Guinea - Conakry Water Supply and Sanitation Project

Do_uet of Tlhe World Bank FOR OMCIAL USE ONLY Report No. 6922 THE WORLD BANK PROJECT COMPLETION REPORT REPUBLIC OF GUINEA CONAKRY WATER SUPPLY AND SANITATION PROJECT (CREDIT 870-GUI) August 31, 1987 Projects Department Western Africa Regional Office This dmenuo ha a nrtdcftd anr@b _d my be _e by rcpient osy in the p$orni of their. dk dties. conte my nd &bwMl be dIsld witbo Wodd Bank aut on.  REPUBLIC OF GUINEA CONAKRY WATER SUPPLY AND SANITATION PROJECT (CR. 870-GUI) Fiscal Year Ending December 31 CURRENCY EQUIVALENTS The official monetary unit is the Syli (redesignated the Guinean Franc in 1986). At Appraisal US$1 = Sylis 20 At Project Completion US$1 = Sylis 24.4 At PCR Date US$1 = Guinean Francs 350 MEASURES AND EQUIVALENTS Kilometer (km) Meter (m) Hectare (ha) Cubic Meter (M 3) Cubic Meter per Second (m3/s) Liter (1) Liter per Second (l/s) Liter per Capita per Day (lcd) Milligram per Liter (mg/1) ABBREVIATIONS AND ACRONYMS UNDP United Nations Development Program WHO World Health Organization AfDB African Development Bank MIE Ministry of Industry and Energy DEG Entreprise Nationale de Distribution d'Eau de Guin6e RAC Region Administrative de Conakry PU Project Unit of MIE PPF Project Preparation Facility GOG Government of Guinea  ISI BLAN - -'Ir _ TOipw lT- AR Aow4 T lp= A I D mfl Xo,*  rY~~~~~o I -< I " i~~~~ A 'r!~ ~ mm I ~ ~ ~ V: co J w  I - e I., I 7Q ^ Ti 0 Q * s .. ~~~~~  - iv - REPUBLIC OF GUINEA CONAKRY WATER SUPPLY AND SANITATION PROJECT (CR.870-GUI) PROJlECT COMPLETION REPORT MISSION DATA Item Date No. of No. of Man- Date of Weeks Persons Weeks Report Identification 03/77 1.5 2 3 04/77 Pre-Appraisal 07/77 2.0 2 4 09/77 Appraisal 01/78 3.0 2 6 02/78 Post Appraisal l 04/78 1.5 2 3.0 06/78 Post Appraisal II 10/78 0.5 1 0.5 11/78 Supervision 1 01/79 1.5 1 1.5 02/79 Supervision II 09/79 2.4 2 4.8 10/79 Supervision III 12/79 1 1 1 n/a Supervision IV 02/80 4.1 2 8.2 03/80 Supervision V 09/80 4 2 8 11/80 Supervision VI 03/81 1 1 1 05/81 Supervision VII 06/81 1 1 1 08/81 Supervision VIII 09/81 2 2 4 11/81 Supervision IX 04/82 1.5 1 1.5 06/82 Supervision X 09/82 1 1 1 11/82 Supervision XI 10/82 1 1 1 12/82 Supervision XII 03/83 1 3 3 06/83 Supervision XIII 06/83 1 1 1 08/83 Supervision XIV 03/84 1 3 3 04/83 Supervision XV 11/84 1 2 2 02/85 Supervision XVI 07/85 0.5 1 0.5 10/85 Completion 12/85 2 2 4 01/86 35.5 63  -v - REPUBLIC OF C- NEA CONAKRY WATER SUPPLY AND SANITAT. N PROJECT (CR.870-GUI) PROJECT COMPLETION REPORT HIGHLIGHTS 1. The Conakry Water Supply and Sanitation project was implemented as a first part of long-term requirements for water supply and sanitation, aimed primarily at establishing Entreprise Nationale de Distribution d'Eau de Guinee (DEG) as a viable organization, at restoring a satisfactory water supply level of service and at providing appropriate sanitation to most of Conakry's population. The IDA credit of US$12.5 million was used to finance construction of transmission and distribution mains and pipes; a reservoir; a booster pumping station and a treatment facility; drilling, rehabilitation and equipment of boreholes; house connections; standpipes and related equipment and materia]s; purchase of chemicals and small vehicles for well inspection and disinfection; technical assistance and consulting services, a training program within DEG and construction of house and office accommodation. Joint financing was provided by the African Develo,'ment Bank (AfDB), in an amount equivalent at appraisal to US$6 million of which US$4.75 were dispursed. The balance is to be used to finance supplies and equipment related to the project as agreed between GOG and AfDB. 2. The total cost of the project as implemented was US$21.874 million, about 0.2% lower than the appraisal astimate of US$21.905 million (para 3.17). 3. The physical works have been completed to a satisfactory standard but not as extensively as specified with SAR for some components (Section III, IV). The project took nearly seven years to complete (April 1979 - December 1985). Institutional (Section VI) and financial (Section V) performance has not been satisfactory. This Project Completion Report (PCR) explores the various reasons for this unsatisfactory outcome. It should be noted that the project was the first Bank involvement in the sector and thus a new venture for both Bank and the Government of Guinea (GOG). Reasons for Unsatisfactory Project Performance 4. The political and economic environment which prevailed at the time of project implementation has been the main factor for poor institutional and financial performance, inspite of the attempt to isolate the sector from thie environment, through a set of conditionalities, attached to the credit. (i) Unsatisfactory Financial Performance. No improvement has been made in financial management during project implementation. The accounting system prescribed for DEG is defective, with major financial data being omitted from the accounts (paras 5.02 ,.. 5.05). The financial covenants of the project agreement have not been met (para 5.16). The weak financial performance is attributed to  - vi - overstaffing, poor operating and maintenance standards, failure to bill or collect adequate revenues, and the absence of financial autonomy so that little incentive exists to cut costs or maximize revenues; all these factors being compounded by shortage of managerial skills (despite massive injections of technical assistance), pervasive lack of motivation, and the widespread shortage of the corsumers' liquid resources in the country (paras 5.07 ... 5.15). (ii) Poor General Management Performance. During project execution frequent changes were made in top management. These, together with the persistent interference in management (including appointment of employees) by higher echelons of government, under the ideology then prevailing, prevented the management from improving their skills and taking advantage of technical assistance. The lack of coordination between DEG, in charge of operations, and the Project Unit (PU) in charge of construction, also at times hindered project execution (paras 6.04, 6.05). Key Lessons to be Learned 5. The key lessons to be learned for implementing future projects in Guinea and in this sector are: (i) DEG as presently constituted is rot competent to be responsible, either for project implementation or for system operation and maintenance (though ideally one authority should be responsible for both). (ii) A greater degree of financial and managerial freedom, with correspondingly greater accountability, should be introduced into the sector; interference by supervisory agencies should be limited to control of the general orientation of the sector. In particular, a sound system of financial procedures and accounts on internationally accepted lines is essential (para 9.05). (iii) To achieve these objectives, partial privatization may be a serious option, preferably with the aid of an established and experienced overseas utility company (para 9.05).  REPUBLIC OF GUINEA CONAKRY WATER SUPPLY PROJECT (CR. 870-GUI) PROJECT COMPLETION REPORT 1, INTRODUCTION A. The Borrower and the Project 1.01 The borrower of Credit 870-GUI was the Government of the Republic of Guinea and its beneficiaries were the National Water Authority (DEG) for the urban water supply component and the "Municipality" of Conakry (RAC) for the sanitation and drainage component. Since none of these organizations had a relevant experience in term of project implementation, it was decided to create a Project Unit (PU) for that purpose. The US$12.5 million Credit was approved on December 12, 1978, signed on January 12, 1979 and effective on April 13, 1979. That was the first Bank financing for the sector and the sixth loan/credit only for the country. The African Development Bank (AfDB) cofinanced the project in an amount equivalent to US$6.0 million. Both financings should cover 100% of the foreign exchange component or 84% of the total project cost; the remaining 16% were to be financed by the Government. B. The Sector 1.02 At the time the project was appraised, only 10% of the urban population benefitted from piped water either through household connections or through standpipes; the remaining 90% were believed to rely on wells in shallow aquifers or running streams. Even in the served urban centers the quality of service was very low except in the mining centers whose water supply facilities were managed by the mining companies. At the same time there were almost no modern rural water points; villagers obtained their water also from traditional dug wells and springs or surface water. Only Conakry and the mining centers were equipped with sewerage/drainage networks but the one of the capital city was in neglect and clogged in many points. 1.03 Apart from a rather important investment in the early sixties for the Conakry water supply (Grandes Chutes scheme) financed by the Federal Republic of Germany (KfW) and some minor projects later financed by AfDB, bilateral agencies (USSR, Italy) and suppliers credit the sector suffered in the mid seventies through under-investment. Only three secondary centers, the capital city and the mining centers were potentially served. This situation forced the Governrent to seek assistance from internatio-aui aid organizations. AfDB, the first contacted advised the Government to ask the Bank to cofinance a first expansion of a water supply and sanitation project for Conakry.  - 2 - 1.04 This PCR has been prepared by the West African Project Department of the World Bank, on the basis of a Completion mission (two weeks in December 1985) plus information contained in the SAR, project files, supervision reports and in the completion reports prepared by the implementing agencies (DEG and PU). The report has been discussed with the Government in June 1986 and its final version reflects, to the extent possible, comments formulated during that meeting. II - PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL 2.01 In 1974, the Government of Guinea requested AfDB's assistance for the rehabilitation and improvement of the Cona'kry water supply. AfDB and the UNDP then accepted to cofinance feasibility studies for a mid-term investment program for the urban water supply and sanitation sector. They were carried out by consultants under supervision of the World Health Organization (WHO). These studies were reviewed in Conakry by a Bank mission in July 1977. 2.02 A joint Bank/AfDB appraisal was carried out in January 1978. The physical components of the project (Conakry water supply/sanitation/ drainage) were defined on the basis of the above mentioned feasibility studies, however, after the water demand forecasts were significantly reduced. The other components (technical assistance, training and consultants services) were identified and prepared by the Government and the Bank. In order to speed up project preparation a US$270,000 PPF was granted by the Bank to help finance detailed designs and tender documents for the drainage network, housing, offices, the services of an expert in commercial management as well as audits of the 1975 to 1977 DEG's accounts. Both the Bank and AfDB requested DEG and PU to be assisted during project implementation by experienced technical assistants in the fields of management, water distribution, companies procurement, and construction supervision. Guinea had hardly benefitted from foreign technical assistance since independence (1959) and this was considered to be an important input by donors if they were to participate in tbe sector. A. Project Objectives 2.03 The objectives expected to be reached during project execution are summarized below: (a) to provide additional production capacity in the vicinity of Conakry and thus to offer greater reliability to the water system, this system being dependent on a single long transmission pipe;  - 3 - (b) to increase the transmission performance of the Yessoulou gravity pipe limited at the delivery point to about 28,000 mt/day (to be compared with a design capacity of about 40,000 m3/day); (c) to improve the performance of the trunk main and distribution system and extend the distribution network and water supply services to a larger segment of the Conakry population; (d) to improve and strengthen the technical and financial capabilities of DEG in both the project area and the secondary centers where it already operated or where it would later take over; (e) to rehabilitate and expand the Conakry drainage works and restore the technical and administrative capability of "Reglon Administrative de Conakry" (RAC) technical services responsible for the maintenance of the drainage network; and (f) (i) to prepare, through appropriate studies and assistance a long-term development plan of the water supply and sanitation for the whole of Guinea; (ii) the development water supply and sanitation schemes for urban centers; and (iii) a policy to reduce depevidence of Guinea on imported water treatment chemicals and smaller diameter pipes, by encouraging their manufacture locally. As a result of the project the expected objectives related to restoring a satisfactory level of service and givlng appropriate sanitation to most of Conakry's population were partly achieved (paras 3.07, 4.07). In this respect the percentage of domestic users was 54% in 1984 against 68% forecasted. The proportion served directly through private connections is approximately the same as expected (28%); however, because of the limited number of new standpipes commissioned, the proportion supplied by standpipes is only 26%, 13% shorter than expected (39%), as a result about 165,000 people have benefitted from the project against 300,000 people expected. B. Project Description 2.04 As finally agreed, the project comprised the following major components, shown in more detail in Annex 1-2: (a) Water Supply: (i) Drilling of boreholes; construction of transmission mains distribution pipes, reservoirs, and a treatment facility; construction of and equipping booster and pumping stations;  - 4 - (ii) Provision of house connections, standpipes, water meters and related equipment and materials; (iii) Construction and equipment of office space, training facilities and houses; (iv) Purchase of chemicals, spare parts, miscellaneous equipment and vehicles to improve DEG's day-to-day operations; (b) Drainage and Sanitation: (v) Conversion of unlined drainage ditches to concrete drainage canals in three Conakry districts; (vi) Purchase of chemicals and small vehicles for the Division of Preventive Hygiene responsible for well inspection and disinfection; (vii) Installation of 10 sanitary blocks in low income parts of Conakry; (c) Consulting Services and Technical Assistance: (viii) Provision of 36.5 tAayears of technical assistance and consulting services; and (ix) Establishment of a training program covering 22.5 man/years of fellowships and training abroad, for engineers and technicians. 2.05 The physical components of the project which focussed on the capital city was only a first step in a possible long-texi involvement aiming at establishing DEC as a viable organization and restoring a satisfactory level of service in a potentially profitable center; furtber expansion in secondary cities, which suffered and still suffer from inadequate water supply but where the cost of water is considerably higher would become possible. Furthermore, the project aimed at addressing the most urgent issues in the field of drainage and sanitation, the latter being perceived as a consequence of an improved water supply. III - PROJECT IMPLEMENTATION 3.01 The Credit became effective on April 13, 1979 four montlhs after Board presentation. The contracts between DEG and a water distribution company; between PU and an Engineering consultant 'nd the opening of a  special account in foreign exchange at the Banque Guingenne du Commerce Ext6rieur were conditions of effectiveness. A. Water Supply 3.02 The contract for the drilling of boreholes was awarded in April 1980 for completion in 12 months. Since the pumping tests were significantly lower than what was expected at the time of appraisal, detailed designs and tender documents for the pumping equipment and the transmlssion had to be revised. Works finally started early 1983 and completed late 1983. Seven boreholes have been equipped at Kakimba and only one (instead of seven) at Bassia. The aquifers yield (in theory) only about 40% of the initially expected production; however, since energy supply is highly unrealiable 1/ the incremental water production resulting from these boreholes is only 20% of what was anticipated at the time of appraisal. Retrospectively, it appears that it would have been much more prudent to drill reconnaissance boreholes particularly at Kakimbo and Bassia during project preparation in order to firm up the available yield of the aquifers. 3.03 Only one 5,000m3 reservoir has been built (out of the two envisaged) due to the available low additional water production. A simplified treatment unit (chlorination, aeration and Ph adjustment) has also been installed at this reservoir. The construction has been satisfactorily carried out albeit with a one year delay. Until now it has been almost impossible to fill the reservoir. The operation of the treatment unit is an unsolved issue, and the aeration tower (initially envisaged for iron removal) in fact leads to energy losses. 3.04 The booster pumping station to be built at the Yessoulou treatment plant located 40 km from Conakry, has not been built. Ir fact detailed surveys carried out during project implementation showed that the pipeline transmission capacity had been dramatically reduced due to chemical deposits on the wall as a result of an improper use of the treatment plant. 'Thus, PU proposed to first clean the 40 km long downstream treated water transmission line (Yessoulou treatment plant - Conakry) and then the 40 km long upstream raw water transmission line (Grandes Chutes Dam - Yessoulou treatment plant). Works were carried out by a specialized contractor for a total cost of US$230,000 which can be very favorably compared to the cost of the envisaged boosters. The conveying capacity has been increased by 12,000 m3/d, i.e. about 40% of the operating yield at the time of appraisal. However and despite (partial) rehabilitation works of the Yessoulou treatment plant, also carried out under the project, improper use of chemicals may again result in deposits on the pipe walls and reduce the transmission line capacity. DEC did under force account the rehabilitation of the transmission line. The old 1/ DEG is presently negotiating financing of standby generators.  - 6 - Kakoulima transmission line has been partly rehabilitated and equipped with a chlorination unit. 3.05 Distribution network expansions were carried out by two companies which both experienced many difficulties due to an under estimation of earth works and inadequacy of equipment. Some network extensions were also carried out by DEG under force account. Since few new connections had been built by DEG on newly laid pipes, PU was asked to temporarily take this responsibility. About 1,000 connections were built but no meter could be installed since those supplied under this project had been diverted by persons unknown from their intended use.. Sixty five public standpipes were built but partly and late connected to the distribution network, only after the Conakry provincial authority has accepted to pay for the water consumption. Budgetary constraints have since thea pushed DEG to seek an improved system which would ensure a better collection ratio. 