Jordan - Third Amman Water Supply and Sewerage Project

Document of The World Bank FOR 0MCIAL USE ONLY Repot No. 5582 HASHEMITE KINGDOM OF JORDAN Credit 780-JO AMMAN WATER SUPPLY AND SEWERAGE PROJECT III PROJECT CCOMPLETION REPORT April 3, 1985 Water Supply and Sewerage Division Europe, Middle East and North Africa Region i document bus a restrited distributon and may be used by recipients enly in the performauce of their official dite Its contents may nu otherwise be discosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = Jordan Dinar (JD) 1978 - JD 0.33 = US$1.00 1983 - JD 0.36 = US$1.00 GLOSSARY OF ACRONYMS AGTP - Ain Ghazal Treatment Plant AWSA - Amman Water and Sewerage Authority IDA - International Development Association JVA - Jordan Valley Authority NPC - National Planning Council USAID - United States Agency for International Development WAJ - Water AuthLority of Jordan WSC - Water Supply Corporation FISCAL YEAR January 1 - December 31  FOR OFFICIAL US ONLY RASHEKITE KINGDOM OF JORDAN CREDIT 780-JO ANMAN WATER SUPPLY AND SEWERAGE PROJECT III PROJECT COMPLETION REPORT TABLE OF CONTENTS Page No- PREFACE ........................... i BASIC DATA SHEET ............................ ii HIGHLIC-GTS ........... v I. INTRODUCTION ........................ I1 Background Data . 1 Bank Role in the Sector .I II. PROJECT PREPARATION AND APPRAISAL ......................... 2 Project Origin and Preparation. 2 Project Objectives .................................... 2 Project Description ...................... 2 Other Works .........3.,,,,. ............ 3 Loan Covenants and Conditions of Effectiveness ....... 3 III. PROJECT IMPLEMENTATION .................................... 5 Effectiveness and Start-up. 5 Revision of Scope of Work. 5 Project Implementation. 6 Reporting .. 7 Procurement. 7 Project Costs and Loan Disbursement .8 Disbursement. 8 Performance of Consultants, Contractors, Suppliers and AWSA. 9 IV. OPERATING PERFORMANCE ..................................... 10 Introduction .10 Water Sources Development. 10 Water Supply .10 Unaccounted-For Water.....,......,,,,,,, . 11 Sewerage Coverage .................2.,,,. ...... 12 Urban Poor .........1.2.......... 12 IThis 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.  Table of Contents (continued) Page No. V. FINANCIAL PERFORMANCE ...... ............................... . 14 Introduction ................................. . 14 Operating Results . . .................................. 14 Sources and Application of Funds ............. 14 Tariffs .................................. 16 Financial Covenants ................................... 16 VI. INSTITUTIONAL PERFORMANCE . . . 17 Organizational Development . . .......................... 17 Training ........................................ 17 VII. IDA PERFORMANCE ....................................... 18 VIII. PROJECT JUSTIFICATION ..................................... 19 Background ........................................ 19 Incremental Cost Analysis ......................... 19 Internal Rate of Return ............................... 19 IX. CONCLUSIONS AND FUTURE PLANS .............................. 20 ANNEXES I - Comparison of Appraisal and Actual Income Statements - Water Supply ......................................... 21 2 - Comparison of Appraisal and Actual Income Statements - Sewerage ............................................. 22 3 - Comparison of Appraisal and Actual Cash Flow Statements.. 23 4 - Comparison of Appraisal and Actual Balance Sheets ........ 24 5 - AWSA Staffing ............................................ 25 6 - Long-Term Incremental Cost of Water Supply ............... 26 7 - Internal Rate of Return .................................. 27 CHART 1 - Network Diagram of Project Activities ................... 28 APPENDIX A, B and C Comments from the Borrower and AWSA ..... ................ 