Colombia - Third Bogota Water Supply, Sewerage and Drainage Project

FILE COPY Document of nIET CoPY The World BankTRWrdB| T REP3ORTr! )'S FOR OFFICIAL USE ONLY T 07 ON,:v Report No. 2359b-CO COLOMBIA THIRD BOGOTA WATER SUPPLY, SEWERAGE AND DRAINAGE PROJECT STAFF APPRAISAL REPORT May 2, 1979 Projects Department Latin America and the Caribbean Regional Office 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.  CURRENCY EQUIVALENTS Currency Unit = Peso US$1.00 = Col$40.81 MEASURES 1 mm = millimeter = 0.04 inches 1 cm = centimeter = 0.39 inches I m = meter = 3.28 feet 1 km = kilometer 0.62 miles I 1 = liter = 0.26 US gallons 1 m3 = cubic meter = 264 US gallons I m3/sec = cubic meter = 22.82 MGC = million US gallons per second per day 1/sec = liters per second mg/l: milligram per litre ABBREVIATIONS AND ACRONYMS CAR: Regional Bogota Plains Autonomous Corporation EAAB: Empresa de Acueducto y Alcantarillado de Bogota EEEB: Empresa de Energia Electrica de Bogota DANE: Departamento Administativo Nacional de Estadistica DNP: National Planning Office EPMs: Empresas Publicas Municipales EMPOS: Empresas de Obras Sanitarias IDU: Institute of Urban Development INAS: Instituto Nacional de Salud INSFOPAL: Instituto de Fomento Municipal  FOR OFFICIAL USE ONLY COLOMBIA STAFF APPRAISAL REPORT THIRD BOGOTA WATER SUPPLY, SEWERAGE AND DRAINAGE PROJECT TABLE OF CONTENTS Page No. I. INTRODUCTION .......................................... II. THE SECTOR ............................................ I A. Country Background ......................... . 1 B. Water Resources and Management ............... 3 C. Sector Organization .............................. 3 D. Service Levels ...... ............... 4 E. Service Standards ...... .............. 5 F. Sector Objectives ...... .............. 6 G. Sector Finances ................................7 H. Previous Loans ...... ............................. 8 III. POPULATION, SECTOR SERVICES AND DEMAND IN THE PROJECT AREA ..................................... 9 A. Project Location ...... .............. 9 B. Population ................... 9 C. Regional Development Prospects ............... 9 D. Sector Agencies ...... ............................ 10 E. Existing Systems .............. .. ................. 10 F. Population Served and Service Standards .......... 14 G. Demand Projections ............. .. ................ 16 IV. THE IMPLEMENTING AGENCY ............................... 19 A. Organization .................. . 19 B. Management and Staff ..... ........................ 20 C. Training ......................................... 21 D. Management Systems ...... ......................... 21 E. Accounting Information Systems and Commercial Operations .......................... 21 F. Audit and Insurance ..... ......................... 22 G. Performance under Previous Loans .............. ... 22 H. CAR .............................................. 23 The project was appraised in October 1978 by Messrs. A. Heron (FNA), E. Maisch (EGR), and J. Culagovski (ECN). This report was prepared by the mission with the assistance of Messrs. R. MacEwen (EGR), and B. Gomes-Casseres (YP). 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.  - ii - TABLE OF CONTENTS (Continued) Page No. V. THE PROJECT ........................................... 23 A. Background ................... .................... 23 B. Objectives ................... .................... 24 C. Project Description ............. .. ............... 25 D. Technical Justification ............... ........... 26 E. Cost Estimates ................... 28 F. Project Financing .............. .. ................ 30 G. Implementation ............... .. .................. 31 H. Water Resources and Environmental Aspects ........ 32 I. Procurement ................... ............. 32 J. Disbursements .................. .............. 33 VI. FINANCIAL ANALYSIS .................................... 34 A. Past Financial Performance and Present Position .. 34 B. Revenues .................... ..................... 36 C. Capital Contributions ............ .. ........ 38 D. Financial Projections ............ .. ............ 38 E. EAAB Financing Plan .............................. 40 F. Monitoring and Evaluation Criteria ....... ........ 42 VII. ECONOMIC AND SOCIAL ANALYSIS ........... .. ............. 44 A. Introduction ................ .. ................... 44 B. Project Benefits .. 44 C. Least-Cost Solution ............. .. ............... 44 D. Incremental Rates of Return ......... .. ........... 45 E. Long-Run Marginal Costs and Tariffs ....... ....... 46 F. Impact on the Urban Poor .......... .. ............. 46 G. Project Sensitivity and Risks ........ .. .......... 48 VIII. AGREEMENTS REACHED AND RECOMMENDATIONS ...... ....... , ... 49  - iii - TABLE OF CONTENTS (Continued) LIST OF ANNEXES 1. EAAB Existing Water Supply, Sewerage and Drainage Systems 2. EAAB Historical and Projected Water Produc won and Consumption and Service Levels 3. EAAB Actual and Projected Sewerage Service Levels 4. Organization Chart of EAAB 5. Status of Chingaza Project Execution 6. Description of the Project 7. Project Cost Estimate 8. Annual Project Disbursements 9. Project Execution Schedule 10. Proposed Bidding Packages for Civil Works Contracts and Equipment Purchase 11. Loan Disbursement Schedule 12. EAAB Tariff Schedule, December 1978 13. EAAB Financial Statements, 1971-1985 14. Economic Rate of Return 15. Average Incremental Costs 16. Selected Documents and Data Available in Project File LIST OF TABLES 2.1 Water Supply and Sewerage Service Levels 2.2 Projected Percentage of the Population Served by Water Supply and Sewerage 2.3 Bank Lending to the Water Supply and Sanitation Sector in Colombia, 1968-1978 3.1 Actual and Projected Water Supply Service Levels for Bogota, 1978, 1979, 1983 and 1990 3.2 Actual and Projected Sewerage Service Levels for Bogota, 1978, 1979, 1983 and 1990 5.1 Project Cost Estimate 5.2 Financing Plan for the Project 5.3 Allocation of Loan Proceeds 6.1 EAAB Summary Statement of Income and Expenses, 1975-1978 6.2 EAAB Selected Financial Data, 1978 6.3 EAAB Preliminary 1978 Income Statement and Projections, 1979-1983 6.4 EAAB Projected Requirements and Sources of Cash, 1979-1982 6.5 Key Monitoring Indicators 7.1 Project Impact on the Urban Poor  - iv - TABLE OF CONTENTS (Continued) LIST OF FIGURES 3.1 Location of Existing Water Supply Sources 3.2 Location of Flooding 3.3 Installed Capacity, Production and Sales, 1969-1989 MAP IBRD No. 13910R - City of Bogota  COLOMBIA THIRD BOGOTA WATER SUPPLY, SEWERAGE AND DRAINAGE PROJECT I. INTRODUCTION 1.01 The Government of Colombia has requested Bank financial assistance for the expansion of water supply distribution facilities, extension and improvement of sewerage services and construction of storm water drainage facilities in the capital city of Bogota. The project was prepared by the Empresa de Acueducto y Alcantarillado de Bogota (EAAB), which is the city-owned authority responsible for the provision of sanitary and drainage services in Bogota. The total estimated cost of the project is US$62.7 million, and a Bank loan of US$30.0 million is recommended to cover its foreign exchange component. The Borrower and Beneficiary would be EAAB which has been the recipient of two previous Bank loans and is a well managed and financially sound public utility. Construction of the project components will be completed during the four year period 1979-1982. The project was appraised in October 1978 and found to be technically and economically justified and suitable for a Bank loan. II. THE SECTOR A. Country Background Physical Features 2.01 Colombia has an area of 1.14 million km2 and is characterized by high mountain ranges running south to north in the west central part of the country and tropical plains in the north and east. Although it is on the equator, as a result of high altitudes in the mountains, Colombia has a wide range of climates, but about 70% of the country is hot and rainy. In the eastern half of the country where most,of the population resides, annual rainfall exceeds 1,600 mm. There are three major river basins with numerous tributaries which cover about 90X of Colombia's land area, of which the Rio Magdalena Basin which parallels the south-north mountain ranges is the most significant as it provides potable and irrigation water in the heavily populated portions of the countriy (see map, page 97). Population 2.02 The population of Colombia in mid-1978 was estimated to be 25.7 million 1/. It is growing at an estimated rate of 2.8% p. a., down significantly from the rate of 3.2% p. a. which prevailed in the early 1/ Departamento Administrativo Nacional de Estadistica (DANE).  -2- 1960s 1/. Of the total population, about 61% live in communities of 2,500 inhabitants or more, defined as urban population for sector purposes. The urban population is growing at an annual rate of 4.5%, down from 6.0% in the early 1960s. The rural population (39.0% of the total) is estimated to be growing at 1.0% p. a., reversing the trend of negative population growth in rural areas which occurred during the 1960s, In contrast with other Latin American countries of comparable size and deveCopment, Colombia has several large urban centers. The population of Bogota, the capital city9 is about 3.8 million, Medellin, 1.3 million, Cali, 1.1 million and Barranquilla, 0.8 million, and there are 18 cities with populations ranging from 0.1 to 0.4 million inhabitants. Recent estimates of the rates of net migration indicate that the predominantly urban orientation of migration will continue at present levels to those cities which have the best employment opportunities, and this will create an increasing demand for public services. By 1990, it is projected that urban residents will account for about three-fourths of Colombia's total population. Economic and Health Indicators 2.03 Per capita income in Colombia in 1977 was estimated at US$660. Income distribution is highly skewed with the lowest quintile receiving only 5% of the national income. It is estimated that about 34% of the urban residents are below the urban poverty income threshold of US$220 per capita. 2.04 The health situation in Colombia is satisfactory. Calorie intakes exceed requirements for the country overall, although there are deficiencies for some low-income groups. There is one physician for every 2,230 inhabitants, which is better than the average for middle-income countries, and medical services are available to about 65% of the population. Life expectancy at birth is 61, compared with 58 for middle-income countries in general, and the crude death rate is 8 per thousand versus 12 per thousand for middle- income countries 2/. Diarrheal diseases, which are closely related to sanita- tion, are still the third largest cause of death in Colombia 3/, whereas for 23 of 34 other Latin American countries the disease is not among the first five causes of death. Although infant mortality has decreased from 75 per thousand in 1969 to 50 per thousand in 1976, diarrhea and enteritis are the number one cause of infant deaths and in recent years have remained relatively unchanged at an index slightly over 10 per thousand 4/. 1/ In June 1978 DANE undertook a household survey which indicated a crude birth rate of 29.1 per 1,000 population for the country as a whole, and rates of 25.0 and 35.9 for urban and rural areas respectively. Based on the country's average crude death rate of 8 per 1,000 popula- tion, the resulting overall population growth rate in 1978 was 2.1% p.a. It is expected that the apparent lower population growth rate in recent years will result in a downward revision of Colombia's present population estimate. 2/ Source: World Development Report, 1978. 3/ Mortality stemming from diarrhea and enteritis in 1975 was 50 per 100,000 inhabitants. 4/ Source: "Health Conditions in the Americas, 1973-1976" - PAHO/WHO.  - 3- B. Water Resources and Management 2.05 In general, high quality water resources for urban and rural water supply are ample. Colombia's population is concentrated in areas of moderate to high rainfall and adjacent to rivers and tributaries. There is, however, a seasonal pattern to the rainfall which requires storage to provide water to some urban areas during the dry season. With proper storage, Colombia's water resources are expected to meet potable water requirements well into the twenty-first century. At present, there are no problems with the allocation of water for domestic consumption which has traditionally been given the highest priority. 2.06 Responsibility for managing the multiple uses of water sources in Colombia is shared by different institutions as follows: (a) Planning: National Planning Office (DNP); (b) Survey, design and development: Colombia Institute of Hydrology and Land reclamation and three regional develop- ment institutions; and (c) Administration: National Institute for Renewable Natural Resources and regional development authorities. Waste Disposal 2.07 Sewage and industrial wastes are largely untreated, and in some cases the loads have reached or exceeded the capacities of the rivers to absorb them. The situation is particularly critical in rivers downstream from the major cities of Bogota, Medellin and Cali. The Government and regional and local authorities are aware of the situation, and programs are underway to require industries and municipalities to control pollution. C. Sector Organization 2.08 Overall sector planning for the water supply and sewerage sector in Colombia is the responsibility of the Ministry of Public Health in co- ordination with DNP. Responsibility for the implementation of national policies rests with the Instituto de Fomento Municipal (INSFOPAL) and the Instituto Nacional de Salud (INAS) in urban and rural areas, respectively. In addition, there are other institutions linked to the sector, the most important of which are the regional development institutions (para. 2.06) which promote the socioeconomic development of regions, have authority over regional resources, including water, and have responsibility for protecting the environment. 2.09 Until the end of 1975, INSFOPAL had direct responsibility for planning, financing, constructing, and operating water and sewer systems in municipalities with over 2,500 population, excluding a few large municipal authorities. Under decrees issued in December 1975 and June 1976, which were designed to decentralize the sector, INSFOPAL assumed responsibility for financing and general supervision of the water supply and sewerage sector  -4- for authorities in all communities over 2,500 in population 1/. Regional and municipal authorities were given executing responsibility for design, construction and operation of water supply and sewerage systems under INSFOPAL's guidance. At the present time, INSFOPAL is in the process of restructuring its organization and redefining its relationships and respon- sibilities. Because of inadequate manpower in the regional and municipal authorities, INSFOPAL has found it difficult to delegate project preparation and construction activities, and at the present time the decentralization envisioned in the decrees is not working satisfactorily. Sector development for communities of less than 2,500 inhabitants is the responsibility of INAS. 2.10 The direct responsibility for supplying water supply and sewerage services is vested in four categories of institutions. Two are supervised by INSFOPAL, Empresas de Obras Sanitarias (EMPOS) which have regional or municipal jurisdiction and Empresas Publicas Municipales (EPMs) which pro- vide services for individual cities. In many cases the EPMs, in addition to providing water supply and sewerage services, are responsible for telecommunications, electric power, slaughterhouses, public markets and solid waste disposal. In those EMPOS and EPMs where INSFOPAL has provided financing, it supervises operations, financial performance, and new construc- tion. The third category of operating authority is INAS, which provides water supply and sewerage services, or alternative excreta disposal facilities, to small communities directly through its regional branches or decentralized regional health agencies. Finally, there are authorities serving municipali- ties which are not linked to any national sector institution. D. Service Levels 2.11 Availability of water supply and sewerage services in Colombia ranks among the highest in Latin America. It is estimated that at the end of 1977, about 73% of the urban population had access to potable water through house connections and about 60% were connected to sewerage systems. Service levels in the rural areas were lower, with about 40% of the rural population having access to water supplies through house connections and about 12% having access to wastewater disposal systems. For the most part, the urban dwellers who are not served with piped water and sewerage constitute the lower income population. Service levels are shown in Table 2.1 below: 1/ Water authorities in the cities of Bogota, Medellin, Cali and Palmira, have not relied on INSFOPAL for financing and have traditionally operated autonomously.  - 5 - Table 2.1: WATER SUPPLY AND SEWERAGE SERVICE LEVELS (%) Urban Rural Total Water supply 1970 76.5 17.7 50.7 1977 73.3 40.3 60.5 Sewerage 1970 63.8 7.9 41.2 1977 60.2 12.1 41.5 Source: INSFOPAL. 2.12 The percentage of total population served with piped water increased from 50.7% in 1970 to 60.5% in 1977. Sector data indicate that this increase was the result of a significant rise in the percentage of rural population served offset by a small decrease in the percentage of urban population served. However, some of the communities with public water systems that were defined as urban in 1970 are now defined as rural, which could account for the reported decline in urban service levels. The extent to which the decline is real reflects the rapid migration from the rural areas to the cities. 