Jordan - Amman Water Supply Project

RETURN TO RESTRICTED REPORTS DE!K EN WITHIN LI ReportN0. TO(IDA) 19a ONE WEEK This report was prepared for use within the Association. It may not be pub- lished nor may it be quoted as representing the Association's views. The Association accepts no responsibility for-the accuracy or completeness of the contents of the report. INTERNATIONAL DEVELOPMENT ASSOCIATION APPRAISAL OF THE AMMAN WATER SUPPLY PROJECT HASHEMITE KINGDOM OF JORDAN December 7, 1961 Department of Technical Operations EFFECTIVE CURRENCY EQUIVALENTS 1 Jordan Dinar = 1 Pound Sterling = US$2. 80 1 U. S. Dollar = 0. 357 Jordan Dinars ABBREVIATIONS 1 pcd = liters per capita per day M3 = cubic meters km = kilometers 1 cubic meter = 264 U. S. Gallons APPRAISAL OF THE AI-MAN WATER SUPPLY PROJECT HASHEMITE KINGDON OF JORDAN Table of Contents Paragraphs SUMMARY AND CONCLUSIONS . . . . . . . . . . .. i - viii I. INTRODUCTION . . . . . . . . . . . . . . . . . 1 - 2 II. THE BORROWJER . . . . . . . . . . . . . . . . . 3 III. THE PRESENT WATER SYSTEM .. . . . ..... . 4 - 19 Present Facilities . . . . . . . . . . . . . . 4 - 13a Management and Administration . . . . . . . . 14 Finance . . . . . . . . . . . . . . . . . . . 15 Water Rates . . . . . . . . . . . . . . * . . 16 Present Demand . . . . . . . . . . . .. 17 - 19 IV. FUTURE DEMAND . . . . . . . . . . . . . . . . 20 - 24 V. THE PROJECT . . . . . . . . . . . . . . . . . 25 - 38 General . . . . . . . . . . . . . . . . : . .25 - 32 Management and Organization . . . . . . . . 33 34 Cost Estimates . . . . . . . . . . . . .a 35 38 VI, FINANCING PLANS AND PROJECTIONS . . . . . . . 39 L5 General . . . . . . . . . . . . . . . . . 39 -43 Water Rates Proposed . . . . . . . . . . . . 44 - 45 VII. JUSTIFICATION OF THE PROJECT . . . . . . . 46 - 49 VIII. CONCLUSIONS AND RECOMIENDATIONS ..... . . . . 50 - 54 ANNEXES 1. Organization Chart - City of Amman 2. Amman Water Department - Pro Forma Revenues and Expenditures 3. Municipality of Amman - Receipts and Expenditures 4. Estimated Water Use by Different Economic Groups 5. Population Trends 6. Investment Schedule 7. Pro Forma Profit and Loss Statements - Basic Project only 8. Pro Forma Profit and Loss Statements - Including Additional Treatment 9. Sources ad Applications of Funds - Basic Project only 10. Sources and Applications of Funds - including Additional Treatment MAP APPR',IS.L OF THE APMYK UiTER SUPPLY PROJECT H 1SHEiTE KINGDOM OF JORD-N SU11PRY 2ND CONCLUSIONS i. The Hashemite Kingdom of Jordan has requested a development credit from the International Development Association to help finance a substantial expansion and improvement of the water supply system in the capital city of fimman. ii. The proposed credit of $2.0 million would include $1.5 million for the basic project and "O.5 million for additional water treatment facilities if needed. The proceeds of the credit would be relent to the hunicipality of Amman. iii. The present water supply system in amman is inadequate and unsafe due in lar-e part to the rapid growth of the city from a population of around 100,000 in 1952 to over 200,000 in 1961. iv. Only about two-thirds of the population are served by the municipal water system. The rest depend upon private charity for water. 1ater use by the population served (other than residents of refugee camps, who receive water in bulk shipment) averageponly 60-65 lpcd. v. The proposed project has been designed to provide a safe and depend- able water system at reasonable cost to meet expected denand for the next ten years within the framework of a 25-year master plan. vi. The proposed project includes the development of new wells to increase the water supply from 620 to approximately 1,500 cubic meters per hour, major improvements and reinforcements to the existing transmission and distribution systems, superchiorination plants at two strategic locations, water testing fEcilities and certain management services. Provision is also included for additional treatment facilities if and as the need is demonstrated. vii. The proposed Borrower and Amman have agreed that all additional funds would be made available as needed for the carrying out of the project;that Amman would employ an experienced management team during an initial period; that the water department would be reorganized with independent administration and separate accounts; and that water rates would be maintained adequate to cover operating and maintenance costs, debt service, and the costs of a program of extensions and improvements to the secondary distribution system as well as a reasonable part of the cost of future major expansion. - ii - viii. The project provides a suitable basis for an IL& development credit of $2.0 million to the Hashemite Kingdom of Jordan to be relent to the Municipality of Amman for a period of 23 years, including a three-year period of grace. Interest would be Et the rate of W, per annum. Of the $2.0 million credit, an amount of $0.5 million would not be drawn upon unless additional water treatment facilities should be found necessary. I. INTRODUCTION 1. The Hashemite Kingdom of Jordan has requested,a development creeit from the International Development Association to help finance a substantial expansion and improvement of the water supply, distribution and water treatment systems in the capital city of Amman. The proposed credit would cover about two-thirds of the total costs of the project, including interest during con- struction. A contribution to the costs of the project would be made out of water revenues collected during the period of project construction, and a portion of project costs would be covered by loans from the Municipal Loan Fund, a Government Agency which has been set up as a revolving fund with initial grants from ICA. 2. Project appraisal is based on information submitted by the borrower and on a field investigation by the Association's staff accompanied by an independent consultant in November, 1960. II. THE PRCPOSED BRROWER 3. The proposed Borrower would be the Hashemite Kingdom of Jordan. The proceeds of the credit would be relent to the Municipality of Amman. An organization chart of the municipality is shown in Annex 1. III. THE PRESENT WATER SYSTEM Present Facilities h. A layout of existing supply and distribution facilities is shown in the map attached. The present system extends through most of the devel- oped area of the city but serves only about two-thirds of the total popula- tion. The inhabitants who are not served by the water system depend for their water in large measure upon the private charity of those who are served. The total area of the city is approximately 36 square kilometers (14 sq. miles). 