India - Third Bombay Water Supply and Sewerage Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 16650 IMPLEMENTATION COMPLETION REPORT INDIA THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Loan 2769/Credit 1750-IN) June 9, 1997 Agriculture and Water Operations Division Country Department II South Asia Regional Office This 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.  CURRENCY EOUIVALENTS Currency Unit = Rupees (RS.) At appraisal (1986) US$1 = Rs.13.0 Completion Year 1996 US$1 = Rs.34.50 WEIGHTS AND MEASURES mm = millimeter (1 millimeter = 0.039 inches) m = meter (1 meter = 3.28 feet) km = kilometer (1 kilometer = 0.62 miles) 1 liter (0.22 Imperial gallons or 0.264 US gallons) lcd = liters per capita per day Ml = million liters or 1,000 cubic meters Mld = million liters per day (0.220 million Imperial gallons per day or 0.264 million US gallons per day) mgd = million Imperial gallons per day (1 mgd = 4,545 m3/day) FISCAL YEAR OF BORROWER 1 April to 31 March ABBREVIATIONS AND ACRONYMS AMCP Additional Municipal Commissioner (Projects) BSDP Bombay Sewage Disposal Project (Ln/Cr 3923/2763-fN) BWSSP I-III Bombay Water Supply and Sewerage Projects (I, II and III) ERR Economic Rate of Return FAO/CP Food and Agriculture Organization of the United Nations/World Bank Cooperative Program FY Fiscal Year Gol Government of India GoM Government of Maharashtra HE Hydraulic Engineer of WSSD IBRD International Bank for Reconstruction and Development ICR Implementation Completion Report IDA International Development Association MCGB Municipal Corporation of Greater Bombay MMRDA Mumbai Metropolitan Region Development Authority OMS Operational Manual Statement PPAR Project Performance Audit Report PPCC Project Planning and Control Cell of WSSD PWD Public Works Department of Government of Maharashtra SAR Staff Appraisal Report WSS Water Supply and Sanitation/Sewerage WSSD Water Supply and Sewerage Department of MCGB Vice President Mieko Nishimizu Director Robert S. Drysdale Division Chief Shawki Barghouti Staff Member Shyamal Sarkar  IMPLEMENTATION COMPLETION REPORT FOR OFFICIAL USE ONLY INDIA THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Loan 2769-IN & Credit 1750-IN) Table of Contents PREFACE ..........................................................i EVALUATION SUMMARY .......................................................... ii PART I: PROJECT IMPLEMENTATION ASSESSMENT ..........................................................1 A. Project Objectives ..........................................................1l B. Achievement of Objectives ...........................................................2 C. Implementation Record and Major Factors Affecting the Project ...................................2 D. Project Sustainability ...........................................................6 E. Bank Performance ...........................................................7 F. Borrower Performance ...........................................................8 G. Assessment of Outcome .......................................................... 10 H. Future Operation ...........................................................11 I. Key Lessons Learned ..........................................................1 I PART II: STATISTICAL TABLES Table 1: Summary of Assessments ..................................................... 13 Table 2: Related Bank Loans/Credits ..................................................... 15 Table 3: Project Timetable ..................................................... 17 Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual ......................... 17 Table 5: Key Indicators for Project Implementation ..................................................... 18 Table 6: Key Indicators for Project Operation . .................................................... 19 Table 7: Studies Included in Project ..................................................... 20 Table 8A: Project Costs ..................................................... 22 Table 8B: Project Financing ..................................................... 22 Table 9: Economic Costs and Benefits ..................................................... 23 Table 10: Status of Legal Covenants ..................................................... 24 Table 11: Compliance with Operational Manual Statements ............................................. 28 Table 12: Bank Resources: Staff Inputs ..................................................... 28 Table 13: Bank Resources: Missions ..................................................... 29 APPENDICES A. Mission's Aide-Memoire ..................................................... 30 B. Borrower's Evaluation ..................................................... 54 Maps IBRD 18974R and 28833 This 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.   -l- IMPLEMENTATION COMPLETION REPORT INDIA THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Loan 2769-IN & Credit 1750-IN) Preface This is the Implementation Completion Report (ICR) for the Thrd Bombay Water Supply and Sewerage Project in India, for which Loan 2769-IN in the amount of US$40.0 million and Credit 1750-IN in the amount of SDR105.5 million (US$145.0 million equivalent) was approved on December 16, 1986 and became effective on January 29, 1988. An increase in the disbursement percentages was introduced by the Bank from September 1, 1990, following the Middle East crisis, and was continued to the Credit closing. On April 9, 1996 the project was restructured to permit financing of some additional works and some uncompleted works of the previous Second Bomnbay Water Supply and Sewerage Project (Cr. 842-IN) which was closed on March31, 1988. The Loan was filly canceled in three steps: US$10.0 million each in June 1993 and on October 6, 1994, and US$20.0 million on June 26, 1995. The Credit was closed on June 30, 1996 after two extensions of one year each. Final disbursement took place on November 22, 1996, at which time the balance of SDR1 5.1 million (US$21.6 million equivalent) was canceled. The ICR was prepared by Mr. Shyamal Sarkar of the Bank's New Delhi Office with assistance from the FAO/World Bank Cooperative Program and reviewed by Mr. Shawki Barghouti, Chief, Agriculture and Water Operations Division, Country Department 2, South Asia Region, and Mrs. Kazuko Uchimura, Project Adviser, Country Department 2, South Asia Region. Preparation of this ICR was begun during the Bank's final supervision/completion mission from July 9-24, 1996. It is based on materials in the project file. The Borrower and implementing agency contributed to preparation of the ICR by: providing data and views, which are reflected in the mission's Aide-Memoire at Appendix A, preparing an evaluation of the project's initial preparation and execution at Appendix B; and commenting on the draft ICR.   -11- IMPLEMENTATION COMPLETION REPORT INDIA THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Loan 2769-IN & Credit 1750-IN) Evaluation Summary Project Objectives 1. The objectives of the project were to expand the water supply and sewerage facilities for the city of Bombay and further strengthen the Water Supply and Sewerage Department's (WSSD) implementation capacity and its financial and operational performance. These objectives were to be achieved by: (a) continuing and expanding on the efforts of previous projects in improving sector efficiency through improvements in project management, procurement, billing and collections, and leak detection and repair in the WSSD; (b) expanding water supply and sanitation facilities for the urban poor; (c) increasing the supply of water to the Municipal Corporation of Greater Bombay (MCGB) area by 455 million liters per day (Mld) to help reduce Bombay's deficit; (d) expanding Bombay's sewerage system in the isolated developed areas; and (e) evaluating operational experience and developing appropriate design criteria and technical options for future investments in sewage treatment. 2. The appraised project included: (a) the construction of 52 km of trunk mains with diameters up to 3000 mm, 49 km of distribution mains up to 1800 mm diameter, 9 km of transmission tunnels, and intemal cement mortar lining of 76 km of pipeline; (b) the provision of leak detection equipment, control equipment and system instrumentation and about 32,000 water meters; (c) construction of a 455 Mld water treatment plant, four service reservoirs and pumping stations; (d) construction of about 54 km of sewers and the building and installation of sewage pumping equipment; (e) provision of water supply and sanitation for the urban poor in slums; and (f) training, consultancies and vehicles. 3. While project objectives were clear and important for the development of water supply and sewerage in Bombay, it would have been appropriate to have specified, as an overall perfomiance objective, the achievement of an uninterrupted water supply during the project period. If, during execution, attention had been given to such a performance objective, higher priority might have been given to rehabilitation and strengthening of the water distribution system, control of leakage and waste, and metering, billing and collection. All of these measures would have assisted with water conservation. 4. The Government of India (Gol) and the Govemment of Maharashtra (GoM) made a request to the Bank in October 1992 to finance left over works from the second Bombay Water Supply and Sewerage Project (BWSSP-II) and high priority remedial works of the Bombay sewerage system from the 'savings"from the Loan/Credit. 'Savings"had arisen due largely to variation in the foreign exchange rates arising from the Rupee depreciation and also due to low disbursements over the initial three years due to delays in award of contracts. The restructuring proposal was approved, and the legal agreements were amended in April 1996.  -iii- Implementation Experience and Results 5. Project implementation started slowly. This was despite of completion of the major part of the designs and contractor prequalification for major critical works prior to negotiations in April 1986. MCGB-WSSD took about three years from effectiveness to award the contracts 6. Project management in WSSD was not adequately organized until March 1991, when an Additional Municipal Commissioner was put in charge of the project. Even then, the existing rigid procedures did not change by much and only marginal improvements resulted and progress continued to be slow. 7. Important parts of the project were unfinished. The water treatment plant and the transmission pipeline works were nearing completion by closing, but the sewerage works were lagging. Improvement in procurement, leak detection and repairs, billing and collection did not receive adequate attention from MCGB. The envisaged poverty alleviation for the urban poor was only partly achieved, (and was financed apart from this project). GoM studies concluded that the development of Middle Vaitarna would provide the least cost development for the next water source (390 Mld) for Bombay, and would complete the logical development of the Vaitarna basin, and the Bank supported this idea and agreed to finance some additional studies. However, at the time of closing, the studies remained incomplete. 8. The estimated total cost of the restructured project was Rs.6,953.5 million (76% more than appraisal estimate) and the expenditure at Credit closing was Rs.3,994.8 million. A comparison of estimates and expenditure is given below: Rs. million US$ million SAR Estimates 3,956.5 100% 304.3 100% Estimated Completion Cost of Restructured 6,953.5 176% 219.1 72% Project (Jan-96) Estimated Expenditure at Closing (Jul-96) 3,994.8 101% 145.3 48% The US$/Rupee exchange rate varied from Rs. 13.00/US$ at appraisal to Rs.34.50/US$ at closing, which contributed to 'tavings." 9. As a result of slow progress, the Loan amount of US$40.0 million was canceled in its entirety during execution of the project. SDR90.4 million (US$127.07 million equivalent) of the Credit amount was utilized, which amounts to only 68.7% of the total Loan/Credit amount. The Credit was closed on June 30, 1996 after two extensions of closing date by one year each (total of two years). Key Factors That Affected Achievement of the Major Objectives 10. A number of factors contributed to the slow progress. These include: (a) the excessive time for approval of the Gol prior to entering into contracts involving payments in foreign exchange (this procedure was discontinued in 1995); (b) inadequate project management, linked to limited financial  -iv- delegations for the Municipal Commissioner; (c) the lack of resettlement plan for project affected persons; (d) slow preparation of engineering and bidding documents by WSSD; (e) the cumbersome intemal procedures for contract evaluation and arriving at award decisions; (f) the slow performance of contractors; (g) the non-cooperative role of Indian Railways that prevented the completion of two sections of the large diameter transmission mains over the railways; and (h) the difficulties faced by MCGB in obtaining support and cooperation from the GoM agencies such as the Traffic Police (road excavation), the Public Works Department of GoM (PWD) (pipe laying along important roads), and Forest Department (Forest clearance). Bank Performance 11. The Bank performance was deficient during preparation and supervision. The staffiweeks utilized between identification and negotiations were only about 50% of the amount normally expected for a complex and diverse project of this kind. The Bank's Operational Manual Statement (OMS) 2.33 on Social Issues Associated with Involuntary Resettlement in Bank Financed Projects was not addressed at the time of preparation. This resulted in failure to identify and plan for the adverse impacts associated with land acquisition/resettlement. The implementation problems (organization, management, procurement) experienced by the previous project due to inadequate institutional capacity were not addressed at preparation and appraisal of this project although they were well known. 12. Supervision was conducted without a plan. The Bank supervision missions devoted a great deal of attention to activities related to the uncompleted works of the BWSSP-IL and as a result spent less time on the BWSSP-fII. The Bank should have deployed more staff resources for this major effort; only 12 supervision missions were undertaken during the 8.5 years implementation period. MCGB commitment for water and sanitation works of smaller nature for the urban poor diminished considerably over time, yet the Bank failed to identify or reverse this trend. Procurement procedures were also inadequate as these did not provide for force account and direct contracting for small works which were appropriate to the circumstances on the ground. Although the Bank very promptly processed in October 1992 an 'in principle" approval of the project restructuring request, the restructuring was delayed, and was only finalized in April 1996. Borrower Performance 13. The poor overall result indicates that there were important deficiencies in Borrower performance. Internal coordination among the WSSD's various divisions during implementation and detailed forward planning did not receive adequate attention. The monitoring indicators agreed at negotiations for reporting on a quarterly basis were not followed. Critical works remained unfinished, and some were not even started. MCGB was not committed to the use of technical assistance for institutional strengthening . Technical assistance was used mostly for the engineering and environmental studies for the proposed Middle Vaitarna project, and engineering preparation and studies for the BSDP, and consultant supervision of complex engineering works. 14. Procurement by WSSD was very slow due to generally slow preparation of engineering and bidding documents and the cumbersome procurement decision making procedures of MCGB. The  complex procedure of making decisions involving agreement and clearance of every technical action by the accounting and legal staff proved to be the bane of efficient project implementation. Procurement procedures were improved and streanmlined and the bidding documents were improved after 1992. The impacts were visible in varying degrees in the various WSSD divisions due to lack of understanding of the difference between the mandatory requirements of the Bank and the recommendations made for reasons of good practice, and their inadequate internal coordination. MCGB had little clout with agencies such as the Indian Railways, PWD, Forest Department, and the Traffic Police, and no support was forthcoming from the GoM to remove bottlenecks. 15. There was compliance with the financial covenant that required MCGB to contribute 40% of capital costs. Audit reports were submitted within the stipulated six months of the end of fiscal year consistently, and counterpart funding was never a problem. Project Outcome 16. The project objectives were not achieved by closing. Slow progress and inadequate attention to important components resulted in the project remaining unfinished, even with two extensions of twelve months each. As a result, the project is rated 'hnsatisfactory." The unfinished works for water supply and sewerage are being completed by WSSD using internal funds and a loan from Mumbai Metropolitan Regional Development Authority (MBD1RDA). Most of the unfinished works are expected to be commissioned by end-June 1997, when the corresponding benefits of the project will begin to be realized. 17. The Economic Rate of Return (ERR) was calculated for water supply and sanitation to be 9.5% which compares with the Staff Appraisal Report (SAR) estimate of 12.3% (Table 9). The difference reflects lower than anticipated benefits, and delays in their realization. Most Important Findings of the Project Implementation Experience 18. The project would have achieved all its development objectives by the extended closing date, and possibly well before, had the institutional weaknesses been addressed at preparation and appraisal by installing a good project management and sound procurement administration in WSSD. Greater supervision effort by the Bank in the early stages of implementation could have identified and found solutions to these weaknesses. Future Operation and Sustainability 19. All the water and sewerage works of BWSSP-III will be integrated into Bombay's water and sewerage systems. Sustainability is likely. MCGB's technical capacity for water supply operations, especially in production and bulk transmission, is satisfactory. MCGB's technical capacity in sewerage is expected to improve through the various actions being taken under the on-going BSDP. Generally, the track record of MCGB in financial performance has been good. Water and sewerage tariffs were revised four times between negotiations and closing. It is likely, therefore, that adequate O&M funds will be forthcoming.  -vi- Lessons for Future Projects 20. Many of the lessons from this project have already been accepted and incorporated into current Bank practices. Lessons already taken on board include the need to: prepare plans ahead of implementation for involuntary resettlement and procurement; obtain convincing evidence of the existence of Borrower ownership; use standard bidding documents; and, have agreed monitoring reports submitted to the Bank quarterly. Below are additional lessons for future projects. 21. Long delays may occur if adequate attention is not given during preparation to the coordination of works and other tasks with other public sector agencies. 22. The agreed Training Plan may be attached to the Minutes of Negotiations. 23. In order to allow sufficient time to enable the signing of contracts to occur, the evaluation of bids should be completed within the first half of the prescribed bid validity period. 