Rwanda - Water Supply Project

Document of The World BanLk FOR OFFICIAL USE ONLY MICROFICHE COPY Report No. 10525-RW Type: (PCR) TWEDDLE, E/ X31707 / T9073/ OEDD3 FROJECT COMPLETION REPORT RWANDA FIRST WATER SUPPLY PROJECT (CREDIT 1345-RW) APRIL 6, 1992 Infrastructure Operations Division South-Central and Indian Ocean Department Africa Regional Office This document has a restricted distribution and may be used bv recipients only in the performance of their official duties. Its contents may not otherwise be disclosed wvithout World Bank authorization.  CURRENCY EOUIvALENTS Currency Unit Rwandese Franc (FRW) 1 FRW a 0.847 US cents US$1.00 = FRW 118 (February 1991) FISCAL YEAR OF ELECTROGAZ January 1 - December 31 MEASUREMENT EOUIVALENTS 1 meter (m) 39 inches = 3.28 feet 1 kilometer (km) = 0.62 mile 1 square kilometer (km2) = 0.386 square mile 1 hectare (ha) = 0.01 1cm2 2.25 acres 1 cubic meter (m3) = 35.3 cubic feet (cu ft) 1 liter (1) = 0.26 US gallon 1 cubic meter per second (m3/sec) 35.3 cubic feet per second 1000 cubic meter per day (1000 m3/d) = 0.26 million gallon (US) per day lcd = liters per capita per day ABBREVIATIONS AND ACRONYMS AfDB : African Development Bank AIDR : Association Internationale de Developpement Rural (Belgium) Bank : IDA or IBRD BCEOM : Bureau Central d'Etudes pour les Equipements d'Outre Mer (France) CCCE Caisse Centrale de Coop6ration Economique (France) CEGOS : Compagnie d'Etudes de Gestion et Organisation (France) COFORWA : Compagnons Fontainiers du Rwanda ELECTROGAZ : Etablissement Public de Production, de Transport et de Distribution d'Eau, d'Electricite et de Gaz EDF : Electricite de France (France) ERR Economic Rate of Return FED : Fonds Europ6en de D6veloppement GDW : Direction G6n6rale de l'Eau Government : Government of Rwanda GTZ : Gesellschaft Fur Technische Zusammenarbeit (Association for Technical Cooperation) (RFA) IBRD International Bank for Reconstruction and Development IDA International Development Association KfW : Kreditanstalt fur Wiederaufbau (Agence Financiere pour la Reconstruction) (RFA) NGO : Non-Governmental Organization MINIFINECO : Ministry of Finance and Economy MINIFOPE : Ministry of Civil Service MINITRAPE : Ministry of Public Works and Energy PCR : Project Completion Report SAUR Soci6te d'Am6nagement Urbain et Rural (France) SDR Special Drawing Rights UNDP : United Nations Development Program WHO : World Health Organization  THE W ORLD BANK )FOR OFmFCIAL USE ONLY Washington, D.C. 20433 U.S.A. Office of Diecto -General Opetat.n Evaluatk)n April 3, 1992 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Rwanda Flrst Water SUv1lV Project (Credit 1345-RW) Attached, for information, is a copy of a report entitled "Project Completion Report on Rwanda - First Water Supply Project (Credit 1345-RW)" prepared by the Africa Regional Office. No audit of this project ha8 been made by the Operations Evaluation Department at this time. Attachment 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.  FOR OMCIAL USE ONLY PROEGCT COLTIOII REPORT FIRST WATER SUPPLY PROJECT (CREDIT 1345-RW) TAB OF COETE Pagg No, Preface .............................................................. (i EVALUATION SUMMARY . ........... ................................. (ii) PART Is PROJTCT REVIEW FRON BANK'S PERSPECTIVR 1. Project Identity ....... ............................... 1 2. Background .........................*.*..* .................. 1 3. Project Objectives and Description ..... .................. * 1 4. Project Design and organization ............... .. ............ 2 5. Project Implementation ....................................... 2 I 6. Project Results ......... ... ..... ......................... .t 3 7. Project Sustainability .................................... 6 8. Bank Performance .......................................... 7 *9. Borrower Performance .................. *..........**.... 7 10. Project Relationship ................ .....................* 8 11. Consulting Services ........ .............................. . 8 I 12. Project Documentation and Data ........... ................. PAR II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE (Translation) A. Verification of Factual Information in Part III ............ 9 B. Comments on the Implementation of the Five Centers Project (Rwanda) Financed by the World Bank ......................... 13 C. Suggestions for the Bank's Performance in the Future ....... 15 D. Suggestions for the Performance of the Borrower in the Future 15 E. Relationship between the Bank and the Borrower during the Implementation of the Project ...... ........................ 15 This document has a restricted distribution and may be used by recipients only in the performance I of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  -2- Table of contents (cntd) Paae No. PART IL:t STATISTICAL INFORMATION 1. Related Bank Credits .......... ........................ 16 2. Project Timetable ... ........ ..................... .... 16 3. Credit Diebursements . .... .... . .................... ... 17 4. Project Implementation . . . .8............................ i 5. Project Costs and Financing ..... ...................... 19 6. Project Results ....................................... 22 7. Status of Covenants ................................... 25 8. Use of Ban): Resources ................................. 26 9. Project Studies . . ..................................... 27 10. ELECTROGAZ - Balance Sheet .......................... 28 Income Statement ....................... 29 Funds Flow Statement ............... .... 30 K&P_: IBRD 16722  (i) PROJECT COIRLETION REPORT RWYANDA FIRST WATER SUPPLY PROJECT (CREDIT 1345-RW) PREFACE This is the Project Completion Report (PCR) for the First Water Supply Project in Rwanda, for which Credit 1345-RW in the amount of SDR 12.0 million was approved on April 12, 1983. The Credit was closed on June 30, 1988, as originally scheduled. It was fully disbursed (except an outstanding balance of SDR 14.06 which was canceled) and the last disbursement was on December 16, 1988. The PCR was jointly prepared by the Infrastructure Operations Division of the South-Central ar.d Indian Ocean Department, Africa Regional Office (Preface, Evaluation Sunr.ary, Parts I and III), and the Borrower (Part II). Preparation of this PCR wai started during the Bank's fi.nal supervision mission of the project in October 1987, and is based, inter alia, on the Staff Appraisal Report; the Credit and Project Agreements; supervision reports; correspondence between the Bank and the Borrower; and internal Bank memoranda.  (ii) PROJECT COMPLETION REP3RT RWANDA FIRST WATER SUPPLY PROJECT (CREDIT 1345-RW) EVALUATION SUMMAQY Obiectives 1. The project's major objectives were to improve: (i) the capability of ELECTROGAZ, the national water, gas and electrici compar- 'n the planning, administrative, financial and technical areas; (ii, efficiency of its operation and maintenance; (iii) the level _, service in five secondary centers ; and (iv) the institutional and financial arrangements for the rural water supply sub-sector (para. 3.01). Imlementation Exverience 2. At the start of the project, ELECTROGAZ was responsible for the implementation of the whole project. When the General Directorate of Water (GDW) was created, in January 1984, it took over the rural water supply component: engineering studies for the Lava Region and institutional and financial study for the rural sub-sector (para. 4.02). 3. On the technical side, ELECTROGAZ' performance was very good. All the works were completed two months before the original schedule, and within the appraisal cost estimate (para. 5.02). The bid documents were very well prepared and ready on time. There was no problem in the bid evaluation process and all the construction contracts were signed six days after the credit effectiveness (para. 5.03). Supervision of works was done smoothly with the help of the same consulting firm which prepared preliminary studies and final design. The performance of the contractors was also excellent. When one of them, AIDR, went bankrupt at the beginning of the works, its associate, ABAY took over successfully the entire contract (para. 5.04). 