India - Rajasthan Water Supply and Sewerage Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 8090 PROJECT COMPLETION REPORT INDIA RAJASTHAN WATER SUPPLY AND SEWERAGE PROJECT (CREDITY 1046-IN) SEPTEMBER 27, 1989 Infrastructure Division Technical Department Asia Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Country Exchange Rates (Yearly Averages) Currency and (Abbreviations) Rupee (Rp) Year Rupees/US$ 1978 8.19 1979 8.13 1980 (Project Approved and 7.86 Effective) 1981 8.66 1982 9.45 1983 10.10 198 11.:6 1985 12.37 1986 12.61 1987 12.96 1988 (Project Closed) 14.60 Government of India Fiscal Year April 1 - March 31 Acronyms GOI - Government of India GOR - Government of Rajasthan PCR - Project Completion Report PHED - Public Health Engineering Department RWSSB - Rajasthan Water Supply and Sewerage Management Board SAR - Staff Appraisal Report ROR - Rate of Return ICB - International Competitive Bidding  FOR OMCFAL USE ONLY THE WORLD SANK Washington O C 20433 USA O6lte n D0"eckw.cg"Wai Opuiatea (vakautan September 27, 1989 HEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on India Rajasthan Water Supply and Sewerage Project (Credit 1046-IN) Attached, for information, is a copy of a report entitled 'Project Completion Report on India - Rajasthan Water Supply and Sewerage Project (Credit 1046-IN)" prepared by the Asia Regional Office with Part II of the report contributed by the Borrower. No audit of this project has been made by the Operations Evaluation Department. Attachment This doeument ha a rsulctsd dibutibn and may be "s by reipents only in the perforMnnA of their offcia dutis. Its contents may not otherwise be discksd without World Sank authouintion.  FOR OMCIAL USE ONLY PROJECT COMPLETION REPORT INDIA RAJASTEAN WATER SUPPLY AND SEWERAGE PROJECT (CREDIT 1046-IN) TANL OF CONTENTS Page PREFACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .i EVALUATI)N SUMMARY .... . . . . . . . .. ii PART I - World Bank Completion Report . . . . . . . . . . . . . .1 Project Identity .1... . . . . . . . . . . . . . . . . . Background .1... . . . . . . . . . . . . . . . . . . . . Project Objectives and Description . . . . . . . . . . . .1 Project Design and Organization . . . . . . . . . . . . . . 3 Project Implementation . . . . . . . . . . . . . . . . . . 4 Project Results . . . . . . . . . . . . . . . . . . . . . . 4 Project Sustainability .... . . . . . . . . . . . . . . 5 Bank Performance .... . . . . . . . . . . . . . . . . . 6 Beneficiary's Performance .... . . . . . . . . . . . . . 6 Project Relationship . . . . . . . . . . . . . . . . . . . 7 Consulting Services .8... . . . . . . . . . . . . . . . . a Project Documentation and Data . . . . . . . . . . . . . . 8 PART II - Beneficiary's Comments ... . . . . . . . . . . . . . 9 PART III - Statistical Summary ... . . . . . . . . . . . . . . 11 ANNEXES Annex 1 - Project Results .... . . . . . . . . . . . . . 14 Annex 2 - Studies .... . . . . . . . . . . . . . . . . . 16 Annex 3 - Status of Covenants . . . . . . . . . . . . . . . 17 This document has a restricted distribution and may be used by recipients only in the performnance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  i PROJECT COMPLETION REPORT INDIA RAJASTHAN WATER SUPPLY AND SEWERAGE PROJECT (CREDIT 1046-IN) PREFACE The following is a Project Completion Report (PCR) on the Rajas- than Water Supply and Sewerage Project in India. An US$ 80.0 million Credit to assist in the financing of the project was approved in June, 1980. The Credit was closed in December, 1988 more than three years behind schedule. Parts I and III of this PCR were done by the Infrastructure Division of the Technical Department of the Asia Regional Office. Part II is a summary of comments received from the Beneficiary of the Credit on Parts I and III which were made available to them in the course of the preparation of this PCR. No formal Borrower Completion Report has been received. The PCR is based on a review of the Staff Appraisal Report (SAR), the President's Report (PR), all legal documents on the project including the Loan, GuaLantee and Project Agreements, Bank supervision reports, records and files, interviews with Bank staff familiar with the project, and the findings of a completion mission in January 1989.  ii PROJEC' C0MPLETION REPORT INDIA RAJASTHAN WATER SUPPLY AND SEWERAGE PROJECT (CREDIT 1046-IN) EVALUATION SUMMhRY Obiectives The project was to provide safe water supply to about 2,000 villages, improve and extend ithe water supply in Jaipur. Jodhpur, Kota and Bikaner, ard extend the sewerage system in Jaipur. Jodhpur and Bikaner. In addition, the project was to help to establish and staff up operations and maintenance units in urban and rural areas and to introduce proper billing and revenue collecting systems for water. The latter would make the Rajasthan Water Supply and Sewerage Management Board fInancitlly self sufficient (para. 4). Implementation Experience The project was carried out substantially as expected. It was restructured along the way to increase the number of villages that would benefit from it, in the end 4,329 instead of 2,000 villages had been provided with varying schemes of water supply (paras. 