3.06 Building and housing construction suffered important delays after the initial contract awarded to the lowest bidder (at the Bank's request) had to be cancelled. Spare parts, tools and miscellaneous equipment for DEG and RAC have been procured either through international competitive bidding or through the technical assistance contracts (on the basis of detailed action plan) and after three suppliers at least had submitted a bid. An electromechanic workshop and water meter repair workshop have also been built and equipped. However, the limited number of water meters in operation does not justify the latter. B. Sewerage and Drainage 3.07 The contract for construction of drains and backfilling of regularly flooded areas was finally awarded in September 1981 after bids were called a second time; the company initially selected was informed by the Government of the decision eight months after bids were received; slowness in bid evaluation and consequently clearance from the Bank were among the reasons for that delay. The other major reasons were the high total cost of the work and undue requirements from the contractor. Works have finally been carried out, without any major problem other than an 18 months delay; they were completed in march 1985. Rehabilitation of existing collectors, carried out under force account by RAO was very slow and always hampered by insufficient budgetary allocation. Only two sanitary blocks out of the ten initially envisaged have been built close co market places, after a new survey of the demand for that type of service during project execution showed a limited interest from the part of the population. Sanitary inspection of openi wells and their disinfection were not carried out, due to internal management problems of the Division of Sanitary Prevention (DPS) which should have been the executing agency for this component. Closing of private open wells had to be postponed due to insufficient implementation of secondary networks and inadequate surveying works on existing wells by PU.  - 7 - C. Consultancy Services and Tachnical Assistance 3.08 The project included an important technical assistance component, intended to help achieving the main goal of institution building. A technical assistance team from a private water distribution company which initially included six members was seconded to DEG. The team arrived too early in Conakry and was not immediately integrated within DEG's structure, partly because of insufficient logistics. The technical assistance team became more efficient when it was decided to assign it specific rehabilitation tasks (for example equipment of the (randes Chutes transmission line, improvement of the treatment plant....) to be carried out with DEG labour, materials and tools, placed under the technical assistance team's responsibility. These maintenance and rehabilitation tasks have been effectively carried out but since no permanent procedures could be implemented, it is unlikely that they could be replicated without external assistance. Technical assistance to the commercial department took place In the form of regular short missions spread out over six years. Although very detailed procedures were prepared they have never been fully implemented. In fact customers management steadily decayed due to permanent external intervention from the Government in DEG's management (especially its division into several independant companies - see para 6.04), inadequacy of the facilities (impossibility to cut-off bad payers) and poor quality of service (low or no pressure). 3.09 DEG's accounts have regularly been audited since 1978. However, major discrepancies between international accounting procedures and the Cuinean ones were rapidlv identified, a revision of the auditors' TORs was needed with an orientation towards accounting procedures. This modification took place in 1983 at the end of the contract of the first auditor selected. 3.10 The engineer'.ag consultant team selected for technical assistance to PU consisted of three engineers (a mission leader, an engineer for the water supply works and another for the sewerage/drainage works). Its role has always been limited both by the Government and the financing agencies to assistance to bid evaluation and construction supervision, although in many cases a considerption of alternatives at the time of appraisal would have led to substantial savings. The performance of this technical assistance team, however, was of good quality, and all the works initiated were finally completed albeit with delays. 3.11 An important training program was also included in the project. On the spot training by the technical assistants (either permanent or on short regular mission) as well as training abroad, which gave DEG's staff the possibility to visit and observe correctly managed water companies, have mainly resulted in an improvement of individual knowledge. Outside training activities in Ivory Coast, France and Tunisia have not always been organized in connection with DEG's actual needs. Also the role played by the training specialist seconded within the framework of the technical assistance contract to DEG has not really been sv.ccessful, the TORs of this expert were oriented too much towards the preparation of a training program  - 8 - and not enough towards follow-up on its implementation. So far the training program financed under the project has had a very limited impact on DEG's operation, partly because of the political environment at that time in Guinea. 3.12 Among feasibility studies initially envisaged on the of secondary centers water supply some were carried out, thanks to additional funding provided by the UNCDF for ground water investigations. The other studies not really relevant in the Guinean context (feasibility of PVC pipe ma"ufacturing and aluminum sulphate) were not performed. However, at the end of the project execution, it was decided to add two preparatory studies for a possible second project (institutional reorganization and a feasibility study of Conakry water supply expansion). D. Project Revision 3.13 As already mentioned there were several small project revisions, which were taken but they had no major impact on the projected objectives. The construction of one 5,000 m3 reservoir was (cancelled (it was not really useful), a booster station had to be built at a different location (due to a lower yield of one of the aquifers), proposed booster stations on the Grandes Chutes transmission line were replaced by much less as expensive pipe cleaning operation which furthermore does not generate any operation and maintenance problems. The technical assistance contracts to DEC and PU could be extended several times thanks to a strong appreciation of the U.S. dollar vis-a-vis the european currencies (in which mest of the expenses were incurred). E. Implementation Schedule 3.14 The credit closing date was extended twice between March 31, 1983 and March 31, 1985 to allow for completion of construction of drains, sanitary blocks and secondary network, and com2letion of the technical assistance contracts. Except for the three above mentioned items which suffered delays of 36 and 12 months respectively (when compared with completion dates envisaged at the time of the appraisal) all major components were completed before the initial closing date. This is a remarkable performance in the Guinean context (if one takes into account important delays because of complicated procurement procedures and permanent difficulties encountered by contractors for the supply of material and equipment) and is mainly due to the good project management by PU. F. Pnecurement 3.15 Cumbersome and centralized procurement procedures and misunder- standings of Bank guidelines for procurement have resulted in the above mentioned delays for contract awards. All contracts have been awarded to foreign companies after ICB. However, the number of bids has always been very limited leaving PU with a very narrow choice.  -9- G. Reporting 3,16 PU has prepared and submitted progress reports every six months; although they were sufficiently documented they were l..ited to a review of implementation of physical components of the project. On its side DEG has never issued a report which would have given a picture of its operations. Monitoring indicators have generally been estimated by Bank !taff during supervision missions on the basis of mostly unreliable statistical data. H. Project Cost 3.17 The final total project cost has been US$21.9 million exactly as estimated at the time of appraisal. Details by components are given in Annex 3. Although the final project cost is almost identical to the initial estimate, there are substantial variations in the final allocation by component. Project Cost (US$ million) Actual Appraisal Water Supplv Works 9.86 12.68 Spare Parts and Chemicals 1.20 0.60 Sewerage and Drainage Works 2.47 3.14 Offices and Housing 1.26 0.50 Training 0.22 0.52 Technical Assistance 2.17 1.88 Construction Supervision 3.19 1.07 Studies 1.50 1.52 Total 21.87 21.91 The main increase has been in the categories "construction supervision" and "technical assistance" for which a total of 386 man-months (equivalent to US$5.4 million) has been spent to be compared with initial estimates of 304 man-months (equivalent to US$2.96 million). DEG and PU weaknesses justified this "heavy" technical assistance. These weaknesses, as well as the ones of the guinean system as a whole, have drastically reduced the impact technical assistance, especially on DEG's operations. I. Performance of Consultants, Contractors, Suppliers and Borrowers 3.18 The engineering consultant who assisted PU in project management has performed satisfactorily as far as procurement and construction supervision were concerned. It may be deemed unfortunate that they were never asked to review some of the questionable choices made at the time of feasibility studies or detailed designs. Feasibility studies for seven secondary centers and for Conakry were performed satisfactorily by the same consultant. The rather average performance of the technical team seconded  - 10 - to DEG is mainly due to the very limited absorptive capacity of the latter. As long as technical assistants were considered advisors to DEG's management team and had to rely on DEG's organization to execute their advise their impact was almost inexistant. The teennical assistants started to be really efficient when specific tasks were assigned to them and sufficient means to perform them were provided. In a short run improvements could be noted but this type of action was not really beneficial since no procedure could be established on sufficiently firm grounds for future rehabilitation actions. Procedures prepared by the technical assistance to the commercial department were established but only partly followed. 