29 aAP  - i - HASHEMITE KINGDOM OF JORDAN CREDIT 780-JO AMMA WATER SUPPLY AND SEWERAGE PROJECT III PROJECT COMPLETION REPORT PREFACE This report reviews the preparation, implementation and Pchievements of the Amman Water Supply and Sewerage Project III (Credit 780-JO), Jordan, for which a credit of US$14.0 million was made to the Hashemite Kingdom of Jordan. The credit was signed in May 1978. became effective in October 1978, and was closed in June 1983. The Amman Water and Sewerage Authority (AWSA) was the implementing agency for the project. The Project Completion Report was prepared by the Europe, Middle East and North Africa Regional Office on the basis of the findings of a project completion mission which visited Amman in November 1983 and of a review of the President's and Staff Appraisal Reports, the Development and Project Agreements, and other reports related to project implementation. In accordance with the revised procedures for project performance audit reporting, this Project Completion Report was read by the Operations Evaluation Department but the project was not audited by OED staff. Following standard procedures, OED sent copies of the draft report to the Government and AWSA for their comments. Comments received have been reproduced as Appendices A, B and C to the report.  - ii - HASHEMITE KINGDOM OF JORDAIN CREDIT 780-JO AMMHAN WATER SUPPLY AND SEWERAGE PROJECT III PROJECT COMPLETION REPORT BASIC DATA SHEET KEY PROJECT DATA Item Appraisal Actual Total Project Cost (US$ Million) 33.9 20.6 Underrun (Z) 39 Credit Amount (USt Million) 14.0 14.0 Disbursed 14.0 14.0 Repaid to 09/30/83 - - Outstanding to 09/30/83 - 14.0 Closing Date 12/81 06/83 Date of Physical Completion 12/80 06/83 Proportion Completed by Above Date (X) 60 100 Time Overrun (Z) 100 Economic Rate of Return - Water Supply Investments (x) 9.0 8.0 Financial Performance Less than Satisfactory Institutional Performance Good Cumulative Disbursements (US$ Million) FY 1978 2.14 FY 1979 12.61 3.76 FY 1980 14.00 3.33 FY 1981 - 9.85 FY 1982 11.04 FY 1983 14.00  - iii - BASIC DATA SHEET (cont'd.) OTHER PROJECT DATA Appraisal Item Estimate Revisions Actual First mention in timetable - - 05/20/76 Government Application - - 07/28/76 Negotiations - - 01/26/78 Board approval - - 03/03/78 Loan agreement date - - 05/19/78 Effective date 09/18/78 - 10/17/78 Closing date 12/31/81 - 06/30/83 Beneficiary Hashemite Kingdom of Jordan Execu-ing agency Amman Water and Sewerage Authority Follow-on Projects: Name Greater Amman Water Supply and Sewerage (Loan 2483-0-JO) MISSION DATA Month, No. of No. of Man Date of Purpose Year Days Persons Weeks Report Reconnaissance 05/76 7 1 1.4 06/24/76 Preparation 07/76 6 3 3.6 09/02/76 Appraisal 08/77 20 3 12.0 03/02/78  - iv - BASIC DATA SHEET (cont.) Month, No. of No. of man Date of Purpose Year Days Persons Weeks Report Supervision 08/78 11 1 2.2 02/05/75 Supervision 02/79 7 1 1.4 06/06/75 Supervision 07/79 6 1 1.2 10/13/75 Supervision 10/79 10 2 4.0 06/21/76 Supervision 12/79 13 2 5.2 09/27/76 Supervision 05/80 10 2 4.0 04/21/77 Supervision 12/80 10 2 4.0 10117/77 Supervision 04/81 7 3 4.2 07/14/78 Supervision 10/81 5 3 3.0 01/05/79 Supervision 01/82 7 2 2.8 10/02/79 Supervision 06/82 10 2 4.0 10/31/79 Supervision 10/82 9 2 3.6 07/25/80 Supervision 03/83 10 2 4.0 04/24/81 Supervision 06/83 4 2 1.6 02/26/82 Completion 11/83 10 2 4.0 Total 66.2 EXCHANGE RATES Currency unit Jordan Dinar (JD) Appraisal year average (1978) US$1.0 = JD 0.33 Average over project period US$1.0 = JD 0.35 Completion year average (1982-83) US$1.0 = JD 0.36 1978 1979 1980 1981 1982 1983 (as of 6/30/83) 0.33 0.33 0.33 0.34 0.35 0.36  HASHEMITE KINGDOM OF JORDAN CREDIT 780-JO AMMAN WATER SUPPLY AND SEWERAGE PROJECT III PROJECT COMPLETION REPORT Highlights Credit 780-JO, approved in March 1978 for an amount of US$14.0 million, was the Bank's fourth credit to Jordan in the water supply and sewerage sector. The Hashemite Kingdom of Jordan was the borrower and the Amman Water and Sewerage Authority (AWSA) was the project implementing and executing agency. Credit 780-JO was expected to finance about 75 percent of the estimated foreign exchange requirements and to cover about 41 percent of total project cost of US$33.9 million. The project aimed at continuing the development of AWSA's institutional and operational capabilities and improving the water supply and sewerage services. The credit became effective with a slight delay (para 3.01). Project start-up was delayed by about 5 months mainly because