24. Identification of all important studies and preparation of consultant recruitment documents should be completed by appraisal and the recruitment of consultants should be completed as per the procurement schedule agreed at negotiations. Consultant recruitment for key studies should be completed before loan effectiveness. 25. By effectiveness there should be in place a fully functional management team, and management plan, which shall be maintained throughout the project implementation period by the Borrower. Any change in the composition of the management team during project implementation should be made only in consultation with the Bank. Project conditionality should include a minimum of three-year posting for senior staff and key staff unless otherwise agreed with the Bank. The management plan should include, inter alia: details of organization and staffing; information management; lines of authority and delegations; and job descriptions for team members. 26. Prequalification of contractors/suppliers before negotiations is not an adequate assurance that award of the contracts will follow immediately after Loan/Credit effectiveness. The bidding documents for a substantial part of the project (works to be carried out in the first two years of implementation period, and those works which are on critical path), should be finalized before appraisal. Loan/Credit effectiveness should be conditional upon contract awards for works on the critical path. 27. Sufficient delegation of financial powers to the Municipal Commissioner and senior technical staff should be put in place to implement works without their actions being routinely subjected to approval by legal and accounting staff, and these delegations covenanted.   -1- IMPLEMENTATION COMPLETION REPORT INDIA THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Loan 2769-IN & Credit 1750-IN) PART I: PROJECT IMPLEMENTATION ASSESSMENT A. PROJECT OBJECTIVES 1. The Third Bombay Water Supply and Sewerage Project (BWSSP III), which was implemented between 1988 and 1996, is the third successive project financed by the Bank for the improvement of water supply and sewerage facilities for the city of Bombay. The First Project (BWSSP I), implemented during 1974 to 1981, included the construction of works to treat all the water for supply to Bombay, and each of the follow-on projects augmented the supply by 455 Mld, abstracting water from the Bhatsai river. Most of the water supply components in the first two projects were completed successfully although with significant delays. Most of the sewerage facilities included in these projects were incomplete at closing. The Project Performance Audit Report (PPAR) for BWSSP I rated the outcome satisfactory but BWSSP II (Second Project) was rated unsatisfactory. There had been an earlier Maharashtra Water Supply and Sanitation Project (1979-85) which had water supply and sanitation components for areas adjoining Bombay. 2. The objectives of the project, as stated in the Development Credit Agreement, were to expand the water supply and sewerage facilities for the city of Bombay and further strengthen the Water Supply and Sewerage Department's (WS SD's) implementation capacity and its financial and operational performance. These objectives were to be achieved by: (a) continuing and expanding on the efforts of previous projects in improving sector efficiency through improvements in project management, procurement, billing and collections, and leak detection and repair in the WSSD; (b) expanding water supply and sanitation facilities for the urban poor; (c) increasing the supply of water to the Municipal Corporation of Greater Bombay (MCGB)l area by 455 Mld to help reduce Bombay's deficit; (d) expanding Bombays sewerage system in the isolated developed areas; and (e) evaluating operational experience and developing appropriate design criteria and technical options for future investments in sewage treatment. 3. As a follow-on from the two previous projects, BWSSP III formed part of a continuing program to improve project implementation and operational performance of the MCGB, and to expand the water 1 Bombay is now known as Mumnbai. In this report both names have been used. BMC has been used to refer to Bombay Municipal Corporation, as it was known at appraisal, Municipal Corporation of Greater Mumbai (MCGM), as it is known now and, also to Municipal Corporation of Greater Bombay (MCGB), as it is mentioned in legal agreements.  -2- supply and sewerage facilities for the city of Bombay2, to keep pace with increasing demand from population growth and expansion of industrial and commercial activities. 4. While project objectives were clear and important for the development of water supply and sewerage in Bombay, it would have been appropriate to have specified, as an overall performance objective, the achievement of an uninterrupted water supply during the project period. If, during execution, attention had been given to such a performance objective, higher priority might have been given to rehabilitation and strengthening of the water distribution system, control of leakage and waste, and metering, billing and collection. All of these measure would have assisted with water conservation. B. ACHIEVEMENT OF OBJECTIVES 5. Implementation effort was largely concentrated in building the facilities for increasing water supply and expansion of sewerage conveyance. However, due to slow progress, many works were unfinished at closing. Improving sector efficiency through actions on procurement, leak detection and repairs, billing and collection did not receive adequate attention from MCGB. The envisaged poverty alleviation for the urban poor was only partly achieved (and was financed apart from the project). Accordingly, project objectives were not fully achieved at closing. 6. A financial performance covenant requiring MCGB to make 40% contribution to investments, after meeting the operation and maintenance costs and the higher of the debt service and the depreciation, was consistently met by MCGB. 7. Of the unfinished works, the water treatment plant and the transmission pipeline were nearing completion at Credit closing, but the sewerage works were lagging. The completion of these investments is being financed by MCGB from their internal sources and by borrowing from the Mumbai Metropolitan Region Development Authority (MMIRDA)3 and they will, eventually, realize benefits. C. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT 8. The Loan of US$40.0 million and the Credit of SDR105.5 million (US$145.0 million equivalent) were approved in December 1986 and became effective in January 1988. The project implementation started slowly. The slow start was despite completion of the major part of the designs and contractor pre- qualification for major critical works prior to negotiations in April 1986. MCGB-WSSD took about three years from effectiveness to award those contracts. Delay was due to slow preparation of bidding documents and cumbersome procurement decision making procedures of MCGB and the unreasonably 2 The Operations Evaluation Department of the World Bank in its Report No. 15849: Impact Evaluation Report-Water Supply and Wastewater Services in Bombay (June 28, 1996) evaluated the impact of the three successive investments in water supply and wastewater. The impact evaluation concluded that (a) significant increases in gross water availability have allowed strong economic growth to continue in Bombay, but they did not translate into improved service levels because of rapid population growth and lack of system rehabilitation; (b) the intermittent nature of the service affect the low income population the most and increase health risks through water recontamination; (c) sanitation objectives were largely unmet; (d) institutional development was positive in that the WSSD is a moderately well run organization and its finances are sound; and (e) construction is often beset with delays and maintenance and rehabilitation are clearly not priorities. 3 MMRDA has set up a revolving fund from the proceeds of its income from sale of developed land for infrastructure development in the Mumbai Metropolitan Region and the local bodies are entitled to borrow under Government of Maharashtra guarantee.  -3- long time taken for technical and foreign payment clearance from the Gol (this was discontinued in 1995). The project management in WSSD was not adequately organized until March 1991, when an Additional Municipal Commissioner was given the responsibility of coordination and management of the project. However, thereafter the rigid procedures did not change by much and only marginal improvements occurred. 9. The Gol and GoM made a request to the Bank in October 1992 to finance left over works from the BWSSP-II and high priority remedial works of the Bombay sewerage system from the 'tavings"from the Loan/Credit. The Bank agreed to the use of savings for the above works and restructure the project as long as the works could be completed within the implementation period of the core elements of BWSSP-III. 'Savings"had arisen due to variation in the foreign exchange rates arising from the Rupee depreciation, and also low disbursements over the initial three years due to delays in award of contracts. The restructuring proposal was approved, and the legal agreements were amended in April 1996. The closing date was extended twice for a total period of two years, and the Credit closed on June 30, 1996. Implementation Record 10. Improving Sector Efficiency. Improvements in sector performance through improvement in procurement, billing and collections, and leak detection and repairs did not occur. A staff training program to increase job-skills and to improve operational and management efficiency, which was agreed at negotiations, was not implemented. 