11 and 12). Project Results This ambitious project ran into two formidable difficultiest lack of counterpart funding, and a prolonged and severe drought that altered cir- cumstances in Rajasthan.l/ Still, the project served the state well by bringing water to drought stricken people. Yet, it did not exactly do what it set out to do institutionally; attempts to initiate institutional improvements met with resistance and the results on this objective were minimal (paras. 13 to 19). Sustainability The project is likely to maintain an acceptable level of benefits throughout its economic life (parss. 20 to 23). Findings and Lessons Learned Project results highlight the need for increased project super- vision and to accept the fact that Implementing Agencies need to go through a learning process before they can perform adequately ( this underscores the over optimistic assumptions made during project preparation and appraisal). Also, financial targets should be set more realistically, in tune with the achievement potential of the Executing Agency (paras. 27 and 28). 1/ From 1983 through 1987 rainfall in most of the state averaged about 6- per annum instead of the normal 18". The 1988 rains were enough to break the drought in most areas.  PROJECT COMPLETION REPORT INDIA RAJASTHAN WATER SUPPLY AND SEWERAGE PROJECT (CREDIT 1046-IN) PART I A. PROJECT IDENTITY Project Name: Rajasthan Water Supply and Sewerage Project Credit No. : 1046 IN RVP Unit : 251-05 ASIVP. Country s India Sector s Population, Human Resources, Urban and Water Operations Subsector Water Supply B. BACKGROUND Sector development objectives 2. The long-range sector objective (SAR) is to provide satisfactory water supplies in all urban and rural areas and sewerage systems in congested urban areas. Priorities were established to address the urgent need for water supplies in rural areas (problem villages) and in rapidly growing major cities. 3. The project was designed to take a significant step toward meeting long range sector objectives and thus, improve public health standards which were, at the time, below Indian average. Infant mortality was high; there was a high level of dysentery and infectious hepatitis; high levels of fluoride in the water caused widespread skeletal fluorosis; there were areas where guinea worm infection was prevalent, and many villages were using water that was hazardous to health. C. PROJECT OBJECTIVES AND DESCRIPTION 4. The Project objectives were: (a) to provide safe water supplies to about 2,000 problem villages and to facilitate further rural development; (b) to improve and extend the water supplies in Jaipur (the state capital), Jodhpur, Kota, and Bikaner, thereby achiev- ing total coverage of the population; increasing the population served by connections from 67Z to 78Z, and providing for industrial expansion; (c) to extend the sewerage systems in Jaipur, Jodhpur, and Bikaner thereby increasing the population served by connec- tions from 18Z to 34Z; (d) to establish and/or strengthen operations and maintenance i4s R 4n nir r"ra arc qR- .  2 (e) to introduce proper billin, and revenue collection systems with set water rates aimed toward achieving financial self sufficiency. Project Description 5. The following tables provide details of major componenta. Urban Areas Rural Areas Water Jaipur Jodhpur Kota Bikaner Total 10 Districts Production capacity MLD /a existing 142 63 63 34 302 0 additional 76 72 64 30 242 100 Impounding Dams 1 - - - ; - Intakes and Treatment Plants 2 1 1 1 5 48 Tubewells 114 - - - 114 475 Transmissions Mains (kms) 91 - 19 45 155 3,750 Service reservoirs Nos 6 2 6 5 19 250 Capacity (m3) 7,250 6,550 16,300 5,600 35,700 15,000 Distribution mains (kms) 73 128 219 133 553 -/b Connections 36,700 6,500 14,500 8,400 66,100 30,000 Standposts 50 - 25 - 75 5,000 Water meters 45,000 10,000 19,000 17,000 91,000 - Sewerage Jaipur Jodhpur Bikaner Total Sewer Connectinns (Nos) 20,950 9,250 8,250 38,450 Laterals (kms) 72 27 53 152 Interceptors (kms) 6 5 6 17 Outfalls (kms) 13 3 3 19 Pumping Stations (Nos) 1 - - 1 Treatment works (Nos) 1 1 1 3 /a Million liters per day. /b Included under tr.nsmission mains. Consultant support was included for: (a) preparation of organizational and staffing proposals; (b) setting up a commercial accounting system; (c) engineering, preparation of contract documents, tender evaluation; (d) feasibility reports; (e) setting up a training program; and (f) setting up a health education program. 6. The estimated cost of the project was Rs 1377.6 million (USS 164.0 million) and the credit amount was US$ 80 million.  