2.13 The percentage of total population served with sewerage in 1977 was similar to that for 1970 (41%). This appears to be the result of an increase in coverage in rural areas and a decrease in urban areas, but the differences may be accounted for by the changes in definition of urban and rural population between 1970 and 1977. E. Service Standards 2.14 Water supply is provided through house connections, with public standpipes only being used as an interim measure. According to a recent analysis made by DNP, of those served with piped water in urban areas, about 61% received water which had been fully treated. The remaining 39% received water which had been partially treated by chlorination, or not treated at all. Sector authorities are aware of the dangers of untreated water and plan to provide adequate treatment to all water supplies in conformity with national water quality standards. There is no information available to allow assessment of the quality of water supplied in rural areas, although legal provisions require compliance with national water quality standards. 2.15 Waste disposal services are provided in urban areas by sanitary or combined sewerage/storm drainage systems. In rural areas, where the density of population is lower, alternative systems such as septic tanks, latrines and other individual waste disposal systems are widely used.  -6- F. Sector Objectives 2.16 Government objectives for the decade 1970-1980 are to provide water supply to 80% of the urban population and to 50% of the nondispersed rural population (centers with more than 200 inhabitants), and sewerage services to 70% of the urban population and to 50% of the rural population. It appears unlikely that the 1980 objectives for water supply in urban or rural areas will be met, and objectives for sewerage in both urban and rural areas will not be attained until well into the 1980s. A major constraint has been lack of financial resources, as internal cash generation has fallen short of the levels expected. Government funds and foreign loans have not been sufficient to meet the gap between available internally-generated funds and investment requirements. There have also been managerial and technical staffing con- straints which have retarded sector development, especially in medium and small-size cities and rural areas. 2.17 By 1990 the Government plans to provide piped water to 90% of the urban population and 80% of the rural nondispersed population. Sewerage service level goals are 80% and 55%, respectively. The Government has ex- plicitly recognized the need to expand services to the low-income population and expects to make services affordable by cross-subsidization from higher income consumer groups. The service level objectives for the next decade are presented in Table 2.2 below: Table 2.2: PROJECTED PERCENTAGE OF THE POPULATION SERVED BY WATER SUPPLY AND SEWERAGE Water Supply 1977 1980 1985 1990 Total 61 68 75 87 Urban 73 80 85 90 Rural (non-dispersed) 46 50 55 80 Sewerage Total 42 62 68 72 Urban 60 70 75 80 Rural (non-dispersed) 14 50 55 55 Source: PLANAL (National Plan of Priorities for Water Supply and Sewerage).  2.18 The Government has prepared a general investment plan for the sector with departmental priorities based on population, geographical status, level of existing services, and estimated per capita investment requirements. In the rural areas, community interest expressed by willingness to contribute a percentage of investment costs and a commitment to operate and maintain the services is a factor in determining investment priorities. 2.19 There are three additional objectives which the Government has for the sanitation sector. One is to improve management practices in water and sewerage authorities and in INSFOPAL and INAS. Another is to establish financial policies which will make the authorities financially viable and which will ensure a reasonable level of self-financing of investment programs. The last is to reduce river pollution which is seriously affecting health, fisheries and agriculture downstream from major cities. 2.20 Sector objectives for 1990 are attainable provided the Government takes measures to increase internally-generated funds, allocates a larger share of its development budget to the sector and is successful in obtaining the required external financing. The major constraint for sector devel- opment apart from funding, appears to be the absorptive capacity of the executing entities, especially in the case of small cities and rural areas. Institutional improvement programs to assist in reducing this constraint are being developed with the aid of international agencies, including the Bank. Of particular significance is a revised manpower training program being undertaken by INSFOPAL. G. Sector Finances 2.21 At the present time many, if not most, of Colombia's water author- ities are in poor financial condition as a result of unrealistically low tariffs. The Government's long-run financial objectives for the sector are to have each authority set tariffs at levels which will at a minimum recover operating and financial costs. At the same time, however, tariff structures must subsidize low-income consumers, therefore providing for income redistri- bution. 2.22 Sector investment during the next three years is expected to average US$100 million annually, of which about 60% will be accounted for by Bogota, Cali and Medellin, 32% by INSFOPAL, and 8% by INAS. It is expected that these investments will be financed 50% from external sources, 35% from the National Treasury (loans and equity) and 15% from internal cash generation of the authorities and local loans. While it would be desirable to have a larger share of capital expenditures financed from internal cash generation, the required tariff increases for many water utilities would be too large to be feasible. Long-range annual investments will have to increase, parti- cularly to meet sewage service level objectives and to reduce river pollution. Accordingly, the Government's financial commitment to the water supply and sewerage sector will have to be increased, and in this regard a detailed long-range sector investment program with associated financing commitments would be desirable.  -8- H. Previous Loans 2.23 Bank lending to Colombia for the water supply and sanitation sector is summarized in the following table: Table 2.3: BANK LENDING TO THE WATER SUPPLY AND SANITATION SECTOR IN COLOMBIA 1968-1978 Amount Loan (US$ Year Number Borrower Purpose million) 1968 536-CO EAAB Water Treatment and Transmission- Bogota 14.0 1970 682-CO EMCALI Water Treatment and Distribution- Cali 18.5 1971 741-CO EAAB Water Storage, Transmission, Treat- ment and Distribution - Bogota 88.0 1971 738-CO EPMP Water Supply, Sewerage - Palmira 2.0 1972 860-CO INSFOPAL Water Supply, Sewerage - Medium- size Cities (7) 9.1 1975 1072-CO INSFOPAL Water Supply, Sewerage - Medium- size Cities (8) 27.0 1978 1523-CO EMCALI Water Supply, Sewerage, Drainage- Cali 13.8 172.4 2.24 Bank lending to the sector encompasses water supply and sewerage in the capital city, the third largest city (Cali), and 16 medium-size cities. In addition to the loans to water utilities, the Bank in 1978 made a loan for the Urban Development Project (1558-CO) which included water supply components for 23 cities. The Bank's participation in the sector is consistent with the Government's policy of improving the service levels in the capital city, which is below that of the other large cities, and of providing better service in the secondary cities to encourage more balanced urban development. In 1977 the Bank extended its sector participation into rural areas through the Integrated Rural Development Project (Loan 1352-CO) which included a water supply component of US$3.2 million and the Integrated Nutrition Improvement Project (Loan 1487-CO) which included US$1.7 million for water supply. Agriculture Loans 849-CO and 1163-CO also included small water suppply compo- nents. The Bank's lending objectives of participation in a broad cross-section of the sector and the provision of assistance for institutional improvements are being achieved by the lending program.  - 9 - III. POPULATION, SECTOR SERVICES AND DEMAND IN THE PROJECT AREA A. Project Location 3.01 The project is located in Bogota, which is the capital of Colombia. Bogota is situated on a high plain known as the "Sabana de Bogota" at 40 36' North and 740 05' West, on the easternmost of the three parallel branches of the Andes Mountain Chain which run south-north through Colombia. Its altitude is 2,600 m above sea level and its climate is cool and fairly uniform throughout the year, with an annual average temperature of 13.60C. Annual rainfall varies from 1,000 to 1,500 mm for different sections within the Plain. B. Population 3.02 Bogota's population was estimated to be 3.8 million in October 1978, accounting for about 15% of the total population of Colombia and 24% of the urban population. Since 1970, Bogota's population has been growing at a rate of 5.8% p. a., primarily reflecting heavy immigration from the rural areas. The Municipal Government expects the present rate of population increase to continue and forecasts a population of 5.0 million in 1983 on completion of the project, and 7.4 million in 1990. C. Regional Development Prospects 3.03 Bogota is the principal administrative, financial, commercial, indus- trial, cultural and educational center of Colombia. Its cool, even climate, above average employment opportunities (its unemployment rate is about 60% of the national average) and ample space for expansion indicate that Bogota has excellent development prospects. The availability of large and favorably located water resources for both water supply and electric power generation are important factors which will contribute to Bogota's long-term growth. 3.04 In 1972 a team of consultants prepared a "Study of Urban Develop- ment of Bogota" which set forth the broad parameters of development for Bogota until the year 1990 and made recommendations for least-cost investment programs to meet public sector infrastructure and service requirements. The basic elements of the development strategy outlined in the study were incor- porated in 1975 into a General Development Plan for Bogota, which is loosely being followed by the various city government agencies and authorities. The development plan of Bogota's water supply and sewerage authority, EAAB, is consistent with the general plan and is being implemented with the objective of providing water and sewerage services to most of the population within the sanitary perimeter 1/. 1/ The sanitary perimeter is extended periodically to encompass Bogota's expanding population.  - 10 - D. Sector Agencies 3.05 The two principal agencies involved in the project are EAAB and the Corporacion Autonoma Regional de la Sabana de Bogota y de los Valles de Ubate y Chiquinquira (CAR), which has responsibility for water resource management and pollution control on the Bogota Plain. EAAB will be responsible for project construction and the sewerage feasibility studies and CAR for the feasibility studies for the rectification of the Bogota River, in cooperation with EAAB and Empresa de Energia Electrica de Bogota (EEEB). EAAB and CAR have a satis- factory working relationship and have reached agreement on the respective responsibilities for the project components. E. Existing Systems Water Resources 3.06 Bogota's water resources are abundant and favorably located. The Bogota River and its tributaries provide the city with a normal yield of 11.6 m3/sec. The Bank-financed Chingaza Project, 45 km east of the city, will make available 14 m3/sec in 1981 and will have an ultimate yield of 22 m3/sec. Additional schemes in Sumapaz and Suarez will provide 40 m3/sec and it is expected that the combined water sources will meet Bogota's require- ments up to the year 2025. 3.07 The surface water currently collected for the supply of Bogota is of good quality, requiring only standard treatment. The new source from Chingaza will be of excellent quality, requiring only simple treatment. There is some groundwater in the Plain, but the quality is poor and the quantity is barely sufficient to supply some small towns and to irrigate small areas in the Plain. Water Supply 3.08 Water used for domestic and industrial water supply is subsequently utilized for power generation downstream from Bogota after being returned to the Bogota River. There is no major conflict in the use of water in the Plain. CAR works in a joint commission with EAAB and EEEB to coordinate releases from the regulating impounding reservoirs. Priority of the use of water for human consumption is recognized by the bylaws of CAR. 3.09 Bogota's water supply now comes from the Bogota River and its tri- butaries (Figure 3.1). In the initial stages of development the system was supplied by small tributaries of the Bogota River that were close to the urban area. These tributaries are still utilized and the water is treated in the San Diego and Vitelma Treatment Plants. Subsequently, water from a more distant tributary, the Tunjuelo River, was tapped and diverted to the Vitelma Plant, and in 1956 direct abstraction from the Bogota River became necessary. The intake was selected at Tibito, about 35 km north and upstream  COLOMBIA THRID BOGOTA WATER SUPPLY, SEWERAGE AND DRAINAGE PROJECT LOCATION OF EXISTING WATER SUPPLY SOURCES / / t jITE~~~~~~~~~~~VTLMA 0n'~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. m3/sec 0~~~~~~% BOGOTA r 3 1~~~~~~~~~~~~~~~~~~~~~~ 2. A,/e Note: Capacities shown are for Treatment Plants World Bank - 20105  - 12 - of the city to obtain less contami3ated water. The first stages of the Tibi5o Treatment Plant were of 4 m /sec capacity, and the plant was expanded to 12 m /sec in 1976 as a part of the project financed by Loan 536-CO. Cur 5ently some additional works are under execution to facilitate the flow of 12 m /sec. The diversion wo5ks from Chingaza and the new El Sapo Treatment Plant with a capacity of 14 m /sec are expected to be completed in early 1981 and will provide a new source of supply. At the present t me Bogota has sufficient water supply and treatment plant capacity (13.6 m /sec) to meet demand until 1981 when the principal supply point for the system will be shifted to El Sapo because of its lower treatment costs and gravity delivery to the city as opposed to pumped delivery from Tibito. 3.10 Bogota's water distribution system is divided into three zones determined by altitude of which the low zone supplied from Tibito is the largest, accounting for about 70% of the city. The intermediate zone forms a narrow strip between the two other zones representing about 10% of the city area. This zone is also supplied from Tibito, but the water has to be boosted at Usaquen. The high zone, representing about 20% of the area of the city, is supplied by the Vitelma and San Diego Treatment Plants and other minor sources. The demand in this last zone has increased considerably because of the connection to this zone of the networks in "barrios populares" 1/ executed as a part of the project financed by Loan 741-CO. At present it is necessary to reinforce the supply to this zone by pumping water from the Tibito system. 3.11 The total length of Bogota's distribution system is 4,200 km including the two transmission lines from Tibito (78" and 60"). Pipes with a diameter of below 14" account for 94% of the total. The normal materials for pipes are galvanized iron for those with a diameter of 3" or less, asbestos cement for diameters of 4" to 12" and concrete for most of the pipes of 24" and abSve. The capacity of the public water storage in the system is 334,000 m , the major part of which is located in the low zone. Sewerage and Storm Water Drainage 3.12 About 30% of the area of Bogota, predominantly the older sections of the city, has a combined sewerage/storm water drainage system, and the remainder has separate systems. The sewerage and storm water drainage system is divided into four main sectors, which correspond to the natural drainage basins of the Bogota River's tributaries (Figure 3.2). The Torca, Salitre, Fucha and Tunjuelo streams flow from the east to the west through the city and discharge into the Bogota River. EAAB's sewerage and drainage master plan provides for the canalization (large open drainage channels) of these four streams and the construction of parallel sanitary interceptors to collect sewage now discharged into the streams inside the sanitary perimeter. 1/ Low-income areas.  COLOMBIA THIRD BOGOTA WATER SUPPLY, SEWERAGE AND DRAINAGE PROJECT LOCATION OF FLOODING BOGOTA ( U n Areas Subject to Flooding World 8ank - 20104  - 14 - 3.13 The limited hydraulic capacity of the Bogota River, which is the ultimate drainage channel for the whole Plain, prevents the full discharge of stormwater and sewage from Bogota when the flow of the River is above normal, causing frequent flooding of low-lying areas of the Plain (Figure 3.2). The Tunjuelo Stream floods in its middle reaches during its peak flow stage, while the other streams flood closer to their confluence with the Bogota River. The limited flow of the Bogota River is also inadequate to absorb the untreated sewage from Bogota and various industries located out- side the city limits. The oxygen content in the Bogota River downstream from Bogota has been depleted, creating a septic condition that is a source of nuisance for the population living near the water course and is a serious sanitary hazard for towns along the River. The possibility of rapid reoxygena- tion, which would normally take place in the Bogota River downstream from Bogota, where the river falls 1,800 m in a 25 km stretch, is in great measure impaired because most of the water is diverted through tunnels and penstocks which feed an electric power generating station on the lower Plain. The condition in which the Bogota River water reaches the Magdalena River may soon endanger the fishery industry in that river. Both the flooding and pollution situation were studied to the pre-feasibility level under Loan 741-CO, and will be studied to the feasibility level under the proposed loan (paras. 