Tunisia - Urban Sewerage Project

Document of The World Bank FOR OFFICIAL USE ONLY' Report No. 4846 PROJECT COMPLETION REPORT REPUBLIC OF TUNISIA FIRST URBAN SEWERAGE PROJECT (LOAN 1088-TUN) December 22, 1983 Water Supply and Sewerage Division Europe, Middle East and North Africa Region This document has a restricted distribution and nmay be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  FOR OFFICIAL USE ONLY REPUBLIC OF TUNISIA FIRST URBAN SEWERAGE PROJECT LOAN 1088-TUN PROJECT COMPLETION REPORT TABLE OF CONTENTS Page No. PREFACE .. .. ..... .......... . , *........ i* BASIC DATA SHEET......... ...... ............ ii HIGHLIGHTS .................................... , .....v I. INTRODUCTION ............................................. . ............. I II. PROJECT PREPARATION AND APPRAISAL ..2 Origin, Preparation and Appraisal.. . .. 2 Negotiations and Approval ...... 2 Major Objectives of the Project ............................... 2 Project Description ........................ ..., 2 Special Conditions . ........................................... 3 III. PROJECT IMPLEMENTATION AND COST ............................... 5 Effectiveness ...... 5 Implementation of Physical Components.5 Revisions to the Scope of the Physical Components.6 Performance of Consultants and Contractors.................... 6 Implementation of the Land Use Study for the Lake of Tunis Area 6 Implementation of the Tunisian Construction Industry Study.... 7 Procurement ................................................... 7 Disbursements ................................................. 7 Project CostS..8 IV. FINANCIAL PERFORMANCE.9 Operating Results .... 9 Financing Plan......9 Consumer Charges ......... . . . 9 Financial Covenants ..................... 10 Financial Position . . .. 10 Tdis 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.  Table of Contents (Contd.) Page Vo_. V. INSTITUTIONAL PERFORMANCE.,.,. 11 Organization and Management ..... . 11 Personnel and Training.......*4* 11 Billing and Collection.11 Accou~~ntig....... ..,,,,... .,,,... 11 Audits .... ,,., .. ,.,., ... , , 12 Management Consultants' Performance.... 12 VI. BANK PERFOR3ANCE, , , 13 VII. PROJECT JUsTIFICAT1ON ....................... . , 14 Institutional Aspec1ts . ... . . . . . . .r 14 Improvement to Greater Tunis Sewerage System. . . 14 Pollution Control of the Lake of Tuni1... . .14 Internal Rate of Return1... . 14 VIII. CONCLUSIONS AND LESSONS LEARNED.......*... .... 16 Conclusions ...... ............................... . 16 Lessons Learned16 *..16 LIST OF ANNEXES Annex No. i. Loan Disbursements .. . ..................... , 17 2. Project Costs ........ ... *.......... 18 3. ONAS - Appraisal and Actual Income Statements ................... 19 4. ONAS - Appraisal and Actual Cash Flow Statements ................ 20 5. ONAS - Appraisal and Actual Balance Sheets....................... 22 6. Evolution of ONAS' Tariff Structure . 23 7. ONAS - Organization Chart ......... ... 24 8. Numier of Staff and Training Data ... . ............... 25 9. Economic Analysis . ............ . 26 10. Letter dated November 11, 1983 from ONAS ........... ...... 29 MAPS  REPUBLIC OF TUNISIA FIRST URBAN SEWERAGE PROJECT LOAN 1088-TUN PROJECT COMPLETION REPORT PREFACE This report reviews the preparation, implementation and achievements of an Urban Sewerage Project, for which a loan of US$ 28.0 million was made to the Republic of Tunisia. The Loan was signed in February 1975, became effec- tive in August 1975 and the loan account was closed in December 1982. The main implementing agency for the project was the national sewerage authority, Office National de l'Assainissetnent (ONAS). The Project Completion Report was prepared by the Europe, Middle East and North Africa Region Office on the basis of the findings of a project com- pletion m.ission which visited Tunisia in January 1983, and of a review of the President's Report, the Loan and Project Agreements and other reports related to project implementation. The project has not been subjected to an audit by the Operations Evaluation Department. Following standard OED procedures, copLes of the Project Completion Report were sent to the Borrower for comments. In a letter dated November 11, 1983, ONAS commented. Those comments have been taken into account in finaliz- ing the report and the letter is reproduced in Annex 10.  - ii - REPUBLIC OF TUNISIA FIRST URBAN SEWERAGE PROjECT LOAN 1088-TUN PRoJECT COMPLETION REPORT BASIC DATA SHEET KEY PROJECT DATA Appraisal Item Estimate Actual Total Project Cost (US$ million) 86.11 101.0 Overrun % - 17.3 Loan (US$ million) 28.0 28.0 Disbursed 28.0 28.0 Cancelled - - Repaid to Dec. 31, 198Z (US$ million) 2.5 Outstanding to Dec. 31, 1982 (US$ million) 25.5 Date of Physical Completion 12/78 07/82 Proportion Completed by above date . 