3 D. PROJECT DESIGN AND ORGANIZATION 7. The project, as appraised, was a substantial undertaking and although geographically extensive it's various elements were straightforwa.d and well within the competence and experience of PHED engineering staff. The physical components were understood and appreciated by all concerned in GOR, PHED, and IDA. The project was well prepared and although the rural com- ponents were not fully pinned down they were simple and straight forward and therefore did not constitute a risk to the success of the project. 8. But the project soon ran into difficulties that revealed that the scale of the works to be undertaken was beyond the funding capacity of GOR. The roles and responsibilities of the institutions and agencies responsible for the project were clearly defined, however, there appears to have been a difference in understanding the roles to be played by the respective agencies. Shortly before appraisal, GOR created the Rajasthan Water Supply and Sewerage Management Board (RWSSB). This semi-autonomous state government organizatiorn together with PHED, was made responsible for all sector activities including operation and maintenance for both water supply and waste disposal works. GOR was to retain power to: (a) borrow funds for capital investments in water supply and sewerage schemes (priorities based on RWSSB's recommendations); and (b) sanction water supply and sewerage tariffs (based on RWSSB recommenda- tions). 9. The SAR indicated that GOR control would be exercised through a Committee of Direction. RWSSB would utilize the facilities and staff of PHED to prepare, execute, and operate schemes for water supplv and sewage disposal; review and advise GOR on tariffs; enter into contracts; advance lo&ns to cus- tomers; and incur expenditures appropriate to their responsibilities (within budget limitations). PHED was to be responsib'e for project planning and design, construction, works operation, finance, and administration. The local view of the organizational set-up appears to have differed from IDA's. The situation over a very long period had PHED operating as a department of GOR. The creation of RWSSB initially may have had some significance, however, it would appear that the earlier regime reasserted itself and now RWSSB is little more than a label. The hope for operational viability was charged to RWSSB, but its withering has resulted in PHED returning to its traditional role of developing and opera.ing engineering projects on the basis of funding short- falls made good by GOR. 10. The project was seriously affected by the need for restructuring in order to respond to the changes in priorities caused by five years of drought. But, in retrospect, the project was also too ambitious and the or- ganizational structuring was not visualized in the same manner by IDA and the beneficiary.  4 E. PROJECT IMPLEMENTATION 11. The SAR identified project funding (by GOR) and cost recovery in rural areas as the most likely risks. What could not have been foreseen was five years of drought and the serious effects in had on the western parts of the state. For example, at its worst, the city of Jodhpur was getting water for only about two hours every second or third day. The falling ground water level meant that amany tubewells were no longer deep enough to draw water. Reservoirs were empty and cattle grazed on their beds. IDA agreed to GOR's request to change the emphasis of the project to benefit the sorely stricken rurc.l areas by cutting back on the funding for the four cities. This could be done without a great deal of difficulty, since because of the shortage of counterpart funding, the works program for the cities was far behind schedule. 12. There are two important parts of the project that have not been completed: One, in Kota, is a main that would provide water to a developing area on the side of the River Chambal, opposite the city proper. This is in hand, proceeding satisfactorily, and should be completed by mid-1989. The second, in Bikaner, is the completion of a raw water reservoir. Work has been del&yed while PHED is investigating different types of lining for the reser- voir interior in an effort to reduce costs. The work has not yet started but assurances have been given that the work will be completed by mid-1990 and that adequate funding will be available. F. PROJECT RESULTS 13. The project was restructured and the physical objectives of the restructured project have been substantially achieved. The changes were made so that the number of village's benefitting from the project could be in- creased thereby bringing them relief from the drought. Emergency measures were also introduced for the cities, for example, a new wellfield was deve- loped and 80 Km of transmission main laid to Jodhpur, at a speed which does credit to PHED and its contractors. Overall, in the four cities the number of people served by connections has increased from 1,303,700 to 1,809,000 (39Z). 