Mozambique - National Water Development

Report No. PIC3735 Project Name Mozambique-National Water Development Region Africa Sector Water Supply & Sanitation Project ID MZPA39015 Borrower Government of Mozambique Implementing agency Direccao Nacional de Aguas - DNA Luis Elias, National Director PO Box 1143 Av. de Septembro, 942 Telephone: 8-1-422 191 Facsimile: 8-1-421 403 Date this PID prepared April 26, 1996 Projected appraisal date June 17, 1996 Projected Board date March 21, 1997 Country and Sector Background 1. With a population estimated at 16 million and an average per capita income of US$90 in 1994, Mozambique is one of the poorest countries in the world. A 20-year civil war and periodic droughts have resulted in widespread dislocation and continuing poverty, but the successful elections in October 1994 give cause for optimism that the country is entering a period of peace and economic growth. The poor condition and coverage of water and sanitation infrastructure is, however, a significant contributor to poor living conditions, and a constraint on economic development. Only about 30 to 35 percent of the population has convenient access to safe water. Access to adequate sanitation facilities is also low. As a result, levels of morbidity and mortality due to water-borne disease are among the highest in the world. Substantial parts of the water systems are either inoperable at present, or at risk of further deterioration and collapse. Most water supply institutions are weak and skilled personnel are rare. 2. As a first step towards the rehabilitation, improvement and expansion of services the Government of Mozambique (GOM) has recently finalized a policy framework for the water supply and sanitation sector. The framework, set out in The National Water Policy document, highlights the policy changes and institution-building efforts that will be needed to promote the protection and management of the country's scarce water resources, and improve the provision of water supply and sanitation services in both urban and rural areas. Project Objectives 3. The overall objective of the project will be to support the implementation of the GOM's National Water Policy, and to assist in its further evolution, by assisting the GOM in its efforts to improve the management of water resources and increase the quality, reliability, coverage and sustainability of urban and rural water supply and sanitation services. Within this broad objective the immediate goals of the project are to (i) improve the policy and institutional framework for the management of water resources and the provision of water services; (ii) restore deteriorating infrastructure and increase coverage to progressively provide access to safe water for an increasing preportion of the population; and (iii) strengthen the ability of government institutions and the private sector to plan and manage the delivery of water supply and sanitation services. 4. A key element in the improved institutional framework for the delivery of water services will be the involvement of the private sector in the management of assets and the implementation of investments. The project will assist GOM in redefining its role in the sector by supporting the shift of responsibilities for the actual provision of services from government to the private sector. Government will develop a new role in regulating and monitoring the performance of the private sector and facilitating sectoral finance, and will strengthen its existing role of providing strategic direction to the sector. Furthermore, by supporting the implementation of adequate and appropriate cost recovery policies, the project will facilitate the development of efficient and sustainable water supply delivery systems. Project Description 5. It is envisaged that the project will have the following four components: (i) Urban water: The project will rehabilitate and extend the water supply systems in the five cities of Maputo, Beira, Nampula, Pemba and Quelimane, proceeding in two phases. In the first phase, priority will be given to rehabilitating existing headworks and distribution systems, and bringing operations, maintenance and administration under control in the five cities. The second phase will see the planning and extension of service delivery, and preparatory activity for coping with the resulting increased volumes of wastewater. Suppport for management improvement of the water companies of the other significant cities will also be available to companies which meet defined eligibility criteria. (ii) Rural water and sanitation: Funds will be made available under the project for the improvement and rehabilitation of rural and small town water treatment and distribution systems, and sanitation facilities. (iii) Water Resources Management: The project will support the strengthening of water resources management both within Mozambique and with respect to international waters. Funding will be directed towards institutional development, river basin studies (both local and international) and priority investment in bulk water supply. (iv) Institutional Strengthening: The project will support capacity building within Mozambique to successfully implement the first three components of the project. Project Financing 6. The minimum likely investment required on the water supply systems, for the five cities of Maputo, Beira, Nampula, Pemba, and Quelimane is estimated at US$86 million. Together with the - 2 - requirements for supporting management improvement in water companies, some rehabilitation of rural and small town water systems, water resources management, and institutional strengthening, the total investment requirement is estimated at US $1 million. Of the US $1 million. IDA contribution is currently set at $30 million. It is proposed that the remainder be made up through contributions from donors and the Government. Project Implementation 7. The project will be implemented under the oversight of the Ministry of Public Works and Housing. Under the proposed new management arrangements for the sector, the construction of all major facilities will be carried out under the direction of the private operator, with DNA responsible for planning and coordination. The private operators will act autonomously but will be accountable to Government for the cost-effective provision of services. The responsible Government authority, Direccao Nacional de Aguas (DNA), will develop a new role in regulating and monitoring the performance of the private operator(s). Local communities will be systematically consulted in order to promote local involvement in the design and eventual execution of project sub-components. In addition, the project would involve non-governmental organizations in the implementation of the rural and small town schemes. Project Sustainability 8. Sustainability will depend on ensuring that the water supply and sanitation options chosen respond closely to user needs and willingness to pay, and subsequently for systems serving urban areas, ensuring cost recovery, and for facilities in rural areas, ensuring the community's sense of ownership and responsibility for operations and maintenance. The employment of technologies which are appropriate in the context of the technical, financial and human resource capacities of the country is also essential to this effort. Lessons from Past Operations 9. Ongoing IDA operations in support of water supply and sanitation services have underscored the need for (i) clear legal and regulatory frameworks, (ii) cost recovery to ensure sustainability, (iii) user participation in the design and implementation of services, and (iv) human resource development. The project will support all four. The project will represent a new approach for the sector, characterized by autonomous, privately managed water and wastewater systems regulated by government, a model that has proved efficient in sector service delivery throughout the world. Poverty Category 10. The project is expected to impact positively a large number of poor people, particularly women in peri-urban areas with currently limited access to regular, clean or affordable supplies of water. - 3 - Development of options ensuring access of the poor to basic services at an affordable rate will be part of the policy dialogue with the Government. Environmental Aspects 11. The proposed project has been screened for environmental issues and has been assigned to category B. A full environmental assessment is being carried out and is feeding into the planning of the investments. The project is likely to have a positive impact on public health by improving the access to clean water at affordable prices. At the same time, it will also increase the volumes of wastewater generated, thereby increasing the need for properly serviced septic tanks and sewerage systems in urban areas, and improved sanitation planning in rural areas. It is proposed that the project support the integrated planning of water and sanitation services, in preparation for the proposed IDA supported local government project which is the project vehicle proposed for te provision of urban sanitation services. This is designed to enable significant environmental health problems to be avoided. The project will also promote improved management and conservation of Mozambique's water resources. Program Objective Categories 12. The primary program objective category for this project is basic infrastructure and urban development. Secondary program objectives are: poverty alleviation, health, environment, and private sector development. Contact Point: Public Information Center The World Bank 1818 H Street N.W. Washington D.C. 20433 Telephone No.: (202)458-5454 Fax No.: (202)522-1500 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Also, an Environmental Data Sheet is available upon request from the Public Information Center. -4-