Uganda - Small Towns Water and Sanitation Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 12296-UG STAFF APPRAISAL REPORT REPUBLIC OF UGANDA sMALL TOWNS wATER AND SANITATION PROJECT FEBRUARY 17, 1994 MICROGRAPHICS Report No: 12296 UG Type: SAR Energy and Infrastructure Operations Division Eastern Africa Department This document has a restricted distnbution and may be used by recipients only in the perfonmance of their official duties. Its contents may not otherwise be disclosed without Wodd Bank athorizadon.  CURRENCY EQUIVALENTS Clrrency unit - Uganda Shilling (U Sh) USS 1.00 = U Sh 1174 (October 29, 1993) U Sh I US$0.00085' SDR I = US$1.3934 (October 31, 1993) US$ 1.00 = SDR 0.7177 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS ADF African Development Fund AfDB African Development Bank CTB Ceatral Tender Board DANIDA Danish International Development Agency DUIWD Department of Urban and Institutional Development (in DWD) DWD Directorate of Water Development (formerly the Water Development Department, WDD) EEC Europesn Economic Commission FY Fiscal Year of the World Bank Group, July 1 - June 30 GDP Gross Domestic Product GNP Gross National Product *OU Govermment of Uganda GTZ Gesellschaft fier Technische Zusammenarbeit IBRD International Bank for Reconstruction and Development ICB Intemational Competitive Bidding IDA Intemational Development Association KfW Kreditanstalt fuer Wiederaufbau LCB Local Competitive Bidding MOH Ministry of Health MNR Ministry of Natural Resources (formerly the Ministry of Water, Energy, Minerals and Environment Protection, MWEMEP) MFEP Ministry of Finance and Ectnomic P;anning NGO Non-Governmental Organization NWSC National Water and Sewerage Corporation OMR Operation, Maintenance, and Replacement PIU-NWSC Project Implementation Unit in NWSC PPF Project Preparation Facility RC Resistance Council RTWSP Rural Towns Water and Sanitation Program STW1P Small Towns Water and Sanitation Project TWST Town Water and Sanitation Team UNCDP United Nations Capital Development Fund UNDP United Nations Development Programme UNICEF United Nations Children's Fund WSC Water and Sanitation Committee WUA Water User Association WUG Water User Group GOVERNMENT FISCAL YEAR July 1 - June 30  OR OMCIAL USE ONLY REP`UBLIC OF UGANDA SMALL TOWNS WATER AND SANITATION PROJECT STAFF AP?'lAL REPORT TABLE OF CONTENTS CREDIT AND PROJEC SLTY .................... i - iv L BACKGROUND Counutyy Baacckggrdd .................................. 1 Economnic Overview .................................. 1 SectOr gairactn .................................. . 3 Present Coverage and Service Levels .. ................. 4 Water and Sanitato Sector Policy ............. ......... 5 The Government's Programs in the Sector ............. 6 Sector Iegation ................................... 8 Issues and Constraints ................................... 9 Implementation Eperience and Lessons Learned ...... 10 Banik Assistance Sttat.eg.y ....... ...... 11 IRationale for II)A Involvement .......................... . 11 Prior Investmnent Levels .... .... . ... 12 H. THE PROGRAM Orligin ................................................ 13 Water and Sanitation Conditions in the Program Area 14 Policies and Guidelines .................................... 14 Town Implementadion Cycle .............................. 17 Scope of the Program ...................................... 19 HL THE PROJECT Baclkground ........................................ 21 Pnroject Objectives . ....................................... 21 Project DJescription ................................. ...... 22 Cost Estinates ....................................... 25 Financing ........................................ 27 Procumment ....................................... 28 This document has a metricted distribution and may be used by necipients onbY in the perfofrmance of fthir oMfcia duties. Its contents may QO otherwise be disclosed without World Bank authariztidonL  li.sbursenments .......................................... 32 Specia Accounts .. ..... *.**...**.*....*.. . ...*...... 32 A uditir. q ............................................ 3 4 IV. G ]EE FOR l I lA I ENTATION AND OPERAnION AND hfiV47ECE rgpasvizationz for I...lemntation ........... ***** ** * ....... 35 Organization for Operation and ienae ....... 39 Pilot IzplJenmentadion ........... ............ ..... 4 1 Legal A spweuts .................... .......... ......... 42 Tariffs and Revenue Collection ........................... 42 P^roject Monitoring and Reporting ..................... 43 Mid-Term lRcTiewV . ........... ................. 44 V. PROJECT JUSTIFICATION Mvlain Benefits and ............. ...... ....... 46 Poverty' Alleviation ..... .... ................ 47 nimpact on W m ........................... ........ 48 Environnmental1Iipact ......... e...................... 48 SJ-Qust.aina.bility. .............. ....... 49 PErojec t ]Riskes...-A ........ 0 ..... .*..#.... ........ 5 0 VL AND lECD&MA2ION Agreements Reached During Negotiations .............. 52 Conditions of CIedit Effectiveness ....................... 54 conditions of D3isbursenment ................ ... *... * * *...... 54 Recozm mendation ............... ................. 