14. The project has had an impact in a number of ways; most important- ly, by far, in drought relief. However, in the 'problem villages" the benefi- cial effects have been twofold. Prior to the project, many women were walking up to five miles every day to fetch water and now these women are free to perform other tasks where they can earn money on a regular basis. 15. Guinea worm was a widespreae health problem in Rajasthan but the provision of piped supplies has reduced dependence on the wells which in many cases were the sources of infection. 16. As a result of restructuring, the target (at appraisal) of about 2,000 problem villages was raised to 3700 and, by December 1987, 4,329 problem villages had benefited; individual villages had been provided with varying schemes raiging from handpumps to tubewells or surface source developments with mains supplies to public standpipes.  5 17. The project took waste prevention and leak detection into account and provision has now been made to pursue an appropriate program. However, in an arid area such as Rajasthan the importance of such a program is much greater than where water is more plentiful. Therefore, the issue of water loss deserved to be addressed as a first priority; instead, the advance to the present position took place less than urgently. 18. Staff Appraisal Report identified cost recovery in rural water supply as one of the most likely risks. As it turned out, introduction of per capita wate: charge of Rs. 1.0 per month to cover operation and ma-intenance proved futi e as collection proved almost impossible and GOR continues to provide necessary funds. 19. Ambitious financial impruvement goals were set for urban area water supply and sewerage operation. Significant improvements have been made toward these goals: introduction of systematic and transparent accounting system, introduction of sewerage charges, substantial increase in tariffs (502 in 1985 and 30? in 1987), and increased collection efficiency to 95Z. However, these revenue enhancement achievements fall short of 32 (revised down in 1987 from the original 72), and the revenues are not expected to even operation and maintenance costs fully. One may interpret these results either as a success or a failure; either as an argument for more modest targets or for ambitious targets as motivational strategy. But there clearly was a case of an overly ambitious financial strategy not coordinated with a sound water resource management system. G. PROJECT SUSTAINABILITY 20. The project will probably maintain an acceptable level of benefits throughout its economic life. The principal risk lies in the local unwilling- ness to recover the cost of providing water, thereby leading to a reliance on GOR to provide larger and larger amounts of money for operation and main- tenance. This it is unwilling to do as there are so many other demands on its financial resources. Consequently, maintenance and the quality of service suffers. 21. There is, in any case, a far greater interest on the part of PHED's staff in the creation of new capital works than in operating and maintaining these works when they have been completed and have started operating. 22. These risks might best be addressed by breathing new life into RWSSB -- giving it extended powers and, concomitant with those powers, increased responsibility. 23. PHED reported that an effect of the revision of tariffs, in 1985 and 1987, was a reduction in the number of connections of the industrial and commercial categories. These consumers installed their own tube wells and stopped buying water. Another reason may have been the scarcity of mains water caused by the drought. There is a clear need for GOR to institute controls over the abstraction of ground water and for water resource utiliza- tion to be a key consideration in plenning controls. This means to probably create a water resources department authorized to grant licenses to abstract  6 water. GOR already has a hydrogeological survey department and a Ground Water Board so it should not be difficult to extend their functions. H. BANK PEP.FORMANCE 24. The Bank, at the heart of the restructuring process, recognized that GOR faced many difficulties in executing the project. As a result, in the physical sense, the project has produced substantial benefits on a state- wide basis. 25. The adoption of commercial accounting in the four cities by PHED was facilitated by the efforts of visiting Bank-staff missions. It was recognized that the financial rate of return (ROR) envisaged at the time of appraisal was quite beyond the state institutions in the short term and at the time of project restructuring the target ROR was reduced from 82 to 32 (after meeting the operating and maintenance cost including depreciation). At the project end ROR was still negative (-10Z for the four towns consolidated). 