3.19 Except in the case of the company to which the construction of offices and housing was initially awarded, all contractors finally completed the works albeit often with substantial delays. 3.20 Performances of the borrower and the Bank are analyzed in the chapters V and VIII respectively. J. Disbursements 3.21 The following table gives a comparison of the actual disbursement profile with the one proposed at the time of appraisal and the standard regional profile for water supply projects. Execution was longer than originally envisaged but shorter than the average disbursement profile for the region. Cumulative Disbursements of the IDA Credit Standard Fiscal Aplraisal Actual Regional Year Ptofile Profile Profile 79 .62 .80 .13 80 4.25 1.84 1.38 81 9.12 3.62 3.25 82 12.00 5.37 5.50 83 12.50 7.10 7.63 84 9.10 9.50 85 11.16 10.88 86 12.47 11.75 87 12.47 88  - 11 - IV. OPERATIONS 4.01 Operations of facilities built under the project is not what was envisaged at the time of appraisal. It has already been stated that the combination of a low yield of the new boreholes compounded with an unreliable energy supply has resulted in an actual production of less than 20% of the expected additional quantity of water to be produced by the Bassia and Kakimba boreholes. The cleaning of the transmission line has resulted in a substantial increase of the quantity of water delivered by this scheme to Conakry. But the improper use of chemicals at the Yessoulou treatment plant could lead to new deposits on the pipe walls. The rehabilitation of the treatment plant was only partially carried out and will need to be continued in future projects. 4.02 Important and visible leaks can still be noted in the distribution network; losses may have increased as a result of reinforcements carried out under the project which have elevated the pressure in neighbourhoods which were formely poorly supplied with water. As for other facilities rehabilitation actions will have to be carried out for several years. At the end of the project the number of connections (registered and unregistered) was still unknown, while their inventory was one of the operational covenants of the Credit Agreement. During the entire period of project implementation, DEG and PU have officially constructed about 1,700 connections (of which 1,050 by PU) while the total number of customers (including regularization of existing connections) raised from 8,800 to 11,200 between 1979 and 1984. A systematic inventory of the connections is presently been carried out as part of the preparatory activities to a possible second water supply project. 4.03 The drainage network built under the project operates satisfactorily. Despite an apparent overdimensioning, drains operate at its design capacity several times per year. At the time of project completion the construction of the sanitary blocks had only just been completed and it was difficult to judge their operation (mainly maintenance may not be problemative). 4.04 The following table gives a comparison between estimates done at the time of appraisal and the perceived situation in 1984 for some monitoring indicators.  - 12 - Appraisal Estimate (Conakry only) 1978 1984 1984 Population 574,000 792,650 741,737 Total Connections 6,176 13,176 11,167 People per Connection 34 28 20 Standpipes 102 342 112 1/ People per Standpipe 1,000 900 2,800 2/ Water Produced (000m3) 10,480 16,890 16,050 Water Sold (OOOm3) 7,130 12,890 11,400 Unaccounted for Water % 32 24 29 Population Served 41% 68% 54% 2/ by Private Connections 23% 29% 28% by Standpipes 18% 39% 26% 1/ Not all in service 2/ Estimated V. FINANCIAL, PERFORMANCE A. Background 5.01 The institutional structure of the sector provides that, under the tutelage of the former Ministry of Industry and Energie (MIE) subsequently known as Ministry of Energy and the Konkoure and more recently renamed Ministry of Natural Resources, Energy and the Environment, Entreprise Nationale de Distribution d'Eau de Guinee (DEG) is in charge of commercial and operational activities. The Project Unit (PU) is in charge of implementation of the Conakry Water Supply and Sanitation Project. 5.02 DEG was created by law in 1961 as a public enterprise owned by the State and purportedly having administrative and financial autonomy and headed by a General Manager; the Board provided for in the statute and whose members are from ministries, has never met. In fact DEG has been treated and managed as a Ministry department with only an illusory semblance of a legal personality. 5.03 PU was created as an MIE agency in charge of project implementation and was to be dissolved once the project was completed. 5.04 Such a division of responsibility in the water supply sector has numerous disadvantages; it means that the financial picture does not reflect the actual situation in the sector. DEG operates and maintains the system and is responsible for billing and collection of water charges. The project unit manages some of the investments; and the Ministry of "State Control" and the Central Bank administer capital expenditure and the debt  - 13 - service and decide when and how the assets and debt should be recorded in DEG's accounts. 5.05 Accordingly, assessing the sector's financial performance implies an examination and collection of information from the four above named organizations which operate under differing accounting systems mostly not in line with generally accepted practice. 5.06 This problem had been foreseen during preparation missions and the Bank had obtained informal assurances that changes in procedures could be Introduced with the help of the auditors to achieve reliable and informative financial accounts. However, despite repetition of requests and assurances (and a considerable consultant Input) no .eal attempt was made to set up modifications in procedures and changes In administrative organization. 5.07 However, these were not the only constraints in the financial field. Other countries have fragmented and dispersed sector responsibilities, but still manage to futction effectively from the financial standpoint; DEG labored under a number of other disabilities, many arising from the economic, political and administrative climate which prevailed in Guinea up to 1984, with a system of rigidly centralized control of economic activity, a much overvalued currency, and a chronic shortage of funds, particularly foreign exchange. Because of centralized control, DEG had little say in staffing or financial matters; any surplus it might earn had to be paid over to COG, and even its depreciation provisions likewise surrenderei for investment, possibly elsewhere. Because of the shortage of funds, everv expenditure over and above trivial sums required specific and time-consuming approval from above; and because of the shortage of consumer goods services at officially administered prices, the Syli became less and less meeningful as an indicator of real value. In these circumstances, it is understandable that DEG officials had little or no incentive to maximize revenues or minimize expenditure; at all events, little effort is visible In these directions. Metering, billing and revenue collection have in particular been deficient throughout; if it had not been for prompt pavment bv GOG of its water bills (albeit on estimated consumption), DEG's finances would have been even more precarious than they are. 5.08 The financial forecasts in the appraisal report showed positive rates of return based on revalued assets and sufficient internal funds to cover the debt service. However, DEG accounts were not kept on a basis to permit comparison with the appraisal forecasts. The failure came from mainly three reasons (a) absence of a proper accounting record of assets and debt service, (b) absence of adequate procedures to certify and to validate data, and (c) lack of internal controls e.g. over billings and collections and the reconciliation of these. 