5.13-5.16). The principal components of the existing water, sewerage and drainage systems are illustrated in the Map and described in Annex 1. Evaluation 3.14 The water, sewerage and drainage systems have been well conceived with sufficient extra capacity for expansion and well constructed under fairly high design standards. The operational effectiveness of the system is satisfactory, with the exception of the system's ecological situation created by the discharge of raw sewage to open water courses. F. Population Served and Service Standards Socioeconomic Indicators 3.15 It is estimated that 1.5 million of Bogota's 3.8 million inhabitants, or 39%, may be classified as urban poor, with annual family incomes of US$1,200 or less (para. 7.12). The crude birth rate of about 25 per 1,000 is the same as the overall urban crude birth rate which is below the national average of 29 per 1,000 1/. Due to the absence of tropical diseases, health conditions are generally better than the national average, with a death rate of 5.7 per 1,000 inhabitants versus 8.0 for Colombia. However, infant mortality is 74 per 1,000 live births, which is above the national average of 50. Service Standards 3.16 In 1978, EAAB provided water supply to 3.2 million persons, which represented about 86% of Bogota's population. The areas not supplied are generally new settlements of low-income population principally outside the 1/ DANE Household Survey, June 1978.  - 15 - sanitary district perimeter. Those individuals not connected to the EAAB system are served by standpipes or obtain water from surface or groundwater sources. EAAB's supply has fully met demands of connected consumers and has provided highly reliable 24-hour per day service during the past decade. 3.17 Treated water quality is good and the quality is maintained in the distribution system which is pressurized at all times. Water turbidity is between 1.5 to 2 units, the color is between 8 and 10 units, the ph between 7 to 7.5, and alkalinity 15 to 20 mg/l. Hardness is around 30 mgr/lt. In general, it fulfills the requirements of international standards. The bacteriological quality is controlled regularly and B Coliform and plate count results show that the water meets public health standard requirements. Composition of Consumption 3.18 Per capita consumption of water in Bogota is estimated at present to be 196 lcpd, down from 217 lcpd in 1970 reflecting primarily the fact that many of the new consumers connected to the system were low-income families with consumption below the system average. About 66% of consumption is accounted for by residences, 27% by commercial and industrial users, and 7% by government. Consumption of low-income families using standpipes or not connected to the EAAB system is well below the average because of lack of water-borne sanitary facilities and sewerage connections. Metering 3.19 Water production is measured at the treatment plants and water sales are metered at all consumers' connections. The only exception to the latter are about 400 standpipes, which account for about 0.3% of consumption. After completion of a leak detection and repair program in 1975, unaccounted-for water was only 22% of water production. It appears to have increased substan- tially in 1977 and 1978 (to 27% and 33%, respectively), but this is in part due to understated water sales as a result of a meter readers' strike. Based on estimated normal per capita consumption of 196 lcpd, unaccounted-for water amounted to 26% of production in 1978. The increase since 1975 has resulted from a combination of factors, including unreliable production meters, insuffi- cient maintenance personnel, increased illegal connections and increased operating pressures to supply the expanding networks. Measures to correct these deficiencies are now underway, including meter replacement, strengthen- ing the leak-detection section, increasing maintenance personnel and metering of standpipes. Sewerage 3.20 About 80% of Bogota's population is served by direct connections to EAAB's sewerage system. The remainder of the population, located mainly out- side the sanitary district perimeter, is served by septic tanks or private or community provisional drains discharging into ditches or small streams. The principal deficiency of the sewerage system is that there is no treatment and all sewage is ultimately discharged into surface waters. In the more developed areas EAAB has constructed interceptors parallel to the surface water courses to collect the sewage discharges and improve sanitary conditions. The sewage  - 16 - development program for the next decade contemplates extension of existing interceptors to the limit of the sanitary perimeter, with the exception of the Salitre interceptor where the backflow from the high waters of the Bogota River extends well inside the perimeter, and construction of sewage and treatment plants. Urban Poor 3.21 It is estimated that in 1978 64% of the 1.5 million Bogota inhabi- tants classified as urban poor (para. 3.15) were connected to the EAAB water supply system and 51% to the sewerage networks. Those not served are gener- ally in areas of low population density inside the sanitary perimeter, or outside the perimeter where EAAB does not provide service. Once a barrio is established and is willing to advance 30% of the cost of the water distribution and sewage collection networks, EAAB will provide service. The individual connection fees to the poor are low and may be repaid over an extended period along with the monthly water and sewerage bills. Furthermore, the tariff structure provides large cross-subsidies to the low-income consumer (para. 6.10). Thus both connections to the water and sewage system and monthly service charges are affordable to the urban poor. The standards of service to the urban poor through individual house connections are the same as for other consumers in the system. G. Demand Projections Water Supply 3.22 Projected water demand has been derived from the expected population growth (para. 3.02), EAAB's planned increase in service levels, and existing per capita consumption of 196 lcpd. The planned increases in service levels have been based on expected future population patterns and extensions of the sanitary perimeter. The constant per capita assumption is the net result of expected lower-than-average per capita consumption for just under half the new population served, which will be urban poor 1/, coupled with expected modest increases in per capita consumption of the more affluent consumers. Further- more, it is not expected that the composition of demand will change signifi- cantly during the coming decade (para. 3.18). The expected population served, total consumption and total production for the years 1979 through 1990 are given in Annex 2 and summarized in the following table: 1/ Middle-income families consume 257 lcpd per capita while low-income families consume 155 lcpd.  - 17 - Table 3.1: ACTUAL AND PROJECTED WATER SUPPLY SERVICE LEVELS FOR BOGOTA FOR 1978, 1979, 1983 AND 1990 Growth Rate 1978-1990 1978 1979 1983 1990 ( Bogota Population (million) 3.78 4.00 5.00 7.40 5.8 Population Served (million) 3.23 3.44 4.52 7.03 6.7 Percent Served (x) 85.60 86.20 90.40 94.90 0.9 Consumption (million m3) 207.80 a/ 246.30 323.50 502.70 6.7 Production (million m3) 312.20 330.80 425.80 639.00 6.2 a/ Percent Unaccounted-for (%) 33.40 a/ 25.50 24.00 21.30 (3.7) a/ Consumption as reported is understated and unaccounted-for water over- stated due to a meter readers' strike. Growth rates have been based on estimated consumption of 231.3 million m3 (3.23 million inhabitants served x 196 lcpd). Source: EAAB 3.23 The projected water demand and available supply are presented graphically in Figure 3.3. It is evident that even if consumption grows at a faster rate than expected, EAAB will have sufficient supply capability to meet requirements up to 1990. After the completion of the Chingaza Project in early 1981, EAAB will have a supply capability of 25.6 m3/sec which compares with projected production requirements of 20.3 m /sec in 1990. Thus, there will be no supply constraints on demand growth. Also, it appears that tariffs would not need to be increased significantly in real terms and accordingly should not have much impact on future demand. Sewerage 3.24 Demand for sewerage service has been based on expected population growth patterns and planned extension of the sanitary perimeter. The projected population to be served is given in Annex 3 and summarized for selected years in the table below:  - 18 - COLOMBIA THIRD BOGOTA WATER SUPPLY, SEWERAGE AND DRAINAGE PROJECT INSTALLED CAPACITY PRODUCTION AND SALES (1969-1989) 9001 System Capacity 25.6 m3/sec 800 Chinaza Project (1 4.0 m3/sec)- 600 z 0 z 2 ~~~~~~~~~~~~~~~~~~~~~~~~Uhaccounted-for 1 Bajo Teusaca Water 400 Diversio n 1 _ , ~~~~~~~~~~~Production / 300 Tibito Plant -- _ _ Expansion . Sae (2.0 m /sec) L Sale I I Construction of World Ba 800 11969 ACUL 1975 1 980 POETD 1 985 1 989 TIME Fig. 3.3 World Bank -19845  - 19 - Table 3.2: ACTUAL AND PROJECTED SEWERAGE SERVICE LEVELS FOR BOGOTA, 1978, 1979, 1983 AND 1990 Growth Rate 1978-1990 1978 1979 1983 1990 M Bogota Population 3.78 4.00 5.00 7.40 5.76 Population Served a/ 3.04 3.24 4.25 6.61 6.69 Percent Served (M) 80.4 81.0 85.0 89.2 .87 a/ Based on 8.23 persons served per connection. Source: EAAB Urban Poor 3.25 In the affluent and middle-income areas of the city over 95% of the residents are served with water and sewerage connections and all new consumers in these areas are expected to be served. Thus, the improvement in the projected overall EAAB service levels for both water and sewerage represents principally increased service levels to the urban poor (para. 7.12). Both the City Government and EAAB have a good record of providing water and sewerage services to the poor, and these policies, including low connection fees and cross-subsidized tariffs for low-volume consumers are expected to continue in the future. IV. THE IMPLEMENTING AGENCY A. Organization 4.01 The Borrower and implementing agency will be EAAB which is an autonomous public enterprise owned by the Municipality of the Special District of Bogota. It was organized in 1955 under a decree of the Municipal Council and has responsibility for planning, constructing and operating all water supply, sewerage and drainage facilities in the Special District. Its charter provides all authorities needed by EAAB to operate effectively, and for exemption from income taxes and duties. 4.02 EAAB is governed by a seven-member Board of Directors with three members representing the Municipality of Bogota, including the Mayor who is the Chairman of the Board, and the others representing financing institutions, including the Banco de la Republica. The General Manager, who is the Chief Executive Officer, is appointed by the Mayor and EAAB's other seven principal officers are appointed by the Board. While EAAB is autonomous, its invest- ment program must be integrated with other development programs for the Municipality, and proposed major works must be approved by the Municipal Planning Board and the Municipal Government.  - 20 - 4.03 The organizational structure of EAAB is presented in Annex 4. There are five major departments reporting to the General Manager which are responsible for planning, administration, engineering, finance and operations. Also reporting to the General Manager is the Office of the Corporate Secretary which is responsible for legal affairs and external relations. The organiza- tion is functional and effective and coordination among the departments is good. B. Management and Staff Management 4.04 While it is the Board of Directors' responsibility to appoint EAAB's General Manager, in practice the nominee is selected by the Mayor of Bogota. This practice has resulted in frequent changes in General Managers, but performance on the whole has been good. The present General Manager assumed office in September 1978 and is fully qualified for the position. To some extent the selection of departmental managers has been influenced by political considerations and internal promotions to these positions have been the exception rather than the rule. The present holders of these positions are, however, qualified and their respective departments are functioning efficiently. Professional Staff 4.05 The quality of professional staff is generally good, although some recruitment difficulties are experienced because remuneration is not competitive with the private sector. This situation is normal for most public utilities in Colombia, but has not been critical in the case of EAAB. Local consultants are well qualified and are used to supplement EAAB staff, prin- cipally for feasibility studies and the design of civil works. Employees 4.06 At the end of 1978 EAAB had a total of 2,691 employees, of which 196 were categorized as professional, 982 as clerical and 1,513 as workers. The number of employees has increased by 63% since 1971 compared with an increase of 75% in water connections and major increase.s in treatment capacity and sewerage and drainage facilities. In 1978 EAAB had 6 employees for every 1000 connections, which is very satisfactory for a water utility in Latin America. Management recognizes that there is some overstaffing in certain job categories and understaffing in others and measures are underway to correct the imbalance. Management's relations with staff are generally good, and Management has the flexibility to hire, discharge and transfer employees as required. Evaluation 4.07 Since the first Bank loan in 1968, EAAB has successfully coped with difficult technical and financial issues and has developed into a mature and efficiently managed water authority. The present Management has both the intention and capability of continuing to improve the functioning of the institution.  - 21 - Covenants 4.08 In negotiations, EAAB agreed to retain provisions under the previous loans which require EAAB to give the Bank the opportunity to comment on any proposed substantial reorganization of EAAB and specify that any amendment to the EAAB charter which would adversely affect project implementation, EAAB's operations or its financial situation, without the Bank's prior agree- ment, would constitute a default under the loan. C. Training 4.09 EAAB's turnover of staff is low and the majority of its employees have a number of years of service on the job. The training requirement is therefore not large, and at present, internal training programs are designed to retrain employees for new assignments in areas where they are needed. Apart from this, most of EAAB's training is on the job after assignment. Manpower planning in EAAB is satisfactory and existing training programs are appropriate to EAAB's requirements. D. Management Systems Planning 4.10 Long-range development planning by the Planning Department is under- taken in a highly satisfactory manner. EAAB regularly prepares and updates four-year investment programs of which the proposed project is one. The Planning Department remains involved in new projects during the design and construction phases, which are the principal responsibilities of the Engineering Department. Capital Budgets 4.11 EAAB prepares long-range capital budgets in conformity with the investment program. Annual capital budgets are prepared in detail and dis- bursements against these budgets by category are monitored during the year. Long-range revenue and expense projections are also prepared, and detailed operating budgets are prepared for each year against which actual results are compared. The system is currently being improved to provide for more frequent and earlier comparisons of actual results versus budget. E. Accounting, Information Systems and Commercial Operations Accounting System 4.12 The accounting system is appropriate for a water and sewerage authority and is being utilized properly. Accounting reports are available within reasonable periods. Management is now considering the rental of a computer with greater capacity which would assume more functions and accel- erate the issuance of reports. The Bank will assist EAAB in the selection of this computer.  - 22 - Information Systems 4.13 There is a wealth of information available within EAAB, but it has been spread over a number of reports issued by different departments and fails to reach the Management in a combined and relevant format. In January 1979, the Planning Department assumed responsibility for the gathering of statistics and commenced the issuance of a report containing key operating and financial data for monthly submission to Management and to the Board of Directors. Commercial Operations 4.14 Meter reading, billing and collection procedures are satisfactory and working well. To reduce manpower requirements, EAAB has recently shifted to bi-monthly billing. Accounts receivable from water sales currently amount to about two months' sales, which is satisfactory. F. Audit and Insurance Audit 4.15 The office of EAAB's Internal Auditor is functioning satisfactorily with respect to verification of normal transactions and ascertaining if required procedures are being followed with respect to contracting and dis- bursements. EAAB's external auditor is Jose Ulises Martinez S. Cia. Ltda. which has performed audits of EAAB's accounts and has issued acceptable reports. Insurance 4.16 EAAB carries fire and casualty insurance on buildings and equipment subject to these risks. While these assets represent only a small portion of EAAB's total assets, it is not considered necessary or practical to ensure treatment plants, transmission mains, distribution mains, sewerage collectors and drainage canals. Accordingly, the insurance coverage of EAAB is adequate. G. Performance Under Previous Loans 4.17 The Bank's relationship with EAAB began in 1966 and encompasses two projects (Loans 536-CO in 1968, and 741-CO in 1971) for water treatment and transmission. For both projects, demand projections were over-optimistic as initial population, population growth rates, service level projections and per capita consumption trends were over-estimated. Construction of the first project, the Tibito Treatment Plant, was delayed by two years as a result of design revisions, faulty workmanship and withdrawal of two contractors. The delays, coupled with inflation which was more rapid than had been antici- pated, produced a 45% cost overrun which resulted in EAAB's retrenching on its water distribution and sewerage network expansion programs 1/. 