20 100 Time overrun % 50 Internal Rate of Return % 24.9 20.2 Financial Performance Good Institutional Performance Good CU1ULATLVE DISBURSEMENTS (US$ Thousands) Fiscal Appraisal Year Estimate Actual 1975 1,000 1976 5,100 - 1977 11,800 1,100 1978 18,900 2,500 1979 25,900 8,700 1980 28,000 12,600 1981 - 23,000 1982 26,454 1983 28,000  - iii - BASIC DATA SHEET (Contd.) OTHER PROJECT DATA Appraisal Item Estimate Actual First Mention in Files 10/00/72 Government Application 09/00/73 Negotiations 12/18-12/26/74 Board Approval 01/26/75 Loan Agreement Date 02/18/75 Effectiveness Date 06/18/75 08/15/75 Closing Date 12/15/79 12/15/82 Borrower The Republic of Tunisia Executing Agencies Office National de l'Assainis- seTnent (ONAS) The District of Tunis Follow-on Projects: Name Second Urban Sewerage Project Loan Number 1675-TUN Amount US$ 26.5 million Loan Agreement Date April 13, 1979 Name Third Urban Sewerage Project Loan Number 2255-TUN Amount US$ 34.0 million Loan Agreement Date March 29, 1983  - iv - BASIC DATA SHEET (Contd.) MISSION DATA No. of No. of Man- Date of Month/Yr Days Persons Weeks Report Identification 09/73 10 2 4 10/10/73 Appraisal 95/74 22 2 8.8 01/15/75 Supervision I 03/75 7 2 2.8 04/02/75 Supervision II 02/76 10 2 4.0 02/11/76 Supervision III 11/76 13 2 5.2 11/08/76 Supervision IV 05/77 8 1 1.6 05/20/77 Supervision V 12/77 5 3 3 12/20/77 Supervision VI 08/78 5 2 2 08/25/78 Supervision VII 04/79 4 2 1.6 04/20/79 Supervision VIII 12/79 3 2 1.2 12/28/79 Supervision IX 07/B0 5 2 2.0 08/22/80 Supervision X 11/80 5 1 1 12/17/80 Supervision XI 01/81 3 1 0.6 02/05/81 Supervision XII 11/8l 3 2 1.2 11/24/81 Supervision XIII 04/82 3 2 1.2 05/14/82 Completion 01/83 10 2 3.0 EXCHANGE RATES Currency Unit Tun4pian Dinar Appraisal Year Average (1974) US .t.00 = TD 0.425 Average over Project Period US$ 1.00 = TD 0.446 Completion Year Average (1982) US$ 1.00 = TD 0.617 ACRONYMS GTZ = Deutsche Gesallschaft fUr Technische Zusammenarbeit ONAS = Office National de l'Assainissement OTTEEFP = Office des Travailleurs Tunisiens a 1'Etranger, de 1'Emploi, et de la Formation Professionnelle. SONEDE = Soci4te Nationale d'Exploitation et de Distribution des Eaux WHO = World Health Organization  REPUBLIC OF TUNISIA FIRST URBAN SEWERAGE PROJECT LOAN 1088-TUN PROJECT COMPLETION REPORT HIGHLIGHTS The Bank Group had been involved in the Tunisian sewerage sector through the Tourism Infrastructure Project partly financed by Loan 858-TUN and Credit 329-TUN of February 28, 1972. Loan 1088-TUN, approved in January 1975 for an amount of US$ 28.0 million, was the Bank's first free-standing loan to the Tunisian sewerage sec- tor. Subsequently, Loan 1675-TUN for US$ 26.5 million and Loan 2255-TUN for US$ 34.0 million, were made in April 1979 and March 1983, respectively. In all three cases the Republic of Tunisia was the borrower and Office National de l'Assainissement (ONAS) the main executing agency. Loan 1088-TUN was expected to finance about half of the foreign exchange requirements of the project, and about 33% of the total project cost of US$ 86.1 million. The principal objectives of the project were; (a) the establishment of a national sewerage authority; (b) the improvement and expansion of the sewerage facilities of Greater Tunis; and (c) the protection of the Lake of Tunis against pollution from stormwater overflows. The Loan became effective with only slight delay (para. 3.01). Pro- ject start-up and implementation, however, proceeded much more slowly than anticipated at appraisal because (i) it took ONAS much longer than foreseen to put together an effective team of technicians (para. 3.02); (ii) the project had been appraised on the basis of feasibility studies and difficulties were revealed when final engineering designs were prepared (para. 3.03); and (iii) cost overruns caused revisions to the project scope (para. 3.03). The project was completed about three years later than forecast (para. 3.02). Loan dis- bursernents were similarly affected (para. 3.11). Total project costs amounted to TD 45.5 million as compared with appraisal estimates of TD 34.2 million, adjusted to reflect project revisions. The cost overruns were met by Government equity contributions. Price escala- tions due to late implementation accounted for over 40% of the cost overruns  - vi - (para. 3.12). Changes in scope, and unforeseen implementation difficulties accounted for the remainder (para. 3.13). ONAS' overall financial position has been sound (para. 4.06). Its present organization works well (para. 5.01) and its current staffing level is acceptable (para. 5.02). During the period 1975-78 ONAS' accounting was sub- ject to serious deficiencies (para. 5.05), but these have since been overcome (para. 5.06). The project was successful in all major aspects. The project objec- tives have been met (paras. 