5.09 Comparison with appraisal forecasts was possible once auditors proposed corrections, and data on investments and borrowings during project implementation were introduced and recorded. DEG's accounts are set out in  - 14 - Annex 4-1 and 4-2 and summarized below for the project period (1978 - 1984). Figures in US dollars are calculated at an average exchange rate of US$1.00 for Sylis 22.24. However, this exchange rate was almost certainly artificial and to this extent, expenditure in foreign currencies (e.g. project imports) are understated in terms of Sylis (see para 7.05). Summy of nncing Plan 1978 - 1984 Apmprial Estimate DEG's Accounts/Actual Actual/AdJust Sylis US$ Sylis US$ Sylis US$ millions millions uillios mildions miUions mllons ReodrfYts Preent Cmakry Project 332.5 16.6 352.00 15.83 Farani/Giekedou Secodary Centers 180.0 9.0 254.00 11.42 Other 115.7 5.8 100.60 4.52 Total Construction 628.2 31.4 266.3 11.98 706.60 31.77 Cash Increase (Decrease) 1.3 0.1 2.5 0.11 2.50 0.11 Inc. (Dec) In Working Capital 37.6 1.8 (57.3) (2.58) (20.89) (0.94) Total Reqyireents 67.3 33.3 211.5 9.51 688.21 30.94 Sources Operating Incou 89.2 4.45 (134.8) (6.05) (134.34) (6.05) Dqpeciation 318.1 15.88 233.3 10.49 232.84 10.47 Taxes 6.3 0.33 Intenal Cash Generation 398.0 20.00 98.5 4.42 98.50 4.42 Less: Debt Service 229.1 11.5 - 112.69 5.07 Net Internl Cash Generation 168.9 8.5 98.5 4.43 (14.19) (0.65) Borrnongs - IDA 159.0 7.9 195.00 8.77 - AfDB 122.9 6.0 96.00 4.32 - Other 140.0 6.9 169.00 7.60 Total Borrwdngs 421.9 20.8 460.00 20.69 C(verment Contribution 76.5 4.0 113.0 5.08 242.40 10.90 Total Sources 667.3 33.3 211.5 9.51 688.21 30.94 B. Financial Analysis 5.10 From information set out in the financing plan above, and in Annexes 4-1 and 4-2, two pictures emerge; the first one is based on data recorded in DEG's accounts (Annex 4-1) the second one (Annex 4-2) is a  - 15 - reconstruction based on DEG's and the PU's data taking into account the investments and the debt service as recorded by IDA and AfDB, after partial adjustment for auditor corrections. 5.11 As recorded in DEG's accounts, the capital expenditure is about Sylis 266 million (US$12.0 million) for the whole period, about 42% of the appraisal estimate. However, this figure is incomplete; DEC incorporates capital expenditure only as and when instructed, at a valuation on the basis implemented by the Ministry of State Control and Central Bank and at long intervals; the true figure of capital expenditure as shown in the reconstructed accounts was about Sylis 707 million (US$32.0 million), about 12% above the appraisal estimate, accounted for by investments in certain minor centers (14% of total). Other omissions are that borrowing requirements to meet this expenditure, as well as debt service, are not recorded in the accounts, which show capital expenditure as financed by government contributions. 5.12 DEG's income statements reflect a steady deterioration in its financial condition. Even without any charge for loan interest, the accumulated losses during the period reached Sylis 134.8 million (US$6.06 million) compared with a surplus of Sylis 89.2 million (US$4.45 million) appraisal estimate. After the adjustments for debt service, the true total deficit 1978-1984 was nearly double, at Sylis 234.9 million (US$10.56 million); deficits arose in every year except 1980. Internal cash generation fell well short (87%) of debt service requirements, reflected in a corresponding drop in working capital, i.e. an excess of liabilities. The root causes of the deficit are related to (i) low tariffs (para 5.14) and customer growth, so that revenues by i984 were only 72% of the appraisal forecast; (ii) overstaffing; (iii) the poor billing system whereby many consumers and all public entities pay only on estimated consumption; (iv) the lack of maintenance and management of the distribution network causing waste of water produced and treated; and (v) the growing operating expenses in Conakry and also in the secondary centers from which derive no substantial revenues, and where operation costs are relatively high. 5.13 The balance sheet shows illiquidity and a decline in financial condition. Customer accounts receivable increased from Sylis 28.8 million (US$1.3 million) in 1978 to Sylis 124 million (US$5.6 million) in 1984, of which Sylis 42 million (US$1.9 million) has had to be written off as irrecoverable. The amount as of December 1984 represents eleven months of billing, mainly in respect of sums due from private consumers; the sums due from Government and municipalities for water bills are regularly paid according to the budget allocation (para 5.14). Liabilities rose from Sylis 5.4 million (US$0.24 million) in 1979 to Sylis 164 million (US$7.4 million) in 1984. There are also other liabilities, not recorded, for electricity and supplies; such expenses are recorded only when paid. DEG's difficult financial situation reflects to some extent the economic recession and the countrywide financial shortage, demonstrated by the amount of debt service overdue to external lenders in this sector -- Sylis 145 million (US$6.5 million).  - 16 - C. Tariff s 5.14 DEG's water tariff was doubled to Sylis 8/mr3 slhortly after appraisal, and it was a condition of the Development Credit Agreement that the tariff would be maintained at a level sufficient to cover operating expenses and depreciation (or debt service if greater). Appraisal projections forecast increases to Sylis 10/mr3 itn 1981 and Sylis 12/m3 in 1983; the first increase was duly implemented, but the tariff then remained unchanged for the rest of the project period, never sufficient to keep DEG out of deficit. There was no attempt to structure the tariff to provide a "life-line" cheap rate for small consumers, with progressively higher charges for large consumption; and the rate is the same fof smaller centers 2/ as for Conakry, even though unit costs are higher in the former. The tariff study proposed under the project was not carried out; a study is however being commissioned as part of the preparation for a possible second project. D. Customer Arrears 5.15 Total arrears represent about eleven months billings but the arrears of private consumers probably average much longer, since Government and municipalities regularly paid for their own consumption until 1985; this is not metered but is paid for on estimated consumption in budgets approved at the beginning of each fiscal year. These budgets represent for DEG the main cash flow to meet its operating expenses. Two attem,ts had been made in 1981 and 1983 to clean up long-standing arrears (more than one year old) but these actions were not followed by new procedures to avoid future accumulation of unpaid bills. In general, due to the absence of adequate means, enforcement of payment by delinquent private customers was not energetically pursued, and the disappearance or disrepair of many meters resulted in widespread charging on estimated consumption. E. Financial Covenants 5.16 Mention has already been made of DEG's performance indicators which were not reported. Other covenants more administrative than financial were agreed, yet not met or only partly met as shown in Annex 1-1. A rate of return covenant was not proposed for this project, and in any case It would never have been possible to test compliance; it is not yet an appropriate covenant in the Guinean context where assets are 2/ Except in one center (Kankan) where the rate was arbitrarily increased to Sylis 50/m3 in 1982, for no discernible reason.  - 17 - not properly recorded and never revalued 3/ . Instead a tariff covenant was agreed, but this was ineffective (para 5.13). VI. INSTITUTIONAL PERFORMANCE 6.01 Two Institutional units have been in charge of construction and operation of the project facilities. A. Project Unit (PU) 6.02 PU was created to assume responsibility for project execution under its several aspects, technical and financial. It was managed by a Director nominated by ministerial decree, and who was assisted by a local team and foreign technical assistance. As required, PU produced regular technical reports on the works carried out. Their accounts were audited and certified by independent auditors. In general, PU performed competently and effectively. B. DEC's Organization 6.03 DEG is in charge of operating and maintaining all the sector infrastructures located in Conakry and the secondary centers throughout the country. It will be apparent from preceding chapters that DEG's performance has remained substandard from the outset. No serious improvement has been observed during project implementation despite assurances given during negotiations and repeated through supervision missions such as: (i) minimizing the counterproductive effect of excess4ve financial control from above; this was relaxed somewhat in 1981, but, it must be admitted, without much impact on DEG's performance; (ii) greater awareness by DEG of the importance of better management and better operation and maintenance; and (iii) the need to provide sufficient funds and tools to improve DEG's operation. 6.04 DEG has to seek approval by both MIE and the Ministry of State Control of its operational expenses. DEG's inter-al organization has been modified several times during 1978/1984 period which has undermined its 3/ The SAR proposed deferment of a rate of return target until after the tariff study had been completed.  - 18 - development. The biggest change, imposed in 19Q1 by Presidential Decree, consisted in dividing DEC into four autonomous enterprises within the capital city and In addition each secondary center became an autonomous enterprise in charge of operating the water system. These sweeping changes had not been agreed by the Bank which urged COG to re-establish the previous situation and to improve DEG as envisaged by the project and by the Credit Agreement. As a result, a new Decree issued in 1982 re-established DEG in its previous organization. However, despite continuous advice and several procedural studies performed by auditors, consultants and Bank staff, DEG has not addressed the recommendations proposed. In general, DEG management does not play any part in decision-making, which takes place at higher levels. C. Staffing 6.05 The number of staff emploved by DEG increased from 280 at the time of appraisal to 500 by the end of 1984 of which 60 were in senior management, 60 in middle management and 380 labor force. The increase can be partly attributed to circumstances bevond DEG's control whereby staff without qualifications had to be taken into employment. In these circumstances, it was impossible to set up a staff development plan. Annex 4-3 shows that the number of staff per 1,000 connections in Conakry was double the appraisal target; it was however lower than in 1978. D. Training and Technical Assistance 6.06 A limited number of staff underwent training under the project (33% of top management). The training program achieved was especially by means of seminars and scholarships abroad which benefitted individual staff with no management improvement within DEG. Two reasons could be cited: (i) the training program envisaged in the SAR for administrative and technical training and for establishment of a small training unit was never completely fulfilled; and (ii' lack of inducement for staff to apply their training; poor salaries, absence of any sense of corporate objectives, lack of incentives to improve efficiency, and a desire for risk avoidance, all contributed to low staff motivation. 