Rwanda - Second Water Supply Project

Document of The World Bank FOR OMCLIL USE ONLY Report No. P- 4516-RW MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 11.9 MILLION TO THE GOVERNMENT OF RWANDA FOR A SECOND WATER SUPPLY PROJECT March 31, 1987 Regional Project Department Eastern and Southern Africa Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official 4uties. Its contents may not otherfise be disclosed without World Bank authoriation.  CURRENCY EQUIVALENTS Currency Unit = Rwandese Franc (FRw) US $1.00 - FRw 84 RF 100 - $1.19 WEIGHT AND MEASURES Metric British/US Equivalents 1 meter (m) = 3.3 feet 1 hectare (ha) = 2.47 acres 1 acre (00Om2) - 0/02 acre 1 kilomenter (km) - 0.62 mile 1 square kilometer (km2) = 0.39 square mile (sq. m.) 1 kilogram (kg) = 2.2 pounds (lb) I liter (1) - 0.26 US gallon (gal.) 1 metric ton (m ton) = 2,204 (lb.) GLOSSARY OF ABBREVIATIONS AfDF - African Development Fund BADEA - Banque Arabe pour le Developpement Economique en Afrique CCCE - Caisse Centrale de Cooperation Economique ELECTROGAZ - National Water and Electricity Company FRw - Rwandese Franc GDW - General Directorate of Water GOR - Government of Rwanda NFRWS - National Fund for Rural Water Supply NGO - Non-governmental Organ1sation UNDP - United Nations Development Program  FOR OFFICL USE ONY MEMORANDUM OF TEE PRESIDENT RWANDA SECOND WATER SUPPLY PROJECT CREDIT AND PROJECT SUMMARY Borrower: Rwanda Beneficiary: Ministry of Public Works and Energy Amount: SDR 11.9 million (US$ 15.0 million equivalent) Terms: Standard Financing Plan: US$ million Local Foreign Total Austria 2.00 5.00 7.00 BADEA 0 7.25 7.25 COCE 6.00 10.00 16.00 IDA 5.10 9.90 15.00 UNDP 0.00 0.70 0.70 Switzerland 3.92 4.38 8.30 AfDF 4.30 8.20 12.50 Communes 1.55 0 1.55 Government 3.9 0 3.90 TOTAL 26.77 45.43 72.20 Economic Rate of Return: No overall rate of return calculated Staff Appraisal Report No. 6602-RW Thb document ha a rstmited distdbution and may be usd by reipiets only in the pWfonnnce of their oflAcl dudes. Its contents may not othowis be dsclosed without Wodd Dank autboadzlo  MEMORANDUM AND RECOMMENDATTON OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS On a Proposed Credit to Rwanda for a Second Water Supply Project 1. The following report on a proposed development credit to Rwanda for SDR 11.9 million (US$15.0 million equivalent) Is submitted for approval. The proposed credit would be on standard IDA terms and would help finance the development of rural water supply in Rwanda. Cofinancing would be provided by CCCE (US$16.0 million), AfDF (US$12.5 million), BADEA (US$7.25 million), Austria (US$7.00 million), Switzerland (US$8.3 million) and UNDP (US$0.7 million). 2. Rwanda has a solid record of development achievements in the post-independence period but faces deep-seated problems mostly related to the pressures of population on scarce land resources. Rwanda's population of 6.0 million or 230 persons per km2 makes it the most densely settled country in continental Africa. Agriculture is the backbone of the economy contributing 46% of GDP, 83% of the total value of exports and employing 952 of the population. About 5.7 million people (95% of the total population) are scattered in rural areas in small hamlets of less than 300 inhabitants. Many travel long distances daily to obtain water, as much as 10-15 km in the highest part of the Lava Region. The purpose of the project is to provide them with safe water at less than 1 km. The Water Supply Sector 3. Responsibilities for rural water supply are with the General Directorate of Water (GDW), established in January 1984, withiu the Ministry of Public Works and Energy. Water Supply in urban centers is the responsibility of Electrogaz, the national water and electricity company, beneficiary of the First Water Supply Project (Credit 1345-RW). Under this project, an institutional study for rural water supply was carried out. Its recommendations for new institutional and cost recovery policies have been approved by the Government on November 15, 1985, and would be implemented through the project. 