4. on the institutional and financial side, the performance is less significant. After an important tariff increase at the time of appraisal, in 1982, there was no more increase during the project life, but a decrease in nominal terms by governmental decree of 14% from January 1, 1988, for electricity (para. 6.08). In addition, Government arrears were not reduced to four months of billing, as required by the Credit Agreement. This deteriorated the liquidity position of ELECTROGAZ, which has been unable to meet its obligations to the Government (para. 6.10). ELECTROGAZ requested the Ministry of Finance to revise the terms of the subsidiary loan, which were: repayment period of 20 years including a five-year grace period, an interest of 10.97% per annum and the assumption of exchange risks by ELECTROGAZ. Nonetheless, the Ministry did not respond to this request (para. 6.11). Results 5. Overall, the project was successful in meeting its objective of improving access to potable water in the five secondary towns of the project (para. 6.01). In addition, the credit financed for ELECTROGAZ an institutional study, an organization study and a tariff study. Even if the recommendations of these studies have not yet been implemented, they helped the Rwandese Government and ELECTROGAZ identify problems and their possible solutions. The third water supply project, in the lending program for FY93, should address the institutional and financial issues (para. 6.07).  ( iii ) 6. The institutional and financial study for the rural water supply sub-sector, financed by the project, had a substantial impact. It helped tha Government adopt a sound policy aimed at giving full responsibility for operation and maintenance of the water schemes to the beneficiary population, under the supervision of the communes (local governments), and guidancei of the GDW (para. 6.01). Sustainability 7. The project helped ELECTROGAZ strengthen its management and organization, and increase the number of house connections by 80% during the project life. This is expected to be continued under the proposed Third Water Supply Project. For the rural sub-sector, the project prepared the groundwork for the Second Water Supply Project (Credit 1783-RW) which covers the whole country and involves six other cofinanciers. Lack of adequate cost recovery still remains a major problem, and is addressed for the rural sub-sector under the ongoing Second Water Supply Project. The proposed Third Water Supply Project should address this problem for the urban sub-sector (para. 7.02). Findinas and Lessons Learned 8. As in many other developing countries, the technical department of ELECTROGAZ performed in an effective and timely manner, but the financial managers were unable to improve the situation, owing to the absence of managerial and financial autonomy. The administrative supervision of the Government is heavily interventionist and overrides the statutory authority of ELEC.ROGAZ' director (para 9.01). 9. The main lesson learned is that without an adequate cost recovery system, the projects of this type cannot be sustainable. Lack of funds for maintenance and renewal will tend to reduce production to the detriment of health, social, and more generally economic impacts. This risk can be avoided by either decontrolling tariffs and assisting the expansion of the enterprise by allowing it to re-invest profits in its own expansion, or by doing the same outside the central government administration, i.e. by privatizing the services. Privatization is becoming increasingly a possibility for public utilities in African countries and needs to be recognized as such in future operations of this nature as an expression of foreign debt/equity trade-offs possibilities. Another important lesson of this PCR evaluation is the need to attempt to measure directly the economic benefits of the project in the course of project preparation. The revenues' proxy is not always the most appropriate one, at least taken alone, and social and health benefits should also be considered. In the case of the First Water Supply Project in Rwanda this was not accomplished, to the extent of raising questions about the economic justification of the project itself (ERR of 2.44%), (para. 6.03). Overall Proiect Assessment 10. The project under review has clearly achieved its social, health and economic goals. The financial problems incurred by ELECTROGAZ because of the lack of complianc;~e on the part of the Government to its obligations to pay arrears to ELECTROGAZ and to allow tariffs increases, can not diminish the actual impacts provided by the improvements of the water service in the five centers. Preparation of the subsequent Second Water Supply Project has also been largely successful. Overall the project can be considered as satisfactory.  PROJECT COMPLETION REPORT RWANDA FIRST WATER SUPPLY PROJECT (CREDIT 1345-RW) PART I: PROJECT REVIEW FROM BANKIS PERSPECTIVE 1. Prolect Identity Name t First Water Supply Project Credit Number I 1345-RW RVP Unit s Africa Rcgion Country I Rwanda Sector : Water Supply and Sanitation 2. Background 2.01 Water supply in urban areas is the responsibility of the state corporation, ELECTROGAZ, established by Decree Law No.18 of 1976. It also produces and distributes electricity in the country and operates a pilot plant extracting methane from Lake Kivu. ELECTROGAZ reports to the Ministry of Public Works and Energy (MINITRAPE). According to the above Decree Law, ELECTROGAZ was responsible for water supply in rural areas as well as in urban areas. Nonetheless, management and organization constraints precluded assumption of rural water responsibilities until its capacity to operate adequately the urban water and electricity systems had been demonstrated. In January 1984, a General Directorate of Water was created within the Ministry of Public Works, with a Rural Water Department responsible for rural areas. 2.02 The First Water Supply Project was the first project financed by IDA in Rwanda for the water and sanitation sector. At the request of the Government, the Bank sent a mission to Rwanda in September 1977 to identify a possible project in the water supply and sanitation sector. Following the mission's recommendations, the World Health Organization (WHO) carried out in 1978 a water supply and sanitation sector study and a water tariff study, under the WHO/IBRD Cooperative Program. This helped in defining the project. 2.03 In the rural sub-sector where the situation was deteriorating as a result of decreasing budget allocations for operation and maintenance , the lack of institutional and financial arrangements precluded any Bank involvement. However, an institutional study was included in the project for the rural sub-sector. When the recommendations of this study were endorsed by the Government, in 1986, the Second Water Supply Project, concentrated in the rural sub-sector, was appraised and Credit 1783-RW, of SDR 11.9 million, was approved on April 28, 1987. 2.04 There were no public sewer systems in Rwanda, and construction of such a system for part of Kigali, where poDulation density is high, was a Government priority. Nevertheless, prerequisites to development of sanitation in Kigali were Government decisions concerning institutional arrangements and cost recovery. To help the Government define its sanitation policy, IDA financad through the Study Fund (under a separate project managed by the Planning Ministry) a norms and standards study, followed by stormwater and wastewater studies for Kigali. 3. Prolect Obiectives and Description 3.01 Proiect Objectives: The major project objectives were to improve: (a) the capability of ELECTROGAZ in the planning, administrative, financial and technical areas; (b) the efficiency of ELECTROGAZ operations and maintenance; (c) the level of service in five secondary cent.ars; and (d) the institutional and financial arrangements for the rural water supply sub-sector. The project, together with works financed by African Development Bank (AfDB) in Kigali and Butare, by Kreditanstalt fdr  2- WiederaufbaL (KfW) in Nyabizindu, and by Caisse Centrale de Coop6ration Economique (CCCE) in four ether secondary centers, covered the main urban areas and constituted an integral part of the rehabilitation and development programt of ELECTROGAZ. 