5. The entire municipal water supply was obtained until ten years ago from an old Roman collection gallery, Ras al Ain, located within the built-up area of the city. Ras al Ain receives the flow of several nearby springs. This source has been supplemented by a spring seven kilometers west of Amman and by a series of wells, of which three were in use in 1960. Others now coming into use will be discussed as part of the project. All sources are treated by simple chlorination. Capacities are given below: Source Number of Estimated Designation Type Chlorinators Capacity Cubic meters hour Ras al Ain Spring 2 (1 out of 180 order) Wadi Sir " 1 150 W-7 (Ain Ghazal No. 1) Well 2 170 W-5 (Station) " 1 80 V.-1 (Palace) " None 40 Total 620 - 2 - 6. There are about 30 producing private wells in the city that are not pumped into the public system. The capacity of these wells is said to be substantial but it is reported that those which are in active use are drawn primarily by small commercial and industrial establishments for only brief periods each day and that the actual pumpage of these wells is only a small fraction of their capacity. The drilling of new private wells is at present prohibited. 7. The distribution system of Amman has been constructed on a piece by piece emergency basis as the city has grown, without major rehabilitation or rearrangement. The water mains extending approximately 107 km. are pre- dominantly three to four inches in diameter and are laid for the most part above ground. Additional local extension lines exist, which are not recorded. Much of the existing system is in poor operating condition. 8. Local topography is characterized by steepsided hills and deep valleys varying from 699 to 927 meters above sea level within the municipal boundaries, and, although the distribution system is divided into high and low altitude zones, the zones are inadequately isolated. The combination of small distribution pipes, inadequate zoning and scarce water supply makes it impossible to maintain pressures, and interruptions of service lasting several days are not unusual in some areas of the city. Current operating practice is to admit water only intermittently to the various sections of the system in an effort to distribute supplies as equitably as possible. These conditions, in addition to restricting water use, tend to permit pollu- tion to be drawn back into the distribution system. 9. Each of the distribution zones is served by a series of reservoirs adequate for present levels of consumption. 10. Because of the frequent interruptions of service, most of the buildings in the higher altitude areas of the city have large roof-tanks, which are filled automatically by the use of float control valves. Some of these tanks are reported to have a storage capacity in excess of three dayst supply. The existence of these tanks may increase the problem of low and intermittent pressures even at times of relatively ample supply and provides additional points of possible water contamination. 11. Leakage and unaccounted for losses amount to about 39% of water pumped, which is not surprising in view of the condition of the distribution system. Water meters are imported from Europe and are checked regularly. The municipality does not believe that defective meters are an important factor in accounting for lost revenues. 12. Test samples from the wells and springs show varying but frequently moderate to high degrees of contamination, and samples from the springs show occasional but infrequent turbidity. The water is characteristically hard. Water testing facilities and techniques are very limited in Jordan at present, so that a rather considerable period of time will be required to conduct a thorough sanitary survey and a program of continuous water sampling before the quality of the water can be fully determined. It is possible that pollution enters the aquifer from which the wells draw water almost directly from domestic wastes discharged into the fractured and channeled limestone strat underlying the city. There is as yet no public sewerage system in Amman. - 3 - 13. The best available statistical data on incidence rates of typical water-borne or partially water-borne diseases are shown for "mman in the following tabulation: Cases per 1,000 Year Typhoid Paratyphoid Dysentery Total Population Population 1953 215 52 333 600 190,499 3.15 1954 187 40 626 853 202,313 4.23 1955 287 15 487 789 211,029 3.75 1956 301 22 300 623 220,032 2.83 1957 309 54 222 585 231,033 2.53 1958 76 19 320 bl$ 245,406 1.69 1959 179 8 104 291 291,971 1.00 Source: Statistical Yearbook, Jordan Government Department of Statistics, 1959. 13a. Although the incidence of these diseases has decreased over the past several years, the rates are still hih when compared with other parts of the world. The data shown below are not strictly comparable, but give an indication of this relationship. Disease Rate - Cases per 1000/Persons Typhoid and Dysentery Area Year Parathphoid Alone Both Puerto Rico 1958 0.009 0.005 (b) 0.014 Taipei, Taiwan 1960 o.c68 0.012 (c) 0.08 Northern .America 1958 0.041 0.094 (a) 0.135 i-liddle America 1958 0.232 0.540 (a) 0.77 ½i-N, JORDAN 1959 0.623 0.377 (c) 1.00 South America 1958 0.90 3.09 (a) 3.58 Source: Reported cases of Notifiable Diseases in the Anericas 1949-1958, PAH0, 'W,H0 August 1960. (a) amoebiasis plus bacillary dysentery plus unspecified (b) emoebiasis plus bacillary dysentery only (c) all types )Janagement and Administration 14. The present water department has a complement of 100 employees and laborers. The Director of the water department has also many other duties as Deputy Mayor of Amman. A young mechanical engineer was added to the staff of the water department in 1961; previous to that time all engineering vork has been done by the engineering staff of the municipality, which is headed by a capable, Sheffield-educated engineer of Jordanian nationality. The accounts of the water department are not separated