26. At appraisal, the Bank's judgement of what was achievable in the project period was over-optimistic but, given the budget constraints, Bank staff performed efficiently and sympathetically during the supervision phase. 27. The staff input in the field amounted to about 32 staffweeks up to appraisal and about 75 for supervision -- the la ter, over a period from 1980 to 1988. What appears to be a small input for a project having difficulties may be due to internal constraints but the effort which went into preparation and appraisal (including Division Chiefs' and Assistant Directors' time) could, with benefit, have been reflected in provision for supervision. 28. Lessons learned: (f) For first-time projects it should be recognized that the beneficiary will have to go through a learning process and, accordingly, the project should be on a scale that will not overburden the executing agency; either in funding capacity or staff capability; and (g) Financial targets should be realistic in terms of local achievement potential. I. BENEFICIARY'S PERFORMANCE 29. The Beneficiary's main strength lies in the expertise of PHED which demonstrated its ability to complete capital works quickly and effi- ciently given the necessary and timely allocation of funds. Its main weakness lies in its inability to make the funds available. 30. The project went through three phases -- during appraisal and the early part of implementation the Beneficiary performed well; at mid-project there was an hiatus; and, towards the end, the Beneficiary again performed well, resuming their early enthusiasm. This was probably due to changes in  7 senior directors of the project; but it may be noted that GOR was alive to the need for stronger leadership and provided it. 31. The Beneficiary's expertise in designing and building capital works is not reflected in PHED's maintenance standards. For example, at one water pumping station in Jodhpur the back cover plates on clectrical panels were all open -- an unsafe practice that evidently had been going on for some time as bees were nest building inside the panel box; at Kota the new chemical house was in need of cleaning because of spillages of alum; and only about 30Z of windows were unbroken on the filter house at Kota's older water treatment plant; etc. 32. The views held in Rajasthan before the project are still in place. PHED staff regard the subsidization of water supply finances as a GOR pre- serve; that negotiating a lower price with the lowest bidder for a contract is a reasonable process which offsets the effect of collaboration between con- tractors; that, as India can produce all the requirements for a water supply project, therp is no need for international competitive bidding (ICB). 33. On the technical side PHED employs civil and mechanical engineers and chemists but the application of their skills, at least among the en- gineers, does not appear to maximize the benefits of their background and training. There is plenty of specialized work for mechanical engineers (and for that matter electrical engineers although none is on PHED staff) but it appears that both sorts of engineers are regarded as interchangeable hence mechanical engineers are involved in civil construction work. There are indications that political patronage is a cause and as a result there is disaffection among staff. 34. On the financial side, although ROR is still negative, the four project cities have adopted commercial accounting. As this method of account- ing is extended, GOR will be provided with the information needed to make sensible allocations of funds between maintenance and capital works. 35. The Beneficiary has introduced computers and they are now being used to monitor physical and financial targets for water supply schemes, storekeeping, and drill rig performance. PHED also employs private agencies that use computers in connection with billing and collection; some difficul- ties have affected this arrangement and it is likely that PHED will try to increase its inventory of computers so that billing and collections can be dealt with 'in house." J. PROJECT RELATIONSHIP 36. On the evidence of two recent (1988 and 1989) visits to Rajasthan it is clear that, at least over the final years of the project, relations between Bank Staff and Beneficiary were excellent. This was probably the case in the earlier years, but in the middle years relations were less than satisfactory. The reason for this is not clear, but probably arose from Bank dissatisfaction with progress in conjunction with the realization on both sides that radical measures were needed to deal with an ailing project and the circumstances surrounding a severe and prolonged drought. Once the restruc- turing was determined, and new PHED leadership had been provided, good relations were restored.  