3.02 Proiect Description: The project consisted of six physical components: (a) rehabilitation, reinforcement and extension of production and distribution facilities for potable water in the five secondary centers of Cyangugu, Kibungo, Kibuye, Ruhengeri and Rwamagana; and (b) construction of a training center in Kigali. 3.03 The project also included: (i) a training program for ELECTROGAZ staff covering both water and electricity, abroad and locally; (ii) external audits of ELECTROGAZ; (iii) detailed engineering studies for rehabilitation and extension of rural water schemes in the Lava Region; and (iv) an institutional and financial study for the rural water supply sub- sector. 4. Project Design and Organizatinn 4.01 The project concept had been developed, with inputs from Bank staff, by the participating institutions/ministries over a four-year period of time (09/77 to 05/82), with the help of a consulting firm. The project was well prepared. Its timing and scope were appropriate. 4.02 ELECTROGAZ was responsible for the implementation of the whole project, including the studies for the rural sub-sector. This was due to the fact that, at the time of appraisal, there was no agency responsible for rural water supply in the Government. Although the Ministry of Natural Resources was responsible for water resources, it had no department specialized in water for human consumption. In addition, this ministry disappeared in January 1984. Since then, the new General Directorate of Water (GDW) took over these studies, which were the basis of the Second Water Supply Project presently implemented by GDW. 4.03 Reinforcement of ELECTROGAZ was provided by CCCE through a technical assistance team of five persons, which was in place in January 1985. This assistance aimed at compaterizing accounting and consumer departments. In addition, IDA financed an institutional study for ELECTROGAZ, and CCCE an organization study. The recommendations of these studies have been only partly implemented, and their full implementation could be an excellent basis for a third water supply project. S. ;oact Implementation 5.01 Credit Effectiveness and Proiect Start-uv: The Credit was approved on April 1? 1983 and signed on July 7, 1983. The initial date of effectiveness was Oct_..er 12, 1983. It was twice postponed, to December 30, 1983, then to March 31, 1984. The only conditions of effectiveness were the signing of the subsidiary loan agreement between the Government and ELECTROGAZ, and the submission of the audit report on the financial statemetits of ELECTROGAZ for 1981. Due to delays in publishing the law ratifying the subsidiary loan agreement, the Credit was declared effective on February 14, 1984. 5.02. Imolementation Schedule: The project was originally scheduled to be completed by June 30, 1987. All the works were completed in April 1987, and at the end of June 1987, 93.8% of the credit was disbursed. The only remaining activity was the technical assistance for the start-up of the training center and the training abroad of ELECTROGAZ trainers. 5.03 Procurement: Procurement action proceeded on time and satisfactorily. The bidding process for the major works _.n the five secondary towns was started in August 1983, and bids were received on  -3- November 28, 1983. TAe woeks had been divided in three lots: (i) supply of pipes; (ii) laying of pipes, treatment plants and civil wurks; and (iii) construction of the training center. The bid evalmation report proposed to award lots 1 and 2 to the consortium ABAY-AIDR, and lou 3 to a local contractor, CONZTAR. The original contract prices were about 20% below the appraisal estimates.. IDA approved by telex on rebruary 20, 1984, only six days after credit e_fectiveness. 5.04 The main problem faced during the construction period was the bankruptcy of AIDR, which occurred in 1985. After a few months of wavering, its associate, AMAY, took over the contract alone and made up for lost time. 5.05 Proiect Costs: The comparison be%ween appraisal estimates and actual costs of the project 'q i. m. in Part III. The appraisal cost estimate was USS 16.9 milli( -bout SDR 15.6 million) and the final cost was USS 15.8 million (at an uva-Age :ate of exchange equal to the rate of 1986). 5.06 Disbursements: Actual disbursements from the Credit by year compared with appraisal estimates and Rwenda profile are given in Part III, table 3. Disbursements took place over x ve years, as estimated at appraisal, while the Rwanda profile extends over a period of six years. The actual disbursement period was rather four and a half years, because of the six month delay of Credit effectiveness. The original closing date of June 30, 1988 was respected, and disbursements against commitments were made till December 16, 1988 and an outstanding balance of SDR 14.06 was canceled. A graph shown in Part III also gives a comparison of the di&bursement performance of this project with the disbursement profile for Rwanda. 5.07 Credit Allocation: The original and revised allocations, and actual disbursements for Credit 1345-RW are shown in table 5, Part I11. Planned and actual expenditures by component are also shown in separate tables. The original allocations were revised on September 7, 1984, following a request from ELECTROGAZ to raise the percentage financed by IDA from 60% to 80% for the civil works and from 65% to 80% for the supply and laying of pipes. IDA proposed to make at the same time reallocations between categoriea, because the categories as defined in the Credit Agreement did not correspond to the contracts which had been signed. 6. Prolect Results 6.01 Proiect Obiectives: Overall, the project was successful in meeting its principal objectives of improving access to potable water in the five secondary towns of the project. The project also assisted in strengthening the management and organization of ELECTROGAZ. Together with the other components of the program, financed mostly by CCCE and AfDB, the project has contributed to the overall development of the water supply sector in Rwanda. In particular, the institutional and financial study for the rural water supply sub-sector had a substantial impact on the sector development. It helped the Government adopt a sound policy giving full responsibility for operation and maintenance of the water schemes to the beneficiary population, under the authority of the Ccmmune, and therefore paved the way for the Second Water Supply Project (Credit 1783-RW) which covers the whole country with the assis *nce of six cofinanciers, in addition to IDA. 6.02 Physical Results: The physical targets of the project were achieved substantially as planned. The overall water supply service in the five centers is detailed in table 6 of Part III. On the whole, the water production reached 3,742 m3/day in 1988, at the end or the project, compared to 1,190 m3/day in 1980 and to an appraisal estimate of 3,356 m3/day for 1988. 6.03 Economic Rate of Return: The ex-post economic rate of return (ERR) of the project was computed as 2.44% using the same methodology shown  -4- in the appraiaal repo-t. Appraisal estimate of the ERR was 4.90%. This result below expectations is in no way re'ated to project economic benefits, but to the failure of the Government of Rwanda to allow ELECTROGAZ to adjust tariffs. It underscores the weakneas of using financial revenues as a proxy for economic benefits under conditions of controlled tariffs. It amountB to an ineffectual proxy, since it is not a reflection of a "willingnees to pay" in a competitive environment, which, in turn, coull be equated to the "utility", i.e. benefits, to be perceived by users. These benefits may be: (i) direct casn savinge if water is being purchased from other sources (norm4lly in Africa at 3 to 10 times the tariff which would recover all costs); (ii) time savings where fetching the water from the point of purchase is necessary, i.e. reduction of household members' productivity; and (iii) health benefits, quite possibly the single most important economic/productivity-related source of benefits. There is no reason whatsoever to infer that these types of benefits either did not exist, or were somehow "reduced" by lower tarifie, in light of the physical accomplishments of the project. Tn fact, this seems to be a clear illustration of the methodological weakness of the approach - 'lowed in the economic evaluation at appraisal, in that it shows that the proxy utilized in this case had no relation to the measurement being attempted. 