India - Second Hyderabad Water Supply and Sanitation Project

Report No. PID5895 Project Name India-Second Hyderabad Urban Water ... Supply and Sanitation Project Region South Asia Sector Water Supply and Sanitation Project ID INPE42755 Borrower Government of India Beneficiary Government of Andhra Pradesh Implementing Agency Hyderabad Metropolitan Water Supply and Sewerage Board (HMWSSB) Mr. L.V. Subrahmanyam Managing Director Tel: 91-40-339 4402 Fax: 91-40-339 4610 Date PID Prepared October 1, 1997 Projected Appraisal February, 1998 Projected Board Date May, 1998 Background 1. Country and Sector Background The main issues facing India's urban water supply and sanitation (WSS) sector include: (a) Inadequate supply and quality of WS services: Although 85t of lndia's urban population has access to water supplies and 48t to sanitation services, the quality of services are very low. Regular water shortages and intermittent supply of a few hours a day are common; (b) Inadequate institutional capacity/arrangements and utility management: The management and operating efficiency of the operating entities is constrained most critically by their limited degree of autonomy and accountability; (c) Inadequate cost recovery policy: Water tariffs are generally insufficient to recover full cost of supply, with tariff structures that are complex and do not provide incentives for efficient use of water; and (d) Lack of comprehensive water resources management policy and plans. The above issues raise serious questions regarding the long-term sustainability of the present urban water supply and sanitation systems in the country and fully apply to the WSS sector in Andhra Pradesh.  The Government of India (GOI) and Government of Andhra Pradesh (GOAP) are aware of these critical issues, and recognize the need to address them. This project supports GOAP's ongoing efforts to increase HMWSSB's autonomy and improve its financial viability. 2. Objectives (a) To improve living and health conditions in Hyderabad and adjoining municipalities through effective use of safe water and sanitation facilities by: - improving water supply and sanitation services; and - developing the Hyderabad Metropolitan Water Supply and Sewerage Board (HM)KSSB) into an effective commercially-oriented water utility capable of sustaining the delivery of such services. (b) To promote reform of the water supply and sanitation sector through demonstration effect and agreed state policy. 3. Description The main project components are: (i) Construction of facilities for abstraction, treatment and conveyance of about 8.25 TMC water from Krishna River to Hyderabad, including intake and raw water pumping station; water treatment plant; clear water pumping stations; large 140 km long transmission pipeline and reservoirs; power supply and substation; telemetry and communication system; (ii) Rehabilitation and strengthening of water distribution system; construction of new service connections; implementation of an accelerated unaccounted-for-water (UFW) reduction program; (iii) Rehabilitation and extension of sewerage system and sewage treatment plants and construction of new service connections, (iv) Implementation of low-cost sanitation program, including construction of 5,000 household latrines; construction of community latrines and community health education campaigns; (v) Implementation of R&R program for project-affected people; and (vi) Institutional strengthening, technical assistance and training of HMWSSB staff in project implementation and monitoring, including Consultancy studies for sector policy studies (private sector participation, willingness-to-pay, etc.), identification of future sources of supply for Hyderabad and detailed engineering designs. 4. Financing (approximate estimate in million USD equivalent) - IBRD: 300 - IDA: - Cofinancing Sources: - 2-  Official Export Credit Private Unidentified 240 - Local/Borrower's Contribution: 60 Total Project Cost: 600 Of which: Foreign 300 Local 300 5. Implementation (a) Implementation period: 5-6 years (1998-2004). b) Executing Agencies: Hyderabad Metropolitan Water Supply and Sewerage Board (MWSSB) will be responsible for implementing all project components, except for the components related to the amendment of the HMWSSB Act (1989), relevant parts of the Resettlement and Rehabilitation Component and related training which will be jointly implemented by GOAP's Municipal Administration and Urban Development Department (MAUDD), the (three) district governments concerned and HMWSSB. 6. Sustainability The sustainability of the water supply and sewerage components of the project will depend critically on how successful HMWSSB will develop, or allowed to be developed, into a sound commercially- oriented utility. This implies that HMWSSB will need to have sufficient autonomy to conduct its business efficiently including the ability to raise tariffs for full cost recovery. A strong representation of the consumers in HMWSSB's Board of Directors should help HMWSSB management in conducting the operation of the utility. These are the key issues being addressed under the project. The sustainability of the low-cost sanitation component, particularly with regards to individual household latrines, will depend largely on the degree of ownership of the users who are among the poorest sections of the population. As for community latrine facilities, the collective ownership and commitment of the communities involved will be most critical to their sustainability. This would be achieved through a demand-driven approach which involves the stakeholders throughout the preparation, design and implementation of this component. Cost are partially borne by the owners. This approach proved to be quite successful for the construction of about 20,000 individual latrines under the ongoing Hyderabad Water Supply and Sanitation Project. 7. Lessons learned from past operations in the country/sector A review of the project implementation reports indicates that in most cases the physical objectives of past operations were attained, although with considerable delays and occasionally major cost overruns. The proposed project intends to prevent most common causes of delays by having final designs, land acquisition, -3 -  environmental and other clearances, and procurement documents finalized for a significant proportion of the works substantially completed by appraisal. The objective of achieving institutional, financial or economic improvements has been somewhat more elusive. Although some achievements have been attained by the Bank's supported projects, overall the improvements in operational efficiency, financial viability, organizational and management capacity of the water supply and sanitation providers did not achieve the stated targets. Reasons for the limited achievements are the predisposition for construction as opposed to rehabilitation and strengthening operational performance, political opposition to tariff increases, inadequate planning and preparation of plans to achieve the targets, inadequate consultation with users, deficient policy framework, and lack of adequate commitment on the part of the Borrower to introduce policy reform and institutional improvements. This project will further develop HMWSSB into a sound utility including a plan to provide consumers with 24 hours uninterrupted water service, stepping up implementation of the leak reduction program, and improving the metering, billing and collection systems. Also, key actions by the Borrower for institutional reform will be taken "up-front". 8. Poverty Category Although this is not a poverty targeted intervention, it will benefit the poor in Hyderabad which suffer the most from the current water scarcity and deficient sanitation coverage. The low cost sanitation program, in particular, should benefit the poorest section of the population in the city and upgrade their living standards. 9. Environmental Aspects This project has major environmental impacts, especially due to the construction of a large diameter transmission pipeline and associated facilities, including the need to resettle some 275 households, therefore it is classified as Category A. The main environmental issues are related to the construction of a large diameter, buried transmission pipeline of about 140 km length and associated facilities such as: intake, treatment plant, pumping stations and reservoirs, requiring land acquisition, resettlement and rehabilitation of project-affected people. A resettlement plan for all affected persons is being developed. 10. Program Objective Categories 11. Managing Division: Infrastructure Sector Unit, South Asia Region 12. Task Team Leader Nguyen Tin Contact Point Public Information Center - 4 -  The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Note: This is information based on an evolving project. Certain components may not necessarily be included in the final project. Processed by the InfoShop week ending January 9, 1998. - 5 -