India Kerala Water Supply and Sanitation Project

 Kerala water supply and sanitation project Report No: ; Type: Report/Evaluation Memorandum ; Country: India; Region: South Asia; Sector: Urban Water Supply; Major Sector: Water Supply & Sanitation; ProjectID: P009858 December 29, 1995 India: Kerala Water and Sanitation Project (Credit 1622- IN) The Implementation Completion Report (ICR) on the India Kerala Water Supply and Sanitation project (Credit 1622- IN, approved in FY86) was prepared by the South Asia Regional Office, with Annex A contributed by the Borrower. The credit, for US$41.0 million was closed on March 31, 1994 after four extensions totaling three years. The project's objectives were to improve the institutional, operational, and financial performance of the water and sanitation sector in the State of Kerala. More specifically, the project was to: (i) help strengthen the Kerala Water Authority, (KWA, was established as a precondition to the credit) and selected municipalities through staff training and improved financial and technical operations; (ii) provide piped water supply to about one million people in rural areas; increase the supply and distribution of water in one urban area (Quilon) with a population of about 150,000; and (iii) introduce on-site sanitation by financing such facilities in ten urban areas (targeting about 200,000 people) and in selected rural areas on pilot scale. The project's achievements were much below target both physically and institutionally. Only two of the seven rural schemes were fully completed, the remaining five were expected to be commissioned seven months after credit closing. The urban scheme in Quilon was still under construction at credit closing, and only 44 percent of the targeted sanitation facilities were constructed; results were slightly better in urban areas than in rural ones. Some institutional development occurred but not until the tail end of project implementation: KWA was unable to improve its financial performance as the required tariff increases materialized late, metering of water connections progressed slowly; billing and collection targets were not met; and most of the critical studies aimed at strengthening KWA were completed late. The KWA's staff training center became operational by credit closing and is now expected to have a positive impact on KWA's operational efficiency and staff productivity. The economic rate of return (ERR) is 8.7 percent for the Quilon water supply (12.2 percent at appraisal) and ranging from 5.2 percent to 11.6 percent for rural schemes (from 7.1 percent to 14.1 percent at appraisal); this lower achievement is attributed to implementation delays and thus deferred project benefits. The Operations Evaluation Department rates the outcome of the project as unsatisfactory and its institutional development as moderate (as in the ICR). The sustainability of project benefits is rated as uncertain versus likely in the ICR because of lingering inadequacies in operation and maintenance staff and budget. Bank performance is rated as unsatisfactory, as in the ICR. The ICR is good. In particular, the Aide-Memoire provides a detailed discussion of the causes for implementation delays and problems. The main lessons are: (i) the project scope exceeded the management capacity of the implementing agency; (ii) a more thorough economic analysis could have led to different components; and (iii) land acquisition and procurement plans were not sufficiently prepared. The project may be audited.