6.04 Institutional Performance: ELECTROGAZ is a public enterprise (6tablissement public). However, owing to the absence of managerial and financial autonomy, it is in reality little more than an extension of the Ministry of Public Works and Energy (MINITRAPE). Administrative supervision by this ministry and the Ministries of Finance and Economy (MINIFINECO), and Civil Service (MINIFOPE), is heavily interventionist, and hampers the authority of ELECTROGAZ' director to: (i) manage the enterprise's operations in accordance with standard utility practice; (ii) prepare and execute an operating budget based on the enterprise's needs; and (iii) recruit, reward or terminate the 40% of his personnel with civil servant status. ELECTROGAZ' Board of Directors, comprised of presidentially appointed high level civil servants from five mtnistries, is equally ineffective in its role; it examines, notes and advises only, deferring decision making to the appropriate ministry. 6.05 With regard to its water activities, ELECTROGAZ is responsible for investments and operation in the urban sector, leaving the rural water supply to the General Directorate of Water (GDW), of MINITRAPE, under an arrangement judged satisfactory by IDA. For electricity operations, the rationale for the distribution of responsibilities is less clear. ELECTROGAZ acts as the technical operator of the entire network, but exerciees a planning and implementation function only for projects at the distribution level. Planning and execution of power network,investments for generation and transm-':aion are de facto responsibilities of MINITRAPE, which has the option of appointing an ELECTROGAZ agent to participate. This is the case even when the external and local funds are generated from ELECTROGAZ' own resources. The arrangement has resulted in: (i) the exclusion of ELECTROGAZ from the planning and programming process; (ii) the delivery to ELECTROGAZ of projects with a higher political than technical rationale; and (iii) a lack of coordination in network operation resulting from the administrative division of the power network into production/transmission on one hand, and distribution on the cther. 6.06 ELECTROGAZ' ability to function as a normal utility ia also constrained by MINITRAPE and MINIFOPE control over key staffing decisions. Hiring of all staff except unskilled labor is based on candidates preselected by MINIFOPE. Engineers and other skilled technicians are paid the same low salaries as civil servants which results in high losses to the private sector. 6.07 To remedy the situation, a CCCE/IDA financed study, completed in 1986 by the consulting companies SAUR/CEGOS/EdF, reviewed the institutional, structural and personnel issues, and made detailed recommendations for reform. For ELECTROGAZ to operate as a commercial utility, its general and personnel statutes will need reform. With regard to the former, ELECTROGAZ must be given the autonomy necessary to manage  -5- its day-to-day water, power and gas operations, including a fully empowered director and board. As for its personnel statute, ELECTROGAZ should be separated from the civil service, and the company's management given full control over human resources policy (recruitment, termination, training). The most important proposal is to privatize part of ELECTROGAZ' activities. However, up to now, the Government has not reacted to the study's proposals. 6.;8 Financial Performance: The financial statements, including both apjraisal estimates and actual results for 1982-88 are given in Part III. Th, financial performance of ELECTROGAZ was comparable with the appraisal estimates durir.g 1984-86 period, but afterwards, in 1987 and 1988, there was a stagnation of the revenues (because of a 14% decrease of electricity tariffs in noninal terms in 1988 by governmental decree) and of the expenses. The following table gives the water and electricity tariffs from 1984 to 1988, compared to appraisal estimates: 1984 1985 1986 1987 1988 (FRW) Water. Average price per m3; 64.5 64.5 64.6 60.9 64.9 Appraisal Estimates: 66.6 82.9 91.3 114.3 114.3 Electricity. Price per KwH: 10.2 10.3 10.6 10.0 7.9 Appraisal Estimates: 10.9 13.6 15.0 18.8 18.8 Ae a matter of fact, there was almost no inflation in Rwanda during the project 1ife, whereas appraisal estimates used inflation escalators. This would reduce the difference of FRW 49.4 in 1988 water tariff by FRW 38.2, and of FRW 10.9 in 1988 electricity tartff by FRW 6.3. 6.09 ELECTROGAZ has little control over its own financial soundness. Power and water rates are approved by MINIFINECO without a rational pricing policy linked to the economic costs of service or f nancial soundness of the company. For the electricity side, rates were not adjusted from 1981 to 1987, a period during which ELECTROGAZ received substantial subsidies from donors for equipment and from the government development budget to finance local counterpart funds for investment projects. High rates and subsidie- put ELECTROGAZ in a sufficiently comfortable cash position to undertake force account construction of non-productive assets such as houses, offices and warehouses at the consumers' expense. However, a water and electricity tariff study completed in 1987 showed that by 1988, even after operating cost reduction measures, debt accumulated in the early 1980's would become due, necessitating an average rate increase of 15%. In January 1988, the Government chose to ignore the recommendations of the study and lowered power rates by an average of 14%, judging that this would make electricity more affordable. The lower rates, combined with a decrease in government subsidies and continued accumulation of government receivables (see para. 6.10 below), have instead decreased ELECTROGAZ ability to meet its debt obligations to the Goverrment. 6.10 The Credit Agreement specified that total amount of receivables should not exceed four months' billings, and three months for governmental customers. This covenant has never been met. The following table shows the number cf months' billings for private and governmental customers from 1984 to 1988: Receivables in months' billings 1984 1985 1986 1987 1988 Private and public enterprises 7 8.9 8.9 7.4 9.8 Governmental customers 7.5 12 7.6 20.2 16.4 Total Customers 7.2 10 8.6 9.9 11.8 The consequence waa that ELECTROGAZ did not pay what it owed the Government for debt service and certain taxes. Periodically, a committee reviewed the problem of arrears, requested the writing off of disputed amounts, and the Government paid ELECTROGAZ the difference between what it owed ELECTROGAZ  -6- or vice versa. Although it is not a sound practice, this was done in 1986 and 1988, under Bank pressure. The amounts involved in these offaets were FRW 480 million in 1986 and FRW 1143 million in 1988. In addition, the Government had to write off an ELECTROGAZ debt of PRW 138 million in 1988. This illustrates the deteriorating liquidity position of ELECTROGAZ. 6.11 The Development Credit Agreement specified the onlending terms of the Subsidiary Loan Agreement as followss repayment period of 20 years including a five-year grace period, an interest of 10.97% per annum and the assumption of exchange risks by ELECTROSAZ. It also stipulated that this interest rate would be subject to revision if the parties, following an exchange of views, agreed that such rate would threaten the financial position of ELECTROGAZ. While ELECTROGAZ' financial situation has deteriorated since the beginning of the project, this is due to several complex factors, among which weak financial management and questionable policies. 6.12 Health Education: To complement ongoing activities under the sanitary education and integrated hygiene program of the Ministry of Health, as well as under other programs delivered by NGOo including COFORWA, the project financed the preparation, publication and distribution of 10,000 copies of a handbook giving pedagogical advice to school teachers and inspectors on the application of health and sanitary education recommendations already prepared by the Information and Education Office of the Ministry of Health. 