4. The recently adopted national policy for the rural water supply sector is based on the following principles: (i) at the lowest level (a group of standpipes), users associations would be established prior to carrying out works to decide on the system design, organise participation in the rehabilitation/extension and to operate and maintain the facilities; (ii) at the next level the comune would have responsibility, through a communal water committee, for supervising the operation and maintenance of facilities within the commune boundaries. This communal water committee will be composed of representatives of users associations and of commune officials; (iii) a system of water charges would oe established at the communal level payable by all beneficiary families to cover operation, maintenance and renewal costs. These water charges would be collected by the users associations; and (iv) a National fund for Rural Water Supply (NFRWS) would be created, as a specialized window of the existing Communal Development Fund (CDF) to finance rehabilitation or construction of rural water supply systems. NFRWS is intended to become the principal channel for all funding to the rural water supply sector.  -2- Project Obiectives 5. The main objectives of the project: are (i) to strengthen the institutions, including the legal framework, involved in the rural water supply sub-sector; (ii> to establish cost recovery mechanisms for safe, self-sustaining systems of supply; and (iII) to support a program to rehabilitate rural water supply systems and implement recently adopted institutional dnd cost recovery policies throughout the country, concentrating initially in the Lava Region where there are no alternative sources of supply. Project Description 6. The project would include: (a) an institutional component with technical assistance and training, to reinforce the General Directorate of Water (GDW), as well as the communes and the users associations, in order to implement the new policy; (b) a national program utilising "line of credit financing" for rehabilitation, operation and maintenance of existing rural water supply systems throughout the country. Priority works would be selected from a national inventory, based upon agreed criteria. The first-year work program is expected to be ready about the time of credit effectiveness. The communes would carry out the sub-projects pertaining to their communities, with assistance from local NGO's; and (c) specific investments for the rehabilitation and expansion of seven water supply systems in the Lava Region (North-West Rwanda). 7. The project would be implemented over a six-year period. The total project cost is estimated at US$72.2 million equivalent, with a foreign exchange component of US$45.4 million (63%). Several cofinanciers would participate in the project (see schedule A). A breakdown of costs and the financing plan are shown in Schedule A. Amounts and methods of procurement and of disbursement and a disbursement schedule are shown in schedule B. A timetable of key project processing events and the status of Bank Group operations in Rwanda are given in Schedules C and D respectively. The Staff Appraisal Report No. 6602-RW dated March 31, 1987 and including a map of Rwanda is also attached. A Project Preparation Facility of US$0.5 million (to be refinanced under the Credit) has been arranged to facilitate initiation of project activities, including studies and technical assistance. Rationale for Bank involvement 8. The dialogue on the organization and financing of rural water supply systems has progressed through the first water supply project, (Credit 1345-RW), The Bank was a leading participant at a UNDP-sponsored Round Table meeting convened in Kigali in January 1986 to discuss the findings of the institutional study, which developed the new sectoral policy based on users participation and cost recovery. The discussions provided a valuable opportunity to promote donor coordination and to foster support for politically difficult