Honduras - Water Supply and Drainage Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-3799-HO REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$19.6 MILLION TO THE REPUBLIC OF HONDURAS FOR A WATER SUPPLY AND DRAINAGE PROJECT May 1, 1984 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.  CURRENCY EQUIVALENTS Currency Unit = Lempira (L) US$1.0 = L2.0 L1.0 = US$0.5 WEIGHTS AND MEASURES Metric System PRINCIPAL ABBREVIATIONS AND ACRONYMS USED CABEI Central American Bank for Economic Integration CDC Commonwealth Development Corporation CONADI National Investment Corporation CONSUPLANE National Superior Council for Economic Planning DIMA Municipal Water Division of San Pedro Sula DREE French Directorate for External Economic Relations DSA Environment Sanitation Directorate ICB International Competitive Bidding IDB Inter-American Development Bank LCB Local Competitive Bidding MC San Pedro Sula Municipal Corporation MH Ministry of Health INA National Agrarian Institute PAHO Pan American Health Organization SANAA National Autonomous Water and Sewerage Service USAID U.S. Agency for International Development FISCAL YEAR January 1 to December 31  FOR OFFICIAL USE ONLY HONDURAS WATER SUPPLY AND DRAINAGE PROJECT Loan and Project Summary Borrower: Republic of Honduras Beneficiaries: San Pedro Sula Municipal Corporation (MC) National Autonomous Water and Sewerage Service (SANAA) Amount: US$19.6 million equivalent, including the capitalized front-end fee Terms: 20 years with 5 years of grace at standard variable rate Relending Terms: Same as to Borrower. The foreign exchange risk would be borne by the MC and SANAA Go-Financiers: Commonwealth Development Corporation (CDC) and the Direction des Relations Economiques Extgrieures (DREE), of the French Ministry of Finance Project Description: The proposed project would consist of two main components, the larger of which would provide improvements to the water supply and drainage systems in San Pedro Sula and technical assistance for institutional improvements for DIMA, the autonomous operational division of the MC responsible for providing water, sewerage, and drainage services. This component would benefit approximately 521,000 persons by 1994. The second component would provide technical assistance to SANAA for support in formulating sound financial policies at the national level in the water supply sector, for the development of an action plan to improve its operational and financial performance, and to improve planning at the national level. Risks: The San Pedro Sula component of the project would involve risk stemming from DIMA's planned assumption of expanded responsibilities and the consequent pressure on its financial resources; however, this risk has been lessened by the advanced stage of project preparation, the willingness of DIMA to use qualified consultants to assist with project impiementation, and the redefinition of DIMA's legal status, which will allow it to operate on an independent basis and 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.  ii obtain needed tariff increases on a timely basis. The main risk associated with the SANAA component involves the continued commitment to providing a suitable environment at the national level, in which the various water supply and sewerage companies can operate. Achievement of ultimate objectives will also depend on application of consultants' recommendations, where appropriate. These would be addressed through close supervision and dialogue with Government. Project Cost: V Item Local Foreign Total -----US$ Million----- San Pedro Sula Component 8.2 15.1 23.3 National Component 0.1 0.7 0.8 Base Cost 8.3 15.8 24.1 Physical Contingencies 0.8 1.5 2.3 Price Contingencies 2.8 4.2 7.0 Total Project Cost 11.9 21.5 33.4 Interest During Construction and Commitment Fees: - Bank Financed --- 6.1 6.1 - Other --- 2.7 2.7 Front-end Fee on Bank Loan --- 0.1 0.1 Total Financing Required 1/ 11.9 30.4 42.3 Financing Plan: Bank Loan --- 19.6 19.6 CDC Loan 1.0 10.0 11.0 Norwegian Grant --- 0.3 0.3 French Grant (DREE) --- 0.5 0.5 DIMA 10.8 --- 10.8 SANAA 0.1 --- 0.1 Total Financing 11.9 30.4 42.3 Disbursements: 2/ Bank Fiscal Year 1985 1986 1987 1988 1989 1990 1991 --------------------US$ Million