7. Project Sustainabilitv 7.01 The project has had the following significant benefits: (a) an increase both in the quality and the coverage of potable water services to secondary towns which had been previously neglected; (b) strengthening the management and organization of ELECTROGAZ to enable it to attain sustained growth in annual new house connections with successive percentage increases of 11.1% in 1985, 12.6% in 1986, 12.3% in 1987 and 15.8% in 1988, represer:ing 80% over the project life; (c) preparing the implementation of new institutional and financial arrangements for the rural water supply sub-sector, giving full responsibility to the beneficiary population for operation and maintenance of the rural water schemes, under the supervision of the communes, introducing cost recovery ana, therefore, supporting the durability of the facilities; (d) helping in the construction and start-up of a national training center for both water and electricity specialized staff throughout the country. 7.02 To further improve the benefits, ELECTROGAZ and the Government need to focus on continued institutional development and on an appropriate tariff policy, both in terms of structure and level. The institutional study financed by Credit 1345-RW (see para. 6.07 above) recommended to change the relationship between the Ministry of Public Works and ELECTROGAZ, in order to prevent the ministry from interfering in the day- to-day management of the company. In addition, the study proposed to privatize ELECTROGAZ operations throuigh a lease contract: ELECTROGAZ would continue to be a public corporation, the owner of the investments and responsible for repaying the loans and making new investments, but it would entrust the facilities to a private company on a lease basis (affermage), giving it full responsibility for operation and maintenance. The rates would be set at a level that allowed the payment of a royalty by the private company to ELECTROGAZ. The third water supply project, in the lending program for FY93, would provide a good opportunity to implement such a privatization policy.  -7- 7.03 To ensure continued financial viability of ELECTROGAZ and enable it to financially support the necessary sustained growth there is a strong need to improve the billing and collecting systems, to review the existing tariff policy (levels and structure, see para. 6.09 above), and to establish a mechanism for periodic adjustments of tariffs to reflect the economic cost of providing the services. This should be done along with the efforts made by ELECTROGAZ, with the help of a consulting firm, to reduce the cost of its operations and increase productivity. 8. Bank Performance 8.01 IDA supervision was relatively continuous, as only one change in project officer occurred during the life of the project. During the implementation period, a total of eight supervision missions visited Rwanda, but only three with a financial analyst. The number of staff- weeks spent on this project, by task, is given below: FY 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 LOP 0.2 0.7 1.6 0.4 7.9 LENP 3.5 6.5 5.1 4.1 LENA 11.3 11.7 LENN 1.6 PAD 1.9 0.5 0.3 0.4 SPN 2.8 4.6 9.4 5.3 5.3 3.8 TOTAL 0.2 4.2 8.1 5.1 15.8 25.9 5.1 9.7 5.7 5.3 3.8 This represents a total of 88.9 staff-weeks for the whole cycle o' the project. The detail of the missions is given in Part III. 8.02 IDA performance has been satisfactory. The project was well prepared, appraised and supervised. The only negative comment would be the insufficient involvement of financial analysts during supervision. Nevertheless, it was the opposite for the IDA-financed power projects also executed by ELECTROGAZ and the results were the same. In the institutional and financial field, IDA's impact has been useful for the preparation of a follow-up project. As regards the rural water supply sub-sector IDA was instrumental in helping the Government adopt sound institutional and cost recovery policies. 9. Borrower Performance 9.01 On the technical side, ELECTROGAZ' performance was excellent: the bidding process and bid evaluation reports were prepared on time, without any procurement problem, and within the appraisal cost estimates. On the financial side, the results are less good, but this is due mainly to the Government interference. With the help of a CCCE financed technical assistance team, management and accounting procedures improved during the project implementation. However, this effort should be continued over a longer period of time. 9.02 Quarterly reports were submitted by ELECTROGAZ to IDA in a timely manner. An independent auditor was retained by ELECTROGAZ for its own accounts. Audited accounts were prepared regularly through 1988. Delays occurred at the beginning, but generally the audit reports were received within one year after the end of the fiscal year, instead of six months as required by the Project Agreement (section 4.02.b). 9.03 ELECTROGAZ' contribution to the PCR consists of reports on the hardware component of the project and statistical data, which have been used for Part III. Part II reflects the Borrower's perspective on the design and implementation of the project, its development impact and lessons to be learned.  10. Proict :elationsbio 10.01 IDA's relationship with ELECTROGAZ on the project has been very good. The relationship with the Government became strained by the issue of governmental arrears, for which IDA threatened several times to suspend the disbursements, with some success, but only temporary. Relationships between the Borrower and the contractors and consultants were also very good. 11. Consulting services 11.01 The success of the construction component, carried out on a timely and satisfactory manner, witnin the framework of the appraisal cost estimates, could not have been attained without the quality of consultant inputs that were provided during the project preparation and implementation periods. 12. Proiect Documentation and Data 12.01 The legal agreements for the project provided less than forceful and appropriate remedies of IDA to compel the Government to pay arrears to ELECTROGAZ, and allow adequate tariffs increases, since no specific mention of the Government's obligation to allow tariff adjustments to take place, and pay the arrears it owed to ELECTROGAZ was made under the list of events capable of triggering the remedies of IDA (Article IV of the Credit Agreement). This omission is difficult to understand since the need to have arrears not to exceed three months of billing is stated in Article III, para. 3.02. Nevertheless suspension of disbursements could have still been threatened pursuant to Article 6.02.(b) of the general conditions. This possibility was indicated to the Government but not followed up. As a result, the covenants 3.02 under the Credit Agreement, and 4.05 and 4.06 under the Project Agreement were not complied with. All other covenants, eleven in total, were complied with. 12.02 Original documentation for the project was adequate and appropriate. The appraisal report of the project provided a useful framework for both IDA and ELECTROGAZ to review project implementation. 12.03 Data related to project's costs monitoring and project's indicators were not readily available, and could have been better provided by the Borrower's progress reports, as well as by IDA's supervision reports. The Borrower's completion report is quite extensive rnd complete and suggest that this ability could have been put to better use during project implementation. However, this lack of formal reporting did not affect adversely the implementation of the project.  -9- PROJICT COMPLETION REPORT RWANDA FIRST WATER SUPPLY PROJECT (CREDIT 1345-RW) PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE A. VERIFICATION OF FACTUAL INFORMATION IN PART III 1. Bank's credits With regard to Credit 1783-RW, the Second Water Supply Project intended to help the Government of Rwanda in financing a rehabilitation and extension program for rural water supply schemes, it should be noted that the Credit has been approved on 04/28/1987 and that the project is currently under execution. The preparation of this project has been carried out under Credit 1345- RW, the execution duration of which runs effectively from identification in September 1977 to completion in April 1987, as indicated in the Bank's completion report. The actual completion date had been fixed at 06/30/1987. 