Jordan - Second Amman Water Supply and Sewerage Project

Document of The World Bank FILE COPY FOR OFFICIAL USE ONLY Report No. 2584 PROJECT PERFORMANCE AUDIT REPORT JORDAN: AMMAN WATER SUPPLY AND SEWERAGE PROJECT II (CREDIT 385-JO) June 29, 1979 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of their oficial duties. Its contents may not otherwise be disclosed without World Bank authorization.  PROJECT PERFORMANCE AUDIT REPORT FOR OFFICIAL USE ONLY JORDAN: AMMAN WATER SUPPLY AND SEWERAGE PROJECT II (CREDIT 385-JO) TABLE OF CONTENTS Page No. Preface (i) Project Performance Audit Basic Data Sheet (ii) Highlights (iii) Project Performance Audit Memorandum I. Project Summary 1 II. Conclusion 4 Appendix 5 Attachment: Project Completion Report I. Introduction 6 II. Project Preparation and Appraisal 8 III. Project Implementation, Operation and Cost 13 IV. Operating Performance 22 V. Financial Performance 25 VI. Institutional Performance 28 VII. Project Justification 30 VIII. Bank Performance 32 IX. Conclusions 33 Annexes 1 - Construction Schedules - Estimated and Actual 34 2 - Comparison of Appraisal Forecast and Actual Schedule of Disbursements 36 Comparison of Forecast and Actual Disbursements by Category 37 3 - Comparison of Appraisal Forecast and Actual Income Statements - Water 38 Comparison of Appraisal Forecast and Actual Income Statements - Sewerage 39 Comparison of Appraisal Forecast and Actual Cash Flow Statements 40 Comparison of Appraisal Forecast and Actual Balance Sheets 41 4 - Organization Chart of the Amman Water and Sewerage Authority Proposed Structure Actual Structure 43 5 - Table of Actual Incremental Benefits and Costs 44 Maps - Sanitary Sewers - Water Network This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. (Continued) Table of Contents ACRONYMS AWSA Amman Water and Sewerage Authority NPC National Planning Council NRA Natural Resources Authority ODA/UK Overseas Development Administration (U.K.) TAMS/DAH Tippetts, Abbott, McCarthy, Stratton/Dar Al Handasah VBB Vattenbyggnadsbyran (Sweden) VBB/FAWZI Vattenbyggnadsbyran (Sweden)/Fawzi (Jordan) YIT Oy Yleinen Insinooritoimisto (Finland) (i) PROJECT PERFORMANCE AUDIT REPORT JORDAN: AMMAN WATER SUPPLY AND SEWERAGE PROJECT II (Credit 385-JO) Preface This report is a performance audit of the Second Amman Water Supply and Sewerage Project in Jordan, for which a credit of US$8.7 million equivalent was approved in May 1973 and closed in March 1978. It consists of a brief memorandum prepared by the Opera- tions Evaluation Department (OED), and a Project Completion Report (PCR) prepared by the Europe, Middle East and North Africa Regional Office (EMENA). Following its abbreviated procedure, OED has re- viewed the PCR, the Appraisal Report and other project documents and discussed the project with Bank staff. On the basis of this review, OED has found that the PCR deals with the major issues in- cluded in the project execution. OED has summarized the main find- ings in its Memorandum and has expanded on the discussions of two aspects of the project experience: the rate covenant and the under- estimation of operating costs at appraisal. Following normal procedures, a copy of this Project Performance Audit Report was sent for comments to the Government and the Borrower. Those comments which were received are re- produced as an Appendix to the Audit Memorandum. 6 (ii) PROJECT PERFORMANCE AUDIT BASIC DATA SHEET JORDAN: AMMAN WATER SUIPPLY AND SEWERAGE PROTECT II - CREDTT 385-,JO KEY PROJECT DATA Appraisal Actual or Item Expectation Current Estimate Total Project Cost (US$ million) 11.55 13.93 OVerrun (%) - 20.9 Credit Amount (US$ million) 8.7 8.7 Disbursed )- 8.7 Cancelled February 1979 - 0.0 Repaid to ) -y0.0 Outstanding to )- 8.7 Date for Completion of Physical Components L17 9/77 Proportion Completed by Appraisal Tareet Date ( - 71.3 Proportion of Time Ovcrrun (%) . 35.7 Incremental Fina.cial Rate of Return (1) 10.1 12.0 Finn, ial Performance Satisfactory Worse Institutional Performance Satisfactor Similar Cumilative Estimated and Actual Disbursements (US$ million) As of June 30: 1974 1975 1976 1977 1978 (i) Appraisal Estimate 2.2 6.0 7.6 8.7 8.7 (ii) Actual 1.5 3.9 7.0 \8.0 8.7 (Ii) as % of (i) 68% 65% 92% 92% 100% OTHER PRO JECT DATA Original Actual or Item Plan Revisions Current Estimate First Mention in Files ot Timetable - 12/ 8/70 Government's Application - -rTTTT Vegotiations 3/12 /73 - 4T 2/73 board Approval 5722fT - 5/22/73 Credit Agreement Date 5!24/73 - 5/24/73 Effectiveness Datt - 8/22/73 Closing Date - 30/78 Borrower HASHEMITE KINGDOM OF JORDAN Executing Agency AMMAN MUNICIPAL AREA WATER AND SEWERAGE AUTHORITY (AWSA) Fiscal Year of Borrower lendar Year Follow-on ProjocA Nim, AMMAN WATER SUPPLY AN SEWERAGE III Credit Number Credit 780-JO Amount (US million) 14.0 Credit Agreement Date 5/19/78 MTSS IN DATA Month, N"'. of No. of Date of Item Yer Wvckr Persons Mnweeks lleporc Identification 5/71 21/ 2 4 6/71 Preappraisal 5/72 2 3 6 6/72 Appraisal 9/72 / 4 16 Total Supervision I 1/74 1 2 2 2/74 II 9/74 1 1 1 10/74 III 11114 1 1 1 11/74 IV 8/75 1 2 2 9/75 V 5/76 1 1 1 6/76 VI 9/76 1 1 1 9/76 VII 4/77 12/ 2 2 4/77 VIII 8/77 33/ 2 6 9/77 Completion 7/78 2 1 2 11/78 12 18 COUNTRY EXCHANGE RATES Name of Currency (Abbreviation) Jordan Dinar (JD) Year: Exchange Rate: Appraisal Year Average US$1 = JDO.32 Completion Year Average US$1 = JDO.33 1/ Including supervision of previous project i/ Including preparation of follow-on project 5/ Including appraisal of follow-on project  (iii) PROJECT PERFORMANCE AUDIT REPORT JORDAN: AMMAN WATER SUPPLY AND SEWERAGE PROJECT II (Credit 385-JO) Highlights The project was intended to improve Amman's water produc- tion facilities and to expand the water and sewer network to the whole of the city area. As a result, 80% of the population (includ- ing about one third of the urban poor) now have water connections and about 28% have sewer connections, so that reliance on water tankers and cesspools has been diminished. Severe drought conditions, how- ever, outweighed the expansion of production facilities, even though more wells were installed than planned, so that supply problems still remain. The project was efficiently constructed; the time and cost overruns which it incurred were not severe in view of the 1973 Middle East war and its aftermath, and the inflation stemming from oil-price rises. The executing agency achieved satisfactory institutional im- provements; financial results, however, were disappointing, partly attributable to the supply shortages which made water rate increases difficult to impose, and partly because the tariff covenant in the Credit Agreements did not (initially at least) provide sufficent incentive to allow for increased costs of operation. The following points are of special interest: (i) project delays and their causes (PCR paras. 3.06-3.13); (ii) extent of and reasons for shortfalls in water sales (PPAM para. 5 and PCR paras. 4.01-4.02); (iii) the executing agency's financial problems (PPAM paras. 5-9 and PCR paras. 5.02-5.03); (iv) inadequacy of the rate covenant (PPAM para. 7 and PCR para. 5.07).  PROJECT PERFORMANCE AUDIT MEMORANDUM JORDAN: AMMAN WATER SUPPLY AND SEWERAGE PROJECT II (Credit 385-JO) I. Project Summary 1. This Credit (for US$8.7 million equivalent) was made in 1973 to the Hashemite Kingdom of Jordan. US$8.33 million was to be onlent to the Amman Municipal Area Water and Sewerage Authority (AWSA) to cover expansion of water production facilities, extension and rehabil- itation of the water and sewerage network, a leak detection survey and other consulting services, and new offices for AWSA; the remaining US$0.37 million was to finance the foreign exchange costs of a tourism development study for Jordan's south coast. The project was estimated to cost US$11.55 million and was to be implemented during 1973-76. The objectives of the water and sewerage component were: (i) to expand the water and sewer service to all parts of the Amman area, with a consequent reduction in the number of cesspools, suspected of pollut- ing underground water sources; (ii) to reduce unaccounted-for water, believed to be at the extremely high level of 64% of production, and hence to increase the rationed supply hitherto available for consumers; and (iii) to help the newly-established AWSA to become an efficient and viable authority, to which end the Project Agreement included various management and financial covenants. 2. The project was constructed more or less as planned, except that the new offices were eliminated; on the other hand, more wells were constructed in view of drought conditions which persisted during 1976-77. The target levels of new connections were reached, total sewer connections in fact almost trebling in number during the period (PCR para. 4.04). The extent of unaccounted-for water proved to have been considerably over-estimated by AWSA at appraisal, but losses were steadily reduced from the true figure of 49% to 41%, which was better than the appraisal target, though still too high for complacency. There were no major procurement problems, except for delays attribut- able to political disturbances in Lebanon (through which country many of Jordan's supplies came). The project had a cost-overrun of some 21% (of which the tourism studies accounted for about a quarter) and a time-overrun of about a year; the closing date was extended by three months. This performance must be considered as creditable, in view of the 1973 war, the Lebanese conflict, and the oil-price rises. The comparatively small cost-overrun may be due to AWSA's having secured some fixed-price contracts just before the 1973 war, and to local bidders winning more contracts than had been foreseen. 3. In the event, improvement achieved in the quality of service was less than expected. Because of the drought, an influx of refugees, and the initial over-estimate of production (which explained the over- estimate of water losses), water supply continued to be intermittent, and even now is purposely curtailed in an attempt to recharge the de- pleted aquifer. - 2 - 4. On the institutional side, AWSA's technical and operational development appears to have been very satisfactory. It has gradually acquired maturity and stature, and has reduced its dependence on for- eign experts. On the other hand, there was some setback in perfor- mance in one or two areas (accounting and sewage treatment) when ex- patriates departed, and AWSA is certainly very generously staffed (about 22 employees per 1000 water connections). AWSA justifies its generous staffing as a way of protecting against high staff turnover which is caused by competition from oil-rich neighboring countries 1/. Such competition also accounts for high salary levels. 5. In the matter of AWSA's finances, results were disappointing. Though the forecast rate of new connections was maintained, water sales (by volume) during 1973-76 were about 6% below expectations, because of limited supplies (especially in drought conditions) and because refugees consumed less water per capita than established residents. Tariff re- structuring kept revenues at about the forecast level, but operating costs were much higher than appraisal projections. During 1973-76, total operating costs exceeded the estimates by about 47% and the cost of salaries in particular reached about four times the forecast level in 1976. 6. Insofar as water rates were concerned, the Credit Agreement required AWSA only to maintain the existing average tariff until 1976, and thereafter to fix the tariff at levels calculated to achieve pre- scribed rates of return on net fixed assets (at historic costs). AWSA observed these requirements, but no more (except to restructure the tariff more progressively); the existing tariff became of course to- tally inadequate to cover rising costs and the 1977 rate of return re- quirement dictated a 50% tariff increase, which was immediately out- weighed by rises in salaries and electricity costs 2/. A further increase of 63% was implemented in 1978. 