MADAGASCAR - Rural Water Supply and Sanitation Pilot Project

Document of The World Bank Report No. 17101 -MAG PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 12.6 MILLION TO THE REPUBLIC OF MADAGASCAR FOR A RURAL WATER SUPPLY AND SANITATION PILOT PROJECT November 18, 1997 Water, Urban Division Africa Region  THE REPUBLIC OF MADAGASCAR CURRENCY EQUIVALENTS Currency Unit = Malagasy Franc (FMG) US$1.00 = FMG 5,041.24 (5/31/97) SDR 1.00 = US$1.3784 (as of November 1997) FISCAL YEAR January 1 - December 31 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS AGETIPA Agence d'Execution des Travaux d'Infrastructure Publique d'Antananarivo AES Project of Water Supply in the South CAS Country Assistance Strategy CFD Caisse Francaise de Developpement CNEA National Committee for Water and Sanitation CREA Regional Committee for water and Sanitation DEA Directorate of Water and Sanitation ESA External Support Agencies ERR Economic Rate of Return FY Fiscal Year IEC Information-Education-Communication MEM Ministry of Energy and Mines NGOs 'Non Government Organizations NPV Net Present Value OM Operation and Maintenance PMU Project Management Unit SAGS Service d'Assainissement et Genie Sanitaire SME Small and Medium Enterprises SOE Statement of Expenses SSPA Sector Strategy and Action Plan TOR Terms of Reference VAT Value Added Tax WPC Water Point Committee Vice President: Callisto Madavo Country Director: Michael Sarris Technical Manager: Jeffrey Racki Task Officer: Andreas Wildt  Republic of Madagascar Rural Water Supply and Sanitation Pilot Project Project Appraisal Document Table of Contents Project Financing Data Block 1: Project Description 2 1. Project development objectives 2 2. Project components 2 3. Benefits and target population 3 4. Institutional and implementation arrangements 3 Block 2: Project Rationale 4 5. CAS objectives supported by the project 4 6. Main sector issues and Government strategy 4 7. Sector issues to be addressed by the project and strategic choices 7 8. Project alternatives considered and reasons for rejection 8 9. Major related projects financed by the Bank and/or other development agencies 9 10. Lessons learned and reflected in project design 9 11. Indications of borrower commitment and ownership 10 12. Value added of Bank support 10 Block 3: Summary Project Assessments 11 13. Economic Assessment 11 14. Financial Assessment 11 15. Technical Assessment 11 16. Institutional Assessment 11 17. Social Assessment 11 18. Environmental Assessment 12 19. Participatory Approach 12 20. Sustainability 13 21. Critical Risks 13 22. Possible Controversial Aspects 13 Block 4: Main Loan Conditions 14 23. Effectiveness Conditions 14 24. Other Agreements 14 Block 5: Compliance with Bank Policies 14 List of Annexes Annex 1: Project Design Summary Annex 2: Detailed Project Description Annex 3: Estimated Project Costs Annex 4: Cost Benefit Analysis Summary/Cost Analysis Assumptions Annex 5: Financial Summary Annex 6: Procurement and Disbursement Arrangements Annex 7: Project Processing Budget and Schedule Annex 8: Documents in the Project File Annex 9: Status of Bank Group Operations in Madagascar Annex 10: Madagascar at a Glance  I  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Africa Regional Office Country Departnent 08 Project Appraisal Document Madagascar Rural Water Supply and Sanitation Pilot Project Date: November 18, 1997 [1 Draft [x Final Task Officer: Andreas Wildt Country Manager: Michael Sarris Project ID: MG-PA-1564 Sector: Water Supply & Sanitation Lending Instrument: Specific Investment Loan PTI: [] Yes [X] No Project Financing Data [] Loan [Xl Credit [ ] Guarantee [ Other [Specify For Loans/Credits/Others: Amount (US$m/SDRm): US$17.3 m/ SDR 12.6 m Proposed Ters: [ Multicurrency Single curency Grace period (years): 10 [] Standard Variable [ Fixed [] LIBOR-based Years to maturity: 40 Commitment fee: not exceeding 1/2ofl % Service charge: 0.75 % ... ... .................................................................................................................................................................................................................................... Financing plan (US$m): Source Local Foreign Total Government 3.43 0.00 3.43 Beneficiaries 0.82 0.00 0.82 IBRD/IDA 2.90 14.38 17.28 UNICEF 0.00 0.76 0.76 Total 7.15 15.14 22.30 ......................................."":......................................................................................................................................................................................... Borrower: Republic of Madagascar Guarantor: Responsible agency(ies): Ministry of Energy and Mines (MEM) Estimated disbursements (CY/US$M): 1998 1999 2000 2001 2002 Annual 6.08 4.02 3.66 2.81 0.71 Cumulative 6.08 10.10 13.76 16.57 17.28 For Guarantees: Partial Credit Partial risk Proposed coverage: Project sponsor: Nature of underlying financing: Terms of financing: Principal amount (US$) Final maturity Amortization profile Financing available without guarantee?: Yes [J No If yes, estimated cost or maturity: Estimated financing cost or maturity with guarantee: Expected effectiveness date: 03/22/1998 Closing date: 12/31/2003  Project Appraisal Document Page 2 Country: Madagascar Project Title: Rural Water Suppty and Sanitaton Pilot Project Block 1: Project Description 1. Project development objectives (see Annex I for key performance indicators): The main objective of the Rural Water Supply and Sanitation Pilot Project is to ensure an improved capacity of the government, communities and private sector to expand a sustainable and cost-effective coverage in water supply and sanitation. Progress toward this objective will be measured by the extent that: (1) realistic future projects are designed and funding commitments are obtained in the sector by the year 2000; (2) adequate repair and maintenance is carried out in project areas, and 70 percent of newly constructed or rehabilitated water systems are functioning properly two years after completion of works; (3) the number of requests for new systems transmitted by communities to local agencies (NGOs or local governments) reaches 500 by the year 2002; and that (4) at least four new companies for well and borehole construction are registered by end of the project. While the Project is expected to have a positive impact on the beneficiaries' lives, the actual health and social indicators such as reduction of incidence of water borne diseases, increased life expectancy or overall poverty reduction cannot be realistically measured. The effectiveness of the Project in improving these indicators will be dependent on other factors (as indicated in Annex 1, Critical Assumptions and Risks) that are outside the scope of this Project. These factors include Government commitment and donor community support for the sectoral strategy and overall improvement of hygiene and primary health care in the project area. ............................................................................................................................................................................................................................................................. 2. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): Costs are including taxes and contingencies ComponCatetQc USSkn % of Total (1) Policy and legal framework for the Water and Sanitation Sector policy 1.3 5.8% . Assistance with the reformulation of the Water and Sanitation sector policy and implementation strategy. This will entail redefinition of the roles of various actors in the community, public and private sectors for sustainable delivery of water supply and sanitation services. The issues to be considered will be the institutional, financial, O&M and regulatory arrangements, technical options, social, IEC and environmental/health aspects, as well cross sectoral interactions; * Assistance for preparation of a Water Law; . Assistance with communication and dissemination of information on sectoral policy and legal framework. (2) Water and Sanitation Sector Capacity Building and Institutional Development institutional 3.6 16.1%