11. Expanding Water Supply and Sanitation Facilities for the Urban Poor. Only five small reservoirs with pumping stations and about 18 km of pipelines were constructed to provide water supply to slum areas on high ground. MCGB has provided, apart from this project, a large number of water connections to the slums during the project implementation period. Sanitation facilities have not been financed by this project, but have been provided under: the Bank assisted Bombay Urban Development Project (Cr. 1544-IN), which closed on September 30, 1994; Gol/GoMIs slum improvement program; and, since 1991, GoMs slum redevelopment scheme. The agreed Bank procurement procedures for this project were considered by WSSD to be inappropriate for carrying out such small works. 12. Increasing the Supply of Water by 455 Mld. Most of the treatment and transmission works were unfinished but nearing completion at closing. It was expected that by June 1997 the additional 455 Mid of treated water would be available. However, due to lack of progress in the construction of trunk distribution mains and reservoirs, the benefit to the city would not be realized fully even then. Instead, benefits will be available to the water deficient areas of eastern and westerns parts of the metropolis. 13. The critical works relating to the distribution and storage reservoirs that remained incomplete are: (a) reservoirs at Malabar ill (estimated completion in December 1998) and Worli Hill (September 1999), where work has not begun due to delay in obtaining access to site; (b) a tunnel between E. Moses Road and Ruparel College, the contract for which had to be rebid (completion planned for January 2000); and (c) pumping station and reservoir at Raoli, which were delayed by decisions on reservoir capacity and pump duty as well as unavailability of access to site which are expected to be completed by July 1998. 14. Expanding the Sewerage System in the Isolated Developed Areas. Progress on the sewerage works was slow. Although the pumping station at Versova was completed and the one at A.S. Marg Powai was nearing completion, none of the sewerage works included in the project was operating by the  -4- time of Credit closing. A substantial part of the conveyance works will be completed by June 1997. At about the same time all the four (Bhandup, Ghatkopar, Malad and Versova) waste water treatment facilities4 of the BWSSP-Il which were included in the restructured project would be completed and commissioned. These will offer substantial opportunities to expand the number of sewer connections and would enable discharge of 685 Mld screened and degritted sewage, of which 140 Mld will be treated at the aerated lagoon at Versova, into coastal waters. 15. Evaluation of operational experience etc. of sewage treatment. The evaluation of operational perfornance to develop appropriate design criteria and technical options for future investment in sewage treatment was not completed. The lagoon construction which was to provide the basis for this evaluation was delayed and is now expected to be commissioned in June 1997. 16. The total cost of the restructured project was estimated to be Rs.6,953.5 million (76% more than appraisal estimate) and the estimated expenditure at Credit closing was Rs.3,994.8 million. A comparison of estimates and expenditure is given below: Rs. million US$ million SAR Estimates 3,956.5 1000/o 304.3 1000/o Estimated Completion Cost of Restructured 6,953.5 176% 219.1 72% Project (Jan-96) Estimated Expenditure at Closing (Jul-96) 3,994.8 101% 145.3 48% The US$/Rupee exchange rate varied from Rs.13.00/US$ at appraisal to Rs.34.50/US$ at closing. 17. The Economic Rate of Return (ERR) was calculated for water supply and sanitation (Table 9). When the same methodology as that used for the SAR was applied but with actual or updated data, the ERR was calculated to be 9.5%. This compares with the SAR estimate of 12.3%. The difference reflects lower than anticipated benefits, and delays in their realization. Major Factors Affecting the Project not Generally Subject to Government Control 18. General shortage of diesel during and immediately after the Middle East crisis in 1990 affected transportation of materials to work sites for a period of over two months. 19. Civil disturbances and the riots in the city in December 1992 and series of bomb blasts in early 1993 caused considerable dislocation in implementation for a period of over four months. 20. There was poor contractor performance despite procedures established for qualifying contractors. There are only a few works, notably Pise-Panjrapur Main (W-6) and Staff quarters (W-18B), which have been completed without requiring extension of contract duration. 4 The waste water treatment facility (WWTF) included only physical unit operations like screening and degritting of sewage.  -5- Factors Generally Subject to Government Control 21. Excessive delays occurred in approval by the Gol prior to entering into contracts involving foreign exchange payments (this was discontinued in 1995), for example: contracts for Pumping Plant at Panjrapur (W-3M); Treatment Plant at Panjrapur (W-5); Tunnel between Futka Tank and Sewree (W-19); and Tunnel between E. Moses Road and Ruparel (W-20). 22. Additionally, MCGB confronted major difficulties in obtaining support and cooperation from the Railways (railway crossings of transmission pipeline and also sewerage conveyance), and GoM agencies (Traffic Police [road excavation], Public Works Department [PWD - pipe laying along important roads], Forest Department [Forest clearance]). These problems considerably delayed the completion of the transmission pipeline. Factors Generally Subject to Inplementing Agency Control 23. Inadequate Project Management. The project management in WSSD was not adequately organized initially to implement a complex and extensive project of this kind including major pumping and treatment facilities, conveyance works and tunnels, laying of sewers in busy congested areas, and creating water and sanitation facilities for urban poor. Only marginal improvements were made after March 1991. The limited financial delegations for the Municipal Commnissioner, which required that any decisions that involved a financial transaction valued above about US$9,000 had to be referred to the Standing Commnittee of the Municipal Corporation, was an impediment for quick decision making. 24. Lack of Resettlement Action Plan. There was failure to address the issues associated with land acquisition/resettlement and plan effective measures for resettlement of affected families in respect of construction of: (a) a length about 175 m of the transmission line alignment at Majiwade junction (W-9) which was occupied by slum houses of temporary construction; (b) inlets/outlets of reservoirs at Raoli and Worli (W- 17 and W- 1 8A) which were occupied by slums; (c) a reservoir at Worli (W- 18) due to reluctance of MCGB tenants to move to an alternate equivalent accommodation nearby; (d) a reservoir at Malabar Hill (W-1 5) due mainly to the reluctance by a privately owned primary school to move to adjoining land provided by MCGB, and also due to slow action from a sub-post-office and a small office of PWD to move to adjoining land. 25. Generally Slow Preparation of Engineering Documents and Bid Documents. For example: (a) the construction of Raoli pumping station and reservoir (W-12& 17) was delayed by a decision on reservoir capacity and pump duty; and (b) bids were not invited by MCGB for Instrumentation and Telemetry (W-3 5E) during the project implementation period as the engineering preparation and bidding documents were completed only close to the Credit closing date. 26. Slow Procurement Performance. It took MCGB over three years from effectiveness to complete the procurement process and sign the contracts for the works for which contractor prequalification was completed before negotiations in April 1986 and the bidding documents were prepared in mid-1987. The procedures for arriving at decisions pertaining to technical matters that involved the accountants and legal officials of MCGB, and finally the AMCP - a process that took many months well beyond the bid validity period, before the issue was placed before the Standing Committee of MCGB -- were excessively cumbersome. For example, the contracts were signed for: Pump Station at Panjrapur (W-1) on March 15, 1991; Panjrapur Treatment Plant (W-5) on October 30, 1992; Pise-  -6- Panjrapur Main (W-6) on June 27, 1991; Majiwade MGL/EEH junction Main (W-9) on January 16, 1991; Tunnels between Futka Tank and Sewree (W-19) and between E. Moses Road and Ruparel (W-20) on October 1, 1990. 27. Inadequate Priority Attached to the Implementation of the Sewerage Component. Weak organizational arrangements and inexperienced and untrained staff in the sewerage division affected performance. This was exacerbated by the frequent turnover in the post of the Chief Engineer. However, MCGB streamlined the organizational arrangements in mid-1995 to enable speedier execution of left-over BWSSP-II works which were included in the restructured project, and this proved effective. D. PROJECT SUSTAINABILITY 28. MCGB's technical capacity for water supply operations, especially in production and bulk transmission, is satisfactory. MCGB's technical capacity in operation and maintenance is expected to improve in sewerage through the various actions being taken under the on-going Bombay Sewage Disposal Project (BSDP - Ln/Cr 3923/2763-IN)5. Generally the track record of MCGB in financial performance has been good and they consistently complied with the financial performance covenants. At present, WSSD generates sufficient revenue to meet the costs of operating and maintaining the system and finances 35%6 of investments after meeting the debt service/depreciation. The WSSD financial performance has been covenanted in the BSDP. Accordingly, it is expected that sufficient resources will be available for O&M:, and the operations are expected to be orderly and sustained. E. BANK PERFORMANCE 29. Identification. In broad terms the identification was satisfactory. The project concept was determined by the conclusions of previous studies for staged development of water sources and a gradual improvement of sewerage. Support to WSSD was appropriate to build on the previous experience and to expand water supply distribution and sanitation facilities for the urban poor. This was consistent with the Government's development strategy of raising service levels and Bank's sector objectives of extending water and sanitation services to a majority of the population, and to assist in improving in efficiency and sector operations and distribution of services. However, higher priority should have been given at the identification stage, and subsequently, to rehabilitation and strengthening of the existing water distribution system, control of leakage and waste, metering, billing and collection, which would have helped with the achievement of an uninterrupted water supply. 