7. In retrospect, it seems clear that the financial targets were not realistic since four years was too long a period to require no more than the maintenance of existing tariffs. The appraisal pro- jections of operating costs appear to reflect almost no provision for inflation (though 7% per annum was used for capital cost estimates). Correspondingly, the rate of return was not required to be based on revalued assets. However, political constraints apparently made it unfeasible to require increases in tariffs until substantial improve- ment had been made to the water supply service. It may be noted that, at appraisal, tariffs in Amman were over four times those charged in Damascus, in neighboring Syria. 1/ The Ministry of Public Works does not fully agree with AWSA's justification for its generous staffing (see Appendix to PPAM, page 5). 2/ It is not clear from the published accounts (PCR Annex 3, p.1) that the 50% increase would in fact have achieved the required return even without the unforeseen cost increases mentioned. However, when the decision to increase the tariff was taken in 1976, the reduction in the 1976-1977 water sales below the appraisal estimate may not have been evident. - 3 - 8. The result was that, although water revenues in 1973-76 turned out much as estimated, AWSA made losses on this service in every year after 1973. Fortunately, sewerage revenues proved to be extremely buoyant -- especially connection fees and a general tax on all householders -- to compensate for higher operating c ts, so that AWSA complied with the earnings covenant for sewerage - . Never- theless, overall internal cash generation was negative, and the cash deficit was made good by Government grants and loans (PCR para. 5.03). 9. In spite of the unrealistic rate covenant, Bank representa- tions were made to AWSA that this was a minimum and AWSA should bring its rates more into line with costs, if only to cushion the impact of the sharp tariff increase foreseen to be needed in 1977. AWSA restruc- tured the tariff to increase its progressivity, but appears to have felt that a general increase in already high rates could provoke a serious reaction from consumers in view of the fact that water ration- ing was widespread and its daily incidence unpredictable from the in- dividual consumer's viewpoint. In any case, AWSA believed that Govern- ment funds were available to make good the deficit. Admittedly, when the rate covenant required it, AWSA did implement two sharp tariff increases in successive years, but by that time the burden of supply shortages could be controlled and the consumers knew in advance when their water could be curtailed. 10. Preparation and appraisal of the project required three Bank missions (which is about normal), and supervision missions were mounted at average intervals of about six months (though some of these comprised one staff member only). In view of the fairly trouble-free execution of the project, this was no doubt a reasonable intensity. Missions gave practical guidance on such matters as tariff structures and leak detection studies, and also carried out a construction industry review. The proposed new offices were eliminated from the project at Bank sug- gestion, to free more funds for house connections. In retrospect, this was probably a mistake, since construction costs subsequently soared and alternative funds proved to be forthcoming for the house connections (PCR para. 8.01). 11. The technical alternatives selected in the project and the sizing and staging of works all remain the least-cost solution to achieve the results obtained. The incremental financial rate of return on the water supply component, estimated at 10% at appraisal, is now calculated to be about 12%. However, the two returns are not strictly comparable as the recalculated return is based on the entire water supply investment program during the 1973-77 period while the appraisal estimate was 1/ Sewerage revenues had to cover operating costs, plus either depreciation or debt service, whichever was greater. calculated on the Bank-financed water supply project onlyle. No meaningful rate of return could be calculated for the sewerage portion as the major benefits in public health cannot be quantified (PCR para. 7.05). II. Conclusions 12. The project was well-conceived and efficiently executed. Though water resources still prove unequal to meet demand, 80% of the people of Amman (including about a third of the urban poor) now have water connections and about 28% have sewer connections, so that reliance on tankers and cesspools has been considerably diminished. All the city's sewerage installations and three-quarters of its water facilities are now comparatively new (less than 15 years old in 1977). Greater supply flexibility is possible and water losses have been steadily reduced. Substantial improvements were achieved in administrative performance, particularly on the technical side, and AWSA is now successfully supervising some contracts with its own staff. A sharply progressive tariff has been introduced, at Bank suggestion, to protect the poorest consumers and curb wasteful con- sumption by the wealthier. 13. The Bank's input to the project was predominantly on tech- nical and institutional matters, supplemented by advisers furnished under bilateral aid. The inadequate revenue covenant may have con- tributed to AWSA's financial problems, but it may well be that more stringent requirements could not have been enforced, given the supply constraints existing. Lessons learned from the project were reflected in the follow-up project (Credit 780-JO): financial projections con- tain an appropriate allowance for inflation; the rate covenant is based on cash generation rather than a return on historic investment values; there is a covenant that overstaffing will be curbed; and the project again contains a training component (over and above bilaterally-aided training) to remedy the remaining deficiencies in AWSA's operations. 1/ It is no longer possible to separate the incremental costs and revenues attributable to the project from those attributable to the entire program. APPENDIX -5- THE HASHEMITE KINGDOM 4.WJ JUil 3 J1 OF JORDAN MINISTRY OF PUBLIC WORKS P.O.BOX. 1220 AMMAN - JORDAN No. to /'//W __ Date 6/79 .......... D at e ........... .. .. .............L j Mr. Shiv S. Kapur Director Operations Evaluation Department The World Bank 1818 H Street, N.U. Washington, D.C. 20433 Dear Mr. Kapur: Thank you for your letter of May 21, 1979. I have read the first draft copy you sent me of the Project Performance Audit Report on Jordan: Amman Water Supply and Sewerage Project II, supplied under Credit 385-JO. The Ministry of Public Works has no direct relationship to the said project. However, from the general information I have regarding the project and my experience in construction procedures and problems in Jordan, I find the draft clear and constructive. The findings in the draft could be useful in appraisal of future projects. The close cooperation between the staff of the AUSA, NPC, The World Bank and the Consultants was beneficial. The causes of some delays and the increased cost of execution is understandable, as the 1973 War and inflation, especially the in- creased price of building materials and works both were contribu- ting factors. I do not fully agree with the ALISA reasoning for the "Generous Overstaffing", as being about double of the International Standards for such operations. Yours sincerely, Said Beano SB:jb - 6 - Attachment JORDAN: AMMAN WATER SUPPLY AND SEWERAGE II PROJECT (Credit 385-JO) PROJECT COMPLETION REPORT I. INTRODUCTION 1.01 The Hashemite Kingdom of Jordan has accorded high priority to the provision of water supply to the Amman Municipality for many years because of the high concentration of population in the city. Sewerage service has been provided on a lower priority. In 1977, the Amman Water and Sewerage Authority (AWSA) estimated that 80% of the city's population was provided with water service connections, and 28% with sewerage service connections. The principal issues of the sector as outlined in the Water Supply and Sewer- age Sector Memorandum of February 1978 are : rapid urban population growth; resource allocation; sector organization and policies; and sector planning and low service levels. Government sector development strategy, as defined in its Five-Year Plan (1976-1980) includes: drilling new wells to increase quantities available, adoption of a progressive rate structure, expansion of water networks, and undertaking sewerage projects in Amman and Salt and studies in other cities. 1.02 The Amman Municipality's Water and Sewerage Department was respon- sible for water and sewerage services until 1973. The engineering and account- ing units in this department were weak because of staff shortages, low salary structures, poor organization and lack of delegation of authority. Operation and maintenance of the facilities suffered from these debilitating elements. In consultation with IDA, the Government established AWSA, through Law No. 19 of 1973. As part of Credit 385-JO, strengthening of AWSA was effected through management studies, improvement of operation and maintenance, and training of AWSA's staff. AWSA's technical and operational development has been exceptional. The total number of house connections for water increased from less than 35,400 in 1973, to almost 45,650 in 1978. Un- accounted-for water dropped from 49% of production, to 40.9% by year-end 1977. Sewage service connections increased from 3,987 to 10,595. AWSA's financial operations however, were subjected to a number of restrictive factors which hindered the achievement of wholly successful results. This Project Completion Report (PCR) scrutinizes those elements which accounted for AWSA's favorable results as well as those in which improvement would still be required. 1.03 IDA's association in the water supply and sewerage sector was initiated in 1961 and has continued through IDA's participation in financing the following water supply and sewerage projects: (a) Credit 18-JO, 1961: US$ 1.5 million for financing foreign exchange costs for improving and augmenting the Amman water supply. Total project cost was US$ 3.5 million. (b) Credit 43-JO, 1963: US$ 2.5 million for financing water supply projects in Ramallah and E1-Bira (Jerusalem), Azraq-Irbid and Zerqa. Total project cost was US$ 4.0 million. - 7 - (c) Credit 385-JO, 1973: US$ 8.7 million for financing 75% of the cost of extension and improvement of the Amman water supply and sewerage systems. Total project cost was US$ 13.9 million. (d) Credit 780-JO, 1978: US$ 14.0 million for financing expansion of Amman water supply and sewerage services. Total project cost estimated at US$ 33.9 million. 1.04 In addition to assisting in the financing of civil works and equip- ment, IDA's objectives in the sector included the development of AWSA's institutional and operational capabilities in order to provide effective water supply and sewerage services in the Amman Municipality. Credits 18-JO, 385-JO and 780-JO, specifically allocated funds and defined approaches which would overcome technical, organizational and administrative problems. 1.05 The principal elements of Credit 385-JO, Amman Water Supply and Sewerage Project II, which became effective on August 23, 1973, were as follows: (a) Water Supply: (i) construction of two pumping stations; (ii) expansion of the water distribution system, including construction of a new service reservoir and installation of 12,000 water meters; (iii) drilling of two new wells, plus pump installa- tions; and (iv) undertaking of leakage control survey and corrective measures. (b) Sewerage: (i) construction of mains and laterals; and (ii) treatment plant improvements. (c) Other: (i) consulting services for leakage survey; master plan and preliminary engineering, and detailed designs and con- struction supervision; (ii) office building and operational equipment for AWSA; (iii) training in administration, as well as operation and maintenance; (iv) consulting services for infrastructural development of the Aqaba Region. - 8 - II. PROJECT PREPARATION AND APPRAISAL Origin 2.01 Following the Government's statement of interest in December 1970, an IDA supervision mission in May 1971 covering Credit 18-JO conducted pre- liminary reconnaissance of a proposed project to expand the Amman water supply and sewerage systems. The mission confirmed that the needs of the city's rapidly growing population, which had increased by 50% through the influx of refugees during 1967, were not being adequately met. The demand for water and the accompanying lack of capacity had reached critical dimen- sions. 