Senegal - Water Supply Engineering and Technical Assistance Project

D_ of The World Bank IOU OMCIL USE ONLY 3apu N.. 6392 REPUBLIC OF SENEGAL WATER SUPPLY ENGINEERING AND TECHNICAL ASSISTANCE PROJECT (CREDIT S 23-SE) PROJECT COMPLETION REPORT August 27, 1986 Western Africa Regional Office 1Ib dseint bm a II 14 1_km.k i my la m by hdphb 11d. In_ plies of do bMi~k dUg.. lb cmOmmi my ad Ulbgwg.o be dbdiinu wl6bmt Wedi B6,.* iudbhsduL.n  CURRENCY EQUIVALENTS Currency Unit CFA Franc (CFAF) US$1.00 = CFAP 360 1/ CFAF 1 million US$2,778 ABBREVIATIONS AND ACRONYMS MR - Ministry of Hydraulics SONEES - Socigtg Nationale d'Exploitation des Eaux du S&negal FISCAL YEAR July 1 - June 30 1/ The CFA franc is tied to the French franc to the ratio of 1 French franc to CFAF 50. The French franc is currently floating.  FOR OMCIAL USE ONLY REPUBLIC OF SENEGAL WATER SUPPLY ENGINEERING AND TECHNICAL ASSISTANCE PROJECT (CREDIT S23-SE) PROJECT COMPLETION REPORT Table of Contents Page No. Preface .......................i Basic Data Sheet ....., ....................*.... ii Highlights ............... ...... v I. INTRODUCTION ....I1 II. PROJECT PREPARATION 1 III. PROJECT IMPLEMENTATION 2 Procurement and Implementationt 2 Outcome of the Studies 2 Follow-up Project 3 Project Cost and Crelit Disbursement .......... 3 Borrower, Consultants, Contractors and Bank Performance 4 IV. CONCLUSIONS AND LESSONS LEARNED ................. 4 ANNEX 1 - Project Cost *................................. 5 This document has a retricted 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.  - i - REPUBLIC OF SENEGAL WATER SUPPLY ENGINEERING AND TECHNICAL ASSISTANCE PROJECT (CREDIT S23-SE) PROJECT COMPLETION REPORT PREFACE This Completion Report reviews the preparation, implementation ancd achievements of a Water Supply Engineering and Technical Assistance Project for which Credit S23-SE was approved in April 1979 to the Republic of Senegal. The Credit was for US$2.5 million, of which an amouzt of US$205,194.64 was cancelled in July, 1985; it has already been fully refinanced out of the follow-up Investment Project (Credit 1554-SE) which was approved in March 1985 and put into effect in July 1985. This Report was prepared by the Western Africa Regional Office on the basis of the findings of supervision missions which visited Senegal in 1986 for the follow-up project, and a review of the President's Report, Credit documents, supervision reports, progress reports and other documents related to project implementation. In accordance with the revised procedures for project performance audit reporting, this Project Completion Report was read by the Operations Evaluation Department (OED), but the project was not audited by ORD staff. Following standard procedures, OED sent copies of the draft report to Borrower and the Executing Agency for comments. However, no comments were received.  - ii - REPUBLIC OF SENEGAL WATER SUPPLY ENGINEERING AND TECHNICAL ASSISTANCE PROJeCT (CREDIT S23-SE) PROJECT COMPLETION REPORT BASIC PROJECT DATA KEY PROJECT DATA Appraisal Item Estimate Actual Total Project Cost (US$ million) 3.200 2.710 Cost Overruns () - - (15)X Credit Amount (US$ million) 2.500 2.500 Disbursed (US$ million) 2.500 2.295 Cancelled (US$ million) - 0.205 Date of Physical Completion 12/81 12/84 Proportion Completed by Target Date - 90% Proportion of Time Overrun 115% CUMULATIVE DISBURSEMENTS Appraisal Fiscal Year Estimate Actual -- -(US$ million) 1980 1.300 0.072 1981 2.500 0.700 1982 - 1.270 1983 - 1.650 1984 - 2.070 1985 - 2.295  - iii - KEY PROJECT DATA Appraisal Item Estimate Actual First Mention in files 05/11/73 First Considered by Bank Mission as Engineering Project 07/19/77 Government Application 10/00/78 Negotiations in Dakar 03/12/79 Board Approval 04/24/79 Credit Agreement Signing 05/23/79 Effectiveness 06/00/79 08/10/79 Closing Date 12/31/81 12/31/84 Executing Agency Ministry of Hydraulics Fiscal Year of the Borrower January 1 - December 31 Follow-on Project Name Eleven Centers Water Supply Project Credit Number Cr. 1554-SE Amount US$24.0 million equivalent Credit Agreement Date April 1, 1985  - iv - MISSION DATA Item Month/year No. of No. of Man- Date of Days Persons Days Report First Identification 03/73 19 3 57 05/11/73 Preparation I 07/75 11 1 11 08/19/75 Preparation II 11/75 18 2 36 12/18/75 Preparation III 05/76 2 1 2 06/15/76 