1/ See Project Performance Audit Report (Loan 536-CO) and Project Completion Report dated March 30, 1978 (M78-260).  - 23 - 4.18 The second project, the Chingaza reservoir, tunnel, treatment plant and pipeline, was originally scheduled for completion in 1977, but is now expected to be completed in early 1981. This substantial delay resulted primarily from award of the tunneling contract, which was the single largest contract and the most time-critical, to a firm which subsequently did not perform satisfactorily. The slow progress duping that contractor's time on the job, and the time taken to retender and for a new contractor to commence work, accounted for the delay. As in the case of the previous project, a substantial cost overrun (estimated to be 60%) is expected (Annex 5). 4.19 Project execution delays experienced in the previous projects were largely not controllable by EAAB. The proposed project works are not technically difficult and are similar to works already completed by EAAB and local contractors. It is therefore expected that the project works will not be subject to the same factors causing delays in the previous projects and that they can be completed on schedule. H. CAR 4.20 CAR is a decentralized organization at the national level, reporting to DNP. CAR was created by Law 3a of 1961, and its principal purpose is to promote and direct the economic development of the Bogota Plain and administer its natural resources to assure their best possible use for urban, agriculture, mining, and industrial development. One of CAR's principal functions is to reduce pollution in the Plain's waterways. 4.21 CAR has not demonstrated much dynamism in carrying out its pollution control functions or in proceeding with feasibility studies which are a pre- requisite to future pollution control and flood reduction programs. CAR will be the implementing agency for the Bogota River rectification feasibility study which is included in the proposed project. However, the study will be super- vised by a permanent committee composed of representatives from CAR, EAAB and EEEB, and since its funding apart from the Bank loan should not be difficult, it is considered that the proposed arrangements are satisfactory (para. 5.16). V. THE PROJECT A. Background 5.01 The project would be the third operation with EAAB. The First Bogota Water Supply Project was financed by Bank Loan 536-CO in 1968 and represented the first stage of Bogota's Water Supply Master Plan developed in 1967 at the request of the Bank. It was implemented between 1970 and 1975 and included an increase in capacity of the Tibito Treatment Plant from 4 to 12 m3/sec, a 78" diameter 62 km transmission main, two storage tanks, 50 km of distribution mains and networks, water metering and leak detection, institutional improvements and preliminary engineering for the Chingaza Water Diversion Scheme, including construction of access roads. The Second Bogota Water Supply Project was financed by Bank Loan 741-CO in 1971 and represented  - 24 - the second phase of the Master Plan. It included engineering design and construction of the first stage of the Chingaza Project and related distri- bution works and provision of equipment and studies for future water, sewer and drainage projects. The first two projects will meet Bogota's water supply requirements up to 1990 and subsequent water supply investments will be for reinforcement and extension of distribution networks 1/. 5.02 The project constitutes ongoing extensions of distribution net- works consistent with the water supply Master Plan and extension of sewerage and drainage systems under a Master Plan which was prepared in 1964. The Master Sewerage and Drainage Plan proposes the canalization of existing natural water courses and the protection of these courses from contamination by collecting all sewage discharges now made into them inside the sanitary perimeter by means of parallel sanitary interceptors. The treatment and proper ultimate disposition of wastewater was not included in the Master Plan and will be studied under the project. The project represents EAAB's 1979-1982 approved investment program. 5.03 The project was formulated by EAAB's technical staff, with the assistance of Colombian consultants, and is consistent with the needs of Bogota's population for additional water supply and environmental improvement. Extension and reinforcement of the water distribution system are in response to the need to facilitating the flow of water to certain areas where the demand has increased in recent years. The need for preventing flooding and diverting sanitary wastes from the open storm water canals has been stated often by the local press and is well recognized by the population in general. EAAB has not conducted a formal public participation program in formulating the project, but plans a public information program to explain the project prior to construction. 5.04 The proposed project is consistent with the Government's policy of improving water supply and sewerage levels in the capital city, which are currently below those of other large cities. Of particular concern in the Bogota area are the increasing levels of pollution in the city waterways and in the Bogota and Magdalena Rivers. The proposed project will include feasibility studies to determine the best means of reducing this pollution. The objec- tives of the project are consistent with Bogota's requirements and development plans and the Government's urban development objectives for Bogota. B. Objectives 5.05 The overall objective of the project is to improve the health and living conditions of Bogota's residents, in particular the urban poor, through provision of water supply, sewerage and drainage facilities. Spe- cific project objectives are as follows: (a) to provide potable water to. 1.1 million additional individuals (131,000 new connections) including 24 low-income barrios to be newly served; 1/ See paras. 4.17 and 4.18 for a description of EAAB's performance in executing these projects.  - 25 - (b) to improve water distribution in the city taking into account the system's new feeding point at Usaquen after 1980 and the newly served areas under the second Bank-financed project and the proposed project; (c) to provide sewerage connections to 1.0 million additional persons (123,000 new connections) including 55 low-income barrios to be newly served; (d) to reduce pollution in city waterways by extending sewerage interceptors to the sanitary perimeter (with the exception of the Salitre Channel, para. 5.09); (e) to provide storm water drainage in 1,900 ha. of low areas where 0.4 million persons live (18 barrios) and which are now periodically flooded; (f) to determine the least-cost means of reducing pollution in the Bogota River; (g) to determine the least-cost means of improving the capacity of the Bogota River to remove wastes and flood waters in the city; and (h) to continue with the institutional and financial improvement of EAAB commenced under the two previous loans. 5.06 In 1983, after completion of the project, the service levels for water supply will be 90.4% compared with 86.2% expected in 1979 and sewerage service levels will be 85.0% compared with 81.0% expected in 1979. The specific objectives with respect to urban poor are set forth in para. 7.13. C. Project Description 5.07 The project consists of a number of independent subprojects which constitute EAAB's water supply, sewerage and storm water drainage investment program for the period 1979-1982. The specific project components are des- cribed in Annex 6 and summarized below: (a) Water Supply: (i) about 27.0 km of primary distribution mains to supply new areas of urban development and to take into account the distribution system's new supply point at Usaquen; and (ii) about 80 km of distribution networks to serve 24 low-income barrios near the city perimeter. (b) Sewerage: (i) about 17.0 km of interceptors to collect sewage that is currently discharged into four surface canals; and (ii) sewerage networks of about 150 km in 48 low-income barrios, plus combined networks in another seven barrios.  - 26 - (c) Storm Water Drainage: (i) about 10 km of drainage canals on three waterways; (ii) three regulating reservoirs in the basin of the Tunjuelo River to hold storm water; and (iii) storm water drainage networks in 18 low-income barrios. (d) Equipment: (i) procurement and installation of 215,000 water meters, equipment for leak detection, construction and maintenance equipment and vehicles. (e) construction of a pilot sewage treatment plant (45 1/sec); (f) Project Engineering: (i) engineering services including consultant services, for detailed design and construction supervision; (g) Feasibility Studies: (i) feasibility studies for the disposal of Bogota's sewage and design for the first stage treatment plant, including consultant services; and (ii) feasibility studies and master plan for the rectification of the Bogota River and design for the first phase of the master plan, including consultant services. D. Technical Justification Project Works 5.08 The water supply component of the project consists of distribution networks to be constructed in conformity with existing designs which are considered appropriate and have proven to be successful. A similar situation exists for sewerage networks. For water supply, individual connections have been established as normal service for all consumers, and water standpipes are only used as interim measures. 5.09 The sewerage interceptors and drainage canals are extensions of facilities already built in their initial stretches. The designs have proven successful and will be followed for this project. The sewerage and drainage facilities included in the project are those whose technical feasibility does not depend on the rectification of the Bogota River which will not be completed until the late 1980s. The Salitre Canal has not been included in the project since flooding inside the perimeter would not be eliminated by the canal under existing Bogota River flow conditions. 5.10 The component of the project which will provide regulation to the Tunjuelo River to diminish periodic flooding was selected among a number of  - 27 - alternatives considered which would have produced the desired benefits. The three basic alternatives were to construct a dam at the upstream end of the middle stretch of the river and reserve an area for flooding in the middle stretch, construction of the dam with full canalization of the river downstream, and construction of earth embankments along the middle stretch to form three impounding reservoirs. The last scheme was selected as it was determined to be the least-cost alternative. / 5.11 Water meters are needed to meet new connection requirements and replace worn out existing meters. Leak detection equipment will help reduce unaccounted-for water. Construction and maintenance equipment and vehicles will improve the overall operations and maintenance of the water supply and sewerage systems. Status of Preparation 5.12 Project preparation is at an advanced stage. Final designs have been completed for the primary water mains, sewerage collectors and drainage systems. Preliminary designs have been completed for the water supply dis- tribution and for the sewerage networks. Final designs for all components are scheduled for completion early this year and bidding documents will be ready for all contracts by mid-1979. There is no need to implement short term remedial measures prior to completion of the main project components. Feasibility Studies - Pilot Sewage Treatment Plant 5.13 Two feasibility studies are included in the project, one for pollu- tion abatement in Bogota and in the Bogota River and the other for flood control adjacent to the Bogota River and its tributaries inside the city. The Bogota River pollution problem was studied to the pre-feasibility level by consultants 1/ 1974 as part of the second Bank project (Chingaza). The consultants recommended as the least-cost scheme for treatment of all of Bogota's sewage, construction of a major interceptor along the east bank of the Bogota River which would convey sewage (with pumping) to one large treat- ment plant south of the city on the Plain or 80 km downstream near Tocaima 2/. EAAB has not accepted this solution as the optimum and considers that the technical and economic feasibility requires further study. The principal alternative to be studied would be the staged construction of three treatment plants at the terminus of each of the main sewage collectors. This latter alternative would avoid a one-time major investment in sewage treatment facili- ties and possibly result in a reduction in total investment as treatment of part of the sewage may be sufficient to allow the natural purification process of the Bogota River to reclaim itself. Both CAR and Bank staff agree with EAAB that further technical and economic studies are required. 1/ Camp, Dresser and McKee, USA and CEI and Hydroestudios (Colombia). 2/ The downstream location would lower treatment costs as its warmer climate and its altitude of 360 m above sea level, vs. 2,600 m on the Plain, would reduce the requirement for injection of oxygen.  - 28 - 5.14 The proposed study would consist of four parts to be completed by the end of 1982 including a receiving water study, an industrial waste survey, laboratory scale treatment studies, and identification and evaluation of alternative solutions. Subsequently, design of the first stage of the recommended collection and treatment system would be prepared. 5.15 For proper completion of the design for sewage treatment, a pilot sewage treatment plant is required and included in the project. Operating data collected from the pilot plant should allow the design of the full size plant to be optimized. The plant is now assumed to have a capacity of 45 1/sec, but the final design and capacity will be determined by the consultants recruited for the treatment plant feasibility study. 5.16 The rectification of the Bogota River to eliminate flooding, has also been studied by consultants 1/ to the pre-feasibility level, which confirmed that river deepening, straightening and canalizing was the best solution. The proposed feasibility study will be undertaken and financed jointly by CAR, EAAB and EEEB, with the assistance of consultants, who will examine all legal and institutional implications of the Bogota River course correction, prepare a master plan for the rectification of the river, determine the least-cost alternative and staging of the works proposed, and prepare designs for the first phase of the master plan. CAR, which is responsible for water management on the Bogota Plain, will be the executing agency. Close coordi- nation will be maintained by EAAB with CAR during implementation of the two studies since the changed hydraulics of the river will affect the discharge conditions of sewers and drainage channels and is therefore directly related to EAAB's sewerage and flood control projects. E. Cost Estimates 5.17 The estimated total cost of the project is Col$3,340 million (US$62.65 million) as shown in Table 5.1. The total foreign exchange cost of the project is US$30.0 million (48%) and the local cost is Col$1,745 million (US$32.65 million). Interest during construction on the Bank loan, which is not included in the cost estimate, is estimated to be US$4.0 million. Detailed cost estimates and basic assumptions, and estimates of annual expendi- ture are provided respectively in Annexes 7 and 8. 5.18 The cost estimates have been prepared by EAAB and their consultants and are based on recent bids made for similar civil works and acquisition of materials and equipment updated to December 1978. The allowance for physical contingencies is 10%, which is realistic since the works are well defined and the conditions in the area are well known. The allowances for price and currency variations are 49% in the Colombian peso cost estimate and 14% in the U.S. dollar estimate, which are considered adequate. The foreign exchange component includes the cost of materials and equipment that will be imported and foreign consultants' fees (US$11.04 million) and the indirect foreign costs of civil construction and local material (US$18.96 million). Indirect foreign 1/ Camp, Dresser and McKee, USA and CEI and Hydroestudios (Colombia).  - 29 - Table 5.1: PROJECT COST ESTIMATE Item Local Foreign Total Local Foreign Total -----Col$ million---- ----US$ million----- Water supply Primary distribution mains 67.1 75.1 142.2 1.65 1.84 3.49 Secondary distribution mains 55.3 32.1 87.4 1.35 0.79 2.14 Sub-total 122.4 107.2 229.6 3.00 2.63 5.63 Sewerage Trunk mains 124.2 72.2 196.4 3.05 1.77 4.02 Collectors 239.9 137.0 376.9 5.87 3.35 9.22 Sub-total 364.1 209.2 573.3 8.92 5.12 14.04 Drainage Canals 169.5 73.3 242.8 4.15 1.79 5.94 Tunjuela River detention reservoir 124.3 44.4 168.7 3.04 1.09 4.13 Pipes 60.2 35.1 95.3 1.48 0.86 2.34 Sub-total 354.0 152.8 506.8 8.67 3.74 12.41 Equipment and meters 9.8 375.4 385.2 0.25 9.19 9.44 Sewerage Treatment Pilot Plant 25.8 39.0 64.8 0.62 0.96 1.58 Pollution abatement study 29.6 29.5 59.1 0.73 0.73 1.46 Bogota River Rectification Study 24.4 24.3 48.7 0.60 0.60 1.20 Engineering and supervision 127.1 42.3 169.4 3.11 1.03 4.14 Direct Cost 1057.2 979.7 2036.9 25.90 24.00 49.90 Physical contingencies (10% of direct cost) 105.7 98.0 203.7 2.59 2.40 4.99 Total cost in Dec. 1978 prices 1162.9 1077.7 2240.6 28.49 26.40 54.89 Price and exchange rate adjustments-/ 582.3 517.2 1099.5 4.16 3.60 7.76 Total Project Cost 1745.2 1594.9 3340.1 32.65 30.00 62.65 a, See Annex 8 for calculation of exchange rate adjustments.  - 30 - costs, estimated to be 37% of the cost of civil works, are principally depre- ciation on heavy construction equipment that will be needed to install the large pipes and to construct major drainage channels. It is considered that the basic assumptions are realistic and that the project can be completed within the estimated cost. F. Prolect Financing 5.19 Total financing required for the project, including interest during construction and working capital, is estimated to be Col$4,173 million (US$78.3 million). Of this total, the proposed loan would finance the direct and indirect foreign exchange component of Col$1,595 million (US$30.0 million). The proposed loan would have a maturity of 17 years, including a four-year grace period. Internal cash generation of EAAB and betterment levies would provide the remainder of the required financing as indicated in the following table: Table 5.2: FINANCING PLAN FOR THE PROJECT (1979-82) ($'000) Requirement Col$ US$ _ Project Cost: Foreign exchange 1,595 30.00 38 Local currency 1,745 32.65 42 Sub-total 3,340 62.65 80 Interest during construction 213 4.00 5 Working capital 620 11.60 15 Total Cost 4,173 78.25 100 Sources Bank loan 1,595 30.00 38 Internal cash generation/ betterment levies 2,578 48.25 62 Total Sources 4,173 78.25 100 5.20 The financial projections for EAAB indicate that internal cash generation during the period 1979-1982 will be adequate to meet all project financing requirements not covered by the Bank loan and that the financing plan for the project is feasible (para. 6.21).  - 31 - 5.21 CAR has approached bilateral donors requesting grant financing for the sewage disposal feasibility studies and the pilot treatment plant. If grant financing is made available for one or both of these components before proposals and bids respectively are called, these components would remain part of the project ut the funds allocated for them would be cancelled from the Bank loan. The amounts to be cancelled in such event are US$730,000 for the sewage studies and US$960,000 for the pilot treatment plant. G. Implementation The Executing Agency 5.22 EAAB will implement the project with the exception of the Bogota River rectification studies for which it shares responsibility with CAR, the coordinator, and EEEB. This will be the third Bank-financed project for EAAB, which is considered to be fully competent to construct the project facilities on schedule and undertake the feasibility studies (Chapter IV). 5.23 One-half of the final designs have been prepared by EAAB and the other half by local consultants under EAAB's supervision. All consultants have done previous work for EAAB and are fully qualified for the design of this project. The project works are straightforward and capable of being constructed by local contractors who have previously completed similar works and who follow well-developed construction standards similar to those applied internationally. Construction supervision for all subprojects will be by EAAB personnel, who are considered qualified. Consultants must still be selected for the feasibility studies, and because of the specialized nature of some of the work, it is expected that the participation of foreign consultants will be required. Schedule 5.24 The project components will be constructed over the period 1979-1982 in accordance with the implementation schedule given in Annex 9. Bidding is expected to commence for most components in mid-1979 and contracts to be awarded before year end. Scheduled completion of all works at the end of 1982 is considered to be within the capability of EAAB and local contractors. 5.25 EAAB will not require any special legislative or administrative approvals for the implementation of the various project components as it already has the necessary authorities within its charter. Land required for the project will be acquired at an estimated cost of Col$98.0 million (US$2.4 million) and purchase contracts for the bulk of the land have already been negotiated. In the event a purchase cannot be arranged, EAAB has the legal authority to force a land sale. Accordingly, there are no legal or adminis- trative factors which would prevent execution of the project on schedule. Operation and Maintenance 5.26 On completion of the project works, they will be operated by EAAB. Because the works consist of water and sewerage networks and heavy civil works (sewerage interceptors, holding reservoirs and drainage canals), operating  - 32 - requirements in terms of manpower and recurring expense will be low. EAAB has demonstrated the capability to operate and maintain similar works and continued satisfactory performance may be expected. Reservoirs 5.27 The project involves construction of three holding reservoirs along the Tunjuelo River. These will be created by construction of low earth- filled dikes which are of conventional design for the Bogota area including factors for seismic forces, and will not require a design review board. H. Water Resources and Environmental Aspects 5.28 Ample water resources are available to meet the water supply require- ments of the project distribution networks and new connections. The studies for sewage disposal and rectification of the Bogota River are directly related to future water quality in the River adjacent to and downstream from Bogota. CAR has established quality standards for this stretch of the River, but because there is no treatment of either industrial waste or sewage, these standards are not being met. The Bogota River study will review the existing standards and recommend ones which are economically justified and environmentally sound. 5.29 There are no negative environmental effects associated with the project. The project works will reduce pollution in the city waterways in populated areas and reduce periodic flooding along these waterways. The feasibility studies will determine solutions for the disposal of Bogota's sewage in a manner to reduce pollution levels in the Bogota River and to in- crease its carrying capacity so as to eliminate flooding. I. Procurement Civil Works and Equipment 5.30 Procurement contracts will be awarded through international compe- titive bidding in accordance with Bank guidelines, with the exception of civil works contracts under the equivalent of US$300,000 and materials and equipment contracts under the equivalent of US$100,000. These smaller contracts will be awarded under local bidding procedures which are acceptable to the Bank up to an aggregate amount of US$2.0 million. It is expected that the contracts to be awarded under international competitive bidding will range from US$0.9 million to US$4.5 million for civil works and US$0.1 million to US$2.8 million for materials and equipment (Annex 10). For the purpose of evaluating bids, the lower of either a margin of preference of 15% or the corresponding custom duties will be allowed for equipment or material manufactured in Colombia with a Colombian content of 20% or more. Civil works contracts are expected to be won by local contractors and most equipment supply contracts by foreign suppliers.  - 33 - Consultants' Services 5.31 Consulting services for project design and supervision and for feasibility studies will be awarded to qualified consultants under terms of reference and terms of contract satisfactory to the Bank. In t.he event the sewage disposal feasibility study is financed from bilateral sources (para. 5.21), the selection of consultants will also be made under the above condi- tions. It is expected that the prime consulting contracts will be awarded to local firms which will subcontract specialized portions to foreign firms. It is estimated that for project design and supervision and for the feasibility studies a total of 1,372 man months of consultancy services will be utilized with an average cost of US$3,450 per man month. Contract Schedule 5.32 A schedule of proposed contract awards is included as Annex 10. All construction contracts are expected to be awarded by January 1980 and all equipment purchase contracts by November 1981. Advance Contracting 5.33 The project component for water and sewerage network extensions and water meters represent ongoing construction programs. In order not to delay the benefits of these programs, EAAB will proceed with the awarding of network construction contracts and the first bidding for meters prior to loan approval. This advance contracting will represent not more than 10% of the total civil works costs, and retroactive financing of expenditures made after January 1, 1979 up to the date of loan signing will not exceed US$900,000. J. Disbursements 5.34 The proposed allocation of the loan proceeds and the disburse- ment percentages are as follows:  - 34 - Table 5.3: ALLOCATION OF LOAN PROCEEDS Category Amount Disbursement Percentage (US$ '000) I. Civil works 11,100 37% II. Material and Equipment 10,540 a) Imported 100% of foreign expenditures b) Locally manufactured and procured under internationally competitive bidding 100% of ex-factory expenditures c) Locally manufactured 37% of ex-factory expenditures III. Consultants' services 2,360 50% of total IV. Unallocated 6,000 TOTAL LOAN 30.000 5.35 A schedule of disbursements by quarter is presented in Annex 11. Disbursements for the project should be completed by June 30, 1983, which will be the closing date for the loan. EAAB is fully familiar with Bank international bidding requirements and disbursement procedures. VI. FINANCIAL ANALYSIS A. Past Financial Performance and Present Position 1971-1975 Results 6.01 During the period 1971-1975 EAAB's tariffs were increased at a rate below that of inflation and operating costs increased by 165% compared with a 111% increase in revenues. The operating ratio increased from .61 in 1971 to .76 in 1975 and the rate of return on revalued net fixed assets in operation declined from 11.8% to 4.0%, versus the covenanted 10.0% rate of return under Loan 741-CO. Because of inadequate internal cash generation the debt service ratio fell (from 7.2 in 1971 to 1.7 in 1975) and capital expenditures for network extensions were deferred (Annex 13 - Historical Financial Statements). 1976-1977 Results 6.02 EAAB's financial situation in late 1975 was a matter of great con- cern for the Bank and EAAB's new management. In June 1976, after a careful  - 35 - analysis of revenue requirements, EAAB undertook a 24-month program of tariff restructuring and increases which improved average revenues per m3 sold by 45% in 1976, 53% in 1977 and 12% in 1978. A summarized statement of income and expenses for the years 1975 through 1978 is presented in the following table: Table 6.1: EAAB SUMMARY STATEMENT OF INCOME AND EXPENSES (1975-1978) (Current Col$ millions) Preliminary 1975 1976 1977 1978 Water Sold (m3 million) 197 205 208 208 Average Revenue/m3 (Col$) 2.51 3.64 5.58 6.24 Revenues from Operations 692 960 1,510 1,731 Operating Expenses 528 632 960 1,305 Interest 80 77 79 130 Net Income 84 251 471 296 Operating Ratio .76 .66 .64 .75 Rate of Return 4.0% 6.8% 9.1% 5.9% 6.03 Operating ratios, net income and rate of return improved notably in 1976 and 1977 as a result of substantial tariff increases. As a result of increased internal cash generation, the debt service ratio improved from 1.7 in 1975 to 4.2 in 1977 and the contribution to capital expenditures from 13% to 37%. The rate of return in 1977 reached 9.1%, which was slightly below the covenanted return of 10.0% under Loan 741-CO. 1978 Results 6.04 The rate of improvement in EAAB's financial situation slowed down in 1978 as a result of three principal factors. First, the 24 month tariff increase program provided for much higher monthly tariff increases at its inception and in early 1978 they had slowed to under 1.0% per month. In May, when the program ended, the Board adopted a program of regular 1% per month increases in water and sewerage charges (12.7% annual rate). The second factor was the meter readers' strike (para. 3.19) which deprived EAAB of an estimated Col$ 147 million of revenues which will not be recovered. The final factor was that operating expenses increased by 36%, reflecting in large part wage adjustments based on the prior year's rate of inflation.  - 36 - 6.05 The actual financial results for EAAB in 1978 represent a reversal of the improving trend, but are still acceptable, particularly from the standpoint of internal cash generation. In 1978, higher tariffs and a result- ing higher rate of return would have generated excess cash flow. Table 6.2 presents key financial data for 1978 as reported on an adjusted basis to include the estimated revenues lost from the meter readers' strike. Table 6.2: EAAB SELECTED FINANCIAL DATA FOR 1978 (Current Col$ million) Reported Adjusted a/ Operating Ratio .75 .69 Rate of Return 5.9% 7.9% Debt Service Ratio 5.0 5.6 Contribution to Capital Expenditures 48% 57% a/ Recognizes estimated revenues lost by meter readers' strike. 6.06 EAAB's assets and depreciation are revalued annually using a national consumer price index 1/, a procedure which will be continued under the proposed loan. Long-term debt, which consists of foreign loans denominated at current exchange rates, amounted to less than 30% of total capitalization at the end of 1978. EAAB's current financial position is wholly satisfactory. B. Revenues Tariffs 6.07 Revenues from sales of water and from the provision of sewerage services provide about 75% of EAAB's total operating revenues. EAAB's over- all required level of tariffs is derived from projections of operating and financial expenses and cash requirements for debt service and capital expendi- tures not to be financed by borrowings. Tariff revisions must be approved by the EAAB Board of Directors which as a practical matter requires agreement of the Bogota Municipal Council. The proposed tariffs must then be approved by the National Tariff Board, which in practice has a record of approving justified requests for tariff revisions. 6.08 During the period 1971-1975 inclusive, EAAB's average revenues per m3 of water sold increased by only 46% compared with a 115% increase in prices, primarily as a result of the reluctance of the Bogota Municipal Council to approve tariff increases. Shortly after the formation of a new Municipal Council and the appointment of a business-minded General Manager, EAAB in June 1976 em- barked on a program of increases which improved average revenue per m3 sold from Col$ 2.51 (US$0.082) in 1975 to Col$ 6.24 (US$0.159) in 1978, a gain of 149% versus a general price level increase of 80% during the same period. 1/ Indice Nacional de los Precios al Consumidor (Costo de Vida) - Obreros.  - 3 7 - 6.09 The present tariff structure is based on an in-house study completed in early 1976 which provided for the gradual change in the then existing structure over a 24-month period, June 1976-May 1978. The structure now pro- vides for six consumer categories, of which residential, commercial, indus- trial and mixed (commercial/residential or industrial/residentij'l) account for 99.5% of the consumers and 87% of consumption. Residential consumers are divided into seven groups based on the assessed value of their properties, and a very modest fixed monthly charge is levied for provision of services 1/. Consumption is billed in four blocks, with tariffs being progressive with respect to both assessed property values and consumption. In the first block (up to 25 m3) consumers in the lowest two categories pay Col$ 2.14/m3 (US$0.054), while consumers in the top category pay Col$5.36/m3 (US$0.134). Consumption for all residential categories above 60 m3 is billed at Col$8.58/m3 (US$0.215) Small industrial and commercial consumers are placed in the appropriate residential category based on assessed property values, and billed at rates which are 15-30% higher. Large industrial consumers are billed at a flat rate of Col$ 7.07/m3 (US$0.177). Charges for sewerage are 30% of the water bill for all categories of consumers (Annex 12). 6.10 The tariff structure is simple, well designed and appropriate to Bogota's economic situation. It produces proper levels of revenue in relation to costs 2/ while providing substantial cross-subsidies to low-income consumers. The two lowest residential consumer categories, accounting for 41% of EAAB's total consumers, use about 28% of the water sold but contribute only 17% of revenues. The cross-subsidies from higher income residential consumers amount to about 50% for the lowest residential consumer category and about 40% for the second lowest category 3/. Overall, residential con- sumers through category four, accounting for 91% of residential consumers, are receiving cross-subsidies. The charge for sewerage service is below the estimated cost of providing service 2/. Since the sewerage charge is levied as a percentage of the water charge and total revenues are sufficient to cover all of EAAB's operating costs, and since most water consumers have sewerage connections, readjustment of the sewage charge vis a vis the water charge would mainly have conceptual significance. Connection Fees 6.11 House and network connection fees account for about 19% of EAAB's operating revenues. House connection fees for new consumers include a flat charge equivalent to 3% of the appraised value of the land and improvements. 1/ Col$ 7.00 (US$0.175) for the lowest group, Col$ 12.00 (US$0.30) for the second lowest group and Col$15.00 (US$0.375) for the remaining five groups. 