2.02 The Amman Municipality Water Department, with the assistance of Swedish consulting engineers, Vattenbyggnadsbyran (VBB) had prepared pre- liminary proposals for a JD 3.0 million project to meet the crisis, but was unable to obtain immediate financing for the project. 2.03 Following the IDA reconnaisance mission report of August 1971 which recommended that the Government proceed immediately with preparation of the project, the Municipality engaged the consultants, VBB/FAWZI for the prepara- tion of a master plan and feasibility studies for water supply and sewerage facilities and also for the preparation of a proposal for an organization which could competently handle the management and policy-making functions connected with the works. In cooperation with the Municipality, the Natural Resources Authority (NRA) and the Jordan Development Board concluded that an agency should be developed which could combine the responsibilities of the Amman Water Committee and those of the Municipality's departments of water and sewerage. Preparation, Appraisal, Negotiation and Approval 2.04 Two IDA pre-appraisal missions visited Amman, in November 1971 and in May 1972, and agreed with the Government on the scope of the project, basic design criteria, and the proposal to establish the Amman Water and Sewerage Authority (AWSA). An IDA tourism reconnaisance mission visited the Aqaba Region in January 1973 to explore the development prospects. 2.05 In July 1972, VBB/FAWZI submitted its draft final reports covering the above subjects. After review by IDA and acceptance by the Government the reports were finalised. Detailed final designs for the sewerage component and preliminary designs for the water supply component were completed and made available for review by the IDA appraisal mission in September 1972. 2.06 The project originally defined by the Borrower included the provi- sion of services to the refugee camps in the Amman area, at the cost of JD 375,000. However, because of the temporary nature of the housing in the camps, the Government decided that permanent installations of water and sewerage facilities would be postponed pending final definition of road - 9 - locations, areas to be served, and levels of service to be provided. Work on extending full water supply and sewerage services to the camps commenced in 1977. This work is being financed by a Government grant. 2.07 Extension and improvement of stormwater drainage facilities were included in the initial project proposal at a cost of approximately JD 1.5 million. This was eliminated because of shortage of funds. Alternative financing was utilized by the Government to implement the stormwater drainage project. 2.08 Statistical information developed by the Amman Municipal Water Department and the NRA was generally acceptable for use in forecasting project results. However, some areas of discrepancy appeared, and these could have affected projections. The extent of groundwater resources in the Amman-Zerqa basin was overestimated. Population forecasts were based on estimated growth only, since no official census has been conducted since 1961. Water production metering proved to be inaccurate by the consultants, VBB/FAWZI, and resulted in over registration of production. 2.09 The alternative considered to the installation of piped sewerage was that of constructing and properly maintaining cesspools. At discount rates of up to 23.7% piped sewerage proved to be the least cost solution. In addition, the sewer system is a superior system to cesspools, particularly since Amman relies on local groundwater for its supply. 2.10 Subsequent to definition of the project components, the appraisal mission revised the proposed construction program to integrate tendering, delivery and installation schedules. However, the period of project imple- mentation, 1973 through 1976, remained relatively unchanged. Overall preparation of the project by the Government and its consultants was satis- factorily detailed and at a level commensurate with that required to ensure efficient appraisal by IDA. 2.11 Key issues raised by IDA during negotations included: (a) study and establishment of an acceptable water and sewerage tariff structure; (b) implementation of an improved accounting system; (c) development of staff training programs; and (d) reduction of unaccounted-for water. 2.12 Negotiations were delayed by about three weeks at the Government's request in order to permit simultaneous processing of the subject project and the proposed Hussein Thermal Power Project. - 10 - Project Role in Long-Term Plan 2.13 In the Three Year Development Plan (1973-1975) and the Five Year Plan for Economic and Social Development (1976-1980) Jordan's broad develop- ment strategy has been focused on the improvement of economic growth and achievement of a more balanced urban growth. In the context of its broad strategy, the Five Year Plan set out the following measures for potable water supply and sewerage: (a) drill new wells to increase the quantity of drinking water produced to the various regions; (b) adopt progressive water tariff structure to control consumption; (c) expand water networks and construct new storage tanks in the various governorates; and (d) undertake sewerage projects to improve facilities in Amman and Salt and sewerage studies in other main cities. The role of the project encompassed all of these measures to some degree. Further, the project was part of an updated master plan for water supply and sewerage for Amman. The Five Year Plan provided 12.7% of the Government's fixed investments for water supply development, which would rank water sup- plies third in importance after mining, manufacturing and transportation. Project Description 2.14 Physical Elements. A. Water Supply: (a) A new pumping station at Tadj (capacity of about 360 1/sec) including aeration and chlorination facilities, a new booster station and additional pumps for Ras el Ain pumping station. (b) Expansion and replacement of the water distribution network, including the installation of about 20 km of large diameter trunk mains, 80 km of medium and small diameter pipes (dis- tribution network including house connections), one service reservoir with a capacity of 4,000 m3, and an improved communications system between existing key reservoirs and pumping stations. Also included were about 12,000 water meters. (c) Two new boreholes and improvement of the existing installa- tions, including new submersible pumps, water production meters, chlorination facilities and pumphouses. - 11 - (d) Provision for employing a specialized firm to undertake a leak detection survey, the mapping of leaks in the network and preparation of a repair/replacement program. (e) Office building, garage, storage and meter repair shop for AWSA and supply of hydrological equipment. B. Sewerage: (a) A 2 km sewer main (500 mm) in the city's center and about 100 km of sewer laterals and house connections. Also, about 8 km of sewer laterals to complete the ongoing program of laterals construction. (b) Minor improvements to the sewage treatment plant. 2.15 Institutional Elements. Consulting Services: (a) Consulting services for leak detection, master plan and preliminary engineering and for detailed design and super- vision of construction of the project. (b) External assistance for training of AWSA's administrative staff in accounting methods and for operation and maintenance training. 2.16 Other Elements. Aqaba Development Studies: (a) Consulting services to review existing studies and prepare recommendations for the basic infrastructural development of the Aqaba Region, including a proposed free industrial and commercial zone. (b) Elaboration of the existing Aqaba tourism development plan. 2.17 The feasibility studies for the Amman water supply and sewerage projects prepared by the consulting engineers, VBB/FAWZI, outlined the staged construction and investment programs covering extensions and improvements of the facilities through 1982 in two phases, 1973-1977 (Stage IIIA) and 1978- 1982 (Stage IIIB). The latter phase formed the basis for development of the succeeding IDA project, Amman Water Supply and Sewerage Project III (Credit 780-JO). Designs of the pumping stations at Tadj and Smissani, which were constructed under Credit 385-JO, were such that additional pumping capacity of 970 m3/hour could be installed during Stage IIIB. - 12 - Main Covenants 2.18 Among the principal covenants affecting the management and opera- tions of AWSA were those applying to AWSA's employing a competent general manager and qualified chief engineer, the former to ensure effective ongoing administration of AWSA and the latter for responsible supervision of the project, in addition to his continuing responsibilities. The rationale used in defining these covenants was that of overcoming earlier managerial shortcomings. 2.19 Similarly, in order to improve operation and maintenance, par- ticularly in view of the expansion of the water supply and sewerage systems, AWSA was to employ (before January 1, 1974) a qualified firm for staff training in operation and maintenance. 2.20 The major covenants relating to tariffs were: (a) that AWSA should not charge less than an average water rate of 75 fils/m3 for water sold to the general public during the period up to December 31, 1976; and (b) that AWSA would establish and maintain water tariffs at a level sufficient to yield an annual rate of return of not less than 6% in 1977, and not less than 7-1/2% from January 1, 1978 onwards. The purpose of these covenants, of course, was to provide adequate funds to meet depreciation and increased operating and maintenance costs and to provide a reasonable contribution towards future expansion of the water supply system. The tariff covenant for the sewerage service required AWSA to set rates to meet operation cost and debt service. 2.21 In order to assist in the enforcement of Public Sewerage Law No. 1 of 1965, a covenant relating to compulsory connection of houses to sewer laterals within six months and in no case not later than nine months of completion of the laterals was included in the Project Agreement. 2.22 Unaccounted-for water reached an estimated level of 64% in 1972 and averaged approximately 50% during the preceding 10-year period. In order to alleviate this problem a covenant was incorporated asserting that AWSA would: (a) employ a leak detection specialist to undertake a leakage survey' (b) establish a leak detection and repair system; (c) undertake a house-to-house survey to detect illegal con- nections and to update records; and - 13 - (d) submit to IDA for comment proposals for reorganizing its billing and collection systems so as to establish proper internal control and implement a mutually agreed upon system. 2.23 Two outstanding interest-free loans which had been provided by Government to AWSA in the amount of JD 2.5 million were to be converted to municipal equity. With regard to future borrowing, the covenant stating that AWSA would not incur debts without IDA's consent, unless net income before interest and depreciation was at least 1.5 times the maximum debt service in any future year, was included. 2.24 During negotiations the Borrower accepted all of these major cove- nants as well as the additional covenants contained in the Credit Agreement and Project Agreement. None were rejected. III. PROJECT IMPLEMENTATION, OPERATION AND COST Loan Effectiveness and Project Start-up 3.01 The Development Credit Agreement and the Project Agreement were signed on May 24, 1973. 