30. Preparation. There were three preparation missions in February 1984, June 1984 and October 1984 (Table 13). Between identification and negotiations 57.2 staffweeks (Table 12) had been utilized against a typical 120 staffweeks for a project of this type. Serious implementation problems (organization, management and procurement) faced by the previous projects due to inadequate institutional capacity 5 Bombay Sewage Disposal Project (BSDP - Ln/Cr 3923/2763-IN) which became effective on March 22, 1996 has the following objectives: (a) strengthening the capacity of MCGB's WSSD in all aspects of the management of the provision of sewerage services; (b) sustaining the financial viability of the provision of water supply and sewerage services in Greater Mumbai through direct charges to beneficiaries at appropriate levels; and (c) improving the health and environmental conditions in Greater Mumbai including slum dwellers. 6 The covenanted capital cost contribution from MCGB was reduced from 40% in respect of BWSSP m to 35% in BSDP.  -7- were not addressed. No experts in organization/management and procurement participated in the preparation missions. Bank failed to identify the problems which would arise with land acquisition/resettlement. There was weak borrower ownership of the institutional development aspects and low levels of commitment for the provision of water supply and sanitation for the urban poor. The suggested prequalification of contractors for major contracts before inviting priced bids as a measure to avoid delays in award of contract promptly after effectiveness did not prove effective. The Bank preparation performance is rated as 'deficient'. 31. Appraisal. Appraisal took place in February 1985, about one and a half years after identification. Board presentation took another one year and ten months. The appraisal was thorough in assessing the financial and engineering aspects of major investment items concerning water supply capacity augmentation but lagged in assessing the institutional capacity (organization, management and procurement) and institution development. Relocation and resettlement was not formally considered and plans to address the resettlement issues were not prepared. The appraisal also inadequately dealt with the approach towards preparation of the next tranche of investment for further improvement of water supply. Overall, the Bank's performance at appraisal is rated as 'deficient'. 32. Supervision. During the 8.5 year implementation (including two 12 month extensions), a total of 146.5 staffweeks (Table 12) was utilized to supervise the project. 12 supervision missions (two missions in each of FY89 and FY90, three missions in FY92; and one mission in each of the remaining five years) were undertaken and about 45 staffweeks were utilized in the field (Table 13). Although supervision was close to the Bank average of 150-160 staffweeks for a project of this nature, the missions used a substantial part of their time in discussing and reporting the uncompleted works of the BWSSP-II. This left only about 100 staffweeks (estimate only) for supervision of BWSSP-III of which about 25 staffweeks were in the field. This was certainly inadequate to supervise a project of such complexity and diverse nature. 33. Supervision was conducted without any plan. The number of missions undertaken was too few for effective supervision. WSSD's commitment to the technical assistance part of the project and the water and sanitation works of smaller nature for the urban poor, diminished as the time elapsed, which the missions were unable to address. Although the Bank very promptly processed in October 1992 an 'in principle" approval of the project restructuring request, the restructuring was delayed, and was only finalized in April 1996. 34. The procurement performance could have been substantially improved with mission inputs from a procurement specialist, providing clarification to WSSD questions and addressing their concems and explaining the Bank requirements. This would have been an alternative to the protracted written exchanges, as was realized much later, but a procurement specialist participated only in the supervision mission undertaken in February/March 1993. 35. The Bank failed to respond to WSSD's lack of action to implement the leak detection and waste prevention component of the project, which may be considered to be critical in the development of the satisfactory and efficient water supply for Bombay. The Bank's performance in supervision is rated as 'deficient'.  -8- F. BORROWER PERFORMANCE 36. The major engineering part of the project was well prepared. Consultants were appointed, designs substantially completed by appraisal and pre-qualification of contractors for major contracts also completed before negotiations. However, only implementation of the physical works for increasing water supply and expansion of sewerage conveyance were taken up by MCGB. 37. The institutional development and training aspects of the project were not given sufficient attention by MCGB as they mostly concentrated on the large expenditure items. This focus may have been in order to avoid repetition of the unsatisfactory experience in implementation of sewerage works in the Second Bombay Water Supply and Sewerage Project (Cr. 842-IN) 7 . Technical assistance was mainly used for: the engineering and environmental studies concerning the proposed Middle Vaitama water supply project; engineering preparation studies for the BSDP; and consultant supervision of complex engineering works. Due to MCGB's slow processing of the recruitment of a consultant to study the critical aspects of metering and charging policies, the recruitment could not be completed before Credit closing. 38. Procurement perfornance by WSSD was very slow due to generally slow preparation of engineering and bidding documents and the cumbersome procurement decision making procedures of MCGB. The complex procedure of making decisions by involving agreement and clearance of every technical action by the accounting and legal staff proved to be the bane of efficient project implementation. Only a few contracts were completed at closing. The quality of construction was generally satisfactory. Completion took much longer than provided in the contracts due to WSSD's weak contract administration, inappropriate bidding conditions, and contractors' poor performance. Procurement procedures were considerably streamlined lately in the later stages and the bidding documents were changed after 1992 by inclusion of improved conditions of contract. The Gol amended in 1995 the procedures requiring clearance before award of contracts involving foreign exchange payments and thus removed a bottleneck. However, the impacts of these changes were visible in varying degrees in the various WSSD divisions due to lack of understanding of the difference between the mandatory requirements of the Bank and the recommendations made for reasons of good practice, and their inadequate internal coordination. MCGM had little clout with agencies such as the Indian Railways, PWD, Forest Department and the Traffic Police, and no support was forthcoming from the GoM to help remove these bottlenecks. 39. The project successfully introduced to India an innovative technique for in-situ mortar lining of distribution pipelines. The project also introduced the concept of trenchless sewer construction which the WSSD will continue to use, where appropriate. 40. The need for improved coordination and detailed forward project planning did not receive adequate attention at the beginning of implementation. Project management required a monitoring system providing for an early warning of delays, measures to overcome the possible impending delays, and an indication whether the scope of the project was being implemented as agreed. Reports and analysis 7 The Second Bombay Water Supply and Sewerage Project (Cr. 842-IN) was effective on June 12, 1979 and closed on March 31, 1988. The Project Performance Audit Report (World Bank Report No. 9265, December 31, 1990) for the BWSSP-II noted that the water supply components met their objectives, and while there were modest achievements with regard to sewerage, in essence this component was a failure. The outcome was rated unsatisfactory, sustainability uncertain, and institutional development moderate.  -9- prepared by the Project Planning and Coordination Cell (PPCC) under the direction of an experienced consultant was discontinued in 1989 without making any effective altemative arrangements. This created a project management vacuum until an Additional Municipal Commissioner was given the responsibility of coordination and management of the project in March 1991. With the earlier experience of two similar projects, many of the problems encountered were foreseeable and could have been avoided or mitigated by adequate advance planning and coordination. 41. The indicators to be reported on quarterly basis were agreed at negotiations. However, no progress reports were prepared. Apart from the requirement to report to the Bank, the systematic gathering and periodic reporting of key project information was essential for effective project management by MCGB-WSSD. 42. MCGB created a separate unit in early 1995 headed by a Deputy Chief Engineer, which has proved effective, for completion of the left-over BWSSP-II mechanical and electrical works. These works will be commissioned in stages by June 1997 enabling preliminary treatment of 545 Mld sewage, and preliminary and biological treatment to an additional 140 Mld sewage before discharge to coastal waters. 