6.07 The project provided for 17 man-years of technical assistance to augment the managerial capability within DEG. The most significant benefits derived from the technical assistance were in technical aspects and day-to-day operatior,s providing tools and spare parts, and helping the operating team to carry out works. Technical assistance participation in day-to-day operations did have some transitory impact on staff motivation, which however unfortunately disappeared after the end of technical assistance contracts.  - 19 - 6.0-8 To improve institutional performance under a future project, certain measures are considered imperative; these are outlined in the chapter "Conclusions" (para 9.05). VII. PROJECT JUSTIFICATION AND ECONOMIC REEVALUATION A. Project Benefits 7.01 The primary benefits of the water supply and drainage facilities were identified at appraisal in general terms of improvement in health resulting from an increased access of the Conakry population to safe water (water supply component) and from the removal of contaminated water and storm water (drainage and sanitation component). 7.02 In this latter respect, tangible results were obtained through the project. Flooding of the low lying areas was reduced and the impact of the lining of existing ditches on the operation of the drainage system in Madina, Boussoura and Kouba was favourable. However, the sustainability of those results will depend on continuous and proper efforts to clean ditches (para 3.07). 7.03 It is estimated that, as a result of the project, about 165,000 people have benefitted from the investments at this point (para 4.04). This fell short of the 300,000 people expected at appraisal. The proportion of the population served directly through service connections is approximately the same as expected (28%); however, because of the limited number of new standpipes commissioned, a deterioration of the quality of service to the population supplied by standpipes is evidenced by the increasing average number of persons per standpipe, from 1,000 in 1978 to an estimated 2,800 at present. 7.04 The expected impact of the training and technical assistance components has not materialized. A measure of their catalytic effects should have been given by improvement in the collection rate, or increased staff productivity. On those matters DEG's performance did not reveal any progress. B. Average Incremental Cost 7.05 The average incremental cost of water (AIC) was recalculated (Annex 5-2) on the basis of actual investment costs and of a rough estimate of the optional level of operating and maintenance costs. AIC is now estimated at US$0.25/ms. If the shadow exchange rate of US$1.00 = Sylis 35 assumed in the SAR was kept for the conversion into Guinean currency, the latter figure would be comparable to the 1985 water rate of Sylis 10/mr. But the comparison becomes meaningless at the prevailing  - 20 - exchange rate of US$1.00 = Guinean Francs 350 4/ . Moreover, the billing process is still being largely based on lump sum assessment of the individual consumption, so that reliable sales statistics are lacking. C. Economic Rate of Return 7.06 The economic internal rate of return (EIRR) of the water supply component of the project was calculated at 7% in the SAR, using DEG's revenues as a proxy for benefits. Annex 5-1 provides the detailed assumptions of the EIRR recalculation. The mainly theoretical rate of Sylis 10/M3 has been retained as a measure of the willingness to pay of the customers. As could be expected (and as was outlined in the SAR), che EIRR is highly sensitive to the exchange rate. With t e rate assumed in the SAR, the EIRR amounts to some 10%. If the current (and more realistic) exchange rate were chosen, the incremental benefits would not even cover the incremental operating and maintenance costs and the EIRR would be negative. That outcome provides ample evidence for a water tariff adjustment. VIII. BANK PERFORMANCE A. Project Preparation and Objectives 8.01 From the beginning, the Bank perceived in the Guinean environment difficulties for implementing the project successfully and took steps to assure the achievement of the expected objectives. The Bank was actively involved in the preparation of the Water Supply and Sanitation project at all stages. The Bank maintained a firm position, and obtained agreement from the Government on: (i) limiting the size of the project to meet Conakry's immediate needs in water supply and sanitation; (ii) enhancing the institutional structure to become capable of managing the project; and (iii) relaxing the heavy administrative procedures in terms of financial control and supply of resources. 8.02 In retrospect, it appears that the identification/preparation and appraisal process focussed too much on the technical issues of the project (e.g., least cost solution for water supply and drainage 4/ The Guinean Franc replaced the Syli as the Guinean currency unit in January 1986.  - 21 - expansion, procurement) and not enough on the institutional and organizational issues. In this area also, a high level mission from IDA tried unsuccessfully. However, significant changes in sector management by modification of staff attitudes could have only been achieved through a radical transformation of the political environment. The latter started only in April 1984 when the new Government took over responsibilities. With normalization of the economic situation, which is the first objective of the new Government, improvement of sector management can now be envisaged through a second water supply project currently under preparation. Also addressing several subsectoral issues (water supply, sewerage, drainage) under the same first project in Guinea, to be implemented by various agencies, can now be judged as far too ambitious. 8.03 In retrospect it can also be seen that (in common with manv projects of that era) appraisal might well have been deferred until more detailed designs were available, to permit firmer cost estimates; however, in this case, there was no overall cost overrun, so that the estimates may be judged to have been reasonably accurate. Similarly, demand projections appear to have been realistic; the apparent shortfall in eventual sales and the downturn in new connections were more than likely the result of poor metering and the consequent availability of "free" water. However, there were certain examples of imperfect preparation of the project (e.g. inadequate site investigation of boreholes, poor appraisal of the issue of water transmission line conveyance capacity) which also suggested that the appraisal may have been premature. B. Project scheduling 8.04 The date estimated for project completion proved to be optimistic but would have been well within the required profile as presently used. The delays which occurred were due to procurement difficulties, an insufficient analysis of physical components and to limited management capability. Consequently, the disbursement period was longer and the closing date was postponed to enable the Government to use Credit funds available for necessary works and studies. C. Project Implementation 8.05 Because DEG and the Project Unit were fairly new and untried, and in view of the peculiarities of the Guinean environment, project implementation went slowly. In addition the measures requested by the Bank to address the institutional deficiencies did not have the desired immediate impact in project implementation. 8.06 The project was first classified as having major problems of management and political concern, in the supervision report of November 1981, though "moderate" problems had been frequently noted previously. Numerous special covenants had been included In the Credit Agreement, but in view of the financial problems of the country in general, and the DEG in particular and of the latter's managerial shortcomings, it might appear that the number of covenants (27) and the content of some of them were  - 22 - overly ambitious from the beginning. However, a review of these does not disclose any which were not important and necessary for sound project implementation. Most of the covenants covering project reporting and financial reporting (monitoring indicators) were not complied with. In retrospect fewer and more carefully considered covenants, limited to the key operating, financial and institutional issues might perhaps have facilitated project implementation and project supervision; however, identification of the financial risks resulting from weaknesses in Guinean procedures and ptoject risks resulting from institutional weaknesses dictated a coaprehensive set of loan covenants to try to ensure even minimal resuits after project implementation. At least, they served to draw the attointion of the project agencies to the importance of the actions concerAed. D. Supervision 8.07 There were 17 Bank supervision missions (including one completion mission) during project implementation from January 1979 to December 1985. Most of them consisted of one or two staff. The more frequent ones were undertaken during 1980, 1981 and 1982, the heaviest period of construction. Projects division staff focussed predominantly on institutional and financial aspects, though with minimal effects. The managerial inertia inherent in the rigid administrative climate at that time appears to have constituted something of an insurmountable obstacle. IX. CONCLUSIONS 9.01 The physical components of the project have mostly been successfully completed. As a result Conakry has increased its water production, transmission end storage capacity. However, that result remains below project expectations. Having regard to the constraints imposed by the economic and administrative ideology then obtaining, the project outcome could be judged as marginally satisfactory in the areas of building new Installations, and increasing the percentage of population served with potable water. 