3.02 Specific conditions of effectiveness included: (a) re-lending of the Credit to AWSA for a term of 29 years including four years grace period on the principal with interest of 6% per annum under a subsidiary loan agree- ment between the Borrower and AWSA; (b) conversion of existing loans from the Borrower to the Amman Municipality for sewerage and storm drainage into equity of the Municipality in AWSA; (c) furnishing to the Association the proposed legislation for establishing a National Water and Sewerage Board (The Board was not established); (d) assistance from the Municipality to AWSA and Wadi Sir Muni- cipality in establishing equitable allocations of Wadi Sir spring water between each entity; (e) requirement for NRA to properly install and maintain the hydrological equipment under the project; (f) employment of engineering consultants acceptable to the Association to carry out Part 2 of the Project; and - 14 - (g) furnishing the Association for its approval, promptly upon their preparation, studies, plans, designs, specifications and supporting documents relating to Part 2 of the project. 3.03 IDA required that the Project Agreement and Development Credit Agree- ment be duly executed by the Government and AWSA. These conditions were fulfilled, and the Credit was declared effective on August 22, 1973 as scheduled. No major delays in start-up and implementation took place. Revisions 3.04 A Credit of US$ 7.5 million was proposed in the Decision Meeting of October 31, 1972. Also, an additional US$ 0.5 million Credit for feasibility studies for Aqaba tourism, proposed by the Country Programs Division, was recommended in the draft Appraisal Report. During negotiations, the amount of the proposed Credit was increased to US$ 8.7 million to take into account realignment of currencies and to cover infrastructural development studies of the Aqaba Region. 3.05 There were no revisions during project implementation to the water supply and sewerage components of the project. However construction of the office building and shops was deferred due to cost overruns on other project elements. AWSA secured adequate rental offices which are moderately priced and postponement of this component did not materially affect the project objectives. Implementation Schedule 3.06 Project completion was projected in the Appraisal Report by mid-1977 (Annex 1). Although the consultants' (VBB/FAWZI) contract for final designs and supervision of construction was signed in May 1973, the consultant had already initiated preliminary design work in December 1972 under a previous contract with the Government. As of February 1974, final designs and tender documents for all contracts, except the office building, were completed, and signature of contracts for materials supply, sewer installation, well drilling, engineering and staff training for operation and maintenance had been accomp- lished. In effect, implementation was approximately on schedule, indicating that Appraisal Report estimates were realistic. Also, AWSA decided to delay design work and tendering for the headquarters office building until all other contracts were awarded and more accurate estimates for overall project costs could be established. By mid-1975 all contracts, except for the office building, had been awarded and construction was proceeding satisfactorily. The leak detection survey was delayed for several months but was completed in March 1975, resulting in some improvement of unaccounted-for water through repair of major leaks. 3.07 As of mid-1976 construction of sewers was delayed by several months because of disagreement with the contractor on claims for compensation for increased costs. Pipelaying and related civil works for water supply con- struction were also several months behind schedule. Pumping station construc- tion was completed and most of the equipment installed. Installation of - 15 - house connections for water supply and sewerage was in progress; however, lack of funds created problems in the civil works element of the house con- nections program. The house connection program for sewers was further delayed due to problems associated with securing payments from landlords for property covered by rent control. The National Planning Council (NPC) decided to utilize a US$ 2.0 million grant from Iran for construction of house con- nections. 3.08 A protracted drought was occurring over the three-year period (1975-1977), resulting in several wells going dry and a substantial reduction in yield in others. Also, the influx of refugees and a flourishing tourist trade simultaneously combined to create water shortages leading to ration- ing of the available supplies. Augmentation of the project's well drilling and improvement program was necessary, and eight additional wells were constructed. 3.09 The consultants for the Aqaba Development Studies, Tippetts, Abbott, McCarthy, Stratton/Dar Al Handasah (TAMS/DAH) completed their report in mid- 1976. In order to coordinate several of the TAMS/DAH recommended projects (which were already in various stages of implementation) with overall planning, the consultants also prepared a revised Master Plan which addi- tionally defined schemes for institutional structure of the Aqaba Region. 3.10 In April 1977 construction of the project works was virtually complete with only testing of some facilities remaining. Reduction of unaccounted-for water to 41% of production, although still quite high, was in line with the Appraisal Report estimates. During the IDA supervision mission in September 1977, although the works had been taken over as part of AWSA's overall operations in July 1977 and the contractor's maintenance phase was in effect, minor construction items were still incomplete. An uncommitted balance of US$300,000 remained in the Credit, and AWSA pro- posed that these funds be used towards financing a US$600,000 contract for the supply of well field pipes and fittings. In view of these factors, the closing date for the Credit was extended to March 31, 1978. 3.11 The primary institutional change in AWSA occurred with the transfer of staff from the Municipality to AWSA in May 1973, and with the appointment of an acting general manager late in 1973. Thus, AWSA effectively replaced the Amman Municipality Water and Sewerage Departments at this time. The present incumbent general manager assumed his position early in 1974. Recruit- ment of the chief engineer took place in June 1973, and retention of auditors occurred early in 1974. An Administration Department had been established by early 1974 with a manager appointed. Since AWSA was unable to recruit a qualified Jordanian finance manager in the first several years of project implementation, an Overseas Development Administration (ODA, U.K.) advisor was retained until June 1976. The incumbent financial advisor took office in - 16 - 1975. AWSA also directed its attention towards recruiting and retaining qualified subordinate level staff. 3.12 The Lebanese crisis of 1975-76 created a series of demands for services and housing which skewed the labor market, causing construction of project elements to slow down and labor costs to escalate. In addition, the oil crisis of 1975 inflated construction costs and resulted in contractors' reducing work forces with concomitant reduction in cash flow. Simulta- neously, the reliability of the electric power supply diminished interfering with work progress and testing. Shortages of water during the drought years forced delays in water system testing. By early 1977 these problems were surmounted, and the construction programs proceeded at an accelerated pace. None of the above problems could have been foreseen; and thus the measures taken were, in all cases, remedial. Delayed delivery of materials and equipment necessitated revision in water supply system construction schedules. Sewer pipes were manufactured in Amman and delivery was prompt. The French pipe manufacturer missed the original delivery schedule (late 1974) by several months, and this was further aggravated by delays in offloading at Aqaba due to congestion following the closing of Beirut Harbour. 3.13 Although the pumps and electrical equipment for the water supply con- struction had proceeded approximately on schedule to Beirut, the anticipated delivery by October 1975 did not occur. The equipment was kept hidden in a Beirut warehouse for nine months before a well paid, courageous crew spirited the equipment out of the city. Civil works in the pump stations reflected the lost schedule time. Again the problems could not have been foreseen. In the case of the supplies of water pipes, failure to meet the original delivery date has led to claims by AWSA for failure to perform according to the contract. The net results of these problems was that construction of the project was delayed by about twelve months. Reporting Requirements 3.14 AWSA complied with the Association's requirement of quarterly reporting and utilized the format agreed with IDA staff. Occasionally, however, the reports arrived at the Bank three to four months late. Technical reports prepared by the consultants were submitted according to the schedule, but some delays occurred in completion of the financial reports after the departure of the ODA advisor. The auditor's report and annual accounts were submitted to IDA not later than four months after the end of each fiscal year as stipulated in the covenants. Costs and Disbursements 3.15 Total project costs were estimated at about JD 3,700,000 in early 1974 and compared favorably with the Appraisal Report estimate of JD 3,712,000. However, physical contingencies in water supply and sewerage works were not included in the 1974 estimate. - 17 - 3.16 In the first quarter of 1976 estimated costs for the project were approximately 15% higher than those of the Appraisal Report, and this was attributed to the substantial cost of the office building and installation costs of house connections. By mid-1976 cost estimates placed the total project cost at JD 4.5 million or about 20% above the Apprai6al Report esti- mates, due primarily to the substantial increase in civil works costs. 3.17 Project costs are summarized below: Local Foreign Total Local Foreign Total ---JD (Millions) ---- --- US$ (Millions) ---- Appraisal estimate 1.22 2.49 3.71 3.80 7.75 11.55 Actual 1.48 3.00 4.48 4.60 9.33 13.93 Project costs exceeded estimated costs by approximately 21%. The original decision to implement the construction program through 10 separate interna- tionally bid contracts and four force account or local contracts was revised to comprise seven internationally bid contracts and three force account or local contracts. (Only two contracts, however were awarded to a foreign firm). The consultants' original estimates called for a total of JD 2.57 million (US$ 7.7 million) for construction and equipment costs. The actual total reached JD 2.72 million (US$ 8.2 million). A major deviation in cost occurred in the Aqaba Development Studies in which the original estimate was JD 0.145 million (US$ 450,000) and the final cost was JD 0.40 million (US$ 1.2 million) because of the expanded scope. Material costs, particularly for piping, also were higher than estimated by approximately JD 0.167 million (US$ 0.5 million). However, the ratio of local to foreign costs did not reflect any variation between the estimated and actual costs. 3.18 The rate of disbursement of the proceeds of the Credit was very close to that anticipated (Annex 2). Initial disbursements during 1974 reached 17.2% as compared with 25.3% programmed. The Credit was 92% disbursed by year-end 1977 while the appraisal estimate showed 100% disbursement. Full disbursement was effected in the first quarter of 1978. Procurement 3.19 All equipment, materials and civil works contracts, except for the furnishing of concrete sewer pipes, were to be awarded on the basis of interna- tional competitive bidding in accordance with the IDA guidelines for procure- ment. Tenders were advertised in two local newspapers, one London newspaper and announced to a number of embassies. With no Government restrictions on importing goods and with AWSA's being exempted by Law 19 from customs duties and taxes, there were no administrative problems with equipment and material supplies. International bidding attracted six bidders for supply of water pipes, one of whom (French) was the successful bidder, and three bids for civil works. A Korean firm won the civil works contract for the borehole - 18 - collector, water mains and laterals. All other contracts were awarded to Jordanian firms. Required payment of a "registration fee" of 1/2% of the total contract to the Government by successful expatriate firms dissuaded some bidders. No major problems were encountered. Specific benefits which have accrued to AWSA include those of utilizing international bidding procedures and similar documentation in the tendering and awards of other construction projects. Operations 3.20 The actual performance of the overall plant constructed through the project generally achieved the results specified by the consultants. Some areas of difference exist, although none of substantial importance. The continuing shortage of water, although reduced, affects the operation of the Tadj pump station. With a constructed capacity of 2,000 m3/hour the actual pumping rate is much lower, falling to 400 m3/hour frequently. Thus the Tadj plant is, in effect, unintentionally over-designed. Reliability of PVC piping in the 20 mm to 50 mm sizes is questionable. Numerous house connec- tions failed in bends and other fittings due to poor connections. This may be overcome by the introduction of rubber-ring joints instead of solvent- cement joints. While the training program, improvements to the sewage treatment plant and higher flows have slightly ameliorated sewage treatment problems, the sludge production and disposal problems still exist. These are being studied and attacked by AWSA as part of its present construction program. 