43. Failure by GoM to fully comply with the on-lending covenant (over Rs. 600 million remained withheld at Credit closing) fortunately did not affect the project implementation due to MCGB's sound financial position and their ability to finance the gap from their own resources. Storm Water Drainage was temporarily transferred to WSSD in 1991 without prior consultation with the Bank. However, the Bank was informed soon after and did not object as at that time the financial perfomiance of WSSD was adequate to cover the extra costs without putting at risk compliance with the cost recovery. Effective April 1, 1997, the Storm Water Drainage has been withdrawn from the WSSD functions. 44. The financial performance of WSSD was generally satisfactory despite no improvement in the efficiency' of collection of charges for water supply, and increase in customer accounts receivable9. MCGB-WSSD were revised had complied with all the financial covenants (Table 10). Water and sewerage tariffs were revised in April 1987, April 1993, April 1994 and April 1996. MCGB consistently provided audited financial statements relating to the water and sewerage operations within the stipulated six months from the end of fiscal year. 45. Thus, the Borrower performance on implementation was mixed, but has been rated as 'deficient' overall. G. ASSESSMENT OF OUTCOME 46. The project objectives were not achieved by closing. Slow progress and inadequate attention to important components resulted in the project remaining unfinished, even with two extensions of twelve months each. As a result, the project is rated 'tinsatisfactory." The unfinished works for water supply and 8 Collection efficiency remained unchanged at 78% in 1994-95, compared with 1985-86. The SAR envisaged that billings and especially collections performance would be improved under the project, specifically by the employment of consultants to assist in developing better computerized programs and procedures. No consultant was appointed and there has been no discernible improvement in performance. 9 Customer accounts receivable increased from Rs 630 million in 1985-86 to Rs 2408 in 1994-95. Some 46% of customer receivables are three or more years old; some unpaid bills date back to the mid-i 960's.  -10- sewerage are being completed by WSSD using internal funds and a loan from Mumbai Metropolitan Regional Development Authority (MMRDA). Most of the unfinished works are expected to be commissioned by end-June 1997, when the corresponding benefits of the project will begin to be realized. 47. The intention of the project to reduce water shortage from 36% to 18% of demand will not be achieved even when production goes fully on stream. Demand has risen in the intervening three- year period between the scheduled completion date and the likely commissioning date of the water treatment plant and the transmission system. A shortfall of about 26% is estimated. Further, although the quality of treated water is expected to meet acceptable standards when it enters the distribution system, there is a risk of contamination before it reaches consumers because of internittent supply and the poor condition of distribution pipelines especially in the city area, which the project did not adequately address. H. FUTURE OPERATION 48. All the water and sewerage works will be integrated into Bombay's systems. Sustainability is likely. MCGB has the capacity to operate the treatment plant and the various pumping plants installed for water supply systems, but has limited number of skilled personnel to operate and maintain the facilities being built for sewerage and sewage treatment 10. However, with careful planning, MCGB would be in a position to redeploy skilled personnel from the existing centers to the newly built facilities such as the sewage pumping plants, waste water treatment facilities " and the aerated lagoon. The operational capacity in respect of sewerage and sewage treatment is expected to improve under the on-going BSDP through various actions being taken up to upgrade skills and preparation of routines, procedures, and manuals. Financial performance has been exceptionally good in the past and this is likely to continue, so finance for O&M is not likely to present problems. 49. It is appropriate that operational indicators are generated for the WSSD as a whole, including both physical, financial and institutional indicators. Indicators have been agreed with the Bank for the BSDP and are being prepared by MCGB and reported every quarter beginning from the December 1996 quarterly report. L. KEY LESSONS LEARNED 50. Many of the lessons from this project have already been accepted and incorporated into current Bank practices. Lessons already taken on board include the need to: prepare plans ahead of implementation for involuntary resettlement and procurement; obtain convincing evidence of the existence of Borrower ownership; use standard bidding documents; and, have agreed monitoring reports submitted to the Bank quarterly. Below are additional lessons for future projects. 51. Long delays may occur if adequate attention is not given during preparation to the coordination of works and other tasks with other public sector agencies. 10 The aerated lagoon being built at Versova will be completed and commissioned in June 1997. The skills required to operate and maintain such sewage treatment plant are regarded as modest and such skills for operation of mechanical and electrical equipment could be developed quickly through the hands-on training of qualified personnel during the pre-commissioning trial operation. 11 MCGB is operating one WWTF at Colaba and has proven skills in operation of WWTF. The four new WWTFs are at Ghatkopar, Bhandup, Versova and Malad and these will be commissioned in stages by June 1997.  -11- 52. The agreed Training Plan may be attached to the Minutes of Negotiations. 53. In order to allow sufficient time to enable the signing of contracts to occur, the evaluation of bids should be completed within the first half of the prescfibed bid validity period. 54. Identification of all important studies and preparation of consultant recruitment documents should be completed by appraisal and the recruitment of consultants should be completed as per the procurement schedule agreed at negotiations. Consultant recruitment for key studies should be completed before loan effectiveness. 55. By effectiveness there should be in place a fully functional management team, and management plan, which shall be maintained throughout the project implementation period by the Borrower. Any change in the composition of the management team during project implementation should be made only in consultation with the Bank. Project conditionality should include a minimum of three-year posting for senior staff and key staff unless otherwise agreed with the Bank. The management plan should include, inter alia: details of organization and staffing; information management; lines of authority and delegations; and job descriptions for team members. 56. Prequalification of contractors/suppliers before negotiations is not an adequate assurance that award of the contracts will follow immediately after Loan/Credit effectiveness. The bidding documents for a substantial part of the project (works to be carried out in the first two years of implementation period, and those works which are on critical path), should be finalized before appraisal. Loan/Credit effectiveness should be conditional upon contract awards for works on the critical path. 57. Sufficient delegation of financial powers to the Municipal Commissioner and senior technical staff should be put in place to implement works without their actions being routinely subjected to approval by legal and accounting staff, and these delegations covenanted.  -12- PART II: STATISTICAL TABLES Table 1: Summary of Assessments Not A. Achievement of objectives Substantial Partial Negligible Applicable Macro policies LI :] EI EC Sector policies FE FI EC LI Financial objectives LI EI lI LI Institutional development LI LI LI FI Physical objectives LI [E11 LI L Poverty reduction LI LI [7] F Gender issues LI L 7 LI Other social objectives L LI LI ITE Environmental objectives LI L LI FT Public sector management K] K] El LI Private sector development LI CI LI E] Other (specify) L-I L LI L B. Project sustainability Likely Unlikely Uncertain m.LI El  -13- Higbiy C. Bank performance satisfactory Satisfactory Deficient Identification FT] LII Preparation assistance LE [7] Appraisal [I CI FT] Supervision LI FE ] Highy D. Borrower performance satisfactory Satisfactory Deficient Preparation LI 7 FI Implementation aI Cl L Covenant compliance LI El LI Operation (if applicable) EI D LI IEghlv Highly E. Assessment of outcome satisfactory Satisfactory Unsatisfactory unsatisfactory O OI [7 OI  -14- Table 2: Related Bank Loans/Credits Loan/Credit title Purpose Year of Status Approval Preceding operations Second Bombay Water To construct 455 Mld filteration plant and other allied 1979 Closed 31 Supply & Sewerage works, construction of balancing reservoir and large March Project (Cr. 842-IN) diameter transmission pipelines; improvement of 1988. distribution system and renovation of transmission PPAR mains, reservoirs, pumping stations, etc.; and December improvement of sewage collection and conveyance 1990 system in 5 zones; renovation of sewage treatment plant. Punjab Water Supply and To improve water supply and sewerage in eight towns; 1979 Closed. Sewerage Project (Cr. 848- and train staff and supply of specialized equipment PCR isued IN) 9/16/87. Maharashtra Water To construct 200 Mld water treatment plant and allied 1979 Closed. Supply and Sewerage works, rehabilitate existing water treatment plant, PPAR Project (Cr. 899-IN) construct reservoirs, transmission