Uganda - Water Supply and Sanitation Rehabilitation Project

Document of The World Bank FOR OFFICIAL USE ONLY Ci?. 154O-O& Report No. 4968 UG STAFF APPRAISAL REPORT UGANDA WATER SUPPLY AND SANITATION REHABILITATION PROJECT June 25, 1984 Water Supply and Urban Development Division Eastern Africa Projects Department - This document has a restricted distribution and mnay be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit - Uganda Shilling (USha) 1 USh - US$0.00333 300 UShs - US$1.00 IMEASUREMENT EQUIVALENTS 1 meter (m) = 39 inches - 3.28 feet 1 kilometer (km) 0.62 miles I square kilometer (km2) = 0.386 square miles I hectare (ha) = 0.01 km2 - 2.25 acres 1 cubic meter (m3) = 35.3 cubic feet (cu ft) 1 liter (1) = 0.26 US gallons 1 cubic meter per second (m3fsec) = 35.3 cubic feet per second I imperial gallon = 1.2 US gallons (US gal) PRINCIT?AL ABBREVIATIONS AND ACRONYMS AFDB African Development Bank CTB Central Tender Board EEC European Economic Community GOU Government of the Republic of Uganda Gtz Gesellschaft fuer Technische Zusammenarbeit ICB International Competitive Bidding IDA International Development Association IDB Islamic Development Bank KfW Kreditanstalt fuer Wiederaufbau LCB Local Competitive Bidding MLG Ministry of Local Government MLMWR Ministry of Lands, Mineral and Water Resources MOH Ministry of Health NORAD Norwegian Aid Agency NWSC National Water and Sewerage Corporation ODA British Overseas Administration PCU Project Coordination Unit SDR Special Drawing Rights SIDA Swedish International Development Authority UNDP United Nations Development Program WHO World Health Organization WDD Water Development Department FISCAL YEAR Government July 1 - June 30 NWSC July 1 - June 30  FOR OFFICIAL USE ONV. UGANDA WATER SUPPLY AND SANITATION REHABILITATION PROJECT Table of Contents Page No. PROJECT SUMMARY . ............................................. . i I. THE WATER SUPPLY AND WASTE DISPOSAL SECTOR Country Background............................... 1 Water Resources .................................. Sector Organization. ... . ... ............. 2 Levels of Service .......................... .... 3 Urban Water Supply.........* .......... ..... 3 Rural Water Supplies ....... ..es.. ....... 3 Sewerage/Sanitation.......................... 3 Solid Waste Disposal ......... 3 Cost Recovery......* .................... ...... 4 Sector Objectives ................................ 4 Sector Development ........................ ......... 5 Sector Constraints ............................... 5 Sector Legislation ......... ..... .... ...... ... 6 The Bank Group's Role ................... .......... 7 II. THE PROJECT AREA Location - Special Features................ ....... 8 Existing Water Supply and Waste Disposal Systems. 8 Population Served and Standards of Services ...... 9 Population Projections and Water Supply Demand... 10 III. THE PROJECT Project Objectives .......... ..................... 12 Project Description..... .... . ..... . ............ . 12 Coordination With Activities of Other Donors ..... 13 Cost Estimates ...........................0.... 13 Project Financing ................. ................ 15 Project Implementation .................. 16 Procurement ............ 00.0 .................... 17 Disbu.rsements .oot.ese.ev.ooo.e., ........................ 19 International Water Rights Issues ................ 21 Health and Environmental Aspects................. 21 Manpower and Training .. ..... ............ ........ 21 Land Acquisition ................................. 22 This report is based on the findings of an appraisal mission consisting of Messrs. K. Kleiner, G. Steinke, T. Skytta, A. Nur, W. Brieger, H.W. Barker, P. Ofosu Amaah, R. Knop and S. Sender (GtZ), who visited Uganda in October/November 1983. This documnt has a resrted distribution and may be used by recipients only in the perfonnu*e of their offial duties. Its contents may not otherwise be discosed without World Bank authorization.  Page ND. IV. THE BORROWER AND THE IMPLENENTING AGENCIES Lending Arrangements ........... .... 22 Organization and Management....................... 22 Training .. eoeoooooooeeoooooeo-9 24 Accounting... .we.oo.o.........e ....e...e.... .....o.... 25 Billing and Collection................ ..000 0......... 27 Audit and Insurance..o ...........................0 27 V. FINANCIAL ASPECTS Past Performance and Present Financial Position.. 28 30 Financ-ing Pln..........................31 Future Operations and Financial Position ......... 33 VIo ECONOMIC AND SOCIAL ANALYSIS Project Benefits ...........0...*.0 ...0............ 