3.21 The overall design of the project fits the present stage of tech- nology. Maintenance and operation of all the elements of the water supply and sewerage systems is within AWSA's capability. In retrospect, the design of some of the sewage collection system might have been revised since popula- tion growth and density did not exactly follow the earlier predictions. Similarly, the Tadj water pumping station could have been reduced in size and in number of pumps. Aqaba Development Studies 3.22 The firms of TAMS/DAH conducted the study of development of the Aqaba Region. Recommendations included the following: (a) Provide one of several suggested appropriate administra- tions for the Region. (b) Develop Aqaba as a complete town. (c) Enforce an agricultural settlement plan in the area. (d) Develop a construction and other industry training institution. (e) Construct needed housing units. (f) Develop tourism along the nearby coast. - 19 - 3.23 In addition, TAMS/DAH reported on a number of ongoing projects, including the following: (a) Phosphate Fertilizer Plant (b) Gcneral Cargo Facilities (c) Free Trade Zone (d) Expand Bulk Port Facilities (e) Tourism Development (f) Regional Highways (g) Aqaba Railway (h) Major Street Network (i) Water Supply Systems (j) Sewerage Systems (k) Electric Power (1) Housing (m) Schools and Health Facilities 3.24 As of mid-1978 the reports (Summary and Recommendations; Existing Conditions; Potential Economic Activities; Framework for Investment; Tourism Development; and Appendices) were still under review by NPC and no further action has been taken by the Government. Performance of Consultants, Contractors, Suppliers and Borrower 3.25 With approximately 10 years experience in Jordan, the engineering consultants' (VBB/FAWZI) grasp of water supply and sewerage design and construc- tion practices in the country was adequate. Therefore, basic design criteria and approaches were such that few revisions were required, other than "normal" situation such as re-designing sewers to fit changed field conditions or minor modifications of structures. Intitially the AWSA contract for VBB/FAWZI's services in design and supervision was to terminate on December 31, 1975. However, due to delays in project construction and execution, plus selection of VBB/FAWZI as the construction supervision consultants, the consultant was retained through December 31, 1977. 3.26 On each construction project AWSA supporting staff was assigned to assist and share in the consultant's supervision reponsibilities. Adjustments in salaries were necessary for the AWSA staff since the construction program was on an 8-hour day as opposed to AWSA's 6-hour day. In association with the mechanical/electrical contractor, VBB/FAWZI also provided training for operators and engineers in the initial running of plant facilities, particu- larly for the AWSA mechanical and electrical engineers who are now responsible in an overall capacity. There was no home office (Stockholm) training pro- vided by VBB/FAWZI to AWSA staff due to budgetary considerations. VBB/FAWZI has been retained by AWSA for the engineering consultant services in the present IDA-supported project (Credit 780-JO). - 20 - 3.27 The leakage survey was conducted by a firm from the Federal Republic of Germany, Hermann Sewerin. Although the five-months program was completed satisfactorily in March 1975, the final report was not presented to AWSA until August 1976, principally because of IDA's observations that the report did not meet the terms of reference concerning assessment of water losses. A com- plete leak survey of the water distribution system was prepared, leak detec- tion and repair materials were purchased and onsite training in leak detection and maintenance was provided to 15 AWSA technicians. Two technicians were trained in West Germany for approximately six weeks. An ongoing program was developed in which the city was divided into four sectors with a two-man team conducting leakage surveys in each sector. AWSA considered the performance of the consultant as satisfactory, and the provision of services and technical staff conformed to that described in the proposal and contract. 3.28 The Finnish firm of Oy Yleinen Insinooritoimisto (YIT) was retained to provide technical asssistance in the operation of the sewage treatment plant. Construction of the plant was completed in 1968, and partial opera- tion was achieved by early 1970. Operation with "full treatment results" was achieved by October 1973 with YIT assistance. After YIT's departure in September 1974 however, treatment levels again eroded. YIT trained a number of staff including plant mechanics, electricians, and operators. In addi- tion, an operating program was prepared, and a maintenance schedule including specific instructions for mechanical and electrical equipment operation was submitted to AWSA in February 1975. 3.29 Performance of construction and material supply contractors varied as far as meeting completion schedules was concerned. The following table summarizes contract costs and completion dates. - 21 - Contract Description Contract Final Original Actual Number Price Price Comple- Comple- tion Date tion Date 1 Water pumping JD 203,425 JD 206,155 09/31/75 06/06/77 stations, reservoirs, boreholes, pipes stores and shops 2 AWSA office building (Not implemented) 3 Supply and insta- JD 335,000 JD 332,984 09/13/75 06/06/76 1lation of mechanical and electrical equip- ment, at pump stations and boreholes 4 Borehole collector, JD 381,187 JD 432,322 12/01/75 09/20/76 water mains and laterals 5 Supply of pipe, JD 6,000 JD 6,000 12/01/74 07/17/76 valves and fittings FF 10,615,060 FF 10,152,319 for water lines 6 Water meters E 99,925 f 98,026 03/01/75 12/31/74 DM 20,526 DM 20,526 7 Drilling of JD 26,480 JD 23,560 04/15/74 12/31/74 boreholes 8 Survey of hydro- (Included in Contract No. 3) logical equipment 9 Construction of JD 954,218 JD 945,893 02/15/76 03/31/77 sanitary sewers 10 Supply of pipes (Included in Contract No. 9) and fittings for sewers - 22 - 3.30 While some of the delays could be attributed to understaffing on the part of the construction contractors, no delays were experienced because of lack of suitable construction equipment. The use of common trenches for water distribution and sewer lines would have shortened pipelaying schedules, and this technique was incorporated in some areas covered in contract documenta- tion for the succeeding project (Credit 780-JO). Construction manpower was sufficiently skilled to perform the necessary tasks, particularly in the case of expatriate firms. Mechanical and electrical installation by national craftsmen was of high quality. Installation of water-tight concrete was unacceptable in several cases and led to redesign of wall thicknesses. Delivery of locally obtained materials was within the target dates. Delays in receipt of materials from foreign sources delayed civil works. The French pipe supplier sustained losses of over FF 320,000 because of items missing in shipments. 3.31 Technical and administrative competence of all contractors was acceptable. However, contractor preparation and handling of invoices, claims and project documentation initially contributed to problems in processing payments. While considerable improvement took place, some minor problem areas still exist. 3.32 The technical and managerial competence of AWSA has improved steadily throughout the life of the project. This has been recognized by both NPC and NRA. NPC's observation at the conclusion of the project was that project control by AWSA had increased to the level wherein a large element of project design and supervision was being handled by the Authority, and commensurate institutional development in the administrative aspects was apparent. 3.33 Relationships between AWSA, the consultants, VBB/FAWZI, and the contractors reflected the Authority's overall control over project implementa- tion. Weekly meetings were held by AWSA with the consultants, and the Author- ity frequently exercised its option to question decisions and voice differing opinions, which resulted in equitable solutions to project problems. Occa- sional tripartite meetings were held with the contractors and the consultants, but generally contractor communications were channelled to AWSA through VBB/FAWZI. IV. OPERATING PERFORMANCE Water Production and Sales 4.01 As indicated in the following table water production and sales were, in most years, lower than the levels projected at the time of appraisal. - 23 - AWSA Projected and Actual Water Sales and Production 1973 - 1977 Year Water Produced Water Sold % Unaccounted-for Proj- Actual Proj- Actual Proj- Actual ected ected ected 1973 19.00 14.81 7.54 7.46 60.0 49.0 1974 19.00 15.97 8.34 8.34 56.0 47.8 1975 19.00 17.56 9.20 9.14 52.0 47.9 1976 19.50 14.21 10.13 8.33 48.0 41.3 1977 19.80 16.17 11.05 9.56 44.0 40.9 4.02 The reason for the failure of water sales to reach projected levels was basically due to the limited supply available from groundwater sources, particularly the protracted drought period during 1976. Even at the very low figures projected by the consultants 1/ per capita consumption during the period of 1973-1977 averaged from 10% to 27% below projected figures which can also be attributed to limited supply and also to the influx of refugees whose per capita usage was relatively low. Increase in water tariffs had little effect on usage. Recovery of recharge was evident to some degree in 1977 but AWSA limited pumping in order to build up groundwater resources. The chronic shortages of groundwater and the consequent suppressed demand have led AWSA to develop a surface water source (King Talal Dam reservoir) for 17 Mm3 per year. The number of water supply house connections was expected to increase from 35,400 in 1973 to 46,500 at year end 1977. Actually the tally in 1977 stood at 45,650 only 1.8% fewer than projected by AWSA. 4.03 Although the percentage of unaccounted for water remained relatively high during the project life, a general regression in the percentage of non-revenue water took place. Further, the actual percentages of unaccounted for water were, in each year, less than the projected figures indicating that the projections made during appraisal were, generally conservative. 4.04 As shown in the following table the number of sewer connnections was only slightly smaller than that projected. 1/ The consultants projected per capita consumption of 44 1pcd in 1972 and 52 lpcd in 1977. - 24 - AWSA Projected and Actual Sewer Connections Year Projected Actual 1973 3,100 /1 3,987 1974 4,700 4,419 1975 6,700 6,400 1976 8,700 7,900 1977 10,700 10,595 /1 Early totals in 1970-1973 were grossly under-estimated by the Municipality. Project 's Role 4.05 Since the water supply and sewerage elements of the project were designed principally to expand and augment the AWSA systems the incremental gains in sales and connections can be directly attributed to the project activity and other investments undertaken in parallel. Reduction in unaccounted for water improved considerably throughout the project due to implementation of the leakage survey and the leakage control programs which had been initiated in the project. 