mains and improve issued distribution system in five towns and villages; expand 4/13/88. sewage treatment capacity and extend sewage collection system. Rajasthan Water Supply To provide water supply to problem villages and 1980 Closed. and Sewerage Project (Cr. improve and extend water supply to four major cities; to ICR issued 1046-IN) extend sewerage system in three major cities; and 9/27/89. strengthen operation and maintenance Gujarat Water Supply and To bring water to rural communities where water is 1983 Closed. Sanitation Project (Cr. scarce or unsafe for human consumption; to ICR issued 1280-IN) improve/extend water supply and sewerage services in 9/24/93. selected urban centers; to extend and upgrade sewage collection and disposal systems in densely populated areas in major municipalities; to provide low-cost sanitation in medium-size towns; and to strengthen the institutional framework of the sector through improved financial management, accounting, billing and collection practices, and introduction of cost recovery targets and establishment of training facilities. Tamil Nadu Water Supply To improve water supply in larger urban areas and to 1984 Closed. and Sanitation Project (Cr. provide water supply to certain smaller towns and rural ICR issued 1454-In & SF-12-IN) areas; to provide low-cost sanitation to selected urban 3/28/96. communities and to strengthen institutional, managerial, and financial practices. Kerala Water Supply and To strengthen institutions including financial 1986 Closed. Sanitation Project (Cr. management; provide water supply to rural areas and ICR issued 1622-IN) upgrade and extend water distribution in one urban area; 6/30/95. provide LCS in 10 urban and selected rural areas.  -15- Loan/Credit title Purpose Year of Status Approval Following Operations Madras Water Supply and To augment water supply sources by 102 Mld and 1987 Closed. Sanitation Project ((Ln. improvement of water supply distribution system; and to ICR issued 2846-IN/Cr. 1822-IN) improve sewerage system and strengthen institution. 3/11/97. Hyderabad Water Supply To provide additional 135 Mld water to Hyderabad; and 1990 Ongoing and Sanitation project (Cr. to rehabilitate and strengthen the existing water system 2115-IN) and sewerage system; and to provide low-cost sanitation units to serve low-income people; and to strengthen institution. Maharashtra Rural Water To raise the standard of living in rural areas through 1991 Ongoing Supply and Environmental improved health and productivity, by expanding access Sanitation Project (Cr. to potable water systems and environmental sanitation 2234-IN) facilities. To develop replicable models for coordinating water, enviromnental sanitation and health communications program and strengthen the institutional capacity. Karnataka Rural Water To raise the standard of living in rural areas through 1993 Ongoing Supply and Environmental improved health and productivity, by expanding access Sanitation Project (Cr. to potable water systems and environmental sanitation 2483-IN) facilities. To develop replicable models for coordinating water, environmental sanitation and health communications program and strengthen the local institutional capacity. Second Madras Water Provide source works, transmission and treatment 1995 Ongoing Supply project (Ln. 3907- facilities for new water supply to city; continue program IN) of water distribution and conservation improvements, technical assistance. Bombay Sewage Disposal Construct 2 marine outfall sewers, and sewage pumping 1996 Ongoing Project (Ln/Cr 3923/2763- and treatment facilities; rehabilitation and improvements IN) to sewerage facilities and systems; low-cost sanitation in slums. Uttar Pradesh Rural Water Support to policy reforms in State Government; 1996 Ongoing Supply and Environmental construct water supply and environmental sanitation Sanitation Project (Ln. schemes in rural areas; undertake studies and awareness 4056-IN) campaigns. Note: Table 2 shows up to 10 years of preceding operations. Year of approval is Bank fiscal year.  -16- Table 3: Project Timetable Steps in project process Date planned Date actual Identification (Executive Project Summary) Jul-83 Preparation: pre-appraisal Jan/Feb-84 Appraisal Nov/Dec-84; Feb-85 Feb-85 Negotiations Sep-85 22 to 30-Apr-86 Board presentation Jan-86 16-Dec-86 Signing 12-May-87 Effectiveness 10-Aug-87; 10-Nov-87; 29-Jan-88 14-Jan-88 Project completion 31 -Dec-93 Dec-96 a/ Loan closing 30-Jun-94 30-Jun-96 a/ The main water supply works were expected to be complete by end December 1996. Some water supply works and sewerage works are programmed to be completed by January 2000. Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual (US$ millions) FY87 FY88 FY89 FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 Appraisal estimate Total: 2.0 23.50 52.4 88.1 125.9 161.0 181.2 185.0 185.0 185.0 185.0 Actual Credit: 0 10.71 19.17 19.34 31.80 50.89 67.46 81.98 91.64 112.62 127.07 Loan: 0 0 0 0 0 0 0 0 0 0 0 Total: 0 10.71 19.17 19.34 31.80 50.89 67.46 81.98 91.64 112.62 127.07 Actual as % of estimate 0 46 37 22 25 32 37 44 50 61 69 Effectiveness date : 29-Jan-88 Date of final disbursement : 22-Nov-96 Note: Loan of U$40 million was fully canceled in three steps: US$10 million each in June 1993 and October, 1994 and U$20 million in June, 1995.  -17- Table 5: Key Indicators for Project Implementation Key implementation indicators in SAR SAR Estimate a/ Actual or ICR estimate Average daily production of treated water Mld 2820 (1991) 2474 (1995/96) Metered consumption: domestic Mld 1471 b/ 1406 (1995/96) Metered consumption: commercial Mld ) 179 (1995/96) ) 785 b/ Metered consumption: industrial Mid ) 145 (1995/96) Total metered consumption Mld 2256 bl 1730 (1995/96) Estimated unmetered consumption Mid n.a. 249 (1995/96) Total estimated consumption Mld 2256 (1991) 1979 (1995/96) Number of water connections Nos. 177,820 (1986) 240,187 (1995-96) Number of operating standpipes Nos. 52,959 (1986) 76,655 (1995-96) New meters installed Nos. n.a. 62,959 Number of sewer connections Nos. 242,815 (1986) 265,000 Length of water mains laid for the urban poor Km n.a. 18.0 Number of ground water tanks constructed for urban Nos. n.a. 5 poor Number of tubewells Nos. n.a. 224 Major leaks repaired Nos. n.a. n.a. Number of seats in sanitation facilities Nos. 30,400 (1986) 38,444 WSSD employees at HQ Nos. n.a. 2,371 WSSD operational employees Nos. n.a. 22,170 Average cost/m3 of water delivered Rs/m3 0.84 (1992/93) 3.0 (1996/97) Average revenue/m3 of water delivered Rs./m3 1.08 (1992/93) 3.5 (1994/95) Quick current ratio 11.0 (1995) 3.03 (1995) Average age of customer receivable Months 3.0 (1995) 7.0 (1995) Collection efficiency % 85 (1995) 78 (1995) Debt:equity ratio 0.29 (1995) 0.27 (1995) Debt service ratio 4.2 (1995) 11.8 (1995) Working ratio 0.40 (1995) 0.54 (1995) Population served by private connections Million n.a. 4.65 Population served by public standpipes Million n.a. 5.75 Total population of served area Million n.a. 10.40 a/ The year to which estimate applies is shown in parenthesis; b/ Unmetered consumption included with metered consumption; n.a. = not available Indicators were not defined in the SAR separately for project implementation and project operation. SAR Annex 6 contained Monitoring Indicators which were to be monitored on quarterly basis during and after the execution of the project to measure the achievement of the technical, financial and administrative goals set for the project. The above are the key implementation indicators.  -18- Table 6: Key Indicators for Project Operation Key operating indicators in SAR SAR Estimate a/ Actual or ICR estimate Average daily production of treated water Mid 2820 (1991) 2474 (1995/96) Metered consumption: domestic Mld 1471 b/ 1406 (1995/96) Metered consumption: commercial Mld ) 179 (1995/96) ) 785 b/ Metered consumption: industrial Mld ) 145 (1995/96) Total metered consumption Mld 2256 b/ 1730 (1995/96) Estimated unmetered consumption Mld n.a. 249 (1995/96) Total estimated consumption Mld 2256 (1991) 1979 (1995/96) Number of water connections Nos. 177,820 (1986) 240,187 (1995-96) Number of operating standpipes Nos. 52,959 (1986) 76,655 (1995-96) New meters installed Nos. n.a. 62,959 Number of sewer connections Nos. 242,815 (1986) 265,000 Number of tubewells Nos. n.a. 224 Number of seats in sanitation facilities Nos. 30,400 (1986) 38,444 WSSD employees at HQ Nos. n.a. 2,371 WSSD operational employees Nos. n.a. 22,170 Average cost/m3 of water delivered Rs./m3 0.84 (1992/93) 3.0 (1996/97) Average revenue/m3 of water delivered Rs./m3 1.08 (1992/93) 3.5 (1994/95) Quick current ratio 11.0 (1995) 3.03 (1995) Average age of customer receivable Months 3.0 (1995) 7.0 (1995) Collection efficiency % 85 (1995) 78 (1995) Debt:equity ratio 0.29 (1995) 0.27 (1995) Debt service ratio 4.2 (1995) 11.8 (1995) Working ratio 0.40 (1995) 0.54 (1995) Population served by private connections Million n.a. 4.65 Population served by public standpipes Million n.a. 5.75 Total population of served area Million n.a. 10.40 a/ The year to which estimate applies is shown in parenthesis; b/ Urumetered consumption included with metered consumption; n.a. = not available Indicators were not defined in the SAR separately for project implementation and project operation. SAR Annex 6 contained Monitoring Indicators which were to be monitored on quarterly basis during and after the execution of the project to measure the achievement of the technical, financial and administrative goals set for the project. The above are the key operating indicators.  -19- Table 7: Studies Included in Project 2. Performanceofaerated EvalPurpose as defined at. l Study appraisal/redefined Status Impact of study 1. Improved leak detection Train and show latest In progress. None so far. l technology. technology. Redefined forl l ~~~~~~~~reduction of contaniinationl l ~~~~~~~in C Ward.l 2. Performance of aerated Evaluate performance & Not done. None.l lagoon. appropriateness for future investment. 