Preparation IV 08/76 5 1 5 08/31/76 Preparation V 10/76 a/ 20 1 20 N.A. Preparation VI 10/76 5 3 15 12/23/76 Preparation VII 02/77 b/ 2 2 4 02/18/77 Second Identification 07/77 5 2 10 07/19/77 Preparation IX 11/77 1 1 11 12/27/77 Preparation X 05/78 8 1 8 06/02/78 Preparation Xl 05/78 10 2 20 06/02/78 Appraisal 10/78 10 2 20 04/11/79 Negotiations 03/79 2 3 6 03/12/79 Supervision I 06/79 14 2 28 07/30/79 Supervision II 02/80 4 1 4 02/28/80 Supervision III 09/80 5 2 10 11/26/80 Supervision IV 03/81 10 2 15 05/20/81 Supervision v 11/81 c/ NiA* Supervision VI 03/82 c/ N.A. Supervision VII 06/82 d/ 7 1 7 08/10/82 Supervision VIII 10/82 d/ 10 2 15 12/08/82 Supervision IX 06/83 d/ 4 2 8 08/19/83 Supervision X 12/83 d/ 6 1 6 01/20/84 a/ Mission carried out by consultant. b/ Discussion in Paris with cofinanciers. c/ Combined with preappraisal and/or appraisal of the -Investment Project. d/ All missions combined with follow-up on appraisal of the Investment Project. Country Exchange Rates Appraisal (April 1979) US$1 - CFAF 220 Intervening years average : US$1 - CFAF 315 Completion (December 1984) : US$1 - CFAF 360  - v - REPUBLIC OF SENEGAL WATER SUPPLY ENGINEERING AND TECHNICAL ASSISTANCE PROJECT (CREDIT S23-SE) PROJECT COMPLETION REPORT HIGHLIGHTS Credit S23-SE in the amount of US$2.5 million equivalent was the first IDA involvement in the sector after six years of a rather difficult dialogue between the Senegalese autborities and the Bank on the institutional set up and allocation of responsibilities. Approved in April 1979, it was intended to finance preparatory activities to an investment project which eventually became effective in July 1985. These activities included reconnaissance boreholes, feasibility studies and detailed designs for water supply in eleven secondary centers, updating of sewerage and sanitation studies, institutional, financial and tariff studies ard technical assistance to the Ministry of Hydraulics and the National Water Authority (para 2.01). Although the closing date of the Credit was extended three times, mainly to allow for financing of extensions of the technical assistance contracts, no cost overrun in US$ was observed due in part to the strong appreciation of the US$ vis-a-vis the CFA Franc during project implementation. The project was successfully executed and without any significant changes albeit with substantial delays. It has been the vehicle for an in-depth dialogue on major financial and institutional issues of the sector. However, while the tariff study served as the basis for an important reform in this field, the institutional study which was at the center of the controversy between the Government and the Bank since the beginning of project preparation did not lead to any substantial modification until Bank staff heavily involved themselves, in the definition of sector reorganization, which was finally implemented before presentation of the follow-up of the investment project to the Board.  REPUBLIC OF SENEGAL WATER SUPPLY ENGIN3ERING AND TECHNICAL ASSISTANCE PROJECT (CREDIT S23-SE) PROJECT COMPLETION REPORT I. INTRODUCTION 1.01 The first identification mission to consider a possible Water Supply project in Senegal dates back to February/March 1973; the US$24.0 million equivalent Credit 1554-SE which finally financed the "Eleven Centers Water Supply Project" was approved by the Board in March 1985 and bacame effective in July 1985. This Completion Report reviews the preparation, implementation and achievements of an Engineering and Technical Assistance Project which was intended to prepare the Investment Project (para 3.06) and to serve as a vehicle for an in-depth institutional dialogue. Therefore, this Completion Report should be considered as an interim one. II. PROJECT PREPARATION 2.01 Following several years of very difficult dialogue between the Senegalese authorities and the Bank on the institutional setup of the sector and on allocation of responsibilities among the several agencies involved, it was initially agreed with the Government and the (at the time) potential cofinanciers 1/ to commission consultant studies to prepare a possible water supply proJect for eleven secondary centers. Therefore, Engineering Credit S23-SE, appraised in October 1978, was approved by the Board in April 1979. This Credit provided financing for 15 reconnaissance boreholes (six of the eleven centers as well as a chemical plant located north of the capital city, Dakar), feasibility studies and detailed designs for water supply in the eleven centers, updating of sewerage and sanitation studies, organizational, financial and tariff studies and technical assistance to the Ministry of Hydraulics (MH) 2/ and the National Water Authority, Socift6 Nationale d'Exploitation des Eaux du S&nEgal (SONEES). 