4.06 The sewer connection program was given added impetus throughout the project, especially during the years 1976 and 1977. The Public Sewerage Law requires that all premises in areas provided with sewer laterals be connected and the premise cesspool closed within three months of notification by the Authority. Non-compliance carries a 20% penalty fee in addition to connection costs. However, since the law was not being vigorously enforced a covenant was provided which required AWSA to ensure that connections be made within six months and no later than nine months following completion of laterals. Total connections in 1977 virtually equalled the projected number estimated in the appraisal. Project Benefits 4.07 The increase in water supply house connections from 35,400 to 45,650 was made possible to a large degree through the extensions of supply mains and distribution system elements constructed in the project. Extension of service in the urban poor areas allowed for some reduction in the total number of tankers serving these areas. Similarly expansion of the sewage collection system has reduced reliance on cesspools, thereby reducing aquifer conta- mination. 4.08 The project has introduced greater flexibility in the water distri- bution system, especially with regard to pumping capacity. The new wells, - 25 - increased storage, and new transmission mains have increased the reliability of supply throughout the system. Provision of water meters and implementation of the leakage control program have reduced non-revenue water as well as water wastage. Institutional development and tariff restructuring has strengthened AWSA, whose technical performance has also been improved. TI.e project generated employment in the construction industry and also in concrete pipe manufacturing but these increases have not been quantified. V. FINANCIAL PERFORMANCE 5.01 The appraisal forecast and actual Income Statements, Cash Flow Statements and Balance Sheets for AWSA from 1973 - 1977 are in Annex 3. A summary of AWSA's financial performance is as follows. Operating Results 5.02 The financial results for the water supply sector from 1974 through 1977 were unsatisfactory with a cumulative loss of about JD 1.0 million compared to a projected net surplus of about JD 440,000. The major cause of the loss has been the high rate of inflation resulting in an increase in operation costs in the four years ending 1977 of over 200% compared to the projected increase of about 50%. Other contributing factors included over- staffing and a severe drought during the period. This resulted in a negative rate of return in each of the four years (1974-1977) compared to an average annual rate projected of 4.5%. The financial results of the sewerage sector were satisfactory and in line with projections. Operating costs in the sector increased by about 150% but revenue increased in parallel. Financing Plan 5.03 The appraisal forecast and actual financing plan for the four year period 1973-1976 are as follows. - 26 - AWSA's Projected and Actual Financing Plan 1973-1976 -------------------- (JD '000)-------------------- Projected % Actual % Sources of Funds Surplus before Depreciation: Water 1,090 138 Sewerage 556 800 1,646 36 938 17 Less: Debt Service 892 19 1,214 22 Net Internal Cash Generation 754 17 (276) (5) IDA Funds 2,675 58 2,488 /1 45 Other Loans 1,075 24 1,640 30 Capital Contribution 60 1 1,651 30 Total 4,564 100 5,503 100 Application of Funds Project Expenditure 3,567 78 3,282 /2 60 Other Capital Works 421 9 1,756 32 Interest Capitalized 500 11 236 4 Increase in Working Capital 76 2 229 4 Total 4,564 100 5,503 100 /1 The balance of the Credit was received in 1977/78. /2 JD 536,000 was expended in 1977. There was a negative internal cash generation of JD 276,000 compared to a positive JD 754,000 projected, resulting from the unsatisfactory financial results in the water supply sector and an increase in debt service. Invest- ment in fixed assets increased by JD 1.0 million compared to projections reflecting increases in prices, additional emergency work in the water supply sector and substantial additional work on storm drainage and sewerage. This latter work was originally dropped from the project because of shortage of funds. The Government provided the additional funds to meet the deficit on internal cash generation and to cover the additional investment in the form of grants (about 80%) and loans (about 20%). - 27 - Tariffs 5.04 On January 1, 1973, AWSA introduced a flat tariff for water supplied of 75 fils/m3. In April 1975 and in line with Section 3.05 of the Project Agreement, a progressive tariff system was established which maintained the average 75 fils/m3 rate, but provided for a 20% decrease to 60 fils/m3 for low consumption to ensure access to potable water supply by poorer members of the community. On January 1, 1977 and 1978, AWSA increased the average water tariff by about 50% and 63% respectively, but maintained the 60 fils/m3 rate for the first block. The tariff progressivity ratio between maximum and minimum at 4.33 is satisfactory. The sewerage surcharge on water consumed of a flat 30 fils/m3 was introduced in 1973 and was increased to 50 fils/m3 on January 1, 1978. However, AWSA derives about 70% of its sewerage charges from a sewer- age tax (31%), connection charges (30%), and other charges (9%). Auditors 5.05 AWSA completed negotiations with a local auditing firm, Shair Ayed and Company; and this firm furnished their reports within a reasonable time. Financial Covenants 5.06 AWSA's performance in adhering to the revenue covenants has been excellent. AWSA implemented an average tariff of 75 fils/m3 for water sold to the general public during the period up to December 31, 1976 and also introduced a progressive tariff. AWSA also increased tariffs by 50% on January 1, 1977 to secure the 6% rate of return. However, during this year tariff increases for electricity and wage adjustments resulted in another net loss for AWSA in that year. Tariffs were again increased by 63% on January 1, 1978 to enable AWSA to earn a 7-1/2% rate of return in that year. 5.07 In retrospect the covenant requiring AWSA to maintain the 75 fils/m3 tariff to December 31, 1976 was inadequate in view of the high inflation rate in the region resulting from the 1973 oil price increases. However, in view of the inadequate services provided by AWSA during that period it is doubtful if AWSA could have adjusted rates to meet a reasonable rate of return require- ment. 5.08 AWSA's performance relating to implementation of improvement in its accounting system was satisfactorily complied with. An ODA accounting advisor was engaged for three years and implemented substantial improvement in the stock control, billing and accounting. However, some deterioration in the accounting performance has been noted in the past year since the departure of the ODA advisor and some key staff. 5.09 The covenants relating to converting two existing interest free loans to equity and the annual audit of AWSA's accounts were adhered to. - 28 - VI. INSTITUTIONAL PERFORMANCE Management and Organizational Effectiveness 6.01 At the time of establishment of AWSA as an autonomous agency in April 1973, only a general manager and two senior engineers, chief engineer (water) and chief engineer (sewerage) were assigned to the Authority as senior staff. Advisory assistance was provided by ODA/UK, particularly in the administration and financial departments. However, at the outset poor organization, lack of delegation of authority, as well as weak operational aspects of the engineering and accounting units characterized the agency. Operation and maintenance of the water supply and sewerage facilities suf- fered from a shortage of trained supervisory, operational and maintenance staff due in part to the existing low salary structure. From 1973 to 1978 AWSA succeeded in staffing its management positions with qualified profes- sionals with minimal attrition at the higher levels. Contributing to the success of the above has been the establishment by AWSA of a salary structure which is competitive with the private sector, thereby attracting competent staff. 6.02 Changes in the organizational structure have been nominal (Annex 4). The addition of a deputy general manager, who also serves as the chief engineer, allows the general manager to concentrate on implementation of the Board of Directors' policies by delegating part of the day-to-day operation to his deputy. The sewerage operations which were under the aegis of the chief engineer sewerage, have been divided between two managers - operations and treatment. Except for the sewerage operations which are in separate quarters in the Jebel Amman area, and of course, the treatment plant at Ras el Ain, all of AWSA's management and administration is located in the AWSA building in the Jebel Hussein area. 6.03 AWSA has assumed its autonomy to an increasingly greater degree during the five years of its existence. While the present development and construction program will provide service to Amman through 1985, long range planning to the year 2002 is under way at the Authority. The strength of AWSA is such that water resource allocation for the Municipality is given high priority in a traditionally water-scarce country. Dependence upon foreign consultants for system design and construction supervision has been reduced, and AWSA is now undertaking responsibility for a reasonable proportion of the expansion of the water supply and sewerage system. 6.04 AWSA had the assistance of the ODA/UK accounting advisor until December 1976. Consequently, an adequate billing, collection, and stores control system is in operation . Since the departure of the ODA advisor, and some key staff trained by him, AWSA began to experience difficulties in keeping the financial accounting up to date. A contract was signed with its local auditor to assist in developing the accounting system and in coding the - 29 - accounts for future transfer to a computer following successful implementation of the manual accounting system. Growth 6.05 In early 1973 the total number of employees comprising AWSA's staff was 439. The consultants recommended that the required total as of 1977 would be 642, with 501 assigned to the administrative and water sections and 141 to the sewerage sections. As of mid-1978, AWSA has 1,040 employees, 770 are assigned to administrative and water supply posts and 270 to the sewerage section. AWSA is, therefore, overstaffed by international standards but not by the standards of neighboring countries. Staff Recruitment, Training and Development 6.06 AWSA has, during recent years, established a salary structure which is competitive with the private sector in Jordan and which has enabled it to recruit qualified personnel. Staff turnover is high, averaging 16% per annum during the period 1975 to 1978 mainly due to higher salaries offered in some of the other countries in the Middle East. AWSA, in common with the private sector, cannot offer the competitive salaries requisite to stemming this movement and consequently is undertaking an active training program to main- tain staff levels. AWSA has overstaffed its departments in order to ensure that an adequate number of staff is available at all times. The staff increase of 32% in a three year period ending July 1977, was, therefore, not justified by the increased operational responsibility. The AWSA training program from 1974 through 1977 included 70 staff members who attended courses in Jordan conducted by consultants. Ten staff members received advanced training in overseas institutions. An active training program will continue through the succeeding project (Credit 780-JO). Expatriates 6.07 Expatriate assistance provided to AWSA during the project was almost exclusively provided through ODA/UK. The accounting advisor was assigned for a three-year period and his contribution to the improvement of AWSA's finan- cial operations was substantial, particularly with regard to billing, stores and the accounting