tender evaluation took longtr than expected (para 3.02). A change was made in a major element affecting but not included in the project, namely the development of the Azraq ground water source instead of the King Talal dam (para 3.06). The estimated project implementation schedule was relatively well maintained and contract execution well organised; the extension of the project completion period was due mainly to the inclusion of additional works (paras 3.08, 3.09). Credit disbursements were similarly affected. Total project costs as adjusted for revisions amounted to JD 7.10 million as compared with appraisal estimates of JD 11.19 million (para. 3.18). The reasons for overall savings appear to have been very favorable bids and to some extent overestimation of costs at appraisal.  - vi - Unaccounted-for water remains high due mainly to increased leakage caused by increased water pressure and continuous water supply (para 4.07). Remedial actions are being taken (para. 4.08) AWSA's overall financial performance was below appraisal expectations. Due to alterations in project scope and the consequent changes in sources of finance, the Government had to meet a large part of AWSA's debt service. Recent changes in Government policy combined with improved efforts in reducing unaccounted for water should improve AWSA's financial situation (paras. 4.06, 4.07 and 5.07). The recalculated rate of return (8X) is slightly lower than the appraised one (9%). This stems from lower revenues partly offset by lower than anticipated project costs (para. 8.03). The project was successful in all major aspects. An important lesson learned is the need for increased efforts in reducing unaccounted for water, both to postpone investments and tariff increases (para. 9.01).  HASHEMITE KINGDOM OF JORDAN CREDIT 780-JO AMMAN WATER SUPPLY AND SEWERAGE PROJECT III PROJECT COMPLETION REPORT I. INTRODUCTION Background Data 1.01 The project constituted an integral part of an ongoing development program for the extension of water supply, sewerage and sewage disposal facilities for the municipality of Amman, and was a continuation of previous IDA financial assistance in the water supply and sewerage sector. It's cost was estimated at US$33.9 million including a US$18.8 million (55X) foreign currency component. 1.02 The borrower was the Hashemite Kingdom of Jordan and the project implementing agency was the Amman Water and Sewerage Authority (AWSA), created in 1973 as a semi-autonomous entity with the responsibility for water supply, sewerage and storm water drainage in the Amman Municipality, except that its tariff's and budget were subject to the decision of the Council of Ministers. Bank Role in the Sector 1.03 The Bank group involvement in the water supply and sewerage sector began in 1961 with the financing of the foreign exchange component of a project to augment and improve the Amman water supply. This was followed in 1963 by the financing of water supply projects in Ramallah-El Bira, Azrate-Irbid and Zarqa. Then in 1973 the Bank group helped finance the extension of water supply and sewerage services for Amman and was instrumental at that time in the establishment of AWSA. This was followed in 1978 by the project under review and subsequently in 1982 by the Zarqa-Ruseifa project (Loan 2213-JO) which is still under implementation and aims at improving water supply and to establish a modern sewerage system in Zarqa and Ruseifa. In 1984 a loan was made for the Eight Cities Water Supply and Sewerage Project (Loan 2425-JO) for water supply and sewerage in eight medium size cities, six in the north and two in the south of Jordan.  - 2 - II. PROJECT PREPARATION AND APPRAISAL Pro lect Orisin and Preparation 2.01 Ammar- is the capital and the center of Jordan's commezcial activLty. During the two decades which preceded the appraisal its population had quadrupled and with the influx of refugees the need for adequate water supply and sewerage services had accelerated. 