decisions,  especially the nationwide introduction of cost recovery measures that, thus far, have only been applied locally. It is Important for the Bank to retain an effective presence in rural water supply as Rwanda embarks on these sectoral adjustments. Agreed Actions 9. In the course of project preparation, agreement was reached on several key technical, institutional and finanuial issues. Appropriate covenants have been incorporated in the legal documents. The most Important actions are conditions of effectiveness: (1) creation of a National fund for Rural Water Supply as a special account of the existing Communal Development Fund and initial deposit by GOR of US$0.2 million equivalent (10% of estimated annual expenditures); (2) establishment and staffing of the project coordination unit for the Lava Region; and (3) fulfillment of conditions precedent to effectiveness of other loans and grants provided by cofinanciers except for UNDP. Other actions have been agreed: (1) establishment of a consultative donors committee for the overall supervision of the project with representatives of all cofinanciers; (2) amendment of GDW's organization; (3) submission to IDA every year during project implementation for its review of a three-year rural water supply investment program and of GDW's proposed annual budget for the following fiscal year, and their finalization based upon this review; and (4) annual review of water charges by the Government to ensure that they are sufficient to cover operation, maintenance and renewal costs. Justification 10. Benefits under the proposed project would consist in improvements in the productivity and well-being of the rural population throughout Rwanda resulting from (i) time savings, mainly for women; and (ii) better health by provision of safe water. The project would also have a significant institutional impact and would mobilize resources for the sub-sector through (1) Improved efficiency in GDW's operations; (1i) institutional decentralization of responsibilities for water systems to the communal level; and (iii) implementation of a cost recovery policy for operation, maintenance and renewal of the facilities. Finally, over the medium term, it would help draw people away from encroaching on a national nature reserve in search of water by providing reliable supply closer to settlements. Risks 11. The major project risks are institutional and financial and are related to (i) the capacity of the communes, helped by users associations to operate and maintain the water facilities and (ii) the capacity of the benefitting population to cover the cost. To minimize these risks, substantial efforts would be required to sensitize the population as to the necessity to pay for safe water and extensive training programs for GDW's and communal staff. Measures included in the project to minimize risk are the participation of the benefitting population to the construction and the operation and maintenance of the distribution facilities, with the help of technical assistance and of NGO's. Recommendation 12. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve the proposed Credit. Barber Conable President Attachments Washington, D.C  Schedule A Project Cost Summary USS Nillion: Local Foreign Total a. LAVA REGION COMMON--: Production Civil lrks 1.690 2.603 4.293 Equipuent t 0.907 4.002 4.909 Sub-total 2.597 6.605 9.202 1 6 Transmission and distribution Pipe supply 0.634 12.444 13.078 Reservoir Equipment : 0.076 0.191 0.267 1 aub-total 0.710 12.635 13.345 Pipe laying 9.615 4.409 14.024 Civil WIrks 0.976 1.503 2.479 Rousing 0.092 0.142 0.234 Sub-total 10.683 6.054 16.737 1 Total 11.393 18.689 30.082 : TOTAL a 13.990 25.294 39.284 : : b. CONSTRUCTION SUPERVISION 0.842 2.042 2.884 1 t- ------ t c. REHABILITAT1ON PRGRMAN I 4.200 7.800 12.000 I _____ - :______ d. STRENBTHENINS OF ONt : : Equipmnt 0.040 0.534 0.514 1 Technical Assistance 0.357 0.519 0.816 t Training 0.404 0.890 1.294 Project Unit 0.877 1.170 2.047 : TOTAL d 1.678 3.113 4.791 : : TOTAL BASE COSTS 20.710 38.249 