9.02 The management and institutional improvement envisioned as the most important component of the project was not achieved. Political and economic factors within Guinea were responsible, in large measure, for the failure of these components to meet objectives. Even more significant, the inadequate support to DEG from MIE and the Ministry of State Control in this respect and the lack of enthusiasm within DEG were additional factors in failing to achieve the goal. 9.03 Low employee morale and lack of motivation continue to prevail throughout DEG, leading r* an underutilized work force, while normal operating requirements such as preventive maintenance are ignored. Inadequate financial management and internal control lead to serious  - 23 - deficiencies, reflected especially in weaknesses of the billing and collection system, compounded by countrywide shortage of financial resources. 9.04 At the moment, there is immediate need for a program of technical assistance and strong institutional reform to prevent deterio- ration of the physical system and to develop an Institution which meets the water supply needs of Conakry's very rapidly growing population. Changes of political power in Guinea and the strong willingness of the new Government to improve institutional weaknesses and poor financial systems make it possible to meet such a challenge. 9.05 Based on experience with the first project, institutional reform to strengthen the sector's financial capability and promote improved systems, would be the predominant components proposed in preparing a new project. The lessons learned from this project are conducive to leading the sector institutions to operational effectiveness, self-sufficiency and financial viability through the second project. These lessons suggest the following measures to be desirable: (i) Though ideally one authority should be responsible for both construction and operation, DEG is not at present competent to carry out both tasks and in any case needs substantial reinforcement in the form of personnel, resources and equipment to carry out any task at all; (ii) The responslble authority should not be subject to detailed control or interference from above; instead, GOG should judge the water authority on its performance of assigned responsibilities, and not seek to interfere in day-to-day management; (iii) In return, the water authority must accept responsibility for its performance in the fields of operation and maintenance; metering, billing and collection; internal control systems and accounting procedures. In particular, it needs a comprehensive and reliable accounting system on commercial lines, to provide dependable accounts for the whole spectrum of water supply operation; (iv) Though substantial technical assistance will still be needed, it is clear from experience under this project that this will almost certainly again be fruitless unless accompanied by a radical reshaping of institutional responsibilities. In the opinion of projects staff concerned with the Guinean water supply sector, the continuing shortcomings of the latter can be remedied most successfully by a more commercial and entrepreneurial approach, preferably by a degree of privatization. A possible scenario in this direction  - 24 - would envisage the whole apparatus of operation, maintenance and consumer billing and collection being sub-contracted to a private sector company, preferably wit's the participation of an experienced water utility from overseas. Such a company would have freedom to hire, fire and recompense its staff, levy tariffs under an agreed formula, and receive a remuneration linked to performance. DEC or its successor authority would, subject to satisfactory reinforcement in personnel, have responsibility for general sector planning and investment as a national water company. These recommendations are consistent with those proposed by the sector organization study.  - 25 - ARM 1-1 Page 1 of 2 REPUBLIC OF WIF aKRY WATER SlPPLY AND SAN1TATION PRBECT (CR.87(1{11) PYm.rr aE1zUN REPRi SUMWIARY OF OCQ ANT - (REDIT ACREFN SE M4ON (TWMA1'T MFr PARIIN NCT (XtffNM MEr T 2.02 (c) Opeing of a Foreign EXchange Acccunt in BFXY. X on 04/13/79 (for spare part.s and chenicals). 3.01 (b) Provision for expenditure orn accout x Iblfilled as project needed project cm-ilted quarterlv in advance to "Credit National". 3.(01 (c) Review perfonwince DFG's improvement plan X No report furnished, review perfomnce during (June and December). Superision Mission 3.02 (b) Eiplovmant of 3 expatriate technlicians as Fxpatriate technician Advisor-s to the project unit staff. X employed from 04/13/79 until the end of the Project 06/85 3.03 Tnprovenent of sanitation conditions X To be carrled out by Ministry (a) sealing off of private wells; of Health, not implenented (b) enact-nit and enforeenet of nppropriate because not equipped to carry legislation out this task. 3.04 (a) Management of drainage activities within RAC (a) nmintaining qualifiedl and experiance staff; X Vey staff 1981 (b) to set up and nwintain account & records; X No inplenintation (c) to operate and neintain equipnent. X No iplementation 3.04 (b) Submdssion of arnual hudget of RAC X 3.05 (a) Submission of a feasibility stutd on the Executed under (ICCE financing rehabilitation and replacement of the (Grands Financed by C(XE Chutes Daam. x 3.06 (a) (crant to DEC, a global licence for the X Domne with delay. inportation of spare parts and chemicals, to open Letter of Credit.  - 26 - ANNEX 1-1 Page 2 of 2 REJBIC OF GJINEA O1AKRY n SlPPLY AND TfTATIN PKUELr (CR.870-aff) PPnEr aX wi N REPOr SURWY OF C ENA1l - CREDIT KGER4W I% M, ON ONEKaNM Tr PATMY Ngr oCI"M 3.10 (b) Maintainirg records and procedures adequate X Done by Project Unit. No input to prepare quarterlv report an project or report from DEG. 4.01 (d) Maintain separate pro-fornm account for X Not achieved both water supply and sewerage and for debt. 4.02 Audit 6 months after FY starting 1979 X Ahdit achieved from 1979 to 1984. 4.03 To take out and nnintain insurance X Not relevant In (bunean against riskAs. context (imuture insurance irdustry). 4.04 (a) Tariff study. X Not achieved 4.04 (b) DBG's water tariff to be maintained at a level to cover DEV's operation expenses plus Depreciation or Debt services. X 100% increase in 1979 25% increase in 1981 No further increase thereafter 4.05 No water sLpplv and sewerage investment in Respected until 1981 exceris of 1U$1 udllion. X Important lnvestmet inder bilatetal Aid Macenta - Fcrecariah 4.06 (b) Availability to IDA of (a) approved operating and investment X budget; (b) quarterly report including technical X No report from DEM and financial onitoring indicators. 4.06 (b) Availability bv borrower funds to meet X the requirement of the investment programn as reeded 4.07 Borrazr shall cause DFG to mm9age its X Gzeat interference of Govt. affairs in adequate nmbers and experienced authorities in DBE's manage- staff in accordance with appropriate net. Very low/or rmedstant administrative and financial public utility accountabilitv within DEG's practices. mmagemnt.  - 27 - ANNEX 1-2 Page 1 of 4 REPIELIC OF GUThEA (IAK WA~Th SUPPLY AlN) SANITACN PRIT (CR. 870-GI) ~ a1ps PLANN) DF.KhXDM MI s PART A - Wt SUPLY (i) Drilling of seven boreholes in Bassla Yes Yield is 1/3 oly of the expected and Kakdnba. production (ii) Installation of booster station with Yes pump and 1.8 km long raw vter tranadssion pipeline of 400 mm dater to the Kaloum treatrent plant and storape site. (iii) Construction of a 5000 n? reservoir at Yes Operation of the treatnmit facilities the Kaloum site, and of a treatenEt still difficult. facility (chlmlination, pH adjustment). (iv) Construction of a 5000 n3 reservoir next No Cancelled because of ftuds shortage and to the existing Bellevue reservoir. because it as not really needed. (v) Purchase and installation of booster Nb Replaced by a nich cheaper clewnin of pumps at Yessoulou totalling 500 l/s the treated uster transission line. to increase the trazinitting capacity frt 330 l/s to 500 l/s. (vi) Rehablitation of the existing Partly Cleaning at Giands Chutes raw water pipe pre-treatennt plant at the Grands Chutes and the Yessoulou tranaisslon line dam; reabilitation of raw uater carried out with great impact; and the and treated water tranmission Yessoulou treatment plant has been pipelines fron Yessoulou and Kadouium rehabilitated. to Conakry. (vli) Supply and laying of na distribution Yes along dIstributian routes close to the resereoirs of Beflevue and Kaloum. (0.7 k of 700 mm diameter, 2.7 km of 600 m diameter, 1.9 km of 500 mn diaeter and 2 km of 400 mm ad waller dianeter).  - 28 - ANNEX 1-2 Page 2 of 4 REPUELIC OF aJlINA 1AKW? WAJER SUPPLY AND SNTAC PRPFXT (CR. 870-I) PRQJBLr =XNs PLAED LrED W44S (viii) Supply and laying of about 10O kn of Partly 90 km executed, 73 of %fbich are extensions distribution pipe (100 to 60 nm dianeter) and 17 km are replace}wnt. (ix) Installation of some 160 standpipe-s Partly 65 out of 160 executed but not connected. (x) Supply of about 4500 water meters and Partly Material purchased for 3000 material for 4000 new connections. connections. 