2. Credit Disbursements Bank's diebursements have been very timely, so that the dates of cumulative disbursements indicated in the completion report are just a short time after the dates of the disbursement requests sent to the Bank by ELECTROGAZ. 3. Proiect ImDlementation One should congratulate oneself on the good development of the project during which customers have increased by 76%, and by 30% in 1988, year of the project completion. This is indicated in the yearly operation reports of the period 1982 to 1988, which give the same results as those given in the Bank's completion report. The number of ELECTROGAZ personnel per thousand customers (in 1982] was 186, whereas in 1988 it is of 79 employees for thousand customers. Dates of bids reception, of contracts' awards, of completion certificates are authentic. The number of employees trained during the period 1984-1987 ls correct (470 employees). 4. ELECTROGAZ Income Statement (Table of the reoortl In the light of our yearly balance sheets some amendments have to be brought. 1984 Net income is of 147 millions instead of 5 millions.  - 10 - 1985 and 1986 All factual information iu correct. Total income is correct (2998 millions) but its apportionment is wrong and should be: . connections s 146 millions instead of 371 millions . other 191 millions instead of 168 millions . total operating revenue s 1821 millions instead of 2023 millions . non operating income s 466 millions instead of 462 millions . amortization of external subsidies s 528 millions instead of 330 millions 1988 One can note that several figures are not consistent with what we have in our balance sheet for 1988. Therefore, one should find under revenues: *total income : 2741 millions instead of 2735 millions . connections : 193 millions instead of 407 millions *total operating revenue : 1732 millions instead of 1946 millions . non operating income : 387 millions instead of 362 millions . amortization of external subsidies : 425 millions instead of 233 millions under expenses: . total expenses 2256 millions instead of 2284 millions . salaries s 761 millions instead of 775 millions . other'services s 886 millions instead of 900 millions under non operating charges: . total : 225 millions instead of 184 millions . other charges s 117 millions instead of 168 millions . exchange losses s 108 millions instead of 16 millions The operating income is therefore 260 millions instead of 267 millions and the net income of 140 millions instead of 147 millions.  MIST WATER SUPLY PROJECT ELECTROOAZ UNCOME STATEMENT (FRW, elIon.) 1964 1965 1966 1987 1988 Appr. Actual Appr. Acual Appr. Actual Appr. Actual Appr. Actual Sale 1,406 1,225 1,970 1,825 2,434 1,404 3,560 1,459 8,671 1,409 Connection 28 So01 298 140 198 ater rent 11 14 1s 17 16 20 17 26 19 20 Other 40 2a 44 41 49 76 54 191 0o 110 TOTAL OPERATINO REVEiNUE 1,469 1,515 2,027 1,664 2,496 1,600 8,427 1,621 3,660 1,732 Non operating Income 1 269 170 466 3s7 Amort.ext.subsidles 28 178 163 197 Own work 33 208 608 528 425 TOTAL DNCOME 1,469 1,606 2,027 2,674 2,498 2,061 8,427 2,898 3,650 2,741 EXPENSES ' Salaris 826 22 373 869 423 453 478 538 643 424 Matorials 274 396 343 643 4W 766 826 901 611 761 Transportation 76 21 69 61 104 26 120 1 139 0 0thbr gervitcs 162 145 1SO 208 217 208 249 255 286 165 Depreciation 622 Su 725 632 617 641 1,063 695 1,335 on Total operating *xP 1,462 1,412 1,78 1,933 2,029 2,169 2,525 2,390 3,113 2,266 Non operating charg. Exchange lose. 64 206 132 106 Other charg 16 667 145 278 117 TOTAL EXPENSES 1,462 1,57 1,718 2,664 2,029 2,540 2,525 2,795 8,113 2,481 OPERATING INCOME (3) 109 309 210 469 111 902 203 5U7 260 INTEREST 94 114 112 96 187 132 268 132 695 120 ~~~~===== ===== ===== __= _== ==___= = _ = NET Ih(uo(E (97) 147 197 114 282 (21) 644 71 (58) 140 rat* of 0.0 1.0 1.9 1.8 2.7 0.8 4.3 1.3 2.0 1.6  - 12 - FIRST WATER SUPPLY PROJECT PROJECT COMPLETION REPORT STATEMENT OF INCOME - WATER ACTIVITY JANUARY-DECEMBER 1990 (FRW) Water Total Water+Electricitv 1. Chemicals 100,503,459 100,515,399 2. Other consumable 91,156,678 731,360,299 3. Water/electricity consumption : 11,682,832 67,542,878 4. Office supplies : 620,206 21,047,729 5. External sub-contracts : 104,238 404,287 6. Equipment and furniture maintenance and repair : 307,165 3,263,253 7. Rent 610,580 5,445,56G 8. Postal services 345,620 12,123,248 9. Other external expenses : 1,019,940,789 3,075,229,329 10. Permanent manpower 45,334,663 415,958,449 11. Temporary manpower 75,077,143 15,783,420 12. Travelling expenses 6,773,336 36,490,295 13. Financial charges 160,248,460 53,244,328 14. Internal transactions : 0 6,000 15. Depreciation 299,235,295 11,329,915,159 16. Provisions 0 8,647,834 17. Vehicles : 10,115,868 92,382,273 18. Total expenses (A) : 1,822,058,332 6,393,599,746 19. Sales water/electricity : 545,159,012 1,693,744,866 20. Connections water/elec. : 81,129,668 446,600,800 21. Works water/electricity : 29,148,587 69,489,252 22. Meters' rent 7,295,040 29,381,159 23. Other revenues 76,203,208 507,598,799 24. Total Revenues (B) 738,935,515 2,746,814,876 (B) - (A) Gross income : -1,083,122,817 -3,603,950,S68 25. Non operating charges : 115,255,902 315,852,102 26. Non operating revenues 300,185,212 611,784,928 Net Income -898,193,507 -3,308,008,042  - 13 - B. COMMENTS ON THE IMPLEMENTATION OF THE FIVE CENTERS PROJECT {RWANDA) FINANCED BY THE WORLD BANK Description of the Project (Credit 1345-RW) : a) rehabilitation and expansion of the water supply scheme of the five secondary centers of the country: Cyangugu, Kibungo, Rwamagana, Kibuye and Ruhengeri, b) building of a training center in Kigali. Part I of the completion report of the World Bank describes in depth the whole process of development of the project. ELECTROGAZ is satisfied with this report. There are no particular comments, but suggestions for future improvements. Given the difficulties we experience generally in Africa and particularly in Rwanda, for a steady maintenance of equipments because of lack of spare parts, the project should have strengthened the water reservoirs system, especially in those centers where the distribution system is depending on pumping facilities. We believe that a water reserve of more or less 48 hours of service would be more appropriate. As water resources are slightly far-away from urban centers, in rural areas, the project should have foreseen a small component along water transmission mains and pumping lines in order to provide water supply to surrounding population. This population is in fact frustrated seeing a water main being laid down near their dwelling without providing a water supply facility. The Project has significantly strengthened the distribution network in the centers. However the project should have given more importance to rehabilitation of the old network, as its defective status carries a great weight in the efficiency of the global system. The case of Ruhengeri is the most conspicuous, where we have reached an efficiency as low as 54%. Physical results of the project are very significant. All water demands are covered presently, i.e. four years after commissioning. The center of Kibungo should reach full capacity utilization in the near future because of the extension of the system towards rural areas: twenty public standpipes on the water main serving the health center of Kirwa, 20 Km away from the main pumping reservoir. The same will occur in Rwamagana if present demands are accepted. More detailed studies should have been carried out on the efficiency of the treatment process of the Muhazi lake waters in Rwamagana. Floccules are too light and do not reach the bottom of the dacantation basin. The project should have studied the system to eliminate algae. In Cyunyu (Cyangugu) row water is heavily cloudy and the need in chemicals for the treatment is excessive. One should have studied the possibility of sources catchment or wells drilling.  