58.959 : I Physical Contingencies t 2.099 3.794 5.893 * : Price Contingencies : 3.957 3.392 7.350 I S TOTAL PROJECT COST 26.746 45.436 72.201 I  Sc'edule A Page 2 Financing Plan US$ million Local Foreign Total Austria 2.00 5.00 7.00 BADEA 0 7.25 7.25 CCCE 6.00 10.00 16.00 IDA 5.10 9.90 15.00 UNDP 0.00 0.70 0.70 Switzerland 3.92 4.38 8.30 AfDF 4.30 8.20 12.50 coamunes 1.55 0 1.55 Government 3.9 0 3.90 TOTAL 26.77 45.43 72.20  Schedule B RWANDA SECOND WATER SUPPLY PROJECT Procurement Arrange&ents Project ICB LCB other a/ N.A. Total Cost Elements Equipment, Pipes 13.6 4.2 7.2 25.0 (3.7) (1.5) (6.2) Civil Works 19.1 10.8 7.8 37.7 (4.1) (1.0) (5.13 Technical Assistance: - Equipment 0.4 0.1 0.5 (0.4) (0.1) (0.5) - Project management 3.8 3.8 (3.4) (3.4) Training 1.2 1.2 (0.3) (0.3) Consulting Services 3.5 3.5 Refinancing of PPF 0.5 0.5 (0.5) (0.5) 33.1 4.3 26.5 8.3 72.2 TOTAL (8.2) (1.6) (3.7) (1.5) (15.0) a/ Contract awards for technical assistance and consulting services, and contracts financed by CCCE and Austria. Notes: (a) cost figures shown in this table are rounded and include contingencies. (b) figures in parenthesis are the respective amounts that would be financed by IDA.  Schedule B Page 2 Disbursements Equipment, including supply of pipes: 1OOX of foreign expenditures, or 80X of local expendltures Civil Works, including pipe laying: 802 Consultant services: 1002 of foreign and 802 of local expenditures. Equipment and civil works for the rehabilitation program 90X Estimated Schedule of Disbursements (US$ million) Disbursement Accumulated Bank Fiscal Year during fiscal year Disbursement FY 88 1.05 1.05 FY 89 2.40 3.45 FY 90 3.30 6.75 FY 91 2.85 9.65 7Y 92 2.20 11.85 FY 93 1.50 13.35 FY 94 1.20 14.55 FY 95 0.45 5.00 Assumption: that the Credit is approved by June 1987.  Schedule C RWANDA SECOND WATER SUPPLY PROJECT Timetable of Key Project Processing Events (a) Time taken to prepare: 3 years. (b) Prepared by: Covernment with IDA assistance (c) First IDA mission December 1983 (d) Appraisal Mission Departure: August 29, 1986 (e) Negotiations: March 1987 (f) Planned Date of Effectiveness: December 31, 1987 (g) List of Relevant PPARs: Note  Schedule 0 2 TM mamOF mm IMC P oWPMAflQ IN A A.sttt of MA Credits (As of Sembeer 30, N9OW) Amut M$ ed3uUm Credit No. Fiscal yew Borrower Purpose (la" . _ (Tom credits have3w fuly disbrsed)1/ 77.49 - 2v2/ 3/ 1979 Emia mitara Ag alctural & Livestock Develpru 1 8.75 0.40 1039-W 1980 Itegrated Fostry & Liestodc Mealopmt 21.00 0.14 1057-5 1981 e mm 7.50 L.46 11265 1981 , Coffee lFo 15.00 3.48 1217-W 1982 Twhncal Asltaie 5.00 L65 125?-W 1982 Fifth Rigtway 25.90 8.62 12634I 1982 - Smwd E hatm 10.00 7.43 1263- . 1982 phe U Iugsera Clsakahtlgongo 16.30 6.42 344{- 19!;3 so m n 7.00 4.25 1345-Il 1983 w ater Supply 13.00 2.65 142D-5 1984 FRzzi. He 15.00 10.28 1495-N 1984 9.00 3.86 OWN5-5 1985 Iasearch 11.50 12.45 M1w 1985 Tebmic al AssIsta I 4.80 5.46 1641-W 1986 U S ithgl 11.00 12.98 JO" 4/ 986Sba HIW 5.00 17.59 165D-W 4/ 1986 Fth BRD 9.00 10.31 1669 16 Gta Apicul & 12.70 14.20 4/ MtrAg~~~~~~a Dri t. Project 1678""f4 ' 1986 F 6yHeal 10.8 11. 168341w/ 1986 1 Thi Bst 15.60 38 _otal 321.34 .92 of ,Atrh bas boo epad 1.71 Total am atstalnixg 319.63 amnt sold 4.10 of whh hs borepad 4.10 Total. tow td by MA 319.63 Total uisbd 12.9 1/ hmda has received om B l. 2/ TeID A credit mmamlitedl by am EE Special Actl'i Credit of BS1.7 fLicon. 3/ Inludtig a NiWA GrC Par 'c1at1n of 4.4 iLiout 4/ Not yet effectve. 5/ bapt. Credts 937, 1039j, 1057-5, tIm sutsed budm of m% 6 & 7 n mm calated at tit S rat af 9/30J86.  *chedule D Tge -2 of 2 B. atemnt of DC Xnvezsts izn R=da (a Jum.30, 1986) UCs dsttzX imesnts in Ri a :mprise tX. tt izmstents prewias1y m6e in S rti i its predemsor co4wdes, SVa and tSLU. DetasIn are as follcws. Total hnytsuit Fisca Type of id b ____ Year Cb wor Es1u B lamn Total -C tidisbised 333-W 1975 Sorwt.M) Tea pro- - 0.54 0.54 0.16 - 4704W 1979 .SoaMtt) ad 0.06 a/ 0.23 0.3 0.11 _ 76141 1985 )Srtt6) - 0.25 0.25 - 0.5 Total 0.06 1.02 1.08 0.27 0.25 af G lld ln Jjly 1984