system in general, including preparation of one accounting manual. A relatively short tour of duty (several months) by a management advisor served to assist in overall administration during AWSA's transition from, a department in the Municipality to an autonomous Authority. In later stages of the project (early 1977) a sanitary engineer joined AWSA for a two-year assignment which is still in effect. Although his efforts are spread over a number of areas of activity, the results of a water meter calibration program initiated by this engineer were useful in determining optimum specifi- cations for water service in Amman. A Dutch wastewater engineer took up a two year assignment beginning in 1978 aimed at improving the sewage treatment plant operation. Two ODA/UK mechanical technicians were assigned for three months to assist AWSA staff in pump station operation and maintenance. Two - 30 - inspectors were also assigned by ODA/UK to AWSA for construction inspection of water supplies and sewerage in the refugee camps. AWSA's appraisal of the performance of all the expatriates is that tpir efforts aided in establishing improved financial, technical and administrative operations and systems. Covenants and Sectoral Developments 6.08 The institutional covenants requiring AWSA to carry out its opera- tions under the supervision of a competent general manager and a qualified senior staff (including the covenant of appointing an experienced chief engineer) have been adhered to by AWSA, and its satisfactory record of adminis- trative and engineering operations reflects the results achieved by this administration. A covenant stating AWSA's responsibility to upgrade its salary structure in order to provide adequate salaries and career development prospects to attract and retain qualified staff has permitted AWSA to expand its forces considerably. Retention of management and accounting advisors was also complied with. In addition, AWSA was to employ a qualified accountant experienced in utility accounting, budgeting and costing. AWSA complied, and the combination of the two above covenants laid the groundwork for the presently effective accounting operations in the authority. The covenant under which AWSA contracted with a firm for staff training in operation and maintenance provided assistance for AWSA to establish and staff a comprehen- sive operation and maintenance program. VII. PROJECT JUSTIFICATION Project Achievement 7.01 Although the objective of meeting the growth in demand for water supply service was not met, due to severe drought conditions which curtailed available water, the level of service provided was improved. The actual number of house connections installed for water supply and sewerage was, at the conclusion of the project almost equal to that projected in the appraisal. Water system flexibility and stability was achieved to a greater degree than anticipated through linkage of existing pump stations and construction of new stations. Reduction of unaccounted for water beyond that anticipated was reflected in a proportionate reduction of bulk supply requirements. Although provision of a continuous supply of water for 24-hours per day is possible, AWSA decided to limit supplies since adverse conditions could recur. Even though water sales and revenue increased considerably during the years 1973- 1977, skyrocketing production and operating costs nullified the financial gains. However, the introduction of the progressive tariff with a decreased first step brought the benefits of potable water to a larger proportion of the lower income population group. Improvement and extension of sewer service closely paralleled that predicted during appraisal, and the financial viability of the sewerage operations continued to achieve expected results. - 31 - 7.02 The emergence of AWSA as an effective Authority fully capable of discharging most of its defined responsibilities must be regarded as a major benefit of the project. Improvement in administrative practices, technical expertise and some financial procedures are hallmarks in the progressive growth of the organization. An unexpected benefit which occurred was the development in the ability of local contractors and the pipe manufacturer to successfully contract large elements of project works. This was particularly evident in the mechanical/electrical contracts. Socio-Economic Benefits 7.03 The improvements and extensions to the Amman water and sewerage system have provided significant benefits. Making potable water of good quality available to a larger portion of the population tends to contribute to a decrease of the incidence of water-related diseases. The replacement of cesspools with piped sewerage can lead to a reduction of both aquifer and water pipe contamination. In addition to the materialization of benefits the distribution of these benefits among different population groups is significant. The introduction of the stepped tariff for water has made potable water accessible to a larger number of the urban poor, albeit in limited quantities. The tariff also penalizes excessive water consumption by higher income households which is in line with project objectives to encourage conservation measures. Provision of piped sewerage in the higher and increasing density areas will reduce health risks in some of the low income areas. Least Cost Solution 7.04 The project elements were reviewed by the consultants (VBB/FAWZI) in the perspective of AWSA's present and anticipated operations. Selection of alternatives for the areas to be served remains valid since the areas chosen as most feasible were the areas of greatest need. Technical solutions to the water supply problems also were still valid. Connection to piped sewerage again reflected a financial advantage to users when compared with retention and operation of cesspools. Sizing and staging of water supply and sewerage system construction produced the same positive economic consequences as in the initial studies. Incremental Rate of Return 7.05 An incremental rate of return on the 1973-1976 investements in the water supply sector was calculaLed using the investment cost,incremental operating costs and incremental revenue adjusted to the 1972 price levels (Annex 5). The incremental revenue for 1978 onwards was based on the tariff introduced on January 1, 1978 adjusted to 1972 price levels. The rate of return was 12% compared to the appraisal projected rate of 10%. The Appraisal Report did not calculate a rate of return for the sewerage in- vestment as the major benefits in public health were difficult to quantify. - 32 - VIII. BANK PERFORMANCE General Performance 8.01 AWSA and NPC share the view that the overall performance of IDA was altogether satisfactory and appropriate to the needs of the authority. IDA staff were well informed and provided sound advice on technical and institu- tional matters. During the project IDA suggested stepped tariffs which were accepted and implemented by AWSA. IDA's suggestions concerning the leakage survey resulted in a report which was considerably more acceptable for AWSA use, particularly regarding water losses. IDA recommended that AWSA use the funds which had been reserved for the office building, for water supply house connections. In retrospect, the investment in the building might have been more profitable since building costs have skyrocketed, and alternate funding for house connections materialized later. Supervision 8.02 The intervals between IDA's supervision missions for the project averaged about six months. AWSA considered this spacing of visits acceptable and, indeed, the performance of the authority, consultants and contractors was such that more frequent missions would have been redundant. AWSA's quarterly reports and close contact with IDA staff facilitated project supervision. The missions fielded by IDA were characterized by the proper balance, continuity and depth of expertise needed to provide the level of supervision deemed practical for AWSA's project implementation. One additional project was prepared and appraised during the project period. An additional spin-off was the construction industry review prepared by an IDA supervision mission. IDA's contribution to the development of AWSA is regarded by the Authority and NPC as important and basic to its genesis and organizational growth. Working Relationship 8.03 IDA's relationship with AWSA and with NPC were amicable, mutually cooperative and productive. In an atmosphere of mutual respect, these agen- cies developed good rapport. This facilitated access by IDA to other govern- mental agencies when contacts with these were necessary. In addition, when information was required from bilateral or international agencies resident in Jordan, the assistance of AWSA and NPC was immediate and productive. Other 8.04 The issues raised by IDA proved to be valid and served as a basis for adequate project appraisal and supervision. AWSA shares the IDA and NPC view that the covenants were appropriate and conducive to the improvement of AWSA as an autonomous institution. - 33 - IX. CONCLUSIONS 9.01 Although the Project Completion Report has been prepared immediately after the Credit closing date there is little doubt as to the final outcome of the improvements generated in the project. Because the basic objective of the project was the improvement of levels and quality of service to users, and because there was little element of uncertainty in the achievement of the objective, the general achievements of the project were in line with the planned objective. The degree of achievement was relatively less and the time required to do so was somewhat more than anticipated in the appraisal report. The results of this type of project, which involves extension and augmentation to existing systems, are fairly predictable. 9.02 The physical plant which was envisaged in the appraisal report was built, except for the office building; and its performance is considered satisfactory even though events, such as inordinate population growth and droughts nullified some of the accomplishments. Standard criteria and designs which were introduced during and after the appraisal process fit existing technology in the country and thus did not introduce operational problems. In retrospect no alternative approaches other than considerable expansion of the project scope would have been more effective, and in any event the absorptive capacity of AWSA was certainly tested in the project as constituted. 9.03 Institutional development of AWSA was not fully achieved to the degree anticipated during appraisal. Although the technical and adminis- trative areas of the Authority were strengthened and consequently improved, the financial department showed less advancement and its inherent weaknesses must be addressed again in the supervision of the follow-up project. The assignment of an expatriate executive financial manager yielded positive operational results and should again be considered by the Authority in order to implement operational plans and procedures which are at present in limbo. Europe, Middle East and North Africa Regional Office November, 1978 JORDAN AMMAN WATER SUPPLY AND SEWERAGE PROJECT - II CONSTRUCTION SCHEDULE (ESTIMATED) 1973 1974 1975 1976 PROJECT COMPONENTS J -ASOND FMAM J J SOND J FMAM J ASONDJ FMAM,JJASOND WATER SUPPLY PUMPING STATIONS: PUMPS AND EQUIPMENT i A amI CIVIL WORKS = I A AM 11 1 WELLS: Ii DRILLING COLLECTORS PUMPS AND EQUIPMENT IMPROVEMENTS WATER PIPES: SUPPLY OF WATER PIPES & ACCESSORIES PIPE LAYING NETWORK DESIGN HOUSE CONNECTIONS A I4 m r I I Construction RESERVOIR 1 1T LEAK DETECTION AND HYDROLOGICAL EQUIPMENT WATER METERS METER SHOP, STORE AND GARAGE OFFICE SEWERAGE SUPPLY OF SEWER PIPES & ACCESSORIES SEWERS IN NEW AREAS SEWERS IN ROAD CROSSINGS SEWERS IN ONGOING PROGRAM HOUSE CONNECTIONS TREATMENT PLANT IMPROVEMENTScon ACTIVITY 1 - - m -DESIGN f.