from other municipal accounts in present practice, although some separation is possible on a pro forma basis as discussed below. Finance 15. Pro forma financial statements for the water department (Annex 2) constructed from receipts and expenditures schedules for the municipality as a whole (Annex 3) show that during the past three fiscal years the municipality has been financing substantial capital investments in water works in addition to covering operating expenditures out of water revenues. Judging from the valuation of existing fixed assets estimated at JD 500,000 by Brown Engineers International, consultants to the municipali.y, nearly half of the present value of the water works has been added dui.ng the past three years. Other municipal expendit,xres have also been incr7easing rapidly as the City has been seeking to modernize its administration and to keep up with population increases. Total budgeted expenditures for fiscal 1962 of JD 1.1 million are 60fo higher than actual expenditures in the prior fiscal year, but would require borrowings from the Government of only JD 40,000 in addition to the loans for the water supply project. Hunicipal revenues include payments from the Government of a share of import duties and certain other taxes collected by the Central Government. No clear break- down between capital and operating expenditures is available, but it appears that well over half of total expenditures are needed for capital improvements, which does not appear extraordinary for such a fast-growing city. Total outstanding long-term borrowings at September 30, 1961 amounted to JD 360,000, of which JD 160,000 consisted of loans from the Municipal Loan Fund for the water supply project to be serviced by water revenues. Water Rates 16. Present water rates start with a minimum charge of 5hO fils ($1.51) every three months for up to 12 cubic meters, or 45 fils per cubic meter (equivalent to 0.48 per thousand U.S. gallons). All water consumed in excess of 12 cubic meters is charged at the rate of 65 fils per cubic meters ('0.69 per thousand gallons). Public and charitable institutions are charged half the regular rate. The average overall rate in each of the past three years was 55 fils. Present Demand 17. The population of Amman has grown from 20,000 in the nineteen thirties to 108,000 at the time of the latest census in 1952 and to an estimated 203,000 in 1961. Immigration of refugees from Palestine and of Transjordanians moving into the capital has been joined during the past three or four years by a flow of refugees from desert and other drought- stricken areas. Combined immigration and natural increase have averaged 8.2% per year since 1952. No accurate year by year statistics are available. 18. Water use also appears to have increased during the past four years on a per capita basis, as indicated in the table below. The average annual increase during this period was about 4c. Estimated Mid- Total Metered Total Metered Calendar year Total Water Consumption Water Use Year Population in cubic meters lped 1957 162,000 1,831,000 31.0 1958 174,000 2,140,000 33.8 1959 186,000 2,330,000 34.4 1960 198,000 2,518,000 34.9 19. These average water consumption data may be misleading, however, since there are great variations in use among different sectors of the population as illustrated in Annex 4. It is estimated that the water use by the 50-60,000 inhabitants who do not have direct access to the water system (there are no public fountains in Amman) and who must depend for their water upon the charity of those who have water service connections, does not exceed 4-5 lpcd, and that the 30,000 residents of refugee camps consume on the average no more than 12-13 lpcd. This would indicate that the remaining population purchase 60-65 lpcd, which is still very low by world standards. Institutional consumers such as hospitals, refugee camps, schools, mosques and Government agencies and commercial establishments together account for about 20% of water sold. IV. FUTURE DEMAIND 20. The projection of future demand for water in Amman is quite speculative. The high rate of recent population growth is due to combined immigration and natural increase, which for lack of statistics cannot be analyzed separately, and it is difficult to say to what extent immigration will continue or in what degree it is related to drought conditions in outlying areas. Pent-up demand is also difficult to estimate and will be related in degree to future water rates as well as water availability. 21. The project has been designed for a population of about 360,000 in 1972, with pipe sizes and overall layout related to a master plan extending to 1987. On the basis of a wide range of possible upper and lower limits of population growth, shown graphically in Annex 5, the design population for 1972 appears reasonable. In the unlikely event that popula- tion growth should proceed at the highest rate, the elements of the system included in the project would provide for demand through at least 1967; if on the other hand, population should grow at the lowest rate, the project would suffice until 1984. 22. The project design assumes that average water use will increase from about 35 lpcd in 1960 to about 50 lpcd by 1972 and 83 lpcd by 1987. This does not appear unreasonable. Since project design is based upon a decrease in the percentage of water lost and unaccounted for from 39% at present to 20% in 1972 and 151 in 1987, increased water use is only partly reflected in the design of system capacity. Institutional demand is expected to increase proportionately with domestic demand. - 6 - 23. As noted in paragraph 19 and illustrated in Annex 4,domestic water use varies radically among different economic groups. The distribution system has been designed giving regard to such variations and expected changes. 