSSA's charter gives it the right of control over the immediate proximity of the areas which could be affected. Surface Water Development 7. If estimates of demand prove realistic, Kabul's long term water needs cannot be met entirely by underground water so that by 1990 some re- charge by river level regulation might be necessary. This could be achieved by dams on the Kabul and Logar Rivers respectively 13 km and 70 km upstream of the city. These sites have been studied by FAO principally with irriga- tion in mind and the implications of the return flow for groundwater reple- nishment have been considered by PRIL. The indication is that natural re- charge of the aquifers from the regulated rivers could increase the assessed aquifer yield by 65% and further increases are possible by mechanically assisting the recharge process. 8. The area proposed for irrigation is 10,500 ha for the dam on the Kabul river of which 8,600 ha, may however alternatively be needed for urban development; at the predicted urban densities water requirements per hectare for irrigation and urban consumers are similar. The allocation of benefits and costs, associated with an impounding structure, would be for future con- sideration by the Water Management section of the Water and Power Department and the AWSSA. In view of the necessity to maintain a reliable public supply, it is expected that domestic needs would be given high priority. Water Quality 9. Examination of groundwater quality in the main aquifers proposed for development confirms their suitability for use as a public water supply. A test program by a Russian group in 1962 examined over 140 samples in the Kabul, Paghman and Logar areas from pumped wells and test pits, and more recent analyses have been carried out by the Ministry of Agriculture and Irrigation, the Public Health Institute and others. 10. The source water is alkaline with a pH range of 7.0-8.5. Chemical analysis largely indicates that the levels for calcium, sulphate, magnesium and chloride are within the international standards recommended by WHO for drinking water. Tests for phenols, zinc, lead, copper, arsenic, iron and fluorides all proved negative. Total dissolved solids are in the 500-1500 milligrams per liter range and, typically, the waters are hard.  ANNEX 3 Page 3 of 6 pages 11. Bacteriological examination reveals the deep sources as generally uncontaminated and bacterial indices are good. The main danger of well conta- mination is from human or animal origins and necessary safeguards will be taken with land use control and disinfection. Forecast of Demand 12. The existing water supply system is intermittent in operation, metering is unreliable or inoperative and system losses are such that no his- torical record of consumption could be used to predict future demand. The one public water supply facility giving a 24 hour/day service, at Mikro Royan where measurements could be made, revealed a gross consumption of 363 1/cd with possibly 250 1/cd as the net use, allowing for losses. This consumptive use is considered excessive and untypical of the likely demand pattern in a community where the supply is metered and consumers pay the full cost of water. In this housing estate the rents paid by tenants include unrestricted water service and some hot water supply from a central heating system; there is thus little incentive for consumers to minimize water use. Mainly for technical reasons this supply will not be integrated with the Master Plan proposals, 13. The principal objective of providing a continuous safe water sup- ply required the consultant to synthesize his demand projections on typical water use elsewhere in the world and by categorizing housing. There is a wide variation in housing densities in Kabul with population per ha varying from a low of 55 to a high of 620 in the Old City. Demand assumptions which allow for reasonable water use, regulated by price and availability, have been adopted as follows: Consumer Type Short Term Long-Term ---------- 1/cd ------------- Private connection 100 150 Public standpipe 30 30 Commercial & Institutional 44 50 Industry (per employee) 1,000 1,500 Project Components 14. The overall scheme consists of source development in the Logar well-field, a high lift pumping station, transmission to the existing city distribution system, storage and new disttibution works in the central area of Kabul and in the new development area of Khair Khana. These works, in conjunction with the KfW project, will lay the foundation for an integrated water supply system for Kabul. (i) Logar Source: Twenty deep boreholes will be drilled in this field where yields of 40 1/sec per borehole are anticipated. Initially only 10 wells will be equipped with pumps and a low pressure collector will deliver supply to a high lift pumping station where disinfection will be carried out.  