7.01 tnrough 7.04). The rate of return is 20.2% as compared with 24.9% estimated at appraisal (para. 7.05). The project confirms the importance of adequate project preparation (para. 8.02) and the need to allow sufficient time in project implementation schedules for the establishment of a new entity (para. 8.03).  - 1 - REPUBLIC OF TUNISIA FIRST URBAN SEWERAGE PROJECT (LOAN 1088-TUN) PROJECT COMPLETION REPORT I. INTROnUCTION 1.nl Between 196n and 1q74 the number of Tunisian municipalities with sewterage svstems had increased from 4 to 20, hut these systems were incom- nlete, overloaded and hadly maintained, if at all. The eight existing sewage treatment plants were either overloaded, malfunctioning or out of service. The prime responsibility for the provision of sewage services had been with the municipalities which lacked the funds and the trained personnel to provide the necessary service. The lack of clear division of responsibility among the ministries, the municipalities and several state agencies had hampered the decision-making process at the national level. The only effective measures undertaken before 1974 had been in the tourist zones as part of the tourism infrastructure project financed partly by Bank Loan 858-TUN and Development Credit 329-TbR of Februarv 28, 1q72. 1.02 In Great2r Tunis, where in 1974 about 75% of the population was served yv seweraRe systems, conditiors had been far from adequate. The deficiencies of the systems were evidlenced in summer when foul odors emanated from the Lake of Tunis and some of the older parts of the city and in winter - the rainv s?ason - when sewers overflowed and sewage stagnated in the low- lying central area of the city. Finally, in some of the low income areas, sewer svstews had been inadequate or non-existent. 1.03 The First Sewerage Project, for which Loan 1088-TUN was approved in Tanuarv 1975, was part of the Government's program under its Fourth Plan to establish a national sewerage authority, to improve and extend sewerage services nationallv starting with those in the Greater Tunis Area, to develop the sewerage infrastructure for the Greater Tunis Area and to develop the Lake of Tunis area. 1.04 The First Sewerage Project was frillowed by the Second Sewerage Pro- iect for which Loan 1675-TITN was approved in April 1979 and which included a second stage of development of the sewerage infrastructure for Greater Ttunis, a sewerage component for Sfax, and further assistance to strengthen the pro- iect planning and control capability of ONAS. A third loan of US$ 34 million for a project for sewerage in 30 smaller cities and towns of Tunisia was approved in March 1983 (Loan 2255-TUN).  - 2 - II. PROJECT PREPARATION AND APPRAISAIL Origin, Preparation and Appraisal 2.01 The Bank had been active in the water supply sector since 1967 and, through a number of projects, had maintained a close dialogue with Tunisian officials on sewerage as well as water supply policies and operations. The Bank mission, which visitdd Tunisia in September 1973, reviewed the feasibi- lity study reports prepared by consulLants and reached agreement on the scope of the project and nn basic design criteria. The appraisal was initiated in May 1974. The key issues were the establishment of a national sewerage entity and the adoption of appropriate sector financial policies. These issues were vesolved expeditiously. ONAS was created by law No. 73-74 of August 1974 and financial policies acceptable to the Bank, the Government and ONAS were agreedl at negotiations. Negotiations-and Approval 2.02 The Loan was negotiated i.i December 1974, approved in January 1975 and signed in February 1975. Major Objectives of the Project 2.03 The major project objectives were; (a) the establishment of a national sewerage authority; (b) the improvement and expansion of the sewerage facilities of Greater Tunis; and (c) the protection of the Lake of Tunis against pollution from stormwater overflows. Project Description 2.04 The project consisted of: (a) the establishment of ONAS, includings (i) training of ONAS staff and assistance on personnel administra- tion and training; (ii) assistance in accounting and standard engineering practices; (iii) purchase of operation and maintenance equipment for ONAS' facilities and training of operators for this equipment; and (iv) purchase of office equipment including calculators, drafting equipment and furniture;  (b) expansion of the trunk sewer system in the Tunis district including construction and installation of gravity sewers and pumping stations over a total length of about 60 km; (c) renovation and renewal of existing sewers in the district and renova- tion and renewal where urgently needed of sewer systems in communi- ties outside the district, for a total of about 75 km; (d) renovation and increase in capacity of the Cherguia treatment plant and the construction of new plants on sites north of Tunis and at South Miliane, serving populations equivalent to about 160,000 and 500,000 person