2.02 The King Talal impoundment had been selected for development as a new water source, and AWSA had employed consulting firms (foreign and local) to undertake feasibility studies and final engineering. With increased water supply, however, the waste water disposal problem would be aggravated with enhanced risk for ground water pollution. To increase the sewerage coverage, the same consulting firms as for water supply were appointed to carry out related feasibility study and engineering works. 2.03 IDA financial assistance was requested by tne Government for the works related to water distribution and sewage collection while other financing was being secured for water source development. The project was appraised on the basis of the feasibility study, in August 1977, after about six months of project preparation. 2.04 IDA's contribution to project preparation consisted mainly in providing assistance in the appointment of consulting firms and in the identification of a project package. AWSA and the consulting firms performed well in their respective functions. Project Objectives 2.05 The project objectives were to ti) continue the development of AWSA's institutional and operational capabilities; and (ii) provide effective water supply and sewerage services in Jordan's major urban area. Project Description 2.06 The project originally consisted of: (i) Water Supply: - approximately 207 kmal' of mains and house connections, a 4000 m3 capacity reservoir and a booster station; - supply of electrical and mechanical equipment for the pumping plant; " Out of 207 km about 116 km were for mains and 91 km for connections.  - 3 - supply of pipes, valves and fittings; supply of 15,000 water meters; and consultant services for construction supervision. (ii) Sewerage: - approximately 225 kmt' of mains, laterals, and service connections and two lift stations; - supply of electrical and mechanical equipment for pumping plants; and - consultant services for construction supervision. (iii) Miscellaneous: - operational and maintenance equipment; and - provision of training. 2.07 The project was scheduled to be completed in about 30 months by December 31, 1980. Other Works 2.08 Other major works to be executed concurrently with the project were: (i) development of the King Talal water source including works for intake, water treatment, transmission main and pumping station; (ii) extension of the sludge handling facilities at the Ain Ghazal Treatment Works (ACTP); and (iii) extension of water distribution and sewage networks as needed and to the extent not being covered under the project. Financial assistance was to be received for works under 2.08 (i), (ii), and (iii) from USAID and for works under 2.08 (i) also from the Saudi Fund. Loan Covenants and Conditions of Effectiveness 2.09 A Development Credit Agreement (Credit 780-JO) was entered into between IDA and the Hashemite Kingdom of Jordan (the Borrower) and a Project Agreement between IDA and the Amman Water and Sewerage Authority (AWSA). The Borrower further entered into Loan Agreements with USAID and the Saudi Fund and a Subsidiary Loan Agreement with AWSA. 2.10 According to the Development Credit Agreement the Borrower was to ensure (i) the allocation of local funds to AWSA; and (ii) the 2' Out of 225 km about 127 km were for mains and laterals and 98 km for connections.  - 4 - execution of the King Talal water source development with a secured annual allocation of L7 mi'lion cubic meters (HCM) to AWSA. 2.11 According to the Project Agreement AWSA was to: {i) appoint 3n experienced senior engineer to be responsible for r-.quired steps to be taken for reducing lnaccounted-for wat-.er (Section 3.01[b][il); this is discussed in paras. 4.J5 through 4.07; (ii) undertake a review of its staffing requirements and maintain its salary structure (Section 3.0l[b][ii); (iii) enforce the legal requirements for connecting to the sewage system and levying a sewerage surcharge in case of no-connection (Section 3.06 [a] and [bl); (iv) establish and maintain a- meter replacement program with at least 750 meters to be replaced per month (Section 3.07); {v) carry out a staff training program (Section 3.08); (vi) have its accounts audited and submit relevant reports to IDA by no later than 4 months after the end of each fiscal year (Section 4.02); (vii) establish and maintain water charges sufficient to cover all operational expenses, debt service, working capital needs and 10% of capital investments for the fiscal years 1978 through 1981 and 20% thereafter (Section 4.03ta][iJ to [ivl); this is discussed in para. 5.07; (viii) establish and maintain sewerage charges sufficient to cover all operational costs and debt service to the extent not covered by depreciation (Section 4.03[b]); and (ix) incur no debt without prior IDA approval and maintain net revenues covering not less than 1.5 times debt service requirement (Section 4.04). All covenants except the one described in para. 2.11 'vii) above were basically complied with.  - 5 - III. PROJECT IMPLEMENTATION Effectiveness and Start-Up 3.01 The execution of the Loan Agreements between the Government and the USAID and the Saudi Fund, which was a special condition of effectiveness was carried out promptly and the credit was declared effective on October 17, 1978 or about 5 months after signature. 3.02 The final engineering progressed roughly as originally envisaged but the first construction works commenced some five months behind estimated schedule mainly because tender evaluation took longer than expected. Revision of Scope of Work 3.03 Following a review of the King Talal Reservoir it was concluded that the water quality was not satisfactory for use as a source for domestic water supply. Neither was the projected water availability considered to be sufficiently reliable. Consequently the Government decided (July 14, 1979) to use the King Talal Reservoir exclusively for irrigation water supply and to develop the Azraq ground water source for domestic water supply. The yield of the Azraq ground water source would be about 15 HCM or slightly below the 17 MCM originally expected of the King Talal water source. The Bank Loan documents were amended accordingly in October 1979, while the loans from USAID and Saudi Fund were cancelled and local financing was made available for the Azraq ground water source development. 3.04 Within the description of the project and in line with its objectives, the Bank agreed in 1981 to finance the laying of a 4 km transmission main between the Ain Ghazal and Taj pumping stations and of 24 km of trunk and sewage network; and the purchase of 15 water tankers to serve areas not covered by the distribution system. 3.05 Because of the change in water source (para. 3.03), the water eventually entered the distribution system at a lower elevation than originally planned which necessitated additional pumping capacity. During final engineering it was also found that the booster station could be omitted and related funds were instead used for the extension of existing pumping plants. It was also found feasible to omit the two proposed sewage lift stations, by realigning pertinent trunk mains. 3.06 A comparison between appraisal and actual lengths of pipes and number of connections is shown below;  - 6 - Length of pipes (kn) Connections (Nos.) (excluding connections) Projected Actual Projected ActualLY Water 116 129 6,700 7,415 Sewerage 127 109 8,630 11,400 / This shows the situation in December 1983 or six months after project completion. Project Implementation 3.07 The major contracts entered into under the project as appraised are summarized as follows: Contract No. Item 2s Sewers in Shimesani and Nushz Areas. 3WS Water mainS and sewers in J. Hussein, J. Amman and Sports City. 4WS Water mains and sewers in Hashemi, Qusour and Nazzal; and reservoir at Rashemi. 6WS Water mains and sewers in Martea. 7MW Pipe supply for 3WS, 4WS and 6WS. 8MW Equipment for pumping plants. 9mW Supply of water meters. Various Additional works (para. 3.04) 3.08 A comparison between appraisal estimates and the actual implementation of the major contracts is shown on Chart 1. Contract 3WS was  - 7 - completed with about 12 months delay mainly because of the contractor's financial problems. The completion of contract 4WS was delayed because of the commissioning of the storage tank which took 2 years longer than anticipated as a result of a leakage problem, which was, however, satisfactorily corrected. Contract 8MW was revised because of changes in water source development (para. 3.03) and the timing for its execution was adjusted accordingly (3.09). Finally the additional contracts, which were agreed upon in 1981, were executed on schedule. The estimated project implementation schedilde was relatively well maintained and contract execution was well organized and the extension of the project completion period was mainly due to the inclusion of additional works (para. 3.04). AWSA's project management and construction supervision unit supervised the execution of contracts 2S and 3WS (para. 3.07), while other contracts were supervised by consultants. 