Water Service in the Five Centers in 1985. year of commissioning, and in 1990 RWAMAGANA KIBUNGO CY aU KIBUYE RUHENGERI 1985 1990 1985 1990 1985 1990 1985 1990 1985 1990 Water production (m3) 109,261 141,785 73,649 179,291 85,291 252,934 104,585 135,458 407,213 759,085 Water sales (m3) 80,741 104,196 62,206 143,150 65,169 181,295 63,907 105,275 332,841 409,321 Network length (m) 22,158 43,429 15,792 28,219 19,548 36,140 19,593 24,706 36,781 125,681 > Number of customers 146 272 113 283 170 496 136 216 317 694  - 15 - C. SUGGESTIONS FOR THE BANK'S PERFORMANCE IN THE FUTURE The Bank has suitably supervised the Project. In a general way the Borrower recommends the simplification of disbursement procedures, in order not to incur in interests on overdue payments to contractors. In the same framework, conditions of effectiveness of the credit should also be simplified. In fact, a poor country as Rwanda, landlocked by all means, experiences some difficulties in complying with all Bank's conditions. We recommend therefore that those conditions be amended to fit the country's reality. D. SUGGESTIONS FOR THE PERFORMANCE OF THE BORROWER IN THE FUTURE As stated by the Bank, technically the Borrower has performed in a very satisfactory way. However we draw the attention of the Borrower on the following points s Selection of consultant companies must be carried out with severity, especially in relation to technical qualifications. In fact, contractors have a tendency to attribute project's shortcomings to the designer's responsibility, especially at the point of commissioning. The Borrower should establish a mechanism which bind to the expected results the consultant company in charge of design preparation. .As soon as studies start, the Borrower shall appoint a project supervision unit, the selection of which shall be based on specific technical qualifications. Also one should avoid to change the personnel of the unit before the project is completed. The Borrower shall endow the project unit with the necessary work facilities. All Borrower's interventions should be channeled through the project unit, and if possible in a compulsory way, in order to avoid modifications in the project's program. B. RELATIONSHIP BETWEEN THE BANK AND THE BORROWER DURING THE IMPLEMENTATION OF THE PROJECT The relationship between the Bank and the Borrower has been very good. One cannot expect that it could be further improved in the future.  - 16 - PROJECT COMPLETION REPORT EFIRST WATER SUPPLY PROJECT (C-EDIT 134S-RW) MAT III1 STATISTICAL INFORMATION 1. Related Bank Credits Credit Purpose Aonroval Status -Credit 1783-RW To help GOR 04/28/87 Under Second Water finance a implementation. Supply Project program of rehabilitation and expansion of rural water schemes throughout the country. -credit 1495-RW To help GOR 06/12/84 Completed 10/87. First Energy finance a Project program of rehabilitation of Ntaruka Power Station and rehabilitation/ expansion of power network. 2. Pro ect Timetable Item Date Planned Date Revised Date Actual Identification 09/77 -- 09/77 Preparation -- -- 05/78-12/79 Pre-appraisal 05/78 -- 05/81 Appraisal 02/80 04/81 05/82 Negotiations 12/82 -- 02/25/83 Board Approval 04/83 04/19/83 04/12/83 Credit Signature -- -- 07/07/83 Effectiveness 10/12/83 12/30/83 02/14/84 Credit Closing 06/30/88 -- 06/30/88 Project Completion 06/30/87 -- 04/87  - 17 - 3. Credit Disbursements Cumulative Estimated and Actual Disbursements ( US$ million ) Bank Fiscal Year Appraisal Actual as Z Actual as Rwanda Semester Ending Estimate Actual of Estimate x of Total Profile FY 84 Dec.31, 1983 1.00 0.00 0.00 0.00 2.00 June 30, 1984 2.50 1.61 64.31 12.37 6.50 FY 85 Dec.31, 1984 4.00 3.66 91.56 28.17 13.00 June 30, 1985 5.50 5.66 102.86 43.52 22.00 FY 86 Dec.31, 1985 7.00 6.69 95.52 51.43 32.00 June 30, 1986 8.50 9.38 110.40 72.18 41.50 FY 87 Dec.31, 1986 10.00 10.93 109.31 84.08 51.00 June 30, 1987 11.50 12.26 106.59 94.29 61.00 FY 88 Dec.31, 1987 12.50 12.92 103.36 99.38 73.00 June 30, 1988 13.00 12.97 99.74 99.74 85.00 Fy 89 Dec.31, 1988 13.23 101.74 101.74 93.00 June 30, 1989 98.00 FY 90 Dec.31, 1989 100.00 June 30, 1990 t.,.;-~~~~~~~~~~~~~~  - 18 - D I SBURSEMENTS ~~~~~~~+ Atal I Pro I I 111 * ..4| ...|||II2 -- I - -- - -| 1 4. ~@ PrlI I I Ile 1/1ta1_ 1_ Xnd cator1 IA Apria Actua 1 - 1 -= I I I - I - I - - 1.Eecrgam staffx I/ I I F pe - 0 I - Icut-r- -8 18 o 9 - --- 79 2.~~ . Bid inie b -11/1 3 11 /I83I I 0.C0 4.94 8.n4 1.f5 0.c 4.90 0.4 4.07 0.6 4.6 8.6 4.6 . 1.0 In~ the fiv s1condr ceters 1 4. Proiect ionlerentatd6 0 1. Electrogaz' etaff per 1000 customer.z 1982 -- 186 1988 -- 79 2. Bids invited by 11/S3 11/83 3. Contracte awarded by 07/84 02/84 4. Completion certificate 07/87 04/87 5 Staff trained (82-87) 460 470 ln the five oecondary centers 6. Volume sold (m3/day) (1988) 2,840 2,285 7. Population aerved (1988) 60,260 70,000 8. Number of cuotomezos 1985 A286 1987 198 Cyangugu 170 214 291 355 Kibungo 113 138 165 203 Xibuye 136 139 165 204 Ruhengeri 317 348 483 565 Rwamagana 146 156 195 222 882 995 1,299 1,549 The percentage of increase of customer. warn 76% during the project life, and 30% the year in which the prcJect waw completed.  5. Prolect Costs and Financina A. Credit allocaton by categorv In SDR '000,000 Category Appraisal Revised Actual 1. Civil works 1.84 0.80 0.73 2. Pipes (supply and laying) 4.42 5.00 4.86 3. Materials and equipment 1.47 1.80 2.11 (exduding pipes) 4. Consultant services and training 1.84 2.00 3.36 5. PPF advance 0.92 0.92 0.94 6. Unallocated 1.51 1.48 TOTAL 12.00 12.00 12.00  5. Prolect Costs and Financing B. Proect Costs by component in US$ '000.000 Apprai estmate Actual Foreign Foreign Local Exchange Total Local Exchange Total Costs Costs Costs Costs Costs Costs 1. Cyangugu center 0.60 0.60 1.40 1.00 1.67 2.67 II. KIbuye center 0.20 0.40 0.60 0.41 0.64 1.05 Ill. IGbungo center 0.60 0.90 1.50 0.78 1.26 2.04 IV. Ruhengeri center 0.90 120 2.10 1.20 2.05 3.24 V. Rwamagana center 1.00 1.50 2.50 1.06 1.77 2.83 VI. Training center, training and 120 2.80 4.00 1.64 2.32 3.96 consulting services SUB-TOTAL I-VI 4.50 7.60 12.10 Vll.Contingencles 2.30 2.50 4.80 Grand Total l-VII 6.80 10.10 16.90 6.09 9.71 15.79 Exchange rate (1986) Source: Electrogaz Project Completion report 1 SDR -US$ 1.22 1 SDR - FRW 102.70 1 SDR - FB 49.42 1 SDR - FF 7.89  5. Projet Costs and Financina C. Prolect Financina by component In US$ '000,000 Appraisal estimate Actual IDA RWANDA TOTAL IDA RWANDA TOTAL L. Cyangugu center 1.06 0.34 1.40 2.19 0.48 2.67 11. Klbuye center 0.49 0.11 0.60 0.85 0.20 1.05 Ill. Kibungo center 1.16 0.34 1.50 1.67 0.37 2.04 IV. Ruhengerl center 1.59 0.51 2.10 2.67 0.57 3.24 V. Rwamagana center 1.93 0.57 2.50 2.32 0.51 2.83 VI. Trainig center, training and 2.93 1.07 4.00 3.30 0.66 3.96 consuling services SUB-TOTAL I-VI 9.15 2.95 12.10 1300 2.80 15.79 VII.ConUlngencbes 3.85 0.95 4.80 Grand Total l-VII 13.00 3.90 1690 13.00 2.80 15.791 Exchange rate (1986) Source: Eectrogaz Project Completion report 1 SDR - US$ 1.22 1 SDR - FRW 102.70 1 SDR - FB 49.42 1 SDR - FF 7.89  6. Prolect results Water supply services and demand for 1988 (ma/day) Appraisal Actual (1988) CENTER Consumption Producton Consumption Produdbon __ ~~~~~~~~.. _ . _ ._ ._... .. . ___............ -: ------- CYANGUGU 547 645 400 715 a KIBUNGO 238 281 236 307 N KIBUYE 332 392 334 436 RUHENGERI 12 1,456 1,019 1,816 RWAMAGANA 494 583 296 468 TOTAL 2,845 3,356 2,285 3,742  6. Protec mut.s RWANDA Economic rbe of rurm FIRST WATER SUPPLY PROJECT ELECTROGAZ Acl Appr. ECONOMIC EVALUAllON (FRW, mlons) 24% 4.901/9 Increment Notes: * Captal cost does not Indude traini. Year Capital cost Production Operating Bonefls CostslBenefitls fbw * The hIemmental water revenues wore taken ______ ( n d) cost as a best proxy of Ihe benefits attributabl to the InvestmentL 1,984 122 153 4 10 (115) ^ The aerage seing pricel 64 Frwnm3 1,985 314 243 6 16 (304) - The incremental operan ostX include only 1,986 294 297 7 19 (282) the hcrease in chemicals, power, and 1.987 223 386 9 25 (207) maintenance but do not ncdude salares 1,988 51 483 11 31 (31) sine there was no recruitment needed. The t 1,989 1 0 513 1 2 33 11 Inc6emental operating costs resulUng fron 1,990 621 14 40 25 the increase of production are estimated 1,991 730 17 47 30 at 23 FRW per m3 ofdncwemntalwater 1,992 838 19 54 34 produced. 