8 K. CONSULTING SERVICES 37. Consultants assisted RWSSB and PHED satisfactorily on project formation and planning and, at the implementation stage, on the design of reinforced concrete structures for water treatment plants. 38. Contractors' performance was disappointingly slow although the quality of their work was adequate. Material suppliers (both local and foreign) were also c.iticized by PHED for slow delivery. L. PROJECT DOCUMENTATION AND DATA 39. The legal agreements were quite adequate despite the fact that SAR provided a useful framework for the project only for the early years of execution. Latterly, it bore little relationship to what was going on under restructuring. 40. Enough data was available to meet most of the needs in the compilation of the project completion report. This was despite the difficul- ties that arose as a result of most of the PHED staff being on strike during the completion mission.  9 PROJECT COMPLETION REPORT INDIA RAJASTHAN WATER SUPPLY AND SEWERAGE PROJECT (CREDIT 1046-IN) PART II UUICIAY'S CON4Z3TS i/ 1. The factual information contained in Part III of the Project Completion Report is accurate and all the relevant information indicated therein is also adequate. 2. The Bank's analyses contained in Part I of the PCR is also confirmed, except Part IV--Project Design and Organization (last paragraph dealing with creation of RWSSB). It is stated that RWSSB, functioned quite independently through the media of its different committees (e.g., Committee of Directions, Policy Planning Committee, Stores Purchase Committee, Finance Committee, Technical Committee, Staff Committee etc.). The board could accord administrative and financial sanction for execution of Urban Water Supply and Sewerage Schemes and Rural Water Supply Schemes much quicker than earlier arrangements of PHED. With the setting up of Board, the observation of various sanctions and formalities required by PHED at the Government level were avoided and various tasks of approving tenders for purchases of stores materials and execut.on of civil works, sanctioning staff, etc., became simpler. The only d-wback with the Board was to arrange the counterpart funding for which the Board had to depend on the Government of Rajasthan. Similarly, the revision of tariff on water rates could not be done by the Board it must be an act of Government of Rajasthan. Under Project sustainabi- lity, there is a need for the Government of Rajasthan to institute control over the abstraction of ground water, and for water resource utilization to be a key consideration in the exercise of planning control, therefore, the state government, after considering the social aspects of the situation, is serious- ly thinking of initiating legislation along these lines. 3. The Bank has performed quite well during the evolution and implementation of the project. The Bank immediately agreed to: (a) the Beneficiary's proposal for restructuring the project, (b) increasing the percentage of reimbursement under different categories, and, also, (c) granting extension of the time limit set for execution of the project. The reimbursement of claims has been quite prompt, however, a few suggestions follows (a) The World Bank should not insist on breaking even on maintenance expenditures, on maintenance of the scheme, with the revenue realized from its beneficiaries. In the case where the state government wants to subsidize the main- tenance expenditure, it should be allowed to do so under certain social obligations. (b) In the matter of deciding the bids for procurement of material and civil works, negotiations with the tenderers should be permitted so as to do justice with non-IDA tenders regarding rates. 1/ The following is a summary of comments received from the Beneficiary on Parts I and III of this Report.  10 (c) The procedure for approval of bid evaluation report from Washington should be streamlined. 4. The lessons to be learned for future, as given in Part I, para. 8 under the heading, "Bank Performance," are for our guidance. These lessons should formulate guidelines for us in implementing the existing project as well as for future projects posed before Bank for favor of financing. 5. Our own performance as evaluated by Bank and as given in Part I at para. 9 is agreed. There are some constraints in arrangement of funds for special repairs and maintenance and more care shall be taken in the better maintenance of machineries, and in civil works. Regarding giving respon- sibilities to the Engineers based on their background, the department is taking steps to do just that. 6. Regarding negative ROR on the financial side, this cannot be helped much as the revision of tariff of water rates, to cover the cost of production, depends upon the state government who has its limitations in view of its civil responsibilities for providing safe drinking water to the public without much burdening financially as a social aspect. 