24. Industrial users, in general, have their ow,n private wells, and there appears little likelihood of inducing present users to use the municipal supply, because the cost of pumping the wells in use is lower than municipal water rates. New industrial users will depend, however, upon the municipal supply, since drilling of new wells is prohibited. Total industrial water use is believed to be small at present. W. THE PROJECT 25. The basic project includes the development of several new wells to increase the water supply from a capacity of 620 cubic meters per hour to approximately 1,500 cubic meters per hour; pumping stations at the new wells; major improvements and reinforcements to the existing transmission and distribution mains; additional distribution reservoir storage capacity of approximately 3,000 cubic meters; superchlorination, dechlorination, retention and high-lift pumping facilities at Ain Ghazal and 1Jadi Sir; necessary water testing laboratory facilities; and management services during the period of construction and an initial period of operations. The project also includes provision for additional water treatment facilities as the need is demonstrated at Ain Ghazal and 11"adi Sir. Construction of the basic facilities could be completed by the end of 1963, and construction of additional water treatment facilities would require about 18 months. The layout of the project as proposed is sho.,n in the map attached. 26. The present water supply would initially be supplemented by water from five additional wells, located in the wadi bed between Ain Ghazal and the settled part of the City. All five wells have been successfully drilled and flow-tested as itemized in the table below. Wells W-2 and W-8 are believed to be capable of even higher yields. Amman Supply Sources Source Estimated Designation Depth Capacity Meters Cubic Meters/Hour W-2 70 202 W-3 69 150 w-4 60 92 w-6 Not reported 155 W-8 94 275 Total New Wells 874 Total Existing Sources 620 Total Supply Sources 1,494 27. The total available sources would be adequate to supply maximum daily requirements for the project as designed. The Central Water Authority, an autonomous agency of the Government with country-wide authority over water resources and administration, believes that additional wells could be drilled further down wadi from Amman without excessive cost if needed. 28. Water from the Ras al Ain spring near the center of the city and from all of the wells would be collected at a point near Ain Ghazal for treatment and pumped from there into the distribution system. Water from the Wadi Sir spring would be treated separately at the site, since this spring is on the opposite side of the city from Ain Ghazal. 29. The proposed distribution system would be built in two stages, of which the first stage would be included in the project. This stage which was begun on an emergency basis in 1961, would rationalize the existing system into high-pressure service and intermediate-pressure service districtc clearly separated at about the 840 meter level, and would serve low-pressure districts by pressure-reducing valves. The project would add about 40 kns. of relatively large diameter mains to the distribution system and would insure adequate delivery to all areas of sufficient population density to warrant service extension at this time. A major program of local extensions and improvements to the secondary distribution network would be undertaken by the water department outside the scope of the project. 30. The superchlorination (massive chlorine dosage) followed by de- chlorination method of water treatment would be used at both treatment sites. It is believed by IDA staff and consultants and by technical advisers to the Government that proper use of this method, incorporating an adequate period of retention at the site for disinfection, would provide a safe water supply. However, as mentioned in paragraph 12 above, complete analyses of the water sources and of the water supplied to consumers are not available and cannot be satisfactorily made available until the expanded system is in operation and laboratory testing facilities are installed. Provision has, therefore, been made in the project for water testing facilities to be installed immediately and for additional water treatment facilities, including filtra- tion and the requisite preliminary stages if and as the need is demonstrated. Because of the conditional nature of this latter provision, additional water treatment is considered separately from the basic project in this report. 31. The major planning and design work on the project has been done by Brown Engineers International of New York as consultants to the Municipality of Amman. Tater resources planning and well drilling have been carried out by the Central Water Authority. The supervision of construction would be done by Brown Engineers International in cooperation with the management team to be employed to operate the water department. 32. All contracts for major items of equipment and works required for the project would be awarded on the basis of international competitive bidding. Management and Organization 33. In order to improve the management and administration of the water works, the municipality have agreed to employ a management team to manage the operation of the water department during the period of construction and initial operations and to train local personnel. This management team would include at least a management specialist to act as director of the water department, a sanitary engineer to supervise technical operations and an accountant to establish and supervise accounting activities, all of whom shall have had responsible experience in efficiently run municipal water works elsewhere. One of the principal tasks of the management team would be to formulate a sound program of extensions and improvements to the secondary distribution system. 34. The municipality has also drafted regulations for the establishment of a new water department with considerable autonomy and separate accounts. These regulations would not be passed by the Municipal Council, however, until a new director of the water department has been appointed and had an opportunity to review them. Project Cost Estimates 35. The estimated cost of the total project, including additional treatment facilities and interest during construction, would be JD 1,090,000, (03.05 million) as itemized below: In Thousands of Jordanian Dinars New Wells 12 Raw Water Pumping Stations and Piping 92 Transmission and Distribution System 280 Reservoirs 30 Superchlorination Plants 119 Water Testing Laboratory 10 Management Services 105 Engineering Services 50 Contingencies 67 Total Basic Project 765 Additional Water Treatment Facilities 169 Additional Engineering Services 16 Additional Contingencies 70 255 Total Project 1,020 Interest during Construction 70 Total 1,090 36. Approximately 60% of all expenditures on the project are expected to be in foreign exchange. The proportion is roughly the same for the basic project and for additional treatment facilities. A detailed breakdown is not as yet available. - 9 - 37. The cost estimates for the proposed project are much reduced from the original cost estimates as a result of major design changes made after restudying estimates of future demand for water. A substantial economy will also be possible if additional treatment facilities are not needed. 