1.993 922 21 59 38 1.994 1,005 23 64 41 1,995 1,041 24 67 43 1,996 1.076 25 69 44 1,997 1.111 26 71 46 1.998 1,147 26 73 47 1'M99 1,182 27 76 48 2.000 1,217 28 78 50 2,001 1,253 29 80 51 2,002 1.288 30 82 53 2003-2019 1 1,324 30 85 54  - 24 - Length of pipe network (Km) Homes served 200 2COw -11 = iuqe4 R _i ig. 150 - E 1500 m 1 - l I2 83 84 85 s 87 88 12 83 84 a Be 87 8 8 Rwanda Water Supply Sales (m31year'000) 1000 Rwamagana 800 Ruhengeri 800 Kibuye _ Kbungo 600 Cyangugu 400 200 0 1982 1983 1984 1985 1988 1987 1988 1989  _ 25 - 7. Status of Covenants Covenant ref. Commitment Compliance record Credit acreement 3.02 Govemment shall ensure that total amount of receivables Not complied with does not exosed 4 months'billing and 3 months' billings for covemment customers Prolect aareement 2.02 Electrogaz shall employ consultants satisfactory to IDA for Compiled with (a) detailed design for pan A (b) supervision for part A tc) carryina out a training program (part P.3)_ 2.03 Procurement shall be in compliance with schedule of Project Compiled with a(zeement 2.04 Adequate provision for the Insurance c? imported goods Compl!ed with 2.05 Electrogaz shall complete, not later than Dec.31, 1984 Not compled with. Study a tariff study (part 0) and apply such tarffs by Dec. 1. carried out but not appiled. 1985 2.06 Electrogaz shall provide perlodic progress reports and a Complied with orolect completion report 3.01 Electrogaz shall continue to employ consultants for Compiled vwth improving and reorganizing Its management and administrative procedures 402 Electrogaz shall submit its account audited by independant Complied with auditors acceptable to IDA, together with the auditor's report, not later than six months after the end of each fiscal year, and an audit of the capital expenditures for the project not later than three months after the end of each fiscal year 4.03 Electrogaz shall prepare, before December 31, 1986 separate Complied with accounts for gas, water and electricity, covering 1983, 1984 and 1985 4.04 Electrogaz will seek IDA's agreement before Incurring any Complied with debt, It after the Incurrence of such debt the intemal cash generation of Electrogaz for the twelve-month period next preceding the Incurrenoe of such debt would be lose than 1.5 ames the estimated maximum debt service 4.05 Electrogaz's tariffs for water, gas and electricity shall Not compiled with be adjusted so as to enable It to produce not less than 25 % of the average annual capital expenditures of previous ____________ and current fiscal years 4.08 Receivables for water, gas and electricity shall not exceed Not complied vAth four months billing 4.07 Electrogaz's fixed assets shall be revalued every year, Complied with commencing In fiscal year 1986 I I  - 26 - 8. Us. of Bank Resoureos Missions - __._._._._.__ - - - ----------------------------------_._._.__. Stage of Date Days Number of Staff days Project Cycle In field persons Through Appraisal Sep.77 7 1 7 May.78 12 1 12 Jun.79 6 1 6 Dec.79 4 2 8 Sep.80 2 1 2 May.81 4 2 8 Appraisal through May.81 21 2 42 Board Approval Board Approval May.83 5 1 5 Through Dec.83 6 1 6 Effectiveness Supervision Jun.84 6 1 6 Oct84 2 2 4 Mar.85 7 2 14 Nov.85 7 1 7 May.86 12 1 12 Apr.87 7 2 14 Oct87 8 2 18 _._._._.__._. .._._._. _..._._.....______....___._ TOTAL 116 23 169 Source: Bank Project Flle  9. Proiect Studies Studies Purvose as defined at Status iloact of Study appralsal 1. Detailed engineering To provide necessary completed. Studies fulfilled their provide Completed. ~~~~~~objective for both the studies for final design for the five for and the rehabilitation and works in the five five centers and the Lava extension of the water centers, and to prepare Region. facilities in the five the Second Water Supply secondary centers of Project in the Lava Cyangugu, Kibungo, Region (Cr. 17S3-RW). Kibuye, Ruhengeri and Rwamagana, and of the rural water schemes in the Lava Region. 2. Institutional, To assess current Completed. Recommendatioe s not yet d organization and tariff situation of ELECTROGAZ implemented. study for ELECTROGAZ. and recommend appropriate solutions. 3. insititutional and To assess current Completed. Study helped the financial study for the situation of the sub- Government adopt a sound rural water supply oub- sector and propose policy for the rural sector. adequate solutions. water upply sub-sector.  RWANDA FIRST WATER SUPPLY PROJECT ELECTROGAZ I-BALANCE SHEET (FRW, rndlons) 19a2 1983 1984 1985 1986 1987 1988 1989 ia-wT Aduaw APpr1 Adus Appr-l Adual Appr1 Adual Appr.| X.Wa Awp.| in Appr.| Alt c ASSETS Fbod asset 13,097 7,496 14.706 9.156 17M389 10,438 21,377 12773 25,442 14,976 28,828 16,710 30,845 17,161 20,690 Cash 0 131 162 121 136 156 0 262 0 402 102 326 403 392 520 Inventodse 575 269 640 435 710 505 828 654 934 853 1,504 823 1,907 905 953 Reooeables 448 640 502 1,446 554 1,373 748 1,249 911 891 1,226 1.601 1.307 1.840 1,996 TOTAL ASSETS 14,120 8,536 16,010 11,158 18,789 12,472 22.953 14,938 27.287 17,122 31,660 19,460 34.462 20298 24.159 EOUrTY and UABILIIIES CSapI subsdy 11,290 5,666 11.510 7,802 11,692 8,181 11,602 6,708 12,012 6,847 12,412 7.054 12,542 7.171 7,379 S Retahtdeags (232) (89) (230) 197 (327) 148 (130) 462 152 441 796 512 738 653 (306) Revakmaonresen 335 266 1,530 266 Z783 441 4,078 1,671 5,450 1,671 6,884 1,671 8,729 1,i71 5,154 WLOG-TERM DEST Debtdue 2,350 2,069 2,852 1,779 4,126 2,818 6,381 4,904 8,741 7,058 10,664 8,594 11,551 8,588 8,964 CURREIIT UABU1Y Payblea 217 371 233 320 378 282 563 476 645 353 671 422 624 464 677 01w 134 253 115 794 137 500 163 717 198 752 233 1,207 278 1,751 2,267 Bakoverd*ft 26 0 0 0 0 102 206 0 89 0 0 0 24 TOTALEQUTfYAND 14,12D 8,536 16,010 11,158 18.789 12,472 22,953 14,938 27,287 17.122 31,660 19,460 34,462 20298 24.159 ILIAEIUTIES  RWANDA FIRST WATER SUPPLY PROJECT ELECTROGAZ IH4NCOME STATEMENT (FRW, milions) 1984 1985 1986 1987 1988 1989 Appr.1 Acual A ~ppr. Adual Appr.1 Actual Appr.1 Actual Appr.| Actual Aal REVENUES Sales 1.408 1,225 1,970 1,325 2,434 1,404 3,356 1,459 3.571 1.409 1,535 Conneclions 253 501 298 146 193 474 Meter ent 11 14 13 17 15 20 17 25 19 20 24 Other 40 23 44 41 49 78 54 191 60 110 84 TOTALOPERATING REV. 1,459 1,515 2,027 1,884 2,498 1,800 3.427 1,821 3.650 1,732 2117 Non operatlng Inoome 138 259 170 466 387 146 AmoLexLsubsdles 529 173 183 197 215 Own work 33 203 508 528 425 208 TOTAL INCOME 1,459 1,68 2.027 2.874 2,498 2,651 3,427 2,998 3,650 2,741 2,686 EXPENSES Salais 328 282 373 389 423 453 478 538 543 424 497 MaterIbs 274 396 343 643 468 786 625 901 811 761 930 Transpotatbn 76 21 89 60 104 26 120 1 139 0 1 Other servlces 162 145 188 209 217 283 249 255 285 185 247 Deprecaion 622 568 725 632 817 641 1,053 695 1.335 886 1.122 Totaloperatng expenses 1,462 1,412 1,718 1,933 2,029 2,189 2,525 2,390 3,113 2,256 2797 Non operatrng chares Exchange bsses 64 206 132 108 178 Other charges 13 667 145 273 117 313 TOTALEXPENSES 1.462 1,425 1.718 2,664 2,029 2540 2.525 2,795 3,113 2,481 3,288 OPERATING INCOME (3) 261 309 210 469 111 902 203 537 260 (0 INTEREST 94 114 112 114 187 132 258 132 595 120 355 NET INCOME (97) 147 197 96 282 (21) 644 71 (5 140 (957) Rate of return .0.0% 3.0% 2.0% 2.4% 2.7% 1.2% 4.5% 22% 2.4% 2.7Yo -4.9%  RWANDA FIRST WATER SUPPLY PROJECT ELECTROGAZ IN-FUNDS FLOW STATEMENT (FRW, millions) 1984 1985 1986 1987 1988 1989 Appr.1 Aciual App r.1 Actu I Appr.I Actua Appr.| Adual A.pp Actual Adual SOURCES Notprofitforyear (3) 148 309 117 469 (21) 902 71 537 141 (959) Depmcation 622 541 725 573 817 613 1,053 647 1,335 815 1,122 Totalintemalfunds 619 689 1,034 690 1,286 592 1,955 718 1,872 956 163 Bormwlngs 1.345 1,185 2,335 2,003 2,448 2,155 2,064 1.627 1,204 330 569 Equity 182 138 0 199 320 258 400 397 130 328 386 TOTAL SOURCES 2.146 2,012 3,369 2,892 4,054 3,005 4,419 2.742 3,206 1,614 1.118 APPLICATIONS Investmnt 2,052 1,580 3,418 2,834 3,510 2,724 3,005 2,382 1,507 1,2C8 1,120 s Debtrepamntws 165 144 192 63 275 96 399 96 912 407 205 o Deuase lf subsidbs 117 183 197 214 resewve 24 173 TOTALAPPUCATIONS 2,217 1,748 3,610 3,070 3,785 2,937 3,404 2,661 2,419 1,812 1,539 INCREASE IN (71) 264 (241) (178) 269 66 1,015 e1 787 (16 (421) WORKING CAPITAL _ Dstahd hemunder_ maease in: hnwnltrceiv. (45) 227 101 (283) 152 (71) 824 159 486 (265) (549) cash (26) 37 (342) 103 117 139 191 (78) 301 67 128 (71) 264 (241) (180) 289 68 1,015 81 787 (198) (421)  MAP SECTION I  R 28