7. The relations between the Bank and the Beneficiary during the evolution and implementation of the Project have been cordial throughout and, in the last two years, could be termed as excellent.  11 PROJECT COMPLETION REPORT INDIA RAJASTHAN WATER SUPPLY AND SEWERAGE PROJECT (CREDIT 1046-IN) PART III STATISTICAL SUMKARY 1. Related Bank Credits Year of Credit Title Purpose Approval Status 1. U.P. Water Supply Water supply/sewerage 1975 Complete and Sewerage Project in 5 towns; water Cr 585-IN supply in rural areas Z. Bombay Water Supply Water supply/sewerage- 1973 Complete and Sewerage Project (I) city of Bombay CR 390-IN 3. Punjab Water Supply Water supply/sewerage 1978 Complete and Sewerage Project urban and rural areas Cr 848-IN 4. Maharashtra Water Supply Water supply/sewerage 1979 Complete and Sewerage Project 6 towns and rural areas Cr 899-IN 5. Bombay Water Supply Water Supply/Sewerage 1978 Complete and Sewerage Project (II) Cr 842-It' 6. Gujarat Water Supply Water supply/sewerage 1982 In progress and Sewerage Project urban and rural areas Cr 1280-IN 7. Xerala Water Supply Water supply/sewerage 1985 In progress and Sanitation Project lost cost sanitation Cr 1622-IN 2. Proiect Timetable Date Planned Date Actual Identification 11/77 11/77 Preparation 78 3-6/79 Appraisal Mission 10/79 12179 Credit Negotiations 4/80 5/80 Board Approval _ 6/19/80 Credit Signature 6/25/80 Credit Effectiveness - 8/5/80 Credit Closing 9/30/85 12/31/88 (3rd extension) Credit Completion 3/85 12/31/88  12 3. Credit Disbursements Culmulative Estimated and Actual Disbursements Appraisal estimate Actual and US$ million Actual 2 of appraisal 1981 Dec 31, 1980 0.5 0.12 24 March 3.1 0.93 30 June 30, 1981 5.7 2.78 49 1982 Sept 30, 1981 8.4 3.35 40 Dec 31, 1981 11.1 4.45 40 March 31, 1982 13.8 6.47 47 June 30, 1982 16.5 9.53 58 1983 Sept 30. 1982 19.6 10.54 54 Dec 31, 1982 22.7 11.99 53 March 31, 1983 25.8 15.59 60 June 30, 1983 28.9 17.27 60 1984 Sept 30, 1983 35.4 18.46 52 Dec 31, 1983 41.9 19.17 46 March 31, 1983 48.4 22.84 47 June 30, 1984 54.9 29.50 54 1985 Sept 30, 1984 60.5 30.91 51 Dec 31, 1984 66.1 34.01 51 March 31, 1985 71.7 35.19 49 June 30, 1985 77.3 40.53 52 1986 Sept 30, 1985 80.0 41.16 51 Dec 31, 1985 41.27 52 March 31, 1986 42.10 53 June 30, 1986 47.64 60 1987 Sept 30, 1986 50.62 63 Dec 31, 1986 50.62 63 March 31, 1987 53.44 67 June 30, 1987 54.48 68 1988 Sept 30, 1987 54.48 68 Dec 31, 198. 56.66 71 March 31, 1988 57.17 71 June 30, 1988 57.17 71 1989 Sept 30, 1988 60.94 76 Dec 31, 1988 69.04 86 Feb 28, 1989 74.53 93 March 31, 1989 80.00 100  13 Proeict Costs and F;nanorag A. Project Costs (Re aillions) Aporaisal Estimte Reovslon Actual Local Foreign Totel Local Foreign Total Local Foreign Total Rural areas Water supply 433.3 100.4 633.7 835.59 100.4 935. 1,207.2 - 1,207.20 Urban areas water supply 612.10 83.6 696.6 296.2 63.5 301.7 338.72 11.61 346.36 Sewerage 147.60 - 147.6 52.6 - 52.6 52.4 - 52.4 Total 1,192.9 183.9 1,376.8 1,186.29 103.9 1,370.19 1,593.32 11.63 1,604.96 B. Proiect Financing Source Planned Credit Agreement Final US$ 000 US$ 000 IDA 80,000 79,690 Domestic 84.000 111.370 Total 164,000 191,060  14 ANNEX 1 Page 1 Proiect Results Direct Benefits The restructuring of the project in 1985 changed the emphasis of the project by shifting funding away from the urban areas towards the rural areas as shown in the following table: At appraisal After restructuring Funding for Rs crores Rs crores Rural areas 53.4 94.3 Urban areas 84.3 43.4 Total 137.7 137.7 As a result of the great change in the target beneficiaries, indicators selected at appraisal have, mostly, little relevance to the actual results. However, at appraisal it was considered tE .t the (financial) rate of return for the urban areas would move from the negative in 1980 to 9 or 102 by 1988. ROR in 1983-84 was about negative 242. It has reached about 102 (negative) in 1989 for the consolidated results for the four IDA towns. Economic Impact An economic R.O.R. was not evaluated at appraisal and so a comparison cannot be made. However. the economic impact has been most significant in the rural areas through improvements in health as a result of abandoning well water in favor of a piped supply; in addition, time previously spent in fetching water over a distance of as much as 4 km. is now used profitably.  