1740 new connections executed - meters not read. (xi) Ccnstruction and equipmnt - Offices; Yes - Houses at Aviation and Yessoulou Yes - Training space No (xii) Procurement of miscellareusna equipuet Yes EXecuted under various contracts. to assist DEG in its day-to-day operation and work by force account. PART B - DRAINAGE AND SANITATICN {i) Clearing, rehabilitation and cleaning Partly executed. drainage ditches. (ii) Backfilling and protecting zones Partly executed. subject to continOus flooding. (iii) Coberting and extending the existing Partly 5 kin out of 9 km executed. Good result. system of unlined ditches to concrete drainage canal in Madina, Boussoura, }oba. (iv) Proiding vhicles and equipmet to Executed RAC s technical services to inprve nminteance of the draina netwo*.  - 29 - ANNEX 1-2 Page 3 of 4 REPUBLIC OF CUIE OUA WATER SUPPLY AND SANIIX'N PROJECT (CR. 870-tLI) ~~~~PRL CDTNNS PLANND E(KU1EC 4IM (v) Purcasling additioaal chemicals and smll Partly Treatmont of wells partly executed vehicles to strengthm the capability chemicals not distributed of Ministry of Health for well inspection Control very limited. and disinfection. (vi) Construction of about 10 sanitary blocks. Partly 2 out of 10 executed. PART C - SI1NGlIlIENG OF DPX (i) Replenishrent of the stock of spare parts Yes and chemicals. (ii) A program of lnroveowat of DEC's Yes Cbnsultancy services provided without customers' file system, meter reading, any significant result. biUing, collecting and disconnecting practices. (iii) Improvement of DEG's operation and Yes Results attained with assistance of mainteane practices. Technical Assistance team. (iv) A training program for DEG's labor Partly No significant impact. Training and forces and technicians, establisbment seminars abroad were the main actions of a training unit, program of achieved. fellowships abroad in various disciplines and traning through apprenticeships and seminars abroad. (v) Plan for the improvement of DBG's No Audits financed from 1979 to 1984 with mmnagerlal and financial efficiency. tangible impact from 1983 (Manuel des procedures). Replaced by an institu- tional study.  - 30 - ANNEX 1-2 Page 4 of 4 REPULIC OF GJIWA MXIKRWAS SUPPLY AND SAN CN PRQJBf (CR. 870-JI) vRwr a34ws PART D - STUDIES (i) Availability of grotd water resmnces. Yes (ii) Feasibility of water supply systens in Yes seven secondary centers. (iii) Matket for Alumia sub-products. No ) ) (iv) Marketing and orgwizational arrangemits No ) for a PVC pipe unfacturing unit. ) Found not to be practicable ) (v) Ways of assisting and proiting local No ) eonstructicn Industry. ) Not Initially Plamned 1. Feasibility of Coakry Water Supply Expansion 2. Restructuring of the Water Supply Sector  - 31 - ARM 2 REPULIC OF GUIWA ICRY WT SUPPLY AND SAN[TACIG P!M)JBZT (CR. 870-aYI) PRWFCr 0IPLlltC REPORT PRD COSr F lN PLA Estimate (US$ million) Actual (US$ mulIle) MA AFDB 0YT UL TDA ADB GM MM 1. wter ly - Investiments 5.A 6.0 2.4 13.7 4.8 4.7 2.8 12.3 - Techniml Assistance & TrainIng 2.3 - 0.1 2.4 2.3 - 0.1 2.4 Sb-Total 7.6 6.0 2.5 16.1 7.1 4.7 _ 14.7 2. Sanitation 2.3 - 0.9 3.2 1.7 - 0.8 2.5 3. hvisi 1.1 - - 1.1 2.3 - 0.9 3.2 3. Sector Studies 1.5 _ _ 1.5 1.4 - 0.1 1.5 Total 12.5 6.0 3.4 21.9 12.5 4.7 4.7 21.9 F- = = _ = = _  - 32 - ANNEX 3 REPUELC OF UMa (X*NAKRY WATER SUPPLY AN) SANTTATIN PRJBCT (CR. 870-GI) PROJBr OLITION REPRTR PRBC Dr -Appraisal (million)- -Actual (million) TOTAL TOML Co,nQonents US$ UC SY US$ US$ UC SY US$ Boreboles & Equipment - 0.925 1.220 1.171 - 1.815 12.172 2.470 Equipment for Varius Stations - 1.546 0.340 0.694 - 0.044 0.045 0.049 Laying & Supply of TrUnk Mbins - 1.137 7.500 1.715 - 1.349 3.131 1.570 Wkbrk9Op Tools & Vehicles - 0.437 0.320 0.541 0.350 0.305 - 0.673 Installation of Teleconirnication - 0.016 0.115 0.025 - 0.064 0.070 0.070 Construction of Reservoirs 0.390 0.492 8.530 1.413 0.256 0.840 16.307 1.879 aUying & Supplying Sec. Mains 2.787 - 14.780 3.526 1.798 - 12.922 2.379 Rehabilitation Wbrks 0.530 - 5.567 0.780 Building Wbrks 0.292 - 1.420 0.363 0.788 0.063 9.111 1.264 Sanitation & Drainage 1.560 - 12.045 2.161 1.730 - 16.485 2.471 Training & Technical Assistance 1.895 - 1.400 1.965 2.278 - 2.624 2.396 SpWervision 1.000 - - 1.000 2.314 - 19.496 3.192 Studies 1.410 - - 1.410 1.386 - 2.445 1.496 Working Capital 0.600 - - 0.600 1,048 - 3.040 1.185 9.934 3.553 47.670 16.584 12.478 4.480 103.415 21.874 = _ - _- _=_ Physical Contingencies 0,853 0,429 6,007 1,668 - Price Contingencies 1,713 1,018 14,420 3,653 - - - - Total 12,500 5,000 68,097 21,905 12,478 4,480 103,415 21,874 1/ E a Rate as of Deceffber 1985 US$1.00 = Sylis 22.24 1 Syli = US$0.044964 US$1.00 = 0.94393 UC 1 UC - US$1.05940  - 33- ANN4L( 4-1 REPURLIr O EEJsEA Pag Iof 2 FIRSI #ATER SUPPLI PROJECT DES - INCUN S'ATEI3ENX - SKLIS *113201t- 3978 1978 19'9 JQ'9 3980 3980 1981 3981 3982 1982 3983 1983 3984 3984 ACTUAL FORECAST ACTUAL FORECAST AC'UAL FORE CAST ACTt3AI FORECAST ACTUAL FORECAST ACTUAL FORECAST ACTUAL. FORECAST KNE toNNECTIONS 8ATf 5 MATED CONNECT10ONS AS OF DEC.311 8101.00 1800.06 11716.0 O VY20. 9616.00 98R*. 0 113'6.00 1403:. 0 1:5'6.00 1452!.00 34226.00 34806.00 36026.00 WATER PROD.,N3LL.113. 10.9t. 371.34 32..b I3. 30 33. 3v 33.99 i2..0 35.44 133'-0 14.48 13.50 19.45 37.51 39.74 EFF3C1ENCV t 6!.14 6.6)7 5s05 6.0~ 69.03 'o.: $9 '.q 62.880 74.$4 78.52 '6.33 v..82 '7.2 WATER SOLD, NIIIL.N13. 7.30 8.74 '.30 9.1 I.8. 9,91 8.3', 13.71 8.30l 37.30 30.60 14.08 33.00 35.215 DES TARIFF, SYLISN!M 5.58 hA;l e.03. 8. 00 so: 04 . 0 8.83 1".0 30.0 3t 0.00 3 0.0 32.01,0 30.00 I12.00i WATER SALES 39.60 49,Sv 56.00 71.4(. '.0 '8.50 '31. 40 332.90 04.0(, 13.00 323 1. IV 3o8. 0 328.00 183.00 MARES INVOICEO - WATER 3.96 4.#0 0.90( 4.50 3,90 S. .'0 4. 40 5. 90 2.80 Ok .40 3.00 a.810 4.00 7.30 TOTAL REVENUES 43.50 54,40 57.",k II. 90 75.50 63.50 '5.80l 339.7 90,80 129,40 124.00 3'S.'0 337.00 390.30 EXPENSES E3PLOYEES 14.90 13.210 16.00 14.40 19.4t. lo.50 24.30 38.80 22.00 2-J.50 26.0ki 22.30 29.00 73.00 C3IENICAJ.S 2.00 5.30 3.00 6.30 4.00 '.00 5.00 8.70 :.oo 1 0. 0c 5.4 3 12.00 4.00 13.70 ELECIPICITY 30.40 33.80 30.90 214.50 76.70 33.210 35.20 OIL OUR SERICES 13340 5.70 15,7.% 8. 00 13.9 8.80 7,310 9.90 321. 40) 33. 0 45.00 33.50 60.00 14.90 TAXES 1.2f' 1.2v 3.30 3.2v 3.06 7.00 2.00 CASN OPM. EX3t. 33.50 3460 35.90 42.30 38.60 49.20 58.60 61.,Q 57.40 0.8.0 '8.00 18.80 95.00 87..0 RECEIYAILES PROISION 43.00 3.00 DEPREC3AT3ON .29. v 31.00 219.00) 371.40 29.80, 3'.270 30.50 46.40 11.0 55.40 36.00 57.60 47.00 58.30 TOTAL OPERA71NS EXPENSES 60.60 85.60 64.9 '4.'0 60.4.) 84.40 8'.10 308.30 99.30, 323.60 155.00 336.40 143.00 345.70 IIPERATIND XNCII -3'.30 -33.210 -7.20 3.710 7.30t -2.90 -32,30 10t. 40 se5. 5.80 -33.00 39.30 -6.00 44.60 oTiER INCOEE 24.00 1.00 OTHE EIPENSS 2.3t' 50.50 36.00 33.00 ICEONE REFOl INTEREST -37.10 -31.2.0 -7,20 11.70 4.80 -2.90 -63.80 30.40 7. 50 5.80 -23.00 39.30 -38.00 44.60 iNlTERET 0.00I 0i.00c 3. .0 0.00 36.3IC 0.0I0c 29.30 0.00 30.80 0.00 28.9 0.00 26.70 Nf89INO EREST DURINS CDNIRIJTION. INTERET DOIASED TO OPERTIONS 0.00 0.00 0.00 3.60 0.00 36.30 C.00 2 9.00 0.00C 30.80 0.00a 28.90 0.00 26.70 INTII EFERE PR0111 TAXES -3.0 -13.210 -7.210 -0.40 4.80 -29.20 -63.80 -38.60 7.50 -25.00 -23.00 10.40 -38.00 17.90 c38pERTI3H3 TAXES 3 6 WET INCONCE -37.30 -23.20 -7.70o -0).40 4.80 -39.210 -61.80 -38.60 7.50 215.00 -23.00 7.00 -38.00 12.00  - 54 - wimic 9 oliuAANE41 01891 60110 SWPL pRoECT Paso 2 of 2 K- BALANCE SHEEt - SILtS mitia- 1970 1978 1971 I479 1910 i9a0 1991 1981 1982 198 1,93 M98 1`94 1984 ACTUAL OUtCAST ACTUAL FOSCAST ACTUAL FOUCAST ACTUAL OUtCAS ACTUAL FORECAST ACTUAL FOREAS ACMok fOREAS 5805 FlIED ASSETS IN OKERATItN 407,70 049.60 379.20 b49.60 356 30 733.20 327.90 1017.90 297.40) 1141.10 424.00 1162.10 613.00 1162.10 ACCIULRATED DEPRECIATION 0.00 164.70 0.00 191.10 0.00 2.34.30 0.00 200.70 0.00 336,10 0.00 393.70 0.00 451.100 NET FIIEB ASSETS IN OPERATION 407.70 484.90 319.70 452.5.0 35o.30 491.90 3217.90 '37.20 .297.40 80.00 o26.00 768.40 613.00 710.30 FIXED ASSETS MgIE COITRIJCTION 0.00 0.00 83.40 .51.I0 2184.70 2.51.2.0 121.20 280.2 2' 11.00 28.00 8.00 OmlE ASSETS TOTAL FlIED ASSETS 407.10 484.90 379.20 53..10 607.40 781.60 579.10 860.40 577.40 826.00 654.00 768.40 621.00 710. 30 CURRNT ASSTS IwwNVET 6.80 1.00 9.60 7.40 13.50 8.00 19.20 61.10 38.40 12.210 26.00 64.40 64.00 16.30 CIISTOMIR RECE1VAOLES 20.80 19.50 52.50 31.10 91.40 29.40 62.40 $1.40 46,00 45.20 03.00 60,60 624-00 65.50 RESERV F91 CUST. RECEIV. 44.00 42.00 OTHE CEMET ASSETS o.oo 6.00 6.00 CASH6 A 866 1.00 t.60 0.50 1.00 0.70 21.00 8.70 2.20 121.60 2.40 MO.O 2.60 4.00 2.80 ToTAL. CORNll ASSETS 36,60 20.10 62,60 42.10 161,40 39,.40 90.3 5o 4.70 167.20 59.80 84.00 77.60 101.00 64.60 TOTAL ASSES 444.3A 563.00 446.80 579.40 714,.4( MN.O W.40 965.10 694,.87 885.40 '38.00 846.00 722. 00 79.90 *SSSSSS *525 ... ......*...... ....... .......555*8 .... 3 *8*5. ......2 .**5... .......353 ESIITY A6 LIABILITIES CAPITAL 0.00 0.00 0.00 0.00 0.00 0.00 ISMIDIES 444.30 507.60 441.80 490.50 769.00 561.10 674.40 512.30 646.50 490.20 717,00 472.40 718.00 449.90 RETAINED EARINSI 0.00 0.00 -62.00 *69,90 -144.00 -l83.00 RESEKVS 0.00 0.00 0.00 0.00 0.00 0.00 54.00 0.00 60.00 0.00 TOTAL. EQU1TY 444.30 507.60 441.80 490.50 719.00 511.80 664.40 5612. 10 536.64 490.20 627.00 472.40 595.0 449.90 LII TERN DEBT 0.00 0.00 0.00 13.50 0.00 303.00 0.00 392.00 0.00 381.70 0.00 359.40 0.00 320t0 BEST INANSERED 0.00 0.00 0.00 140.00 0.00 126.00 0.001 112.00 0.00 90.00 0.00 84.00 IDA 0.00 0.00 36.80 0.00 79.50 0.00 143.10 0.00 159.0 0.00 159.00 0.00 151.90 Anl 0.00 0.00 46.10 0.00 83,50 0.00 122.90 0.00 112.70 0.00 102.40 0.00 92.20 .--- ... ... ... ... ... ... ... ... --- --- --- TOTAL ENITY & L.T.DE8T 444.30 "17.60 441.80 572.00 719.00 814.80 614.40 904.30 536.60 813.90 627.00 831.80 595.00 778.00 SORPIERI