3.09 The Azraq ground water source development with transmission main -as completed in September 1980 after a comparatively brief construction period and the change of water source did not delay the provision of additional water supply to the Amman area. Reporting 3.10 The reporting system consisted of quarterly and annual reports utilizing key indicators as agreed upon. Both reports were submitted on a fairly regular basis. Procurement 3.11 AWSA's consultants prepared the tender and contract documents and carried out tender evaluation. Preparation was timely as was rDA's review and response. AWSA entered into 13 contracts of which 7 were under ICB and 6 under LCB. No contract was awarded to a foreign bidder. 3.12 According to the Project Agreement contracts for civiL works and equipment of less than US$200,000 aggregating to no more than US$1,000,000 could be awarded on the basis of competitive bidding advertised locally (LCB). As a result of IDA's agreement to finance additional works (para. 3.04) contracts totalling about US$4.3 million equivalent and amounting to about 20% of total project costs were awarded on the basis of LCB. 3.13 The provision for retroactive financing up to US$1.5 million was not used. 3.14 The comparatively high cost of construction supervision which amounted to US$1.3 million or about 6% of total construction costs, was mainly due to the rather significant use of foreign consultants. 3.15 Contracts for the water distribution system contracts were initially awarded separately for civil works and equipment supply. This created certain coordination difficulties and experience indicates that combined contracts would have been preferable.  - 8- Project Costs and Loan Disbursement 3.18 The following table compares estimated and actual costs in JD and US$ equivalent, the latter at annual average conversion rates: Item Estimated Actual Estimated1' ActualL' Increase ----JD Million--- ---US$ Million - (Decrease) A. Water Supply - Civil Works 2.23 2.917' 6.76 8.432# 63 - Materials & Equipment 2.85 1.86 8.63 5.39 (38) B. Sewerage - Civil Works 5.26 3/ 15.94 _A - Materials 0.11 -_' 0.32 -3/ C. Maintenance Equipment & Vehicles 0.20 0.32 0.62 0.93 50 D. Consulting Services 0.47 0.47 1.43 1.36 (5) E. Training 0.07 0.04 0.22 0.12 (45) Sub-Total 11.19 5.60 33.92 16.23 (52) F. Additional Works - 150 _ Total 11.19 7.10 33.92 20.58 (39) T7- Estimated and actual costs assume a conversion rate of US$1:JD 0.330 and US$1:JD 0.345 respectively. Z/ This amount includes civiL works for water and sewerage and material for sewerage. 3/ Included with water supply. 3.19 Final project costs including additional works (para. 3.04) were 63% and 61% in JD and US$ respectively of appraisal estimates. In the project execution period actual and forecast inflation were relatively close. The reasons for overall savings appear to have been very favorable bids and to some extent overestimation of costs at appraisal. Disbursement 3.20 Disbursements started some 12 months later than appraisal and were  - 9 - completed about 36-months later than originally forecast. This reflects {i) the delay incurred in getting work underway (para. 3.02); (ii) the lower than estimated costs; and the decision to finance addtional works (para. 3.04). Performance of Consultants. Contractors, Suppliers and AWSA 3.21 In general the consulting firms performed well. The civil works ar.d equipment supply contracts were basically completed on schedule and the quality of most of the work was satisfactory. The initial testing results were approved except for the storage tank where rather significant remedial works had to be undertaken to achieve water tightness. AWSA performed very well and developed its capability in project management and construction supervision significantly.  - 10 - IV. OPERATING PERFORMANCE Introduction 4.01 The subject areas addressed in the evaluation of the operating performance are the following: (i) water sources development; (ii) increase in population coverage by public water supply; (iii) control of unaccounted- for water; (iv) increase in population coverage by sewerage system; and (v) coverage of urban poverty popuiation groups. Water Sources Development 4.02 The water production capacity has increased slightly less than projected from 17 MCM to 32 MCM through the addition of 15 MCM from the Azraq groundwater source. The daily per capita water production has increased from 72 liters (1978) to 118 liters (1983) and the water distribution has changed from partly intermittent to continuous supply. Water Supply 4.03 According to a population census undertaken in 1979 the population figures used at the time for appraisal were on average overestimated by about 20%. A comparison between appraisal and revised projections for the municipality of Amman is shown below. 1977 1978 1979 1980 1981 1982 1983 Appraisal ('000) 685 716 748 780 813 847 881 Revised ('000) 573 598 624 652 681 712 785 The population coverage by a piped water supply system has increased from about 80% at the time of appraisal to about 98% in 1982 which is broadly in line with the appraisal estimates. Remaining population is served by water tankers. 4.04 Estimated and actual data on water production, water sold, unaccounted-for water and number of water connections are summarized as follows:  - 11 - 1977 1978 1979 1980 1981 1982 1983 Water Production (MCM) - estimated 17.5 18.0 19.0 20.0 21.0 23.5 25.2 - actual 16.2 15.8 15.3 20.4 22.3 25.3 29.1 Water Sold (MCM) - estimated 10.9 11.7 12.7 13.8 14.7 16.7 18.0 - actual 9.6 7.2 8.4 12.9 12.4 14.2 16.32 Unaccounted for (X) - estimated 38.0 35.0 33.0 31.0 30.0 29.0 28.5 - actual 41.0 54.0 45.0 37.0 45.0 44.0 44.0 Water Connections (Nos.) - estimated 45,600 47,800 50,000 52,200 54,000 56,000 58,000 - actual 45,650 49,831 54,323 57,793 63,348 67,048 71,700 In the period 1977 to 1983 an additional 160,000 people were served by water connections while many more received improved service. Analyses also show that water quality has improved. The number of water connections exceeded estimates by a wide margin due no doubt to the new practice of installing water meters for individual apartments. However, the total quantity of water sold was below estimates due mainly to an overestimation of the population. The forecast reduction of unaccounted-for water was not realized (para. 4.06-4.07); as a result more water had to be produced than had been originally foreseen. Unaccounted-for Water 4.05 In 1975, unaccounted-for water amounted to 47% of water produced. It was then estimated that 10% was due to leakage, 10% to inaccurate production metering and 27% to underregistration of users' meters. AWSA has now appointed a senior engineer to coordinate its program for reducing unaccounted-for water which includes (i) leak detection; (ii) calibrating and testing production meters; and (iii) a meter replacement program with no less than 750 meters to be replaced per month. 4.06 Actions taken or being taken include: (i) a monitoring system established for each distribution zone with appropriate data being recorded; (ii) production meters being installed where needed and properly calibrated; (iii) velocity meters, which were the only ones existing by 1978, are comparatively inaccurate at low flows, are being replaced by volumetric  - 12 - meters; 70% of all meters are at present volumetric and it is planned to increase the coverage to 100% by the end of 1984; (iv) it is currently estimated that out of the present unaccounted-for water of about 44%, between 25% and 30% (as compared to 10% estimated in 1975 [para.4.061) is due to leakage which has increased because of higher and continuous distribution system pressure, while the unaccounted-for water related to metering inaccuracies has decreased; and (v) leak detection is being undertaken on a continuous basis with about 70 repairs being done per day; the leakage mainly occurs at small diameter pipes and at connections points. 