54  MST OF ANNEXES Annex 1 Program Inivestments and Covesge Annex 2 Letter of Sector Policy Annex 3 Policies and Guidelines for Small Towns Annex 4 TownImp a Process Annex 5 Choice of Technology Annex 6 Saniion and Hygiene Education Annex 7 Project Description and Costs: Part A - Small Towns Annex 8 Project Description and Costs: Part B - Irmja-Njeru Annex 9 Project Description and Costs: Part C - stitational Stgening Annex 10 Procurement Arrangements and Implementaion Schedule Annex 11 Consultants' Services and Technical Assistance Annex 12 Disbursements Annex 13 Key Performance Indicatos Annex 14 Supevison Plan Annex 15 Documents in Project File MAP IBRD No. 25071 lths report is based on thefindings of a Bank aMpris mission *ch vtd Uganda In Aprll 1993. Mr. Gerhard Tsdwnnerl (S. Mwnipal Engineer, AM) was the Mssion Leader and Task Manager. The mssion conistedofMessaiMmes. Rainer Bergthaler (Consuat on Water Spply Enginering), Rama Oindran (Procume eciafli, AF2EI), Fred 'sher (Conslta on T)ainig), Tosihiro Fk#wa (Urban PFiania Secaftt, AF2BI), JosePh Gadek anStadon Speciat, AFIS); Rowen Maiez (Opeain Analyst, AF2), Denyse Morin (nstwonal ecIalist, Rurl Water aNd Sant Grqi, Nairobi), Robert Roche (Yalrigineer, AF41, and Wouter vn den Wall Bae (Consul on Rural 4rucure). lhe peer revwrs wereMs. Paudine Boenna (AF2AE) and Mr. N.V. Jaganata (7WUWS) Mr. Stephen J. WeLwnan and Mr. Frans X. Colago are the Managing Dvsion W and Depaent Dictor, respety, for the operaion.  REPUBLIC OF UGANDA SMAL TOWNS WATER AND SNATION PROJECT CREDIT AND PROJECT SAY Bimvwer: The Republic of Uganda ImplentIng Directorate of Water Development (DWD); Agency and National Water and Sewerage COqoration (N WSC) for a pordon Benftw: of the credit Credit Amount: SDR 30.4 million (JS$ 42.3 million eqivaklent) Tenrs: Standard IDA terms with a matuity of 40 years Relnng Out of a total passed on to NWSC of approximaely US$ 22.0 Tens: milion, 50 percent or approxmately US$11.0 mllion wodd be passed on to NWSC as equity, and 50 percent relent at the prevaiwng mnumn rate cuarged by commercial banks in Uganda for commercial as to compnes, plus 3 percent, repayable over 25 years incuing 5years of grace. heforeign exchange risk of the NWSC portion of the credit would be bomne by the Govermnent. Prject The Project would support the Government's economic recovery Objec,ves: program by exending the rehabiliion ana upgrading of water supply and sanitation services to towns that have sofar not been covered. It would (i) inprove health conditions through better water supply, ercreta disposal, waste water management, and public hygiene; rii) alleviae povety and inmrove the lot of women, and riii) reduce envirownental degr4ation rough better waste management. Pwoject The Project would provide 12 snal towns and Jirya with Descpo: biproved and sustainable water spply and sanitation through ff) the rehabilitation and/or expnion of water supply and sanitationfaciites; (ii) hygiene educaion related to water spply and san=adon, (l) communiy paripation in planng, implementation, operation, and maintenane of water supply and sanitationfacilities; and fv) instittional strengthening, technial assistance and training for the organwaons in the sector.  - ii - Ben qAts: The creation of water suly and san on systems woud mprove the health and weUl-being of the populaion of the wns in te project areaa A large share of the benefits woud go to the poor by ncluding them In the coverage wih an appropriae thology. Women's tadItional bud to proJde water ad look ter the health of children would be kssened, and they would have more tine to devote to other ativies, inclding ncome generating acviies, as a result of imrovements In water supply and sanitaon. Better sanaiton at a household level woudd mean im ved healthfor the entiefamiy. The Project would also bnng about enronmental Improve thorough the safe disposal of acreta and waste water. Risks: The implmenion of the Government's adnistave decentralirion policy, which was approved in July 1992, has not yet progres.ved to a level where the new relationship betwen centra governent and the district and town administraton is cmpetely dfined. The risk of local goverment and cent government nouonal colct does exist and needs to be monitord Similarly, the newly esblished Water User Groups, Water User Associatons, and Water and Saniaon Comm would reqidre project plem aon experiece beore dte risk ofmanagement cots, due to overlapping responsiles and i cdons, is removed. Periodicfollow-up and superivilon wuld be proided by DWD mntoring the perfomswwe of the Water User Groups and Assoiaions and dte reated Water and Saion Commitee to ue dtat ts concern Is properly addressed. here is a risk that the technical and managerial capabilities of the town and district adninistrtons may iially be insficientfor ffec#ve projec mpmentaton Selec sff of the town adminsraons and possibly some personnelfin the distr adminisations directly involed wUh project impleenr,uaion woUld receive appropriate tralng through the Project. Back-u4p armngemens would be made by DWD to supponr the wn admin sratons paMcular in the early stages ofproject impenton.  - i# - EAimated Caft EaPD laaL % f * - fs$ mXo - Small Towns 11.1 4.4 15.5 39 Jlqa-Neru 15.4 5.6 21.0 52 instiutiona Strengtwng 0.9 1.1 2.0 5 Project Prepaton Facty 1.2 0.3 1.5 4 Total Base Cost 2&6 11.4 40.0 100 Contingencies Physkal 2.4 0.8 3.2 PrIe 3.4 1.4 4.8 Sub-Towl of Contingendes 5.8 2.2 8. TOTAL PROJECT COST 34.4 13.6 48.0 Taxes and lJuies 0.8 0.8 TOTAL COST NET OF rAE AN 34.4 I2.8 47.2 DU77ES mmndn~~~g rsEd " d % of - (S$ nmon) IDA 34.4 7.9 42.3 88 Governme of Uganda 2.5 2.5 5 NWSC 3.2 3.2 7 TOTAL PROJECT COST 34.4 13.6 48.0 100