1/ Caisse Centrale de Cooperation Economique of France and Government of Spain. 2/ At appraisal, a Directorate of the Ministry of Equipment.  - 2 - Terms of reference for the studies and technical assistance and tender documents for the drilling of boreholes were discussed during appraisal and finalized at an early stage of implementation. The implementing agency was the Ministry of Hydraulics. 2.02 The Credit was negotiated in Dakar in March 1979, approved in April 1979 and became effective in August 1979. It was intended to finance 100% of foreign expenditures and 77% of local expenditures of consultant services and drilling works and 100% of foreign expenditures of technical assistance contracts. There were no specific conditions for effectiveness. III. PROJECT IMPLEMENTATION Procurement and Implementation 3.01 The contract for drilling of boreholes in the six centers was awarded to a joint venture between a French company and the Senegalese National Drilling Company; the latter experienced some financial difficulties, but the works (as well as the drilling for the chemical plant - executed by another French contractor) were successfully carried out in the end. 3.02 A German consultant firm was selected to perform the engineering studies and consultants from xrance and Senegal were awarded the institutional/manpower studies and financial/tariff studies. All consultants mobilized rapidly and their studies were available late in 1981. Technical assistance to MH and SONEES was provided by German and US firms respectively; however, both technical assistants seconded were French. After several months of delay in contract signing due to unusually long administrative procedures, they arrived in Dakar in fall 1980. Audits of SONEES accounts were executed by a joint venture of British and Senegalese auditors. Outcome of the Studies 3.03 The engineering studies have been satisfactorily completed; however, during their preparation, it appeared that additional groundwater investigations were necessary in the centers not covered by the drilling activities financed by the Engineering Project. Consequently, other reconnaissance boreholes to be financed by a PPF advance for the Investment Project. Also, no satisfactory solution could be found to remove the excess of fluoride in the water produced in the Sine Saloum region (including the city of Kaolack), despite interesting test runs using locally produced aluminum phosphate which would have possibly led to a low-cost solution. Other investigations, to define a technology adapted to Senegalese financial and cechnical conditions, will have to be carried out under the Investment Project.  - 3 - 3.04 The institutional study, which was at the center of the controversy between the Government and the Bank since the beginning of project preparation, did not lead to any substantial modification in the prevailing sectorial setup. This type of study, which, inter alia, often embodies a tacit objective of limiting some of the prerogatives of the administration which commissioned the study, is always very sensitive. A major sector reorganization was implemented, however, before presentation of the Investment Project to the Board after Bank staff heavily involved themselves in its definition (para 3.06). The manpower study which addressed the Issue at the sectorial level was far too ambitious and did not lead to any concrete action. Detailed training activities are now being defined and implemented under the Investment Project. The tariff study was successfully carried out and has served as the basis for an important reform in this field. 