2/ For relationship of tariffs to long run marginal costs (AIC), para. 7.11. 3/ Subsidies measured by the difference between the average revenues/i3 and the revenues/m' from the specific category.  - 38 - In the case of new low-income consumers, the fees are customarily made in installments and/or reduced to affordable levels. Where distribution net- works are installed by developers, the developer is required to pay Col$16.90 (US$0.423) for each square meter of saleable land as a contribution to the cost of transmission mains. C. Capital Contributions 6.12 EAAB has two additional sources of funds which are treated as capital contributions rather than operating revenue. These include better- ment levies, known as valorization, and consumer contributions to installation costs and to distribution networks. Valorization 6.13 Valorization is a levy on residents of an area whose property values will be enhanced by public works projects such as roads, sewerage or drainage. The valorization charge in total is designed to recover the capital costs of a project, and the individual property owners pay their pro-rata share based on land area. Where the charges are low in relation to incomes they are col- lected in one payment, but normally the beneficiaries are able to make payment over a six-year period with interest. Valorization for all public works in the City of Bogota are billed and collected by a city authority, the Institute of Urban Development (IDU). IDU's collection of valorization charges on EAAB's sewerage and drainage works has been well below scheduled collections. While these collections do not represent a significant source of funds to EAAB, a workable means of receiving these funds on schedule is considered desirable and EAAB agreed in negotiations to make arrangements with IDU acceptable to the Bank. Consumer Contributions 6.14 Consumer contributions to EAAB's water and sewerage networks are made in three ways. First, new consumers must reimburse the actual costs of making a connection. For low-income consumers deferred payments are accepted. Second, before EAAB installs networks in new areas the residents must contri- bute 30% of the cost of the networks, and subsequent to installation repay the remaining 70% of the cost over a period of ten years. Third,.when a developer installs the networks, the cost is recovered in the selling price of the lots and houses, and the networks are donated to EAAB. These methods of recovering network capital costs are effective, and have not precluded the provision of services to poor areas. D. Financial Projections Income Statement 6.15 Financial projections for EAAB for the years 1979-1985 have been based on the assumption of continuing with the 1% monthly increase in water and sewerage tariffs in 1979, an increase to 1 1/2% monthly commencing in 1980 and revision in consumer classifications in 1979 which will produce an additional 9% in revenues. Operating expenses have been projected to increase  - 39 - in line with water sales plus inflation of 22% for 1979, 20% for 1980 and 1981 and 16% p.a. thereafter. Financial projections for the years 1979-1985 and the basic underlying assumptions are contained in Annex 13. 6.16 Projected income statements for the years 1979-1983, which cover the period or project construction, are presented in the following table: Table 6.3: EAAB PRELIMINARY 1978 INCOME STATEMENT AND PROJECTIONS FOR THE YEARS 1979-1983 (Current Col$ million) Preliminary Projections 1978 1979 1980 1981 1982 1983 Average Tariffs/m3 a/ 6.24 7.61 9.10 10.88 13.01 15.55 Revenues b/ 1,731 2,316 2,931 3,682 4,632 6,042 Operating Expenses 1,305 1,544 1,931 2,413 3,028 3,686 Interest 130 150 169 451 932 1,066 Net Income 296 622 831 818 672 1,290 Operating Ratio .75 .67 .66 .66 .65 .61 Rate of Return 5.9% 7.1% 7.2% 5.6% 5.0% 6.0% a/ Water and sewerage combined. b/ Includes connection fees. 6.17 EAAB's projected income performance is satisfactory, but will not produce a rate of return of 10% in 1979 and 1980 as covenanted under Loan 741-CO. At the time that Loan was approved, it was expected that this high rate of return would be needed as long as the Chingaza Project were under construction, and that after completion a lower return would be established in light of EAAB's then existing financial requirements. In view of the fact that the projected rates of return of 7.1% and 7.2% in 1979 and 1980, res- pectively, will produce sufficient internal cash generation, after meeting debt service requirements, to cover 51% of capital expenditures in those years, raising tariffs further than now proposed simply to achieve a higher rate of return is not warranted. A similar situation is projected in subse- quent years when the contribution to capital expenditures is forecast to increase to a higher percentage. In negotiations EAAB agreed to maintain a 7.0% rate of return in 1979 and 1980, 5.0% in 1981 and 1982, and 6.0% in subsequent years. The lower rate for 1981 and 1982 reflects the inclusion of the substantial investment in Chingaza in the fixed asset base. The projections indicate that the proposed rates of return will produce satis- factory levels of internal cash generation during the 1979-1985 period.  - 40 - Internal Cash Generation 6.18 EAAB's capital expenditures in 1979 and 1980 are expected to amount to almost Col$ 5.4 billion (US$116.0 million). While internal cash genera- tion is expected to increase substantially and funds will be available from two Bank loans, there are still expected to be uncovered cash requirements in those years. The major reason for this shortfall is the continued expend- itures on the Chingaza Project which has been delayed and is expected to experience a 60% cost overrun. To cover the expected Col$909 million (US$20.0 million) cash shortfall in 1979 and 1980, EAAB will secure a foreign exchange loan for which proposals have been received and informal approval granted by the Government. 6.19 After 1980, internally generated cash and the proposed Bank loan are projected to meet cash requirements for debt service and capital expendi- tures not covered by the Bank Loan. EAAB's capitalization is forecast to remain conservative with the debt-to-total capitalization ratio remaining below 30% during the forecast period. E. EAAB's Financing Plan 6.20 EAAB's financing plan for the period of project construction is summarized in Table 6.4:  - 41 - Table 6.4: EAAB PROJECTED REQUIREMENTS AND SOURCES OF CASH 1979-1982 Current Requirements US$ millions a/ Col$ millionsb/ % Capital Expenditures: Chingaza 51.2 2, 381 Proposed Project 62.7 3,340 Other c/ 86.5 200.4 4,839 10,560 77 Debt Service 43.2 2,282 17 Working Capital/Cash 16.3 858 6 Total Requirements 259.9 13,700 100 Sources Internal Cash Generation d/ 166.2 8,774 64 Consumer Contributions 26.4 1,391 10 Valorization 8.5 451 3 Other 1.0 51 Borrowings: Bank e/ 41.0 2,124 16 Other Foreign Exchange 20.0 909 7 61.0 3,033 _ Total Sources 259.9 13,700 100 a/ Based on average exchange rates for the periods of disbursement or receipt. b/ Based on Country Programs' inflation and devaluation guidelines given in footnote 3/, para. 5.18. c/ Includes networks constructed by contractors, capitalized technical and planning expenses, renovation expenses, capitalized interest and un- programmed works now in preliminary design. d/ Net of pension payments. e/ Loan 741-CO and the proposed loan.  - 42 - 6.21 The financing plan indicates that internal cash generation will meet 64% of total cash requirements. Of the total capital expenditures of Col$10.6 billion, about Col$1.6 billion in 1981 and 1982 represents works in the stage of preliminary design which may be deferred if necessary. Accordingly, there is sufficient flexibility in the financing plan and it is considered to be feasible. F. Monitoring and Evaluation Criteria 6.22 Continuing of the procedure established under previous loans, EAAB will submit quarterly reports on the progress of the project and on the operating and financial performance of the authority. Specific criteria for the monitoring of project implementation and the financial performance of EAAB were agreed upon in negotiations and comparisons with actual performance will be included in EAAB's Quarterly Reports to the Bank. These quantitative objectives will include inter alia a comparison of project construction schedules, disbursements, water production and sales, revenues per m3 of water sales, number of employees, operating ratio and rate of return on net fixed assets in operation (Table 6.5). 6.23 EAAB also agreed in negotiations to prepare after completion of the project a Project Completion Report which will evaluate the extent to which the project achieved its objectives and the efficiency of its execution. The report is to be in conformity with guidelines to be provided by the Bank.  Table 6.5: KEY MONITORING INDICATORS Indicators 1979 1980 1981 1982 1983 1984 1985 Water Produced (million m3) . . . . 331 352 371 394 426 452 478 Water Sold (million m3) . . . . . . 246 263 279 298 323 345 367 Unaccounted-for Water (%) . . . . . 25.5 25.2 24.8 24.4 24.0 23.7 23.3 Average Revenue per m3 Sold (Col$). 7.61 9.10 10.88 13.01 15.55 18.59 22.23 No. of Connections (000): Water . . . . . . . . . . . . . 418 446 475 505 549 585 623 Sewerage. . . . . . . . . . . . 393 418 446 475 516 550 585 Service Levels (%): Water . . . . . . . . . . . . . 86.2 86.8 87.4 88.0 90.4 91.0 91.7 Sewerage. . . . . . . . . . . . 81.0 81.6 82.1 82.7 85.0 85.6 86.2 Employees per 1000 Connection . . . 6 6 6 6 6 6 6 Operating Ratio . . . . . . . . . . .67 .66 .66 .65 .61 .61 .59 Debt Service Rati_. . . . . . . . . 6.0 6.5 4.2 2.9 2.9 2.6 2.7 Rate of Return (%). . . . . . . . . 7.0 7.0 5.0 5.0 6.0 6.0 6.0 Loan Disbursements (US$000) . . . . 3,870 11,210 8,860 6,060 - -  - 44 - VII. ECONOMIC AND SOCIAL ANALYSIS A. Introduction 7.01 The proposed project constitutes an important component of EAAB's and CAR's efforts to provide an integrated approach to the water supply, sewerage, and drainage problems faced by the population of Bogota and the pollution problems downstream in the Bogota River. Bogota's rate of popula- tion growth is expected to remain high at about 5.8% p.a., and significant investments in water production (Chingaza Project), currently at an advanced stage of implementation, require complementary investments in water distri- bution and sanitary sewerage. To improve living conditions and make more land available for urbanization, storm water drainage investments are re- quired. In the near future, pollution control investments must be under- taken. The objective of the proposed project is to improve the health and living conditions of the population of Bogota through an investment program which includes initial measures towards meeting the above-mentioned require- ments. B. Proiect Benefits 7.02 In water supply, the project will make possible the distribution of water to be produced in existing or soon-to-be completed treatment plants. Service levels will be maintained in areas already fully covered, while cover- age will be extended into marginal areas where poverty groups will receive much of the benefits (paras. 7.12 and 7.13). Sewerage networks will also be extended into new areas, improving sanitary conditions and complementing the expansion of the water supply network. The drainage component of the project will benefit several areas which are flooded during periods of heavy rainfall and where little infrastructure now exists. Drainage will decrease the hard- ship of frequent flooding and will allow the improvement of these areas with roads, water and sewerage networks, and other infrastructure. The residents of these areas are largely urban poor, who, generally being owners of the land they live on, will receive benefits in the form of both increased wealth and better living conditions. 7.03 The studies for sewage disposal and river rectification will provide the basis for investments in sewage treatment facilities and for improving the flow of the Bogota River. Together, these future investments will reduce the River's pollution and practically eliminate flooding in the city. The procure- ment of maintenance equipment financed by the project will improve the oper- ation and maintenance of the whole water supply and sewerage system of Bogota. C. Least-Cost Solution 7.04 The project components represent the least-cost solution for achiev- ing the desired benefits. Most of the subprojects represent extensions of existing systems and will be constructed according to existing and proven design standards. The Tunjuelo drainage scheme proposed is the least-cost among the three principal alternatives studied (para. 5.10).  - 45 - D. Incremental Rates of Return 7.05 The high population densities of the areas to receive water supply and sewerage mean that these components are essentially complementary. In addition, since much of the incremental population served will receive both water supply and sewerage, these are treated as one subproject, and a combined incremental rate of return (IRR) was calculated. The water supply and sewerage components account for 37% of project cost, and the drainage works with sewerage interceptors 1/ represent 32%. The estimated IRR for the water and sewerage component is 47% and that for the drainage component is 21%, yielding a com- bined rate of return of 37%. Incremental rates of return were not computed for the studies, the pilot plant, the purchase of maintenance equipment, or for two specific parts of the drainage component 2/, because of the impossi- bility of quantifying benefits. The combined cost of these subprojects represents 31% of the total project cost. All costs are expressed in December 1978 prices and include engineering, administration, and physical contingencies, and are exclusive of taxes and custom duties. 7.06 Incremental rates of return for the water and sewerage component were calculated using revenues from consumer charges as a proxy for the economic benefits of the project. Since all positive externalities due to improved sanitation and nutrition are not fully reflected in tariffs and other revenues, the resulting rates of return are understated. The IRR was calculated using December 1978 tariffs held constant in real terms. Costs and benefits for these calculations can be found in Annex 14, page 1. 7.07 The IRR of 47% for water and sewerage is high because the project will add to the use of existing water production capacity and sewerage collectors and interceptors. As such, small investments in distribution mains and networks are associated with a significant increase in consumption. The sewerage component consists of the expansion of a network already largely completed, so that here also large benefits are associated with minor invest- ments in capital works. The water and sewerage component is thus fully justified in economic terms as it represents the expanded use of existing capacity and yields high returns. 7.08 The IRR for the drainage component has been calculated under the assumption that its benefits can be represented by increases in land values due to better environmental conditions. The calculation was based on cost and benefit streams shown in Annex 14, page 2. 1/ Sewage interceptors are included with the drainage component as they are not related to the additional sewerage connections but with the environ- mental improvement of the areas to be drained. 2/ The drainage canal in Niza and the storm water networks amounting to an investment of Col$126 million (20% of drainage component and 5% of total project cost).  - 46 - 7.09 The IRR of 21% for the drainage component is higher than the country's shadow discount rate (estimated at 11%), so that it is justified in economic terms. In addition, the population benefitted includes a large proportion of urban poor so that the investments are also desirable on social grounds (paras. 7.12 and 7.13). Since the sites to be drained represent only some 4.5% of the total area of Bogota, it is expected that the availability of these lands will not significantly affect real estate values in the rest of the city. E. Long-Run Marginal Costs and Tariffs 7.10 Long-run marginal costs for water and sewerage were calculated separately using the Average Incremental Cost (AIC) method with an 11% dis- count rate. All costs are expressed in December 1978 prices. In both cases non-tariff revenues (connection fees) were deducted from total costs, so that the resulting AICs are comparable to tariffs in evaluating pricing and resource allocation. 7.11 The AIC for water supply was estimated to be Col$2.38/m3 1/ which is lower than the projected average tariff of about Col$5.06/m3. This is because the former does not include the sunk cost of water production facil- ities. The relatively high tariff is necessitated by financial consider- ations. The AIC for sewerage recognizes a portion of costs of the new sewage treatment plant capacity expected to be built in 1983-1990. The resulting AIC is Col$2.40/m3 2/, which is higher than the projected average tariff for 1982 in real terms of about Col$1.47/m3. However, tariffs on volumes in excess of the first two blocks of consumption (over 45 m3) are close to the AIC, indicating that pricing here is roughly in line with the requirements of efficient resource allocation. Details and assumptions for the calculation of these AICs can be found in Annex 15. F. Impact on the Urban Poor 7.12 The main components of the project, i.e., water supply, sewerage, and drainage works have a relatively higher beneficial impact on the urban poor 3/ than on other income groups. About 95% of the population above the urban poverty threshold was already connected to public water supply and sewerage systems in 1978, a coverage which will be maintained during the project. The areas into which water and sewerage networks will be extended 1/ The AIC for water calculated without deducting non-tariff revenues was Col$2.83/m3. 