38. A year by year investment schedule is given in Annex 6, showing that approximately one-quarter of the expenditures on the basic project (excluding interest during construction) will have been incurred by the end of 1961. The cost estimates have been based, therefore, to some extent upon construction experience and appear adequate. Contingencies of approximately 20/ on construction items yet to be completed include a factor of $" for price increases. Interest during construction consists of 4% interest charges on the 11unicipal Loan Fund loan and on the proceeds of the proposed IDA credit. VI. FINANCING PLANS A7D PROJECTIONS 39. The project costs including interest during construction would be financed as follows: JD US $ Sources 000' Millions Sub-Total Basic Project IDA Credit 535.7 1.50 65 M1LF Loans 160.0 0.45 19 Municipal Funds - Project Costs 69.3 0.19 8 - Interest during construction 63.9 0.18 8 Total Basic Project 82.9 2.32 100 Additional Treatment IDA Credit 178.6 0.50 66 Municipal Funds - Project Costs 76.4 0.21 29 - Interest during construction 6.1 0.02 3 Total Additional Treatment 71.1 0.73 100 Total Project 1,090.0 3.05 4O. AN IDA credit of $1.5 million would cover nearly all of the capital expenditures scheduled for 1962 and 1963 on the basic project, except for interest during construction. Additional treatment would require a further contribution from local funds of about one-third of the additional costs, part of which might need to be obtained from the hunicipal Loan Fund or other outside sources. 41. The IDA credit would be relent by the Borrower to Amman at 4% interest per annum,which is at about the level of the prevailing Government lending rate, repayable in local currency- over 23 years including a 3 year period, of grace. The loans from the Municipal Loan Fund carry interest at 4% per annum and are repayable over 9 years including a one year period of grace. - 10 - 42, The earnings projections in Annexes 7 and 8 and the cash flow projections in Annexes 9 and 10 indicate that proposed increases in water rates in the order of 15% on the average for the basic project and of 25% for the project including additional treatment would yield satisfactory returns, cover debt service by at least 1.6 times and provide substantial funds for an urgently needed program of extensions and improvements to the secondary distribution network. The large cash deficits appearing during the construction period on the cash flow for the project including additional treatment indicate merely that additional local funds would have to be found during this period. Possible sources would be the Municipal Loan Fund or further rate increases during this period, etc. Another solution might be the deferral of a portion of the program of extensions and improvements, which has not yet been worked out in detail. Since the degree of additional treatment required, if any, cannot yet be determined, financial arrangements have not as yet been worked out. 43. No balance sheet is as yet available for the water department, but allowances have been made in the cash flow for increases in working capital that will be required as the expanded water system comes into operation. If the estimated value of present fixed assets of JD 500,000 is correct, the ratio of long-term debt to equity would not be greater than 50:50 for the basic project and 60:40 including additional treatment. Depreciation allowances in the profit and loss projections have been made on the basis of this asset valuation. water Rates Proposed 44. Water rates at the levels proposed would not impose an unreasonable burden upon most consumers (not more than 3% of disposable income on the average) for a water-scarce area. The WR0 regional office for the Americas (PAHO) concurs in this opinion. The proposed rates of 63-68 fils per cubic meter ($0.67-0.72 per thousand gallons) compare with rates averaging over 100 fils in Jerusalem and other Jordanian cities. The proposed rates would provide funds for a large and necessary program of extensions and improvements to the secondary distribution system. A contribution to the cost of further major expansion could be made out of revenues after three or four years of project operation. Earnings would yield a reasonable return on the total investment. (See Annexes 7 and 8). 45. If the lower-income groups who do not at present have water service are to benefit fully from the expanded system, it may be necessary to reduce the minimum charge, which is at present 540 fils ($1.51) every three months for up to 12 cubic meters. Minimum usage per service connection is not more than 7-8 cubic meters per quarter. A reduced rate for this quantity of water would probably not affect average revenues too adversely. Since the relatively well-to-do residents and establishments located on the hills of the city, where water service is now intermittent, would be among the most immediate benefi- ciaries of the project, it might not be inequitable to increase average rates by introducing a more steeply graduated rate schedule than is in use at present. Such a rate schedule would also have the effect of avoiding wasteful use of water. An alternative or supplementary solution to the problem of bringing water to the inhabitants not now served might be to construct public fountains and charge the costs of water supplied to general municipal revenues. - 11 - VII. JUSTIFICATION OF THE PROJECT 46. The emergency measures which Amman has undertaken in the past few years to improve the water supply system have been inadequate to provide even a minimal, safe water supply for the fast-growing population. Nearly one-third of the population have no water service and depend for water upon the private charity of those who have water service connections. The water consumption of those who have direct service connections is very low due to water shortages, erratic water pressures and frequent interruptions of service. The erratic water pressures and interruptions of service also permit pollution to enter into the distribution system even when the supply sources are adequately treated. All of these conditions have an adverse effect upon personal health and hygiene in Amman. Water-borne disease rates, although declining in recent years, remain high in comparison with other areas of the world. 