4.07 Additional steps contemplated for further reduction of unaccounted-for water consist of: (i) the total renewal of the metering system, which however, is expected to have only a limited effect; (ii) the strengthening of the leak detection teams and (iii) water distribution system rehabilitation. Sewerage Coverage 4.08 Estimated and actual data on population served and number of sewer connections are summarized below: 1977 1978 1979 1980 1981 1982 1983 Population Coverage (Z)' - estimated 34 42 48 58 61 63 N/A - actual 30 39 48 47 47 55 75 Sewer Connections (Nos.) - estimated 11,000 18,000 24,000 28,000 31,000 34,000 N/A - actual 10,865 11,788 13,068 14,650 20,069 24,654 38,054 -' The data are based on the same proportion as apply for water sold and water surcharged for sewerage. From 1977 through 1983 some 360,000 additional people have been served by sewer connections. The increased coverage was less than forecast at the beginning of the implementation period but accelerated after 1979. Urban Poor 4.09 The provision of adequate water supply and sewerage services for urban poverty groups was a major project objective which has been achieved  - 13 - since (i) almost the total population has been provided with satisfactory water supply; and (ii) the bulk of the densely populated areas (including refugee camps), where most of the urban poor resides, has been covered by a sewerage network.  - 14 - V. FINANCIAL PERFORMANCE Introduction 5.01 The appraisal forecast and actual Income Statements, Cash Flow Statements and Balance Sheet for AWSA from 1978 - 1983 are in Annexes 1 - 4. A summary analysis of AWSA's financial performance follows. Opera:ting Results 5.02 AWSA's operating results were less favorable than foreseen at appraisal. This was mainly due to its water supply operation where revenues were lower and operating costs higher than forecast. The revenue shortfall was due to excessive unaccounted-for water in a period of unsatisfied total demand and higher than originally forecast production. Appropriate action has been initiated by the Water Authority, AWSA's successor (paras. 4.06 and 4.07). Increased operating costs have been affected mainly by rising personnel costs. Sources and Application of Funds 5.03 The appraisal forecast (1978 - 1981) and the actual (1978 - 1983) sources and applications of funds may be summed up as follows:  - 15 - AWSA's Projected and Actual Financing Plan (JD Thousands) Projected Actual (1978-81) 2) (1978-83) (2) Sources of Funds Internal Cash Generation 6,849 18 2,859 8 Less: Debt Service 2,995 8 10,483 (28) Available from operations 3,854 10 (7,624) (20) IDA Credit 4,620 13 4,721 13 Government and Other Loans 22,008 59 28,443 77 Government and Other Contributions 6,600 18 11,171 30 Total , 1QQ ___ Application of Funds Increase (Decrease) in Working Capital 248 1 (921) (2) Proposed Project - Water 4,990 13 4,276 12 - Sewerage 6,202 17 2,824 8 other Investments - Water 1,237 3 19,273 52 - Sewerage 3,587 10 11,217 30 King Talal Water Source Development 18,440 50 42 - Capitalized Interests 2,378 6 - _ Total 37,082 1QQ 36.71 1Q 5.04 Overall funds requirements were remarkably close to appraisal forecast, although substantial changes occurred in planned expenditures (paras. 3.03 to 3.06). Sources were affected mainly by lower cash generation and higher debt service than foreseen at appraisal. This shortfall was compensated by Government and other contributions and higher borrowings. The lower cash generation stenmed from overall lower revenues due to lower volume and average revenues per cubic meter of water and higher operating expenses than originally foreseen. The higher debt service resulted mainly from the replacement of concessionary borrowings from USAID and the Saudi Fund (para. 3.03) by much more costly and shorter financing in the local bond market.  - 16 - Tarif fs 5.05 The following table sets out the projected and actual average water supply and sewerage charges over the period of project implementation. Year 1978 1979 1980 1981 1982 1983 ---- tfils/m')