15 ANNEX 1 Page 2 Financia. Impact Future Without project with project Actual Financial rate of return (23) (3) (10) Fiscal impact: Tariffs were raised twice during the project as shown in the following table: At appraisal 5/1/8 911/87 Rates Rs. After After After Consumers Gross rebate Gross rebate Gross rebate Domestic up to 15,000 KL 1 .8 1.25 1.0 1.25 1 15,000-100,000 1 .8 1.25 1.2 1.5 1.2 over 100,000 1 .8 1.25 1.6 2.0 1.6 Commercial up to 15.000 RL 1.5 1.2 1.875 1.5 2.5 2 15,000-50.000 1.5 1.2 2.25 1.8 3 2.4 50,000-100,000 1.5 1.2 2.25 1.8 3.75 2.7 over 100,000 1.5 1.2 3.0 2.4 4.5 3.6 Industrial up to 15.000 KL 2 1.6 2.5 2 5 4 15,000-50,000 2 1.6 3.0 2.4 6 4.8 50,000-100,000 2 1.6 3 2.4 6.75 5.4 over 100,000 2 1.6 4 3.2 9.0 7.2 Flat rates 2 taps 12.5 10 17.5 14 19.25 15.4 for added tap 5 4 5 4 5.5 4. R. per flushing unit 2 1.6 - - - - The financial targets have not been met but the four cities included in the project have at least moved into the position of knowing where they stand financially by having adopted commercial accounting. GOR is made aware of how much it has to provide from general taxation to supplement what is needed for operation and maintenance of water supply installation, for the provision of water thrc,ugh public standpipes and for subsidizing domestic, commercial and industrial supplies.  16 ANNEX 2 Studies Study Status Impact Design and install Complete Comercial accounting now in commercial accounting system operation in four IDA cities Hydrogeological studies Complete Development of ground water resources made possible Network analysis Complete Basic design of mains Design of engineering Complete Part of contract documents structures  STATUS OF COVENANTS INDIA RAJASTHAN WATER SUPPLY AND SEWERAGE PROJECT (CREDIT 1046-IN) COMPLIANCE WITH COVENANTS AGMT Section Status la Original Revised Description of Covenant Comments Date Date Proj 2.01 OK Rajasthan to provide adequate Under restructured facilities, etc. to implement proiect GOR is project. providing adequate counterpart funding. < Proj 2.02 OK Employment of consultants eccording to agreed timetable. Proj 2.04B OK 7.01.81 PHED to be adequately staffed. Proj 2.07C OK 1.01.81 Rajasthan through RWSSB to establish monitoring and reporting systems for project. Proj 2.10 OK By each March 1, Rajasthan to prepare and furnish to IDA a proposed implementation program. Proj 2.11 OK 3.01.83 Rajasthan to prepare and furnish to IDA a health education program. Proj 2.12A OK 4.01.81 Rajasthan to establish training unit to carry out training program. D -  AGMT Section Status /a Original Revised Description of Covenant Comments Date Date Proj 2.13 OK 4.01.81 Rajasthan to prepara program for financing cost of sewer connections/plumbing etc. Proj 2.14A OK Re Part A Rajasthan to ensure Waived by RWSSMB each local authority to contri- as agreed vith IDA bute 2.52 of construction cost. May 2, 1981. Proj. 2.14B&C OK 4.01.81 Re Part A Rajasthan to Rs 0.25 and Rs 1.0/ introduce water charges to capita/month intro- cover operation and mainten- duced in 1982, but ance ok rural water supply. not being collected. X In event of shortfall of GOR providing these collection by local authorities funds through GOR will make funds available Panchayat Department. to PHED to cover shortfall. Proj 2.15 OK 4.01.81 6.01.85 Rajasthan to carry out a study Tariff increase of of urban areas re block tariff about 50X, and new structure/water charges and slab system, intro- implement same. duced in Hay 1985. Proj 2.16A OK 4.01.81 9.01.84 Local authorities to transfer Assets taken over in to Rajasthan operation of Jaipur in mid-83 and sewerage disposal works and Jodhpur in mid-84. assets. New works in Bikaner under PHED. Proj 2.16B OK 4.01.81 7.01.84 Rajasthan to introduce sewerage Charges introduced in charges. Jaipur, Jodhpur and ' Bikaner on 7.01.84. x N3W  AGMT Section Status /a Original Revised Description of Covenant Comments Date Date Proj 2.17 OK 4.01.81 4.01.82 Local authorities in Rajasthans GOR now allocating urban areas to pay PHED for funds on behalf of water supplied through stand- local authorities. posts. Proj 2.19 OK 4.01.86 Rajastnan not to transfer to Commercial accounting local authorities operation of systems are established of urban water supply or sever in the four IDA cities, systems. and are being intro- duced in the other six Class I towns. Proj 3.02A REVS 4.01.81 RWSSB and PHED to establish Legal Agreement revised @ and maintain a supplementary 12/87 to cover only commercial accounting system. four IDA cities. Accounts for FY87 for project cities sent to IDA. Proj 3.02B OK 12.31.82 RWSSB and PHED to audit accounts/ reports due to IDA no later than nine months after end of FY. Proj 3.03 REVS 4.01.81 Rajasthan to review and adjust Legal agreements revised NIC tariffs for urban water supply 12/87. Four IDA cities services to meet ROR specifi- to meet 31 ROR in water cations. supply services. 50? tariff increase introduced in 5/85 and 302 increase in 10187. For FY88 IDA cities expected to cover 902 of O&M costs X and depreciation.  AGMT Section Status la Original Revised Description of Covenant Comments Date Date Proj 3.04 OK 4.01.82 RWSSB and PHED to progressively Monthly billing done increase level of revenue for all registered collection to meet criteria. consumers statewide. Average of 952 collections achieved. la OK = Covenant complied with NIC = Not in compliance REVS - Needs revision in agreement with borrower to reflect changed circumstances. 0 stat ,.