ANNEX 3 Page 4 of 6 pages (ii) Pumping: Pump capacities for the 10 boreholes to be equipped at Logar will be determined when depth and quantities from each source are confirmed3by test drilling; each borehole should yield a minimum of 3,456 m /day. High lift station design allows for meeting the maximum estimated daily demand in the zone to be supplied from this source. It is proposed to install electrically- powered pumps each with a capacity of 32,000 m3/day plus a stand- by diesel unit. The pumphouse will be designed to accommodate 4 units but only 2 pumps and the standby will be installed ini- tially; by 1984 the third unit would be required to meet maximum daily demand. (iii) Transmission: A 700-800 mm dia 9 km transmission line to the Jeshen Bazaar in the city will connect with the existing distribu- tion. The pumping main will balance on new storage being provided at Sia Sung, at elevation-1,860 m, which is complementary with the storage on the existing Alaudin System. Independently a gra- vity transmission line 3.3 km long will be constructed to supply Khair Khana which will be connected with the Afshar source. (iv) Storage: Storage capacities at Sia Sung and Khair Khana will each be 5,000 mI capacity. The Sia Sung storage is to be inter- connected with an existing 1,000 m3 capacity reservoir which is presently fed by an arrangement with the Bagrami Textile Mill. The storage at Khair Khana will be for the exclusive use of this area. These reservoirs are referred to elsewhere as '0' & 'H'. (v) Distribution: The new distribution system being provided will extend service in the following areas: (a) The Old City - About 100 km of 200 mm and 50 mm local and arterial mains are proposed for the Old City area where the present water deficiency is great. Supply will generally be at standpipes but pipe design allows for ultimate supply by private connection. Approximately 1,000 new standpipes have been allowed to provide for the 180,000 inhabitants in this area. (b) Wazir Akbar Khan and Shashdruk 1/ - This is a high quality residential district where supply will be delivered through metered connections. Arterial and local mains 200mm - 37mm diameter, 17 km in length, will be laid to provide service through 1,400 metered connections. The ability to pay for water service in this district is high. Population is expected to increase to 5,000 persons by 1979. (c) Khair Khana - The development of this middle class and low cost housing area has been severely restricted by lack of a satisfactory water supply. The present population is 1/ Formerly called Karte Wali.  ANNEX 3 Page 5 of 6 pages 20,000 and this is projected to increase by 90,000 over the next 5 or 6 years. Detailed engineering design of the dis- tribution system has been completed and 98 km of new mains ranging 50 mm - 300 mm diameter are proposed. Supply will be by metered connection from a double service pipe; some standpipe service will also be retained and extended when necessary. (vi) Services: The project allows for installing 20,000 meters and about 16,000 new connections. The 1,040 new public stand- pipes will maximize the benefits of the water supply improve- ments. Details of pipe length and diameters are listed below: Length km Dia. (mm) 800 700 600 500 300 200 Component Well-field Collector .9 .8 .8 Transmission to Old City 4.5 4.1 .5 Transmission to Khair Khana .3 3.0 Smaller Distribution: Old City 30 diameters as Wazir Akbar required Khan area 3.4 of Khair Khana 6.67 14.4 Total 5.4 5.2 3.8 .5 6.67 47.8 Afshar (KfW) Project 15. A component complementary to the IDA project is the Afshar proj- ect proposed to be financed by the Federal German Republic and technically administered by KfW. This scheme dovetails and is integrated with the long range development plans and will supply water for general needs and Khair khana. The source of supply is the Paghman well-field; 5 wells are to be drilled in this field with a maximum output to the distribution system of 17,300 m3/day. 16. Disinfection of the supply will be carried out before pumping to a new 10,000 m3 storage reservoir at Bagh-e-Bala. Supply from this tank, at elevation 1,880, will be fed into the city system by a new 500 mm trans- mission line; another 400 mm line will feed the Khair Khana district. Remedial Works - Existing System 17. These include: repairing leaks in the existing system, taking out of service defective piping in the Old City and transferring existing connections to the New System, and essential repairs to the Alaudin pumping system including the installation of a chlorination unit. Modification of the outlet on the existing Demazang 7,500 m3 reservoir is also necessary to take advantage of full storage and a water level recorder is to be in- stalled. A regular preventive maintenance program will be initiated to  ANNEX 3 Page 6 of 6 pages repair defective house connections. As the new and improved sources are introduced, the existing untreated supplies from Kharga, Khair Khana, Bagrami and other sources will be disconnected.  ANNEX 4 Page 1 of 3 pages APPRAISAL OF THE KABUL WATER SUPPLY AND SANITATION PROJECT AFGAUNISTAN Background and Development of Sanitation Component Background 1. The WHO consultant (PRIL) study identified night soil and vault latrines as a major problem in Greater Kabul. While domestic refuse was estimated at a low level of 20-50 kg/caput/annum, night soil quantities are 6-7 times greater and collection and hygienic,disposal infinitely more diffi- cult. Over 60 percent of the population is served by vault latrines and by 1979 it is expected that more than 100,000 tons/annum of night soil will require disposal. Refuse 2. Intensive recycling of household materials such as bottles, metal, paper and kitchen waste explains the low volume of refuse generation. Quan- tities for disposal are estimated to rise from 13,200 tons/annum in 1975 to 16,000 tons/annum in 1979. Service generally consists of removing house re- fuse deposited in the street with other street sweepings and transporting to collection points where it is removed by truck to one of four official refuse dumping grounds, which in fact receive only a fraction of the total waste. Because of the deficiencies in the service, collection points often become de facto dumps, together with any other open space which can be used for this purpose without causing nuisance or complaints. 