2/ The AIC for sewerage calculated without deducting non-tariff revenues was Col$2.84/m3, equivalent. 3/ Defined as families earning less than Col$42,000 annually (US$1,200) in mid-1977 prices or approximately Col$7,600 per capita p.a., which is one-third of the estimated per capita national income.  - 47 - are heavily populated by families below the poverty threshold. Most areas to be drained similarly contain a higher proportion of urban poor than the whole of Bogota. It is estimated that about 75% of the families in these areas are owners of the land they live on. The following table illustrates the project's impact on the urban poor. Table 7.1: PROJECT IMPACT ON THE URBAN POOR Population Benefitted (1979-1983) (in thousands) Urban Proiect Component Total Poor Water Supply Main Networks a/ 1,079 464 (43%) Sewerage Networks a/ 1,004 398 (40%) Drainage and Interceptors 260 144 (55%) a/ Includes networks constructed by private developers. Source: EAAB 7.13 It is estimated that in 1977 the urban poor made up 39% of Bogota's population and this share is assumed to remain constant through 1983. The number of urban poor with water house connections will rise from 1.0 million in 1979 to 1.5 million in 1983, with the share connected rising from 64% to 75%. The number of poor with sewerage will rise from 0.8 million to 1.2 million, with the share connected rising from 51% to 61% during 1979-1983. The popula- tion affected by drainage works, with its higher-than-average 55% share below the poverty threshold, will benefit from better sanitary conditions, higher values of their land, and from the opportunity for upgrading the infrastructure of their neighborhoods. The share of the loan attributable to providing services to the urban poor is estimated at 32% 1/. 7.14 The poor population remaining unconnected to a water supply or sewerage system in 1983 generally will be living outside the sanitary peri- meter where distances and low population densities make network extensions uneconomic. The explicit policy of EAAB is to provide these areas with potable water through public standpipes, and to encourage the application 1/ About 90% of the water and sewerage networks to be constructed by EAAB are for the urban poor, since networks for the rest of the population are normally built by private urban developers. The cost of water mains was distributed in proportion to estimated consumption. The cost of drainage and interceptors was distributed according to the estimated share of urban poor living in the areas of influence and owning the land they live on. For Tunjuelo, the area of vacant land was deducted since the income levels of the owners are unknown.  - 48 - of individual solutions in the sanitation field, such as latrines and septic tanks. EAAB will expand its water supply and sewerage networks into new areas when population densities are sufficiently high to justify the investment. 7.15 An evaluation of the affordability of water supply and sewerage services was made based on 1978 tariffs. In 1978 an extremely poor family earning around Col$22,800 (US$590) a year would pay 2.7% of its income for minimum acceptable consumption of water (15 m3) and sewerage services, while those with incomes of Col$45,600 (US$1,170) would pay 2.2%. Both water and sewerage tariffs are projected to remain roughly constant in real terms during the 1980's. Therefore, the services are currently affordable to this group, and are expected to remain so in the future. 7.16 Under the current tariff structure most residential consumers, and especially low-income ones, are subsidized by high-volume consumers and by commercial and industrial users. In the payment of initial connection charges, new consumers in low-income areas are charged less per connection and are granted payment terms of ten years at 10% per annum interest, while others are charged 18% per annum interest for payment in one to four years. EAAB has thus been attempting to make water supply and sewerage services available and affordable to the poor, and intends to continue these policies in the future. G. Project Sensitivity and Risks 7.17 The rate of return for the water and sewerage component is fairly sensitive to changes in costs and benefits. However, revenues are not ex- pected to deviate significantly from those projected since no major real tariff increases appear to be required and the composition of consumption is expected to remain basically unchanged. Investment works are straightforward, and significant cost overruns are not likely. In addition, the IRR calculated is so high that the possibility of it falling to unacceptable levels is negligible. The rate of return for the drainage component is highly sensitive to changes in costs and benefits. A 20% increase in costs lowers the return from 21% to 12%, while a 20% decrease in benefits gives 10%. A 10% increase in costs combined with a 10% decrease in benefits yields a return of 11% (Annex 14, page 2). 7.18 The project works are of conventional design and well within the capability of local civil works contractors to construct. Design is at an advanced stage and it is therefore expected that the works can be completed on schedule and within the cost estimate. EAAB's external and internal cash resources are expected to be adequate to meet the costs of the ongoing Chingaza Project as well as the proposed project. The project is considered to be of high priority by the Bogota City Government, and the implementing agency, EAAB, is fully competent to supervise its construction. In summary, there is a high degree of certainty that the project works will provide the desired benefits, within the project cost estimate and on schedule.  - 49 - VIII. AGREEMENTS REACHED AND RECOMMENDATIONS 8.01 During loan negotiations assurances were obtained from EAAB on the following principal points: (a) that satisfactory arrangements for collection and remittance of valorization levies to EAAB will be worked out with IDU (para. 6.13); (b) that EAAB will maintain the following rates of return on net revalued fixed assets in operation: 7% in 1979 and 1980, 5% in 1981 and 1982, and 6% in subsequent years (para. 6.17); (c) that quarterly reports on the progress of the project and on operating and financial performance will be submitted by EAAB to the Bank (para. 6.22); (d) that on completion of the project a Project Completion Report will be prepared (para. 6.23); and (e) that the Bank will have the opportunity to comment prior to any major structural reorganization of EAAB; and that any amendment to the EAAB charter which would adversely affect EAAB's operations or finances, without prior Bank agreement, would constitute a default of the loan (para. 4.08). 8.02 As agreement was reached on the above conditions, it is recommended that a Bank loan of US$30.0 million be made for the project. The terms would be 17 years' maturity, including 4 years' grace.  - 50 - ANNEX I Page 1 of 8 COLOMBIA THIRD BOGOTA WATER SUPPLY, SEWERAGE AND DRAINAGE PROJECT Existing EAAB Water Supply, Sewerage and Drainage System General 1. Bogota has a modern water supply system which serves 86% of the population with metered connections. The remainder of the population, which for the most part is located outside of the sanitary perimeter, is served by public standpipes supplied by main extensions from the city's system, cisterns which store rainwater, and shallow wells. There are three water supply systems with full treatment which account for 99% of the total supply capacity. The Bogota River and its tributaries are the source of supply for these systems. The remaining supply capacity consists of small intakes located in the hills to the east of the city. Water from these sources receives chlori- nation only. The Chingaza Project, now under construction, will more than double the available supply. This water will receive full treatment. 2. The city has both sanitary and storm water drainage systems within the boundaries of the sanitary district. The systems are separate except in the area of the old city where they are combined. Sewage is discharged raw into the Bogota River and its tributaries. 3. The Map (page 97) shows the more important features of the water, sewer and drainage systems. Details of the systems are tabulated in the tables at the end of this Annex and explained below. Water Supply 4. The principal water supply systems and their capacities are as follows: Minimum Supply. Treatment Capacity Capacity System m /sec m /sec Tibito 10.0 a/ 12.0 Tunjuelo/San Cristobal 1.5 1.5 San Francisco 0.1 0.1 Other (chlorination only) negligible negligible Subtotal 11.6 13.6 Chingaza (under construction) 14.0 14.0 25.6 27.6 a/ Available 9 years in 10.  - 51 - ANNEX 1 Page 2 of 8 5. The Tibito system obtains the major part of its water from an intake on the Bogota River, 35 km north of the city upstream of the section where industrial and domestic wastes pollute the River. The River at the intake is partially regulated by three reservoirs in the upper river basin with storage totalling 890 million m3. These reservoirs belong to and are operated by EEEB and CAR, but a joint commission of EAAB, EEEB and CAR coordinates the releases according to the needs of the three entities. Water is also diverted from the Teusaca River to the treatment plant at Tibito. The combined yield of both sources is 10.0 m3/sec. 6. The Tibito water treatment plant provides flocculation, sedimentation and filtration. The plant was originally designed for 4.0 m3/sec with a provision to double its capacity to 8.0 m3/sec by duplicating all installa- tions; however, between 1972 and 1976 the capacity was increased to 12.0 m3/sec by adding only new flocculation sedimentation capacity, replacing the sand inthe existing filter basins with dual filter media (antracite and sand) and introducing more efficient operating rules. 7. Two raw water pumping stations pump water from the Bogota River to the plant and a third raw water pumping station pumps water from the Teusaca River. Treated water can either flow by gravity from the filter well through parallel 60" and 78" pipelines to the city or can be pumped to a treated water reservoir at Tibito. The 60"' pipeline terminates at the Usaquen pumping station in the city. The combined capacity of both pipelines with booster pumping is 15.0 m3/sec. 8. The Tunjuelo supply system is an all-gravity system which withdraws water from the Regadera reservoir on the Tunjuelo River, 25 km south of the city. Water from the reservoir is treated at a plant at Vitelma. This treatment plant is directly connected with the distribution system and serves most of the highlying areas along the eastern city limits. 9. The San Cristobal, San Francisco and the other minor intakes on the hills east of the city are of little significance compared to the Tibito system. The San Cristobal supply is connected by gravity to the Vitelma treatment plant. The San Francisco system has its own small treatment plant located at San Diego. The other systems which serve isolated high-lying sections of the city are provided with chlorination as the only means of treatment.  - 52 - ANNEX 1 Page 3 of 8 10. The Chingaza system is currently under construction. The first stage, which will be completed in 1980, will increase the city's supply capacity by 14 m3/sec to a total of 25.6 m3/sec. Its main feature is the diversion of water from the Chingaza area, a previously almost inaccessible watershed 40 km east of Bogota, through a series of tunnels and conduits. The principal components of the works currently under construction are: (a) a dam and reservoir on the Chuza River above its confluence with the Guatiquia River. The storage volume will be 200 million m3; (b) a 45 km conveyance system between the Chuza reservoir and Bogota consisting primarily of tunnels 3.7 m in diameter; (c) a water treatment plant at El Sapo, with a capacity of 14 m3/sec expandable to 22 m3/sec in the future; (d) 100 km of access roads; and (e) a run of the river diversion from the Guatiquia River which consists of a 3.5 km tunnel from the Guatiquia River to the Chuza reservoir and related intake works. Treated water from the plant clearwell will flow by gravity through a short tunnel and pipe system to the Usaquen and Parque Nacional storage tanks. Water Distribution 11. The city is divided into three distribution zones (low, intermediate, and high). The low zone supplied by the Tibito treatment plant is by far the largest, serving about 70% of the city's area. The intermediate zone forms a narrow band between the two other zones and supplies approximately 10% of the city area. It is connected to the Parque Nacional tank which receives some water by gravity from the Vitelma treatment plant and some from the Tibito water treatment plant by the booster pumping station at Usaquen. The high zone, representing about 20% of the city area, is supplied by the Vitelma and San Diego treatment plants. 12. The total length of distribution system pipe is 4,200 km including the two tranmission lines from the Tibito treatment plant. Pipes range in size from 3" to 78". The majority of the pipes (94%) are 14" and smaller. Commonly used pipe materials are galvanized iron for diameters 3" and smaller, asbestos cement for diameters 4"-12", and prestressed concrete for pipes 24" and larger. 13. Distribution storage capacity is 334,000 m3. The major part of this capacity is located in the low pressure zone.  - 53 - ANNEX I Page 4 of 8 Sewerage and Drainage Systems 14. About 30X of the area of Bogota, the older part of the city, has a combined sewage and storm water drainage system. The rest of the city is served by separate systems. These systems, including the combined system serving the older part of the city, are divided into four main sectors. These sectors correspond to the drainage basis of the following small streams which are tributaries to the Bogota River: Torca, Salitre, Fucha and Tunjuelo. The sewerage and drainage master plan provides for the canalization of these streams and the construction of parallel sanitary sewer interceptors to collect all sewage discharges. 15. A recent addition to the drainage system is a series of concrete line canals constructed along the eastern perimeter of the city at the base of the hills. These canals are designed to trap sediment and debris which, if washed downsteam, would clog the drainage channels of the middle of the city and cause flooding. Parts of this system are still under construction.  COiMBIA THIRD BOGOTA SATER SUPPLY. SEWERAGE AND DRAINAGE PROJECT EXISTING EAAB RATER SUPPLY FACILITIES - TREATMEET AND TREATED WATER TRANSSMISSON TREATMENT PLANT san DiSte (1931) Viacl.a (193R/1953) Tibi-o (1959/1966/1972) El sape (under -onstr;ction) SDURCE San Fran.i.co TunJuelo and SDn Crtintba1 BRogia at Tibite and Teu..a. Chingaka divernion CAPACITY 0. 1n/sec 1.5 12.0 .3/sec 14.03/src TREATMENT t) Aer-ti-n no Iee Eon 1 bonln, 1000 m2, 96 ..n s n1O er. .tonion b) Uapid MN. 2 basins of 7 m3, rotcntion 40 sec. 2 bo.ios of 85 a3 r_tenti_o 115 sec. capacity 1.5 n3/sec. 4 basins of 66 n3, retention 30 sec. S buti-n capacity a) Flocculatinn 2 bhsina of 235 a3, retention 45 min. 3 bAaita of 965 =, retention 32 nin. 6 basins of 300U n3, ettenei-n 30 nin. 32 basins ith lb .ontact 6 batnt f 12700 n3, retention 2.0 bourn Elno-uiaton d) Sodimentation I bhnto nf 2200 n3, rotanciu 3.5 hr. 3 bi-s of 4735 m3, retention 3.6 he. o) Filtration 2 basin of 36 D2 16 banin- of 48.4 m2 16 basins of 142 m2 ea.ch 32 b.sint Tilterhbd - 0.25 anthracite (si-e 1955) ..diii: 0.6 0S4 a sand 0.15 a sand 0U.51 raveS 0.35 m grovel Eilte nicer fltagar-Aat/ft2 filter rate 3.51 gp/fit2 rate 1.0-2.9 gpa/fR2 rote 5.2-9.1 gpm/ft2 fill- rte 4 f) Wasbhater Tonk I tnick: 200 a3 1 tok: 3100 m3 (at 2820 a) 1 tank: 2800 m3 (ot 2662 m) --- g) TreacodWorrTani -- W__ Tio loanL took. 2050001 3 (o 2662 a) high 1-te tke: 15,R 00 (at 2D92 a h) Electri-al Subs-tion --- tc 7 tntorn, 12,100 k --- TREATED WATER TRANSMISSION a) Treated Water Pipeline --- directly conneted nith distrlbution system 1) 33.8 km, 60", prete-oneord co2crote to 3.2 kn tunnel to Par-ue NarionsJ Reser-oir Usaque- boos.ter poepiog staion Cepacity: arity: 2.5 m3/sec;3 UEaquen boostar Pempig station 4.0 a3/sec; UasJu:n pins Tibito booster pusping statinn 2) 30.0 km, 78", prestressed concrete to northern citylmis Cap-ilty:- gr4vity 1.4 33/se i T;bito booster pumpiug station 7.3 JI/5cc b; Booser Pumping Stations --- --- Usaq... (at northe-n rieJ limits): itsto1led ctpecity 6.6 m /sec; 5 poms; head 64/78 m; 4 transformats 6,700 kb- Tibito (to lreeted eater 5aai): insealltd eapacity 13.5 m /tet; 5 pumps; heed 3D a; power aupply fron Tibito aub_tetie (too above)  COLOMBIA CHIRP BOGOTA WATER SUPPLY. SEWERAGE AND DRAIGOGE PROJECT EXISTING EAAB WATER SUPPLY FACILITIES - GTTIHONT ATND GOB WATER SRTRASMISINRB NGCIHEI tan Cristohel (1924) (and yero I NSo. rac. c 919 1/1 ) TuTn3OE (193R(h9SSy BOGOTA (1959/1966( TRUNACA (1972) EIGX nonoRin rage oderog the Eas-o f RA Bogota river originating -ot f Noe rhuais oiic nrtrie.dehargite GO dosshe- of Erhtre f the fleEs rive charing tohe Bogot rvresof the BASIN (osichnent area) incat.1. 40 GO2 163 1002 (atHoder) 1517 InsT (ci Tibito) 12o2TtlTOIn 2) Sen Fr-niar lB 1BB 00 kH 3) Arebispo S I3RdS 1.230.B..lO RAW WATERB.001. CATCERIINT IB SORAGE 1 T00 WNE AAMEI- TGOg VOTOOT 10YAT- ER STORAGE BAMT AB.II- EYOR STOR. DAM1 ALTI- 901 BT.VER WI UEONH SOP GlE.090 WIGHT TURE OWNER HOME GRNTE. VO%. WEIGR TUBE BOttER NWAfT EORe. VO%. HEIGh TrII WE i)Readt 193 . 