3.05 The technical assistants were well accepted and integrated in MH and SONEES. Their contracts have been extended several times (financed either by the Engineering Credit, the PPF advance or the Investment Project); they were still in place in 1986. Technical assistance to SONEES focussed on creating a Studies and New Works Division within the technical department and has performed without major problems. Technical assistance to NH, intended to strengthen planning capability and implement the new institutional setup, however, has not always been an effective intermediary between the Government and the Bank, particularly during difficult exchanges concerning reallocation of responsibilities. Follow-up Project 3.06 The follow-up Project (Eleven Centers Water Supply Project) was appraised in March 1982. However, major disagreements still remained regarding institutional arrangements and allocation of responsibilities. The Project was finally presented to the Board in March 1985 but only after the Government agreed to (a) revise SONEES's statutes; (b) entrust SONEES with full responsibilities for urban water supply and sewerage (including planning, financing, construction, operation, billing and collection and debt servicing); (c) sign an "Enterprise Contract" defining mutual agreement and commitment for a three-year period; (d) put into effect new water tariffs and provisions for regular revisions along with the recommendations of the corresponding study; and (e) settle mutual arrears. These Important modifications in sector management constitute the main achievements of the Engineering Project. Project Cost and Credit Disbursement 3.07 Although the closing date of the Credit was postponed three times from the original date of December 31, 1981, until December 31, 1984, to allow for inter alia financing of extensions to the technical assistance contracts, no cost overrun in US$ was observed, due in part to the strong appreciation of the; US$ vis-a-vis the CFA franc during project implementation. At the time of Credit closing, an amount of US$205,194.54 was cancelled. Total cost of the completed project (see Annex) was  - 4 - CFAF 855 million (US$2.71) compared with the appraisal estimate of CFAF 705 million (US$3.20 million). Credit disbursements were refinanced under the subsequent Investment Project. Borrower, Consultants, Contractors and Bank Performance 3.08 The Borrower performed satisfactorily when addressing technical and financial issues, but experienced more difficulties in understanding the rationale behind the proposed sectorial reorganization and reallocation of responsibilities; this caused significant delays in processing the Investment Project. The few special conditions or covenants under the Credit (i.e., investment limitation, implementation of agreed study recommendations, IDA approval of consulting contracts) were all in compliance. Consultant performance proved satisfactory, especially for the engineering tad tariff studies, as did, ultimately, the drilling contractors. For its part, the Bank provided a major input on the institutional reorganization; however, this input came mainly after appraisal of the Investment Project. The Bank also provided necessary support to the Government by independeutly reviewing progress and helping to define least-cost solutions and appropriate alternatives for expansion of water supply systems. IV. CONCLUSIONS AND LESSONS LEARNED 4.01 The project was successfully completed, albeit witth substantial time overruns. It has been the vehicle for ar in-depth dialogue on major institutional and financial issues concerning the urban water supply and sewerage sector. The fact that it took 12 years to reach an agreement (if one includes the five years spent in the discussions which led up to the project) would suggest, however, that it might well not have been the best vehicle for that purpose. Nevertheless, the protracted dialogue did pave the way for perhaps greater institutional reform under the follow-up project than might have been otherwise possible. .  REPUBLIC OF SENEGAL WATER SUPPLY ENGINEERING AND TECHNICAL ASSISTANCE PROJECT (CREDIT S23-SE) PROJECT COMPLETION REPORT PROJECT COST A raisal Actual ---(CFAF million)-- - Geophysical and Drilling Works 160 250 - Water Supply Feasibility Studies 170 235 - Sanitation and Sewage Disposal Studies 45 - - Financial Studies and Audits 45 65 - Sector Organization Studies 20 55 - Training and Tariff Studies 30 35 - Master Plan on Management of Water Resources 50 - - Technical Assistance 105 215 - Contingencies 80 Total 705 855 Total (US$ million equivalent) 3.20 2.71 Exchange Rate CFAF/US$ 220 315