47. In its role as the site of ancient Philadelphia as well as in its capacity as the Capital of present-day Jordan, Amman is a tourist attraction of growing interest, and tourism is one of the most hopeful sources of increased foreign exchange earnings for Jordan. There is little doubt that a safe, dependable water supply would significantly enhance the status of Amman as a tourist center. 48. Although industrial use of the municipal water supply is not significant at present and is not expected to become important in the immediate future, the existence of a good water works could in the longer run have the effect of attracting more industrial activity to the Amman area. In the meanwhile, the many small-scale commercial establishments in the city would benefit from an improved water supply, as would the numerous institutional consumers, such as hospitals, refugee camps, schools, mosques and Government. agencies. The consumption by such large users amounted to about 201o of the total in 1960. 49. The project as presented in this report would establish the basis for a safe, dependable and adequate water supply system in Amman at a reasonable cost. Financial projections indicate that adequate funds could be obtained through water revenues to operate and maintain the expanded system and to carry out a program of extensions and improvements which would bring public water supply to a larger community. - 12 - VIII. C011CLUSIONS AND RECOUDENiTIONS 50. The present water supply system in Amman is inadequate to provide safe water in reasonable quantities in large part because of the extra-ordinary growtrh in population from around 100,000 in 192 to over 200,000 in 1961. $1. The proposed project has been designed to provide the basic elements of a safe and dependable water system at reasonable cost to ieet expected demand for the next ten years as the first stage within the framework of a 25-year master plan. Project expenditures for a high degree of water treat- ment would be deferred until the need is clearly demonstrated. 52. Present rates of water-borne disease, lack of water service by about one third of the population, Amman's growing attraction as a tourish center and potential institutional and commercial demand provide ample justification for this project. 53. The proposed Borrower and Amman have agreed to the following conditions: a) that knman will employ an experienced mana:ement team to manage the water department and train local personnel during the period of project construction and initial operations. b) that a water department will be established with con- siderable autonony from the administration of the municipality and with separate accounts. c) that water rates will be maintained adequate to cover operating and maintenance costs, debt service, and the costs of a program of extensions and improvements to the secondary distribution system as well as a reasonable part of the cost of future major expansion. 54. The project provides a suitable basis for an IDA development credit of 2.0 million to the Hashemite Kingdom of Jordan to be relent to the uunicipality of Amman for a period of 23 years, including a three-year period of grace. Interest would be at the rLte of Le per annum. Of the sP2.0 million. credit, an amount of 0.5 million would not be drawn upon unless additional water treat.-ent facilities should be found necessary. December 7, 1961 JORDAN ORGANIZATION CHART CITY OF AMMAN CITY SECURITY AND FIRE DER LEGAL ADVISOR COUNCIL MUNICIPAL COURT ACCOUNTING VETERINARY DIV. GENERAL SERVICES ENGINEERING DIV. STORES MEDICAL DIV. WATER DEPT. () OFFICE OFFICE MEC 8 ELEC. SEC. BUILDINGS SEC ROADS SEC ACCOUNTING MOTOR POOL WORKSHOP DESIGN CONSTRUCTION DESIGN CONSTRUCTION PIPE LAYING ! MAINT. METERING SURVN.- PUMPING STATIONS fl} Organization proposed by the municipality DECEMBER 1961 IBRD 918R ANNEX 2 AMAN WATER DEPARTMENT Pro Forma Revenues and Expenditures ('000 Jordanian Dinars) Years Ending March 31 Actual Budget 1959 1960 1961 1962 Total Water Produced - 1,000 m3 3,465(?) 3,960(?) 4,075 4,470 Total Metered Sales - 1,00 mI3 2,132 2,411 2,485 2,727 % unaccounted for 39%(?) 39%(?) 39% 39% REVENUES Average Water Rates per m3 55 fils 55 fils 55 fils 55 fils Revenue from Water Rates 117.8 132.5 137.1 150.0 Charges for Truck Deliveries - 4.3 3.8 - Meter Registration Fees 2.1 2..2. 2.5 Total Revenues 119.9 139.2 143.3 152.5 EXPENDITURES Operatinp Costs Fuel 22.3 26.2 30.0 32.0 Chemicals 1.0 0.6 0.5 1.0 Maintenance 5.5 5.5 4.8 8.0 Salaries including Cost of Living 16.9 19.2 22.1 31.6 Assumod Admin. Costs (50" of Salaries) 8.4 9.6 11.0 15.8 Other 2.7 _ 2 7.8 - Total Operating Costs 56.8 66.3 76.2 88.4 Interest 0.8 0.6 0.4 4.0 Assumed Depreciation 13.4 14.6 20.0 20.0 Total Operating Costs 71.0 81.5 96.6 112.4 Net Profits 48.9 57.7 46.7 40.1 Return on Net Fixed Assets 17% 19% 11% 8%o Total Operating Costs 71.0 81.5 96.6 Plus: Capital Improvement Expenditures 25.6 117.0 72.1 n.a. Less: Assumed Administration and Depreciation (21.8) (24.2) (31.0) Total Reported Expenditures 74.8 174.3 137.7 Revenue Surplus/(Deficit) 45.1 (35.1) 5.6 ANNEX 3 MUNICIPALITY OF AMMAN Receipts and Expenditures (1000 Jordanian Dinars) Years Ending March 31, Actual Budget 1959 1960 1961 1961 1962 RECEIPTS Taxes and Fees Collected by Central Government 222 248 279 277 298 Water Revenues 120 139 143 157 153 Loan Disbursements: Jordan Development Board 25 25 25 50 148 Arab Bank - 50 28 50 - 1/ Other 30 - - - 200 Total Loan Disbursements 55 75 53 100 348 Other Receipts 150 176 219 240 220 Total Receipts 547 638 694 774 129 EXPENDITURES Operating: Salaries and Wages 94 117 120 175 195 Water Department (excluding salaries) 32 38 43 46 41 Other Operating 95 91 102 159 190 Total Operating Expenditures 221 246 265 380 426 Capital Improvements (Estimated): Water Works 26 117 72 78 173 Roads, Bridges and Culverts 187 137 136 141 165 Other 80 139 110 221 170 Total Capital Improvements 293 393 318 440 508 Debt Service: Amortization 59 31 29 29 160 Interest 4 2 5 _f 10 Total Debt Service 63 33 34 34 170 Total Expenditures 577 672 617 854 ll4 Surplus (Deficit) (30) (34) 77 (80) (85) 1/ The Municipality has refinanced all outstanding loans except JD 160,000 from the Municipal Loan Fund by a loan of JD 200,000 from the Government granted in 1961. 