29 3B02 EA 1)navtc1962 691 42 2628 EEEB Tepias lOOT 4.1 10 UAAO Ch-n lde -2B2 ITO 2995 EWAB 2)Chsc 151 50 34 31411EA 2)065 191 NR 5 69 i oer 31 too 195'9 2.4 H 395 UWB 3)! TWng 1951 I)01 6 2999 CAR 11.5 090 4 b) RAe WOcte90 Intakes dtit- rIver intke (ttienics) GOo -rkhonA atOgdseevor A ntec inek a Tibito, 35 GO norh of DiverionoeIr sad d-siaaato ieso la adanaeo siga 25 GO south ofBotacy Boasts~J, ciy tApeeiecto o re ie.o red intake. co. of. ho GOB WATER ront07t 2.1 03st 0 0 0 pin pin 12. o ttighe s-adhY diesel geerco 2.I ER 592'190 n (1924) ... .:-i 2) ~ ~~~~~~~~~~1) 11.29 0 40, I 4'-3' , nC--tt(1930) 1) 60O`-411 S" loon preYtens to...ned 2:1,IGkOIR7'. peatveCdh..et s31 o,141'-2V0" - stel(931) 2)953H', 46 u,prseadnann ln 6) 1 Au, iT", AC (1950 concrete, topaci ty H0 /sec (1911) hAt n, 5'', p65sdrn2snF-oCh.e. b)(g 7 GravIty AC 4.9600 23"F-"TAC,(1959)LIa) 30.9k GOtune 3hArohsm:gry,pie 1.1 4to, t''-B'',CI 11091)6'I5.94GO Pipelin 3(iea-b r- , ip: ,3GO t'' A (C191T950t 3A 9-na Pirea 0ev Otnito .36GO.C12..92T7v,9a4enl 3e(throuth 3d) ar --nctd dt--cIy-, ou -sc-  COLOMBIA THIRD BOGOTA WATER SUPPLY, SEWERAGE AND DRAINAGE PROJECT EXISTING EAAB WATER SUPPLY FACILITIES - DISTRIBUTION MAINS (Length in km, as of December 1978) M a t e r i a1 Diameter Galvanized Cast Asbestos Pretensioned Prestressed Total (inch) Iron Iron Steel Cement Concrete Concrete by Size 1/2 - 3/4 11.1 - - - 11.1 1 1/2 - 2 441.5 - - 16.3 - - 467.8 2 1/2 - 3 149.5 9.9 - 921.3 - - 1,080.7 4 - 6 - 121.1 30.1 764.4 - - 915.6 8 - 9 - 21.6 10.1 165.8 - - 197.5 10 - 11.2 4.6 .3 - - 16.1 - ~~~~~~~~~~~~~~a' 12 - 11.9 5.6 229.9 - - 247.4 14 - 7.6 1.7 - - - 9.3 16 - 5.1 3.5 12.3 16.5 - 37.4 18 - .8 - - - - .8 20 - 3.1 2.5 - - - 5.6 24 - 7.1 - - 66.5 - 73.6 30 - - - - 12.2 - 12.2 36 - - - - 16.6 - 16.6 42 - - - - 28.2 - 28.2 48 - - - _ 1.4 _ 1.4 0 60 - - - - 10.6 - 10.6 X 78 - - - _ _ 23.3 23.3 Total by 602.1 199.4 58.1 2,110.3 152.0 23.3 3,145.2 material  ANNEX 1 57 - Pag 8 of 8 COLOMBIA THIRD BOGOTA WATER SUPPLY, SEWERAGE AND DRAINAGE PROJECT EXISTING EAAB WATER SUPPLY FACILITIES - STORAGE TANKS Volume Year Altitude Name m3 Commissioned (meters) Serving Low Santa Lucia 26,000 1964 2,624 Pressure Zone: Parque Nacional 52,000 1965 2,632 Casablanca 140.000 1972 2,636 Usaquen 30,000 Under Constr. 2,700 248,000 Serving High Vitelma 38,000 1938 2,787 Pressure Zone: San Diego I 4,500 1952 2,700 San Diego II 31,000 1954 2,787 Egipto 2,000 1886 1939 2,700 Dionisio 4,000 1966 2,920 Alpes 4,500 1965 2,942 84,000 EXISTING EAAB DRAINAGE FACILITIES - PIPES AND CANALS Pipe (8"-36"), material Length, Km Vitrified clay 1,651 Concrete 392 Masonry 184 Box culverts, material Length, Km Concrete 26 Masonry 1 EXISTING EAAB SEWERAGE FACILITIES - PUMPING STATIONS Capacity P u m p s Name m3/sec Head Number Type Fontibon 4 8 6 Screw El Salitre 4 8 6 Screw  COLOMBIA THIRD BOGOTA WATER SUPPLY, SEWERAGE AND DRAINAGE PROJECT EAAB: HISTORICAL AND PROJECTED WATER PRODUCTION, CONSUMPTION AND SERVICE LEVELS Bogota % Popula- % Un- Confstump- Supply Total Pop- Populatiou tion No.. of Consumption Production accounted Production tion Capacity Year ulation A Served b/ Served Connections m3 e/ m3 for m3/sec m3/sec m3/sec 1970 2,413,465 1,807,203 74.88 223,958 143.27 190.85 24.93 6,052 4.543 6.6 1971 2,552,601 1,968,821 77.13 237,594 146.85 196.26 25.14 6.220 4.657 6.6 1972 2,699,759 2,109,322 78.13 254,708 160.32 216.11 25.92 6.844 5.070 8.5 1973 2,855,400 2,330,292 81.61 282,167 171.96 245.90 30.04 7.794 5.453 8.5 1974 3,020,014 2,488,794 82.41 301,863 182.66 253.12 27.84 8.027 5.792 8.5 1975 3,194,118 2,658,145 83.22 322,867 197.24 252.96 22.03 8.022 6.254 8.5 1976 3,378,258 2,842,128 84.13 345,044 204.80 265.49 22.86 8.396 6.476 11.6 1977 3,573,015 3,035,991 84.97 369,314 208.46 285.63 27.02 9.057 6.610 11.6 1978 3,778,999 3,233,312 85.56 392,869 207.80 312.15 33.40 9.899 6.589 11.6 0n 1979 3,996,859 3,443,294 86.15 418,383 246.33 330.77 25.53 10.489 7.811 11.6 1980 4,227,278 3,667,164 86.75 445,585 263.07 351.98 25.16 11.131 8.319 11.6 1981 4,470,980 3,905,848 87.36 474,587 279.42 371.47 24.78 11.779 8.860 25.6 1982 4,728,732 4,159,393 87.96 505,394 297.56 393.64 24.41 12.483 9.436 25.6 1983 5,001,343 4,521,714 90.41 549,418 323.48 425.79 24.03 13.502 10.257 25.6 1984 5,289,671 4,815,716 91.04 585,142 345.46 452.46 23.65 14.308 10.925 25.6 1985 5,594,620 5,128,588 91.67 623,158 366.90 478.17 23.27 15.163 11.634 25.6 1986 5,917,150 5,462,121 92.31 663,684 390.76 506.75 22.89 16.069 12.391 25.6 1987 6,258,274 5,817,066 92.95 706,812 416.15 536.96 22.50 17.027 13.196 25.6 1988 6,619,064 6,195,444 93.60 752,788 444.44 570.59 22.11 18.044 14.055 25.6 1989 7,000,653 6,598,115 94.25 801,715 472.03 603.00 21.72 19.121 14.968 25.6 1990 7,404,240 7,026,624 94.90 853,782 502.68 638.97 21.33 20.262 15.940 25.6 Notes: a/ Projections assume Rate of Increase of 5.8Z p.a. b/ From 1979 on 8.23 inhabitants per connection have been assumed. c/ From 1979 on, 196 lcpd has been assumed.  - 59 - ANNEX 3 COLOMBTA THIRD BOGOTA WATER SUPPLY, SEWERAGE AND DRAINAGE PROJECT EAAB ACTUAL AND PROJECTED SEWERAGE SERVICE LEVELS (000) Bogota Population % Population Sewerage Year Population Served a/ Served Connections 1970 2,413 1,732 71.79 210 1971 2,552 1,838 72.01 223 1972 2,699 1,970 72.99 239 1973 2,855 2,182 76.45 265 1974 3,020 2,335. 77.33 283 1975 3,194 2,497 78.20 303 1976 3,378 2,669 79.01 324 1977 3,573 2,857 79.96 347 1978 3,778 3,03c 80.43 369 1979 3,996 3,236 80.98 393 1980 4,227 3,447 81.55 418 1981 4,470 3,671 82.12 446 1982 4,728 3,909 82.68 475 1983 5,001 4,250 84.99 516 1984 5,289 4,526 85.58 550 1985 5,594 4,820. 86.17 585 1986 5,917 5,134 86.77 623 1987 6,258 5,468 87.37 664 1988 6,619 5,823 87.98 707 1989 7,000 6,202 88.59 753 1990 7,404 6,605 89.21 802 a! Assumes 8.23 inhabltants served per connectlon.  COLOMBIA THIRD BOGOTA WATER SUPPLY, SEWERAGE AND DRAINAGE PROJECT EMPRESA DE ACUEDUCTO Y ALCANTARILLADO DE BOGOTA (EAAB) ORGANIZATION CHART PRELIMINARY~ ~ ENGNEEIN COMUIT RERELATRSNS [30 I DRCOR I I F PLANNINGI J r BASIC INVESTIGATIONS I f ~~~~~NIORATCIVS | H PRELIMINARY ENGINEERING I I~~PUBICAF DEPARTMENT PEINREG DEPARTMENT DEPARTMENT D MANAGER MANAGER MANAGER MANAGER ENGINEERING OPERATION FINANCE AGMNNS RA ON SOIL & CONCRET ELECTROMECHANICA LABORATORY MAINTENANCE I DIRECTOR DIRECTOR DIRECTORDIETR DRCO DIETRDRCO DIETR DRCO DIETR DETR DRCOR IETR WATER SUPPLY SEWERAGE MINOR WATER WATER SUPPLY MAINTENANCE MAINTENANCE- ACCOUNTING SUPPLIES FINANCIAL SYSTEMS INDUSTRIAL CUSTOMER GENERAL MASTER PLAN MASTER PLAN DISTRIBUTION & DISTRIBUTION WATER SEWERAGE METER SHOP SERVICES AND RELATIONS SERVICES SERVICES WORKS WORKS & SEWERAGE WORKS W PROCEDURES _ |I W.dd 8.-k - 201B6  - 61 - ANNEX 5 COLOMBIA THIRD BOGOTA WATER SUPPLY, SEWERAGE AND DRAINAGF PROJECT Status of Chingaza Project Execution 1. The 120 m high dam necessary to impound the water from Chingaza watershed and 80% of the 38 km length of tunnels necessary to convey the water to Bogota have been completed. The 7 km pipeline section of the transmission system will start soon and the water treatment plant and treated water storage tanks are under construction. All the works are expected to be completed by early 1981. 2. The critical activity in the project is the excavation of a 6.5 km section of tunnel remaining to complete the 18.5 km section between Chuza and Ventana. To complete this work by the end of June 1980 (allowing 6 months for lining) it will be necessary to progress in the two headings of this section at a rate of 13 m per working day. The average rate accomplished to date is only 9 m per working day. This low average has been the result of difficult geological conditions encountered in the other sections. Geological studies seem to indicate that the characteristics of the rock for the remaining excavation are good so that the higher rate of progress may be attainable. 3. The project is three years behind the original schedule. The major reason for the delay is the difficulties encountered in the construction of the tunnels. The first contractor had to be replaced because of substantial slippages with regard to the schedule. Considerable time was expended in settling the termination of the first contract and in rebidding the work. The new contractor is performing better, but he is having difficulty with the geological formation through which the tunnel has to be excavated and has asked for a 15-month extension of the contract completion date. Due to a water demand growth lower than that anticipated, these delays are not likely to produce any substantial water shortage in Bogota. The completion of the remaining 1.1 km of the 10 km Ventana-Simaya stretch will allow the catchment of some in-route water sources that could help cope with the immediate increase in water demand in case of a further slippage in the completion of the critical Chuza-Ventana stretch. 4. The project has projected cost overruns of about 60% (US$189 million versus US$118 million at the appraisal time). The disbursement percentages of the loan have been repeatedly reduced to assure Bank participation in the project until its completion. The cost overrun is to be covered by internal cash generation and a foreign exchange loan in 1979.  - 62 - ANNEX 6 Page 1 of 5 COLOMBIA THIRD BOGOTA WATER SUPPLY, SEWEPAGE AND DRAINAGE PROJECT DESCRIPTION OF THE PROJECT General 1. The project represents EAAB's total investment program for the period 1979 to 1982. The program includes water, sewer and drainage system additions and improvements, equipment purchases and studies. Primary Water Distribution System Extensions and Reinforcements 2. The Chingaza Project will add an additional 14.0 m3/sec to the supply capacity of the water system. The proposed extensions and reinforcements will increase the capacity of the system to distribute additional water. They will also improve pressures in existing parts of the system where demands have increased recently and extend service to areas of new development. 3. The proposed mains range in size from 12" to 42". The locations are shown on the Map (page 97). The lengths, according to diameter, are as follows: Diameter Length in. km 12 11.1 24 8.0 36 3.3 42 4.1 26.5 Sewerage and Drainage Improvements 4. The sewerage and drainage works included in the project are part of an ongoing program to separate sanitary wastes from storm water drainage and to prevent localized flooding. The basis for the project elements presently under construction and the elements proposed for Bank financing is a master plan prepared by Camp, Dresser & McKee in 1961 and studies prepared by EAAB and local consultants during the past 16 years. The 1961 study included only the Salitre and Fucha systems. The proposed project for the Tunjuelo River is the result of an initial study in 1970 by APRON, a local firm, and a second study by a joint venture headed by Camp, Dresser & McKee in 1974. 5. Prior to the beginning of the present construction program, sanitary sewers and storm water drains discharged to the main stems of the three river systems which drain the Bogota Plains, the Salitre, the Fucha and the Tunjuelo.  - 63 - ANNEX 6 Page 2 of 5 Except for the old city area, sewerage and drainage systems are separate, up to the point where the two systems discharge into the main streams of the three rivers. As a result, the rivers are now nothing more than open sewers. In addition to being a sanitary hazard, the natural channels of the three rivers lack sufficient capacity to accommodate the high rates of storm water runoff which have resulted from urbanization. Flooding of large sections of the city during heavy rainfalls is a common occurrence. 6. The Master Plan developed by the 1961 and 1974 studies recommended canalization of the main stems of the Salitre and Fucha Rivers, the construction of a storm water retention reservoir on the Tunjuelo River and straightening of the Bogota River. A smaller storm water retention reservoir was proposed for the Cordoba River, a tributary of the Salitre River. 7. To eliminate pollution in the newly constructed canals and in the Bogota River, the plan proposed to parallel the new canals and the Bogota River with sewerage interceptors. The Bogota River interceptor would serve as the city s main interceptor and discharge into a large sewage treatment plant southwest of the city. The straightening of the Bogota River, the Bogota River interceptor and the treatment plant are still under study and will be studied further under this project (see paras. 13-15). 8. Implementation of the approved part of the master plan was begun in 1974 and has proceeded from the upstream end of each drainage basin down. It is proposed to extend the canals and parallel interceptors only within the limits of the sanitary perimeter. Beyond the boundary of the zone, flooding results from the backwater of the Bogota River, and canalization to increase runoff capacity would not prevent flooding. 9. Considering only the improvement of the three tributary systems, 70% of the program is either completed or under construction. The works to be financed by the Bank loan will complete the program. The map at the end of the report shows the location of the portions of the program to be financed by the Bank loan. 10. Characteristics of the components to be financed by the Bank loan are as follows:  - 64 - ANNEX 6 Page 3 of 5 Interceptors Cross- Name System Section Dimensions (m) Length (m) Fucha (Right) Fucha Rectangular 3.2 x 1.7 2,000 Fucha (Left) Fucha Circular 1.1 1,500 Tunjuelo Tunjuelo Rectangular 1.7 x 1.7 10,000 Torca Torca Circular 1.0 3,200 Drainage Canals Cross- Name System Section Dimensions (m) Length (m) Niza Salitre Rectangular 4.5 700 Fucha Fucha Trapazodal 25 (base) 4,800 Cordoba (Sector D) Salitre Trapazodal 5 (base) 1,500 Torca Torca Rectangular - 3,000 Tunjuelo Flood Control Reservoir Surface area: 175 ha Storage Volume: 180,000 m3 Design frequency: 25 years Water Supply, Sewage and Drainage for Low-Income Barrios 11. There are a number of areas inside the sanitary district boundaries which developed without the construction of proper utilities. The project includes construction of water systems in 24 barrios with an aggregate pipe length of about 80 km, sewerage systems in 55 barrios with an aggregate pipe length of about 150 km and drainage systems in 18 barrios. The location of the barrios to be served is shown on the Map. Purchase of Water Meters and Maintenance Equipment 12. In order to improve system operations, EAAB intends to purchase the following items of equipment: (a) water meters (215,000) for new connections and replacement; (b) sewer and drain cleaning equipment, including equipment that will allow the cleaning of drain inlets during daylight hours;  - 65 - ANNEX 6 Page 4 of 5 (c) television cameras for sewer and drain inspection; (d) radio communications system for Operations Department vehicles; (e) construction-type equipment, such as backhoes, trenchers, truckmounted cranes and bulldozers. This equipment would be used on repair work and for keeping drainage canals free of debris and silt. It is not intended for new construction; (f) machine tools for fabricating replacement parts; and (g) replacement vehicles for trucks and automobiles dating back to 1973 and earlier. Pollution Abatement Study 13. The discharge of untreated domestic and industrial wastes into tributaries of the Bogota River has caused a serious pollution problem down- stream of the city. This pollution poses a threat to the health of persons living in communities which use the River for drinking and irrigation and is even affecting the use for fishing and recreation of the Magdalena River, which the Bogota River joins 200 km south of the city. 14. The problem is not new. In 1974 Camp, Dresser & McKee made a study of the pollution problem and recommended the construction of an interceptor paralleling the Bogota River, terminating at a major treatment plant where the river leaves the Plains. This was one of three alternatives studied. The other two were: (a) build three separate treatment plants, one for each of the major interceptors; and (b) construct the Bogota River interceptors included in the recommended plan with treatment in Tocaima, which is located at a low elevation on the plain below Bogota. EAAB is concerned that the above study did not adequately address the finan- cial feasibility of the recommended plan or clearly identify the economic, social and ecological benefits of providing treatment. To answer existing doubts concerning the benefits of treatment and reexamine the alternatives in the light of today's conditions, a new study of the entire pollution problem has been proposed. 15. The proposed study would include the following: (a) a receiving water study to measure by sampling and flow measurement the existing condition of the Bogota River, estimate the future condition without treatment and project the effect of various levels of treatment under present and future conditions;  - 66 - ANNEX 6 Page 5 of 5 (b) an industrial waste survey to determine the type and quantity of wastes now being discharged, future industrial waste quantities and the need and effect of controls on industrial waste discharges; (c) laboratory scale treatment studies to determine treatability and develop design criteria for treatment; (d) design, construction and operation of a pilot plant to test and refine the proposed design criteria; (e) reexamination of alternatives proposed in the 1974 study and the evaluation of economic, social and ecological benefits using the data developed in steps (a) through (d) above; and (f) preparation of designs for the first stage of the recommended program of works. Bogota River Flood Control - Preliminary Design 16. Although the canalization of the three tributaries draining into the Bogota River will reduce flooding, the flooding of the Bogota River main stem must be solved to completely eliminate the problem. The controlling agencies have all agreed on the solution which is to straighten and deepen the River channel. The next step is to develop preliminary designs and cost estimates and arrange for financing. 17. This project will be supervised by CAR. The cost will be shared equally among CAR, EAAB and EEEB. EAAB will use proceeds of the loan to pay its share of the cost.  - 67 - ANNEX 7 COLOMBIA Page 1 of 3 THIRD BOGOTA WATER SUPPLY, SEWERAGE AND DRAINAGE PROJECT PROJECT COST ESTIMATE