3. To improve refuse handling PRIL briefly recommended the following: (i) The use of 200-liter capacity standardized household refuse containers. (ii) A collection system using a specially designed towable handcart (karachi) of 2-1/2 m3 capacity. (iii) Refuse be composted for agricultural use; 75 percent is compostible and the remainder would be disposed by sanitary landfill. (iv) Three sites be used for dispoal and composting and transpor- tation of material, depending on the distance, carried out by trains of karachis hauled by four-wheel drive vehicles.  ANNEX 4 Page 2 of 3 pages (v) An operational department in the Municipality be responsible for solid wastes handling. Night Soil 4. Pit or vault latrines are in widespread use in Kabul. In 1972 it was estimated that there were 29,000 in service with about 8,000 located in the Old City. Vaults are normally open to the streets but some are equipped with doors. The contents, feces and ash, are removed by contractors making private bargains with householders. The crude material is sold as a fertili- zer to farmers by the donkey load at a price equivalent to 80-300 Afs/ton, according to demand. 5. Collection of night soil is irregular and house owners with dispo- sal difficulties sometimes add this waste illegally to refuse at collection points. When this happens, municipal employees will not remove the mixed material so the potential for the spread of disease multiplies. The Munici- pality removes night soil from mosques where the only public sanitation is provided, although almost exclusively for male use. Old City Sanitation 6. Proposals for redevelopment of the Old City affecting its 180,000 inhabitants have been submitted by various authorities but never acted upon. Rich in history and alive with atmosphere, it is likely the area will resist change if only for the reason that there is no ready alternative. The design of the water supply component recognizes that change will come gradually and provides for service at standpipes so private latrines will be in use many years hence. Latrine improvements, better collection and disposal in this area will benefit, directly, 30% of Kabul's inhabitants. Sanitation Improvements 7. The proposed credit will: (i) provide 8,000 improved vault latrines equipped with collection boxes; (ii) help finance the purchase of 200 locally made karachis for collecting night soil. (iii) finance the purchase of twelve 4-wheel drive vehicles for hauling trains of karachis to disposal sites. (iv) establish a composting site.  ANNEX 4 Page 3 of 3 pages 8. About 90 tons of night soil would be removed daily for composting with domestic refuse and other fibrous material. It is estimated that the Municipality spends about Afs 11 million on its present street cleaning, collection and disposal service. The preparation of a tentatively identified site for a simple composting operation, using household refuse and night soil, will include surface preparation, fencing, hard accesses and drainage. Com- posting units would occupy about 100 m2 apiece, each unit including four stacking cells 6.25 m2 by 1.5 m high. During the process, cells would be turned over twice manually, to maintain aeration and ensure the temperature rise necessary for the destruction of harmful pathogens. The matured compost would be sold to local farmers who already apply to their land bacterially active night soil supplied by private collectors. Thus, some useful addition would be made to local agriculture (mainly vegetable growing), while reducing the potential for spreading disease by the existing night soil disposal practice. 9. Implementation of the proposal would be in the hands of an opera- tional department of the Municipality which would extend its very limited responsibility for night soil collection to include the Old City area. The Health Authority of the Municipality would initiate a program of latrine im- provements. The design of. the latrine would permit later conversion to a waterborne conveyance system.  APPRAISAL OF THE KABUL WATER SUPPLY AND SANITATION PROJECT AFGHANISTAN 10o0tios Predicated water demand, production and population growth in project area Demand Millions 00' 3 3ilin 1000's m3/day m3 /year 130 . . 120 - 45 110 1Available Water Afshar 2nd Stage--_ _ 40 1:0 . . _ - Logar 2n Stage - 35 90 - | , i _~~~~~~~~~~~ 30 Anticipated PoPulation Growth _4'- W D . \ | _ _ _ | "~~.... .-*Estimated Water Demand 70 - -2_______I _ __ .__ __25 60 ___ _ _ ' . _ ,,______-'- Afshar 1st Stage -.f .. --- _ 20 50 . _ _ _ _ l _ _ _ _ _ _ _ _ _ _ _ ,. _ - - - -' _ _. .. . .. . . . . . _ _ _ _ _ _ _ _ _ 40 1 .. Population Served - 15 Logar 1st Stage .-_ 30 10 New Well Source 20 System Repair I N,_ I_ _ __ o I I I7 Io 0 . ...........______ o I Years 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 Afghan Years L 1354 1 1355 1 1356 1 1357 1 1358 1 1359 1 1360 1 1361 1362 I 1363 1 World Ban k-9678  APPRAISAL OF = 1 of 2 THE KABUL WATER SUPPLY AND SANITATION PROJECT AFUWANISTAN Cost Eatitates and IDA Allocatiaos Proposed Allocation Cost Estirites IDA Credit Local Foreign Total Local Foreign Tota. Percentage -Afs (lillion) - ----------$ (00' )--------- Basis Afe (million) $ (