2/ The breakdown between operating and capital expenditures is arbitrary. A1MAN WATER PROJECT Estimated Water Use by Different Economic Groups Population (1987) Assumed for Design of Distribution 1960 System Average Average % of Metered % of Metered Total Consump- Total Consump- Economic Popula- tion Popula- tion Categories tion in lcpd tion in lcpd A - Wealthy 1.6 80 2.0 200 B - Well to do 8.1 70 8.0 170 C - MiddleIncome 20.2 60 20.0 100 D - Lower Middle Income 19.6 30 30.0 70 E - Poor 31!.7 4-5 28.0 25 F - Refugees 19, 12-13 12.0 _ Weighted Average 100.0% 30 100.0% 70 Bulk Users other than Refugee Camps Over-all Weighted Average 35 83 Sources: Report on Amman Water System, Brown Engineers International, April 1961. Modern Amman, A Social Study, Jane M. Hacker, Department of Geography, Durham Colleges in the University of Durham, 1960. 700, 000 700,000 Basis for second stage design 628,.000 , DESIGNV CURvEN 00,000 -TTrend at aStemntt- 600,000 naturol 1-952-1,960 rate (5% per ye r soo,0oo 500,000 Trend af esfimaoted Prij -tion of str.ight -line total 1952-1960 estimated total / 92-1960 rate at per year increase 400, 000 - -- 400,000 360, 000 Basis for first stage design 300,000 300,000 Projection of stra4 ht-line estirnated /952-I natural increase total inkcrease /952 -1960 203 60 / 200, including immigration -' JORDAN 6001 AMMAN WATER SUPPLY PROJECT ' | POPULATION TRENDS 1952 Census, - Notural increase 1952-1960 -19L,200. (reported bir ths and deoths) 100,000 195?-1960 incýrease Straight -line ond> ~vrage annual ratez z 1950 '955 1960 1965 1970 '975 1980 1985 1990 '995 2000 ul DECEMBER 1961 IBRD-927R AiT!EX 6 1if11U UATER PROJECT Investnent Schedule Expenditures in Thousands of Jordanian Dinars Description 196o- 1962 1963 1964 Total Basic Project 1961 Raw Later Supply System New wells (except equipment) 12 12 Raw water system piping 27 8 35 Raw water reservoir 8 2 10 Raw water pumping stations 11 35 11 57 Total Raw Water Supply System 31 ;T 19 ilL Distribution System Pipe lines 170 95 265 Booster stations 10 5 15 Reservoirs 20 20 Total Distribution System 170 107 2 300 Total Supply and Distribution System 201 169 4 LlL Water Treatment Superchlorination, dechlorination, retention and high-lift pumping facilities: At Ain Ghazal 2 48 41 91 At Wadi Sir 16 12 2 Total Water Treatment 2 74 3 11 Labratory Testing Facilities 10 10 Total Construction Uost 203 23 97 771 .1anagement Services 25 40 h 0 1-1 Engineering Services 14 31 5 50 Contingencies 37 15 15 67 Total Basic Project 217 336 157 55 765 Additional Iater Treatment Construction Costs 85 84 169 Engineering Services 8 8 16 Contingencies _ 70 70 Total Costs of 2dditional Treatment 93 162 52- Total Project Cost excluding Interest during Construction 217 336 250 217 1,020 Interest during Construction 3 13 24 30 70 Total Project Cost including Interest during Construction 220 349 274 247 1,090 AMMAN WATER DEPARTMENT Pro Forma Profit and Loss Statement Basic Prolect Only ('000 Jordanian Dinars) Calendar Years 1962 11966 17 1968 1970 1972 Total Water Produced, 1,00 m3 5,015.0 5,557.0 5,831.0 6,103.0 6,368.0 6,663.0 6,959.0 7,255.0 7,551.0 7,844.0 8,235.0 Total Water Sold, 1,000 m 3,081.0 3,501.0 3,790.0 4,089.0 4,394.0 4,731.0 5,080.0 5,441.0 5,814.0 6,197.0 6,588.0 % Unaccounted for 39.0 37.0 35.0 33.0 31.0 29.0 27.0 25.0 23.0 21.0 20.0 Average Proposed Water Rates, fils/m3 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 Revenues from Water Rates 194.1 220.6 238.8 257.6 276.8 298.1 320.0 342.8 366.3 390.3 415.0 Other Water Revenues 2.5 2.5 225 2.5 2.5 Total Revenues 196. 223.1 241.3 260.1 279.3 -0. 322.5 _T-3-688 392.8 7-. Operating Costs: Power and Fuel 42.0 46.0 50.0 54.0 58.0 6z.0 65.0 68.0 71.0 74.0 77.0 Chemicals 10.7 11.5 12.3 13.1 13.9 14.7 15.2 15.7 16.1 16.6 17.1 Maintenance 6.0 9.0 12.0 12.5 13.0 13.5 14.0 14.5 15.0 15.5 16.0 Salaries 40.0 41.0 42.0 43.0 44.0 45.0 46.0 47.0 48.0 49.0 50.0 Administration 20.0 20.5 21.0 21.5 22.0 22.5 2;0 22-, 24.0 24525.0 Total Operating Costs 11 8. 7 128.0 137.3 144.1 150.9 157.7 1 3.2 =18.~ 174.1 179.Z 185.1 Other Expenses: Interest - MLF 6.4 5.6 4.8 4.0 3.2 2.4 1.6 0.8 - - - IDA 6.7 16.6 20.6 21.4 20.7 20.0 19.2 18.4 17.6 16.7 15.8 Other 0.2 - - - - - - - - - - Depreciation - New assets 7.0 14.9 24.8 25.8 26.8 27.9 29.1 30.4 31.7 33.1 34.5 Existing assets 2 23.0 23.0 230 23.0 22.0 23.0 22. 23.0 Total Other Expenses 3*3 6o.1 73.2 74.2 73.7 73.3 72.9 72.6 72.3 72.9 73.3 Total Costs and Expenses 162.0 188.1 210.5 218.3 224.6 231.0 236.1 241-3 246.4 252.4 258.4 Net Operating Profits 35.0 30.8 41.8 54-7 69.6 86.4 104.0 122.4 140.4 159.1 Add back interest 13.3 22.2 25.4 25.4 23.9 22.4 20.8 19.2 17.6 16.7 15.8 Net Profits before Interest 47*9 57.2 56.2 67.2 78.6 92.0 107.2 123.2 140.0 157.1 174.9 Net Fixed Assets at beginning of year 677*0 903.0 1,126.1 1,120.3 1,116.5 1,114.7 1,115.8 1,119.7 1,126.3 1,135.6 1,147.5 % Return on Net Fixed Assets at beginning of year 7.1% 6.3% 5.0% 6.0% 7.0% 8.2% 9.6% 11.0% 12.4% 13.8% 15.2% AMMAN WATER PROJECT INCLUDING ADDITIONAL TREATMENT Pro Forma Profit and Loss Statement ('000 Jordanian Dinars) Calendar Years 1962 1963 196 1965 1966 1967 1968 196 1970 197 12 Total Water Produced, 1,030 m3 5,051.0 5,557.0 5,831.0 6,103.0 6,368.0 6,663.0 6,959.0 7,255.0 7,551.0 7,844.0 8,235.0 Total Water Sold, 1,000 m 3,081.0 3,501.0 3,790.0 4,089.0 4,394.0 4,731.0 5,080.0 5,441.0 5,814.0 6,197.0 6,588.0 % Unaccounted for 39.0 37.0 35.0 33.0 31.0 29.0 27.0 25.0 23.0 21.0 20.0 Average Proposed Water Rates, fils/m3 68.0 68.0 68.0 68.0 68.0 68.0 68.0 68.0 68.0 68.0 68.0 Revenues from Water Rates 209.5 238.1 257.7 278.1 298.8 321.7 345.4 370.0 395.4 421.4 448.0 Other Water Revenues 2.3 2 252 2.5 2.5 Total Revenues 21. 30. 32. 