34 Least Cost Solution.......e...ewe........e....... 34 Economic Rate of Return. ...oe..e....ee...... e.g..e 35 Impact on Poverty Group .......................... 35 Project Risks ......... .... ......... 35 VII. AGREEMENTS REACHED AND RECOMMENDATION Agreements Reached e..e..........e.....eoe........ 36 Recomo uendations...........................e....... 38  LIST OF ANNEXES 1. Sector Investment Program 2. Existing Facilities for Water Supply, Sewerage and Solid Waste Disposal 3. Population/Water Demand Growth 4. Project Description 5. Project Cost Estimates 6. Program of Project Expenditures 7. Project Implementation Schedule 8. Procurement Arrangeuents 9. Estimated Schedule of Disbursements 10. Health Education Components 11. NWSC, WDD and City Councils Organization Charts 12. Training Needs and Program 13. Recurrent Expenditures - WDD 14. Development Expenditures - WDD 1980/81 - 1983/84 15. Financial Forecasts - NWSC FY84-FY90 16. Financial Forecasts - WDD FY84-FY90 17. Consolidited Financial Forecasts: NWSC and WDD - FY84-FY9O 18. Notes to Financial Statements 19. Tariff Structure 20. Economic Rate of Return and Average Incremental Cost of Water 21. Selected Documents and Data Available in the Project File IBRD Project Area No. 17806  - i - UGANDA WATER SUPPLY AND SANITATION PROJECT CREDIT AND PROJECT SUMMARY BORROWER: Republic of Uganda BENEFICIARIES: National Water and Sewerage Corporation (NWSC) and Water Development Department (WDD) of the Ministry of Lands, Mineral, and Water Resources (MLMWR), the Ministry of Health (MOR) and the city councils of seven major towns through the Ministry of Local Government (MLG). AMOUNT: SDR 26.9 (US$ 28.0) million equivalent. TERMS: Standard. RELENDING TERMS: Of the proceeds of the credit, the Government would: (a) (i) onlend US$10.8 million equivalent to NWSC for 20 years, including four years of grace at a variable interest rate; and (ii) channel US$ 4.6 million equivalent as equity to NWSC; and (b) allocate: (i) US$ 8.4 million equivalent to WDD; (ii) US$ 0.4 million equivalent to the Ministry of Health; and (iii) US$ 3.8 million equivalent to the Ministry of Local Government. PROJECT DESCRIPTION: The proposed project is designed to assist the Government in financing the rehabilitation of the water supply and sanitation facilities of seven major towns; and provide training and technical assistance. RISKS: The main risks facing project implementation are weak organizations and the limited capacity of local con- tractors. They have been addressed: by providing technical assistance and designing procurement pack- ages which would attract strong contractors for the mechanical/electrical, and civil works; and by retaining consultants for the supervision of con- struction work. The remaining risk is the still unsettled political and security situation in the country. Under prevailing conditions, the project as designed is feasible. A deterioration, however, could have adverse effects on project implementation, both in terms of cost and completion, and in a severe case may require revisions of the project scope.  - ii - ESTIMATED COSTS: Local Foreign Total US$ million -- 1. Rehabilitation of and replacements for: water supply facilities 2.18 7.22 9.40 sewerage facilities 0.83 1.90 2.73 2. Supply of refuse dis- posal equipment and septic tank emptiers 0.37 2.63 3.00 3. Low cost sanitation and health education 0.51 0.34 0.85 4. Training 0.01 0.75 0.76 5. Technical assistance 0.32 1.43 1.75 6. Consultancy services 0.70 2.00 2.70 7. Total Base Costs 4.92 16.27 21.19 (January 1984) Physical Contingencies 0.77 2.42 3.19 Price Contingencies 2.40 4.05 6.41 Total Project Cost 8.09 22.74 30.83 (net of taxes and - - duties) FINANCING PLAN: IDA Credit 5.3 22.7 28.0 Government of Uganda 2.8 - 2.8 Total Financing 8.1 22.7 30.8 ESTIMATED DISBURSEMENTS: FY85 FY86 FY87 FY88 FY89 - in US$ million -- Annual 5.0 8.0 7.0 5.0 3.0 Cumulative 5.0 13.0 20.0 25.0 28.0 RATE OF RETURN: 20% on 98.5% of total project costs using current tariffs as a proxy for benefits. APPRAISAL REPORT: Report No. 4968-UG, dated June 25, 1984.  UGANDA WATER SUPPLY AND SANITATION REHABILITATION PROJECT I. THE WATER SUPPLY AND WASTE DISPOSAL SECTOR Country Background 1.01 Uganda lies astride the Equator in East Africa. It is bounded by Kenya, Tanzania, Rwanda, Zaire and Sudan and has no direct access to the Indian Ocean. It has a total area of approximately 240,000 km2, about 20% of which is lalces and swamps. Most of Uganda is on a plateau varying between 900 m and 1,300 m above sea level. 1.02 Uganda's altitude moderates the tropical climate; mean maximum temperatures range from 20