- - GRO0UPED INTERNATIONAL COMPETITIVE BIDDING CONTRACTS M smamusmusmTENDERING INTERNATIONAL COMPETITIVE BIDDING CONTRACTS ~ MOBI LI ZATION OR MAN UF ACTURE FORCE ACCOUNT OR LOCAL CONTRACTS SUPPLY, INSTALLATION OR CONSTRUCTION ------PRINCIPAL INTERCONNECTIONS BETWEEN ACTIVITIES World Bank - 7158(2R) JORDAN AMMAN WATER SUPPLY AND SEWERAGE PROJECT - II CONSTRUCTION SCHEDULE (ACTUAL) C ONTR 1973 1974 1975 1976 1977 1978 PROJECT COMPONENTSAACTS WATER SUPPLY PUMPING STATIONS PUMPS & EQUIPMENTS INCLUDING RESERVOIR, LEAK DETECTION & HYDROLOGICAL Installation EDUIPMENTS C-3 S CIV IL WORKS Cntuto INC. METER SHOP, STORES & GARAGE C-1 WELLS DRILLING & IMPROVEMENTS C-7 WATER PIPES SUPPLY OF SEWERAGE PIPE & Supply ACCESSORIES C-5 S PIPE LAYING & WELL COLLECTORS C-4 Construction and Installation HOUSE CONNECTIONS WATER METERS C-6 SEWERAGE SUPPLY OF PIPES & ACCESSORIES Cnstruction AND CIVIL WORKS C-9 HOUSE CONNECTIONS AcuityWorl. B-k-19297 COMPLETION DATE INTERNATIONAL COMPETITIVE BIDDING CONTRACTS SIGNING CONTRACT ORIGINAL COMPLETION DATE FORCE ACCOUNT OR LOCAL CONTRACTS CERTIFICATE OF COMPLETION ISSUED JORDAN AMMAN WATER SUPPLY AND SEWERAGE PROJECT II CREDIT 385-JO COMPLETION REPORT COMPARISON OF APPRAISAL FORECAST AND ACTUAL SCHEDULE OF DISBURSEMENTS Calendar ----- Appraisal Report Estimate -------------- Actual ------------- Year Annual a % Cumulative a! % Annuala Cumulative a 1974 2.2 25.3 2.2 25.3 1.5 17.2 1.5 17.2 1975 3.8 43.7 6.0 69.0 2.4 27.6 3.9 44.8 1976 1.6 18.4 7.6 87.4 3.1 35.6 7.0 80.5 1977 1.1 12.6 8.7 100.0 1.0 11.5 8.0 92.0 1978 - - 8.7 100.0 0.7 8.1 8.7 100.0 a/ Amounts shown in US$ Millions. JORDAN AMMAN WATER SUPPLY AND SEWERAGE PROJECT II CREDIT 385-JO COMPLETION REPORT COMPARISON OF FORECAST AND ACTUAL DISBURSEMENTS BY CATEGORY Category Description Appraisal Amounts Variations between Estimated Report Disbursed and Actual Disbursed Estimate Amount Percentage --------- US$ US$ % 1 Supply of Equipment (including contingencies) 3,538,000.00 3,918,163.33 380,163.33 10.8 2 Civil Works (including contingencies) 3,887,000.00 3,135,407.86 751,592.14 19.3 3 Consultants Services and Training 905,000.00 1,276,428.81 371,428.81 41.0 4 Studies 370,000.00 370,000.00 - - 8,700,000.00 8,700,000.00 JORDAN AMMAN WATER SUPPLY AND SEWERAGE PROJECT II CREDIT 385-JO COMPLETION REPORT AMMAN WATER AND SEWERAGE AUTHORITY Comparison of Appraisal Forecast and Actual Income Statements - Water ------ 1973 ------- ------- 1974 -------- ------ 1975 --------- ------ 1976 --------- ------ 1977 ------- Appraisal Actual Appraisal Actual Appraisal Actual Appraisal Actual Appraisal Actual Report Report Report Report Report Estimate Estimate Estimate Estimate Estimate Year Ending December 31. Water Produced (m3 million) 19.00 14.81 19.00 15.97 19.00 17.56 19.50 14.21 19.80 16.17 Water Sold (m3 million) 7.54 7.46 8.34 8.34 9.20 9.14 10.13 8.33 11.05 9.56 % Water Unaccounted for 60.0 49.0 56.0 47.8 52.0 47.9 48.0 41.3 44.0 40.9 Number of Connections at year end ('000) 36.50 35.38 39.00 37.00 41.50 39.02 44.00 41.61 46.50 45.65 Average Tariff (fils/m3) 73 73 73 68 73 76 73 79 83 117 ----------------------------------------------------------JD Thousands --------------------------------------------------------- Revenue Water Sales 550 541 609 566 672 696 739 659 917 1,118 Meter Rent - - - 1 Other Charges 40 59 40 73 40 80 40 111 40 146 Total 590 600 649 639 712 776 779 770 957 1265 Operating Costs Salaries and Wages 150 135 154 244 159 374 163 499 168 648 Fuel and Power 153 150 158 184 163 188 172 182 178 375 Materials and Chemicals 46 35 54 49 67 81 85 192 88 169 Other Expenses 25 25 28 50 30 75 33 184 37 133 Depreciation 90 116 107 123 134 128 173 141 181 160 Total 464 461 501 650 553 846 626 1.198 652 1485 Surplus (Deficit) before Interest 126 139 148 (11) 159 (70) 153 (428) 305 (220) Interest 63 61 55 58 47 69 39 81 181 77 Net Surplus (Deficit) 63 78 93 (69) 112 (139) 114 (509) 124 (297) Rate of Return on Average Net Fixed Assets (%) 4.9 5.3 4.7 - 4.0 - 3.2 - 6.2 - Cash Operating Ratio (M) 79 77 77 102 78 109 80 156 68 117 JORDAN AMMAN WATER SUPPLY AND SEWERAGE PROJECT II CREDIT 385-JO COMPLETION REPORT AIMAN WATER AND SEWERAGE AUTHORITY Comparison of Appraisal Forecast and Actual Income Statements - Sewerage ------ 1973 ---------- ------ 1974 --------- ------ 1975 -------- ------ 1976 -------- ------ 1977 -------- Appraisal Actual Appraisal Actual Appraisal Actual Appraisal Actual Appraisal Actual Report Report Report RReport Report Estimate Estimate Estimate Estimate Estimate Year Ending December 31 Number of Connections 3,100 3,987 4,700 4,419 6,700 6,400 8,700 7,900 10,700 10,595 Water Surcharges (m3 million) 0.65 0.98 1.04 1.40 1.55 2.10 2.12 2.30 2.74 2.90 Surcharge (fils/m3) - 30 - 30 - 30 - 30 - 30 ----------------------------------------------------------JD Thousands-------------------------------------------------------- Revenue Surcharge on water 20 29 31 42 47 62 64 67 82 86 Connection Fees 120 147 96 139 80 136 70 101 70 213 Sewerage Tax 114 117 117 191 121 229 125 233 129 275 Other Revenue 20 29 20 28 19 47 18 65 18 64 Total 274 322 264 400 267 474 277 466 299 638 Operating Costs Salaries and Wages 70 69 72 110 74 168 76 222 79 298 Fuel and Power 12 11 12 19 13 23 13 26 18 46 Materials and Chemicals 30 9 35 10 39 10 41 25 38 36 Other Expenses 8 19 9 32 10 34 11 75 12 66 Depreciation 90 123 103 132 116 133 123 144 125 141 Total 210 231 231 303 252 368 264 492 272 587 Surplus (Deficit) before Interest 64 91 33 97 15 106 13 (26) 27 51 Interest 3 3 1 2 - 19 - 22 76 39 Net Surplus (Deficit) 61 88 32 95 15 87 13 (48) (49) 12 Cash Operating Ratio (%) 77 72 87 42 94 50 95 74 91 92 JORDAN AMMAN WATER SUPPLY AND SEWERAGE II CREDIT 385-JO COMPLETION REPORT AMMAN WATER SUPPLY AND SEWERAGE AUTHORITY COMPARISON OF APPRAISAL FORECAST AND ACTUAL CASH FLOW STATMENTS ---------1973------------ ----------1974----------- ----------1975----------- ----------1976----------- ---------1973/76--------- ----------1977----------- Appraisal Report Appraisal Report Appraisal Report Appraisal Report Appraisal Report Appraisal Report Estimate Actual Estimate Actual Estimate Actual Estimate Actual Estimate Actual Estimate Actual Total SOURCES OF FUNDS Surplus before Depreciation: S ater 215.7 255 255.2 112 293.5 58 325.6 (287) 1,090.0 138 485.4 (60) ve ge 154.0 214 136.2 229 131.2 239 135.3 118 556.7 800 152.2 192 Total 369.7 469 391.4 341 424.7 297 460.9 (169) 1,646.7 938 637.6 132 Capital Contributions 15.0 2 15.0 220 15.0 723 15.0 1356 60.0 1651 15.0 1587 oDA Credit 600.0 122 1,200.0 673 800.0 1167 75.0 526 2,675.0 2468 - 301 Other Loans 295.0 190 400.0 615 180.0 835 200.0 - l,71640 - 1351 Total 895.0 312 1288 980.0 2002 275.0 526 3,750,0 4128 _- 1652 Total Sources of Funds 1279.2 703 2,006.4 1849 1,419.7 2372 750.9 1713 5,456.7 6717 652.6 3371 APPLICATION OF FUNDS Project Expenditure Water 6 Sewerage 922.9 302 1,630.3 981 983.0 1328 30.8 671 3,567.0 3282 - 536 Other Capital Expenditure 51.0 252 35.0 456 35.0 346 300.0 702 421.0 1756 200.0 1621 Interest Capitalized 20.0 - 100.0 30 180.0 78 200.0 128 500.0 236 223.9 146 Total 993.9 554 1.765. 1467 1,198. 1752 530.8 1501 48 5274 423.9 2303 Debt Service Aarti:ation 189.8 184 174.8 198 159.8 196 159.8 221 684.2 899 190.4 320 Interet 66.3 65 56.1 59 47.0 88 38.8 103 208.2 315 32.4 143 Total 256.1 249 230.9 257 206.8 284 198.6 424 892.4 114 222.8 463 Increase in Welling Capital gccluding g Ch) a 25.7 (49) 2.0 83 2.0 315 17.0 (166) 46.7 183 25.0 100 Total Application of Funds 1275.7 754 1,998.2 1807 1,406.8 2351 746,4 1759 5,427.1 6671 671.7 2866 Net Cash Generation 4.0 29 8.2 42 12.9 21 4.5 (46) 29.6 46 (19.1) 505 Cash Balance End of Years 42.7 33 50.9 75 63.8 96 68.3 50 - - 49.2 555 DEbt Service Coverage 1.4 1.8 1.7 1.3 2.0 1.0 2.3 - 1.8 - 1.6 0.3 JORDAN AMAN WATER SUPPLY AND SEWERAGE PROJECT IT CREDIT 385-JO COMPLETION REPORT AMAN WATER AND SEWERAGE AUTHORITY Comparison of Appraisal Forecast and Actual Balance Sheets ------ 1973 -------- 1974-------- ------ 1975 -------- ------ 1976 -------- ------ 1977 -------- Appraisal Actual Appraisal Actual Appraisal Actual Appraisal Actual Appraisal Actual Report Report Report Report Report Estimate Estimate Estinmate Estimate Estimate --------------D-------------TO Thousands--------------- Year Ending December 31 ASSETS Current Assets Cash 43 33 51 75 64 96 68 50 49 568 Inventaries 310 309 310 287 310 438 310 489 310 827 Accounts Receivable 95 187 105 275 118 629 131 258 164 816 1/ Advanced Payments - - - - - - - 314 - - Total Current Assets 448 129 466 637 492 1.163 509 1.111 523 2,211 Fixed Assets Gross Fixed Assets - Water Supply 3,243 2,995 4,071 3,112 5,246 3.338 5.832 3,677 5,932 5,083 Less: Depreciation 464 425 571 548 706 674 879 815 975 Net Fixed Assets - Water Supply 2,779 2,570 3.500 2,54 4.540 264 4 2.862 4 4 Gross Fixed Assets - Sewerage (including storm drainage) 4,117 3,803 4,694 3,885 4,997 4,299 5,157 4,507 5,257 5,697 Less: Depreciation 484 515 587 666 703 799 825 943 951 1,084 Net Fixed Assets - Sewerage 3.633 3,288 4.107 3,219 4.294 3.500 4 3,564 4 4,613 Work in Progress 145 346 505 1,614 225 2,722 10 3,678 10 3,273 Total Fixed Assets 622994 TOTAL ASSETS 7,005 6,733 8,578 8,034 9,551 10,049 9,804 11,215 9,712 14,205 LIABILITIES & EQUITY Current Liabilities Accounts Payable 99 307 99 249 102 372 90 468 90 657 Deposits 124 194 132 237 140 304 148 368 156 528 Total Current Liabilities 223 501 231 486 242 676 238 836 246 1,185 Long Term Debt IDA - First Loan 375 375 348 348 321 321 295 295 268 268 IDA - Second Loan 600 122 1.800 822 2,600 1.990 2,675 2,516 2.627 2,964 Previous Local Loans 767 738 619 695 486 678 353 572 257 570 New Local Loans 295 127 695 585 875 1 1 108 1055 2030 Total Long Term Debt 2,037 1 3362 42 42450 44.28 4,207 5, Equity Equity, Retained Earnings and Capital Contributions 4.745 4,870 4,885 5,098 5,027 5.116 5.168 5,916 5,259 7,188 TOTAL LIABILITIEF & EQUITY 7,005 6.733 8,578 8,034 9.551 10.049 9.804 11,215 9.712 14,205 Debt/Equity Ratio 30:70 22 78 41:59 32:68 46-54 45:55 46-54 43:57 44:56 43:55 1/ Included JD. 404,612.00 for compulsory connection to the swer,ge system brought into account during th, Fourth quarter. JORDAN AMMAN WATER SUPPLY AND SEWERAGE PROJECT - II ORGANIZATION CHART OF AMMAN WATER AND SEWERAGE AUTHORITY PROPOSED STRUCTURE (1973) BOARD OF DIRECTORS GENERAL MANAGER I I1 ADMINISTRATION FINANCE WATER OPERATIONS OPERAION ENGINEERING ADM. MANAGER FINANCE MANAGER CHIEF ENGINEEAR CHIEF ENGINEER CHIEF ENGINEER PERSONNEL AND FINANCIAL DISTRIBUTION DEVELOPMENT STAFF RELATIONS ACCOUNTS NETWORK TREATMENT PLANT & PLANNING COSTNG MAITENNCENEW WORKS COFFICE SERVICES I COSTING 1 PUMPING STATIONS MAINTENANCE CONSTRUCTION & SUPERVISION PROCUREMENT CONSUMER MAINTENANCE &MAJOR & SUPPLY RELATIONS LEAK DETECTIONAINTENANCE & BILLING PLANNING METER SHOP World Bank-7289 Il mt' l' JORDAN AMMAN WATER SUPPLY AND SEWERAGE PROJECT - II ORGANIZATION CHART OF AMMAN WATER AND SEWERAGE AUTHORITY ACTUALSTRUCTURE (1978) BOARD OF DIRECTORS GENERALMANAGER DEPUTY GENERAL MANAGERI] ADMINISTRATION FINANCE WATER OPERATIONS SEWERAGE ENGINEERING TEWAGEN ADM. MANAGER FINANCE MANAGER HIFENGINEER OPMANAGONS C .HIEF ENGINEER M NWWR CONSTRUCTION_ PERSONNEL AND FINANCIAL DISTRIBUTION OEXTENSION DEVELOPMENT SEWAGE STAFF RELATIONS ACCOUNTS NETWORK H. & PLANNIN TRANSPORT CONTRACTED PLANT COTN AINTENANCE CONTRUCTIONLAN OFFICE SERVICES g UCOSTING PUMPING STATIONS NTEACK CONSTRUCTION MAINTENANCE & SUPERVISION & PUMP STATIONS REONR MAINTENANCE LABORATORY & BILLING Chie Engineer PLANNING PROCUREMENTMERSO S & SUPPLY MTRSO CONSTRUCTION EXTENSIO NS & *is also Chief Engineer H. CONN. World Bank- 19298 ANNEX 5 - 44 - JORDAN AMMAN WATER SUPPLY AND SEWERAGE PROJECT II CREDIT 385-JO COMPLETION REPORT AMMAN WATER AND SEWERAGE AUTHORITY Table of Actual Incremental Benefits and Costs Year Capital Incremental Total Incremental Operating Revenue Costs -----------------------JD Thousands---------------------- 1973 183 2 185 98 1974 374 53 427 101 1975 918 237 1,155 177 1976 647 387 1,034 202 1977 679 459 1,138 442 1978-2012 100 418 518 960 Rate of Return: 12% BRD13193PCR NUZHA ARJANEM- SHAMSANI ARKA -- \jANUARY 1973 AND IBRD 139 N -. INFOIMATIDN H BEEN A NDED -- -Il -1 -I -11 MAPIso 1IT - - - - < 3 - - - -'NA S R / 3 - - - ABDOUN - -J RDA N Amman Water Supply and Sewerage Project ]i - SANITARY SEWERS TU RK E Y .¯- r - - _-=_ - - - Snitarysewer contruted undercrdi 385-JO - 5enitary1. seer exiig in 1973 -I I ¾ ARadad tre ntwr 5 Y R l A -? -- ---Muicpal boundøry ,.LEA ON- SEAl |SRA L ® mo I I I JORDAN ARAB EPUBl i..- · EG-PT 5AUDI ARABIAOD ADn2 . 40.3cernc scbondn  33. ,- Z 3. c N O~-C - E- 2%- - I- . - - ----- - - - .- - - -I-- ---- - '2) I jr--'