3 79 372.5 397.9 423.95 Operating Costs: Power and Fuel 42.0 46.0 50.0 54.0 58.0 62.0 65.0 68.0 71.0 74.0 77.0 Chemicals 10.7 11.5 12.3 16.9 18.0 19.0 19.6 20.3 20.9 21.6 22.2 Maintenance 6.0 9.0 12.0 15.0 15.5 16.0 16.5 17.0 17.5 18.0 18.5 Salaries 40.0 41.0 42.0 49.5 51.0 52.5 54.o 55.5 57.0 58.5 60.o Administration 20.0 20.5 21.0 24.Z 25. 26.2 27.0 27.7 28.5 29. Total Operating Costs 118.7 128.0 137.3 1l0.1 168.0 175.7 182.1 188.5 194.9 201.3 207.7 Other Expenses: Interest - MLF 6.4 5.6 4.8 4.0 3.2 2.4 1.6 0.8 - - - IDA 6.7 17.9 25.4 28.6 27.6 26.6 25.6 24.6 23.4 22.3 21.2 Other 0.2 - - - - Depreciation - New assets 7.0 14.9 24.8 34.8 35.8 36.9 38.1 39.4 40.7 42.1 43.5 Existing assets 23.0.0 23.0 3, 23.0 23.0 23.0 2 3.0 23.0 Total Other Expenses 43.3 61. 7 9487.8 Total Costs and Expenses 162.0 189.4 215.3 250.5 257.6 264.6 270.4 276.3 282.0 288.7 295.4 Net Operating Profits 50.0 51.2 30.1 43.7 59.6 77.5 96.2 115.9 135.2 155.1 Add back Interest 13.3 23.5 30.2 32.6 30.8 29.0 27.2 25.4 23.4 22.3 21.2 Net Profits before Interest 63.3 74.7 75.1 62.7 74.5 88.6 104.7 121.6 139.3 157.5 176.3 Net Fixed Assets at beginning of year 677.0 903.0 1,126.1 1,391.3 1,378.5 1,367.7 1,359.8 1,354.7 1,352.3 1,352.6 1,355.5 % Return on Net Fixed Assets at beginning of year 9.4% 8.3% 6.7% 4.5% 5.4% 6.5% 7.7% 9.0% 10.3% 11.6% 13.0% 0 AMMAN WATER PROJECT - BASIC PROJECT ONLY Sources and Applications of Funds In Thousand of Jordanian Dinars Total Calendar Years 1961 1962 1963 1964 Construc- 1965 1966 1967 tion Period Sourses of Funds Net Profits at Propased Rates 20.6 1 34.6 35.o 30.8 121.0 41.8 54.7 69.6 Depreciation 20.0 1 30.0 37.9 47.8 135.7 48.8 49.8 50.9 Interest on Long-Tem Debt 3.6 1 22 2 2 . 6 42. 21? 22.4 Total Generation of Fubdo from Operations d.2 77.9 110.0 321.2 116.02 142.9 Loan Disbursement - MY 160.o - - - 16o.o - - * - Ik - 336.0 157.0 42.7 535.7 - * - Utilisation of Pipes on Hand 21.5 - - - 21.5 - * Total Sources .6.7 116.0 28.9 Applications of Funds Project Investments 217.0 336.0 157.0 55.0 765.0 - - - E.ensaiosand improvenas to the Secondary - 34.0 38.0 42.0 14.o 45.o 48.o 52.0 Distribution System Y Provision fbr Second Stage Expansion - - - - - - 10.0 20.0 Additions to Working Capital other than Cash W . 5.4 6.2 4.5 16.1 4.6 4.8 5.3 Debt Services Amortisation - IDA - - - - - 17.8 18.5 19.2 . MLF - 20.0 20.0 20.0 60.0 20.0 20.0 20.0 - Other 5.1 5.2 - - 10.3 - - - Interest - IMA - 6.7 16.6 20.6 43.9 21.4 20.7 20.0 - IF 3.2 6.4 5.6 48 20.0 4.0 3.2 2.4 - Other 0.4 0.2 - - 0.6 _ - Total Debt Service 197 j97_ 72.2 9-.T lU 6322 Total Applications 2.W3.14 1!L6.9 112.812 Change in Cash Position during Period - 8.7 (0.2) 8.5 3.2 3*2 4.o Cash Available at end of Period - 847 8a5 8*5 11s7 14.9 1809 Debt Service Coverage 5.111 2.Orl 2.2:1 2.3:1 t2.l 1.8s1 2.Otl 2.3:1 Pro forma estimates at present rates Estimated on the basis of 20% of projected revenues using present rates Y Debt service on the MLF loan will terminate ir 1969 making available additional funds for Second Stage Expansion ./ Estimated on the basis of 25% of additional revenues for each year. The figure for 1962 provides for some lag in the collection of increased rates, inter alia. The cash deficit in 1962 could be met by deferral of some extensions and improeeonts to the secondary distribution system, for which no detailed pr*gram has as yet been formulated. AMMAN WATER PROJECT INCLUDING ADDITIONAL TREATMENT Sources and cations of Funds In Thousands of Jordanian Dinars Total Calendar Years 1961 1962 1963 1964 Construc- 1965 1966 1967 Sources of Funds tion Period Net Profits L 20.6 2/ 3k.6 33.7 4.9 133.8 30.1 43.7 59.6 Depreciation 20.0 2/ 30.0 37.9 47.8 135.7 57.8 58.8 59.9 Interest on Long-Term Debt 16 2 2 30 06 16 3.0 Total Generation of Funds from Operations his.2 77.9 95.1 122.9 3iu.1 . 133.3 = Loan msbursements - IMLF 160.0 - * * 160.0 * * * IDA - 336.0 222.0 156.3 714.3 - - - Utilization of Pipes on Hand .2 Total Sources 225.7 __ 1. 279.2 L915.9 120.5 ik__ U-8. Application of Funds Project Investment 217.0 336.0 250.0 217.0 1020.0 - - Rtensions and Improvemqa to the Secondary matribution System - 34.0 38.0 42.0 11.o 65.0 a.0 52.0 Provision fbr Secondary Stage 2pansien - * - - - - - 10.0 Additions to Working Capital other than Cash 3/ - 5.4 6.2 6,3 17.9 5.1 5.1 5.7 Debt Serviest Amortization * IML - * * * 23.6 24.6 25.6 -IMLP 20.0 20.0 20.0 60.0 20.0 20.0 20.0 -Other 5.1 5.2 - - 10.3 - - - Interest - ID - 6.7 17.9 25.4 5o.0 28.6 27.6 26.6 -ILF 3.2 6.4 5.6 4.8 20.0 4.0 3.2 2. - Other o. 0.2 - - o.6 - - - Total Debt Service -T.7 _3___ 43.5 W__2 ___w.-___ Total Applications 22.7 13.9 177 __ 2%_8 63 128-1 Changes in Cash Position during Period - * (20.6) (36.3) ($6.9) (5.8) 4.8 6.2 Cash Available at End of Period (20.6) (56.9) (K6.9) (62.7) (5709) (51%7) Debt Service Coverage 5.1:1 2.0:1 2.2:1 2.4tl 2.hs1 1.6:1 1.8:1 2.0t1 At rates proposed for basic project through 1963 and at rates proposed to include additional treatment thereafter Pro forma estimates at present rates Estimated on the basis of 20% of projected revenues using rates Debt service on the MLF loan will terminate in 1969 making available additional funds for second stage expansion Estimated on the basis of 25% of additional revenues for each year. The figure for 1962 provides for some lag in the collection of increased rates, inter elia. These substantial cash deficits would have to be met either by deferral of extensions and improvements to the secondary distribution system, far which no detailed program has as yet been formulated, by additional borrowing or by greater than proposed rate increases. 10 ..... E..697 W -8..... /V ~El.697 W-8 Ain Ghazal 0 3000 Ms .. Pumping Station .... shmeisoni Reservoir.° W· El 927 Proposed Ain Ghazal Hse0 'M-- Water Treotment 1200 mW Reservoir PPRaEnt ... EU088ha0M Um UhnT Hosh,mi No 2 - Rese i serr 4: El 975..E82 600 m, ,. Hrashimift Nrnsis--- rpReservoir - 2 ..El 795 to- - 0 Wel- 400M uweibnern °°-..servoir W-I '--El. 837 18 -. 3000 M 1 st. Stage e·-..-- Reservoir 4, 4 el m"n 10 0 3000 M3 600 mý .... &sRaeArvnS r Joufo Reservoir Tap! Reser .voir METERSRa MAlpa binnSpring iPurnping Staton mE 834 JORDAN E/. 927 AMMAN WATER SUPPLY PROJECT SOO Ms each 6 4shrofiya Twin12 - Reservoirs E/ 92/! 8" F.xisting transmission mains 6", 4" Proposed transmission mains •Proposed row water -/0 Wells 250 0 250 500 75 1000 Bitu ra METERS... ••••.. •••••.-... ••.. Municipal bounda ries All elevations a re in meters. DECEMBER 1961 IBRD-934R