3. Filter washwater recycling Reduce treated water deficit. Not done. None. 4. Metering, billing and To make commercial Start expected in None. tariff systems. operations efficient, early 1997. 5. Financial modeling. Forecast needs for funds. Completed. Forecasts are made in December each year and tariff adjustments are worked out. 6. Upgrading audit Strengthen Municipal Completed. Audit reports are capability. auditing. produced on time. 7. Materials management Rationalize stores and Completed. Number of stores materials management. reduced and inventory carrying costs are reduced. 8. Materials Management - To make stores management In progress. None so far. Computerization of stores efficient 9. Tansa dam strengthening Review spillway capacity Prelininary reports .None so far. design review and earthquake resistance. presented recommending modification of spillway and adding buttresses. 10. Upgrade sewerage O&M Upgrade O&M and reduce In progress. To be None so far. services cost. Train staff. Monitor completed under BSDP. performance. 11. Condition assessment of Assess condition of sewers to In progress. To be None so far sewers plan rehabilitation. completed under BSDP. 12. Topographical survey of Update network map. In progress. To be None so far. manholes & sewer lines Computerize manhole data. completed under BSDP. Eliminate storm water drain connections to sewers.  -20- Purpose as defined at Study appraisal/redefined Status Impact of study 13. Site Investigation for Progress preparation of Complete. Detailed design could | Middle Vaitarn dam Bombay IV project. proceed once seismic | criteria agreed.l 14. EIA of proposed Middle Progress preparation of Complete. Further work needed to Vaitarna dam Bombay IV project. meet Bank requirements. 15. EIA of Middle Vaitarna Progress preparation of In progress. Will permit progressing conveyance, treatment, Bombay IV project. of Mid-Vaitama project. storage and distribution 16. Topographical survey for Progress preparation for In progress. None so far. Bombay IV Bombay IV project.  -21- Table 8A: Project Costs Appraisal estirnate (US$M) Actual/latest estimate (US$M) Item Local Foreign Total Local Foreign Total costs costs costs costs 1. Water supply 167.0 48.1 215.1 81.9 38.0 119.9 2. Sewerage 30.6 4.3 34.9 28.6 12.9 41.5 3. Facilities for slums 5.5 0.6 0.0 0.0 0.0 6.1 4. Common services 3.0 3.9 6.8 8.9 15.7 6.9 5. Other 38.7 2.1 41.4 133.2 26.1 42.0 TOTAL 244.6 59.7 304.3 133.2 85.9 219.1 NOTE: The Actual/latest estimate included expenditures to be incurred to complete all works under each item of restructured project. Table 8B: Project Financing Appraisal estimate (US$M) Actualllatest estimate (US$M) Source Local Foreign Total Local Foreign Total costs costs costs costs IBRD 32.2 7.8 40.0 0.0 0.0 0.0 A 116.5 28.5 145.0 77.2 49.9 127.1 Subtotal 148.7 36.3 185.0 77.2 49.9 127.1 MCGB 95.9 23.4 119.3 56.0 36.0 92.0 TOTAL 244.6 59.7 304.3 133.2 85.9 219.1 NOTE: The Actual/latest estimate for GOI contribution included expenditures to be incurred to complete all works of restructured project. Domestic contribution to Credit closing was US$ 18.2 million.  -22- Table 9: Economic Costs and Benefits The economic analysis for this ICR employed the same methodology as was used in the SAR (Annex 18) with actual or updated data. Certain key assumptions were modified where this seemed to be appropriate, as identified below. The economic rate of return (ERR) was calculated for water supply and sanitation taking into account capital costs, operating costs and project benefits, as measured by the value of the water supply, expressed in constant prices. Capital costs were those relating to the whole project and were expressed net of taxes and duties. The project was unfinished at closing but the estimated costs to completion at the end of December 1996 have been taken into the analysis. A labor shadow price for local labor of 70% was used, which was applied to 26.4% of the investment costs, representing the estimated labor element. Annual incremental operating costs were estimated and divided into local and foreign components assuming proportions of 85/15 respectively. A standard conversion factor of 0.9 was used for the local component. Operating costs were assumed to start to be incurred from January 1997, at the completion of investment, for a period of 25 years. (The SAR assumed operating costs would start to flow from the second year of construction). The project benefits have been assumed equal to the product of the additional water sold to consumers, after losses in distribution, and the average tariff. (The SAR analysis made no allowance for losses in distribution, and implicitly assumed production and consumption were equal). There will be some supplementary benefits associated with water conservation in Tansa and Vaitarna lakes but these are difficult to quantify and are not included. Sewage benefits are also difficult to estimate, and are not included. Benefits were assumed to accrue from January 1997, at the completion of investment, for a period of 25 years. (The SAR assumed benefits would start to flow from the second year of constmction). Year Local Labor Plant & Foreign Incr. Total Incr. Incr. Value of Net cap. element of material element operating incr. water water mcr. economic (to expend. local cap. cap. of cap. costs economic supply supply supply benefits end expend. expend. expend. costs March) (Rs. m) (Rs. m) (Rs. m) (Rs. m) (Rs. m) (Rs. m) (mild) (m m3) (Rs. m) (Rs. m) 1989 116.88 21.60 64.80 20.94 107.34 -107.34 1990 33.32 6.16 18.47 5.97 30.60 -30.60 1991 302.33 55.87 167.61 54.17 277.65 -277.65 1992 483.18 89.29 267.87 86.57 443.73 -443.73 1993 460.32 85.07 255.20 82.47 422.74 -422.74 1994 850.56 157.18 471.55 152.39 781.12 -781.12 1995 643.34 118.89 356.67 115.26 590.82 -590.82 1996 759.97 140.44 421.33 136.16 697.93 -697.93 1997 1132.97 209.37 628.12 202.98 37.75 1078.22 113.75 41.52 207.59 -870.63 1998 650.71 120.25 360.75 116.58 151.00 748.59 455.00 166.08 830.38 81.79 1999 398.45 73.63 220.90 71.39 151.00 516.92 455.00 166.08 830.38 313.46 2000 74.18 13.71 41.13 13.29 151.00 219.12 455.00 166.08 830.38 611.25 2001 151.00 151.00 455.00 166.08 830.38 679.38 2002 151.00 151.00 455.00 166.08 830.38 679.38 2020 151.00 151.00 455.00 166.08 830.38 679.38 2021 151.00 151.00 455.00 166.08 830.38 679.38 Note: For the purposes of compacting the presentation, years 2003 through 2019 are not shown. Results SAR estimated ERR = 12.3% ICR estimated ERR at benefits valued at average tariff = 9.5% The lower actual ERR compared with the SAR estimate reflects the delays in the realization of the WSS benefits and lower than anticipated revenues. Benefits measured by the consumers' willingness to pay for water would be higher than the average tariff.  Table 10: Status of Legal Covenants INDIA: Third Bombay Water Supply and Sewerage Project Original Revised Covenant Present fulfillment fulfillment Agreement Section typ status date date Description of covenant Comments DCA 3.01(a) 10 C India to cause Maharashtra and MCGB to perform in accordance with the provisions of the Maharashtra Agreement and the Project _______ .________ Agreement respectively. 3.01(b) 10 C India to make the proceeds of the Credit available to Maharashtra. LA 3.01(a) 10 C India to cause Maharashtra and MCGB to perform in accordance with the provisions of the Maharashtra Agreement and the Project Agreement respectively. 3.01(b) 10 C India to make the proceeds of the Credit available to Maharashtra. MA 2.01(a) 10 C Maharashtra shall cause BMC to perform in accordance with the provisions of the Project Agreement. 2.01(b) 4 C Maharashtra shall relend the proceeds of the Credit and Loan to BMC under SLA with the following terms: (1) proceeds to be made available for 25 years including a grace period of 5 years; (2) interest to be charged at the rate of 8.75% per annum; and (3) proceeds to be made available quickly as required to enable BMC to meet expenditures required for the project. 2.01(c) 3,4 CP Maharashtra shall ensure that funds not less than 60% of the annual About Rs 600 million capital expenditures are available to BMC under the same terms and outstanding at Credit closing. conditions as given for 2.01(b). l 2.01(d) 4 C Maharashtra shall exercise its rights under the SLA and except as the Association shall otherwise agree, Maharashtra shall not assign, amend, abrogate or waive to SLA or any provision thereof. 2.02(a) 5, 9 C Maharashtra shall, at the request of the Association, exchange views with the Association with regard to progress of the project, etc. 2.02(b) 5 C Maharashtra shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of the project. 2.03 10 C 30-Jun-94 Maharashtra shall make available water from the Bhatsai reservoir as required for the project. 2.04 10 C Maharashtra shall take all actions to acquire as and when needed all  Original Revised Covenant Present fulfillment fulfillment Agreement Section tp status date date Description of covenant Comments such land and rights in respect of land as shall be required for carrying out the project. PA 2.01(a) 5 C BMC shall carry out the project with due diligence and efficiency and shall provide promptly as needed, the funds, facilities, services and other resources required for the project. 2.01(b) 10 C BMC shall carry out the project in accordance with the Implementation Procedures set forth in SCH 2 to the PA and such Schedule may be amended form time to time by Agreement between the Association and BMC. 2.02 10 C Procurement of goods, works and consultants services required for the project and to financed out of the proceeds of Credit/Loan shall be governed by the provisions of Schedule I of PA. 2.04 4 C BMC shall duly perform all its obligations under the SLA. 2.05(a) 9 C BMC shall exchange views with the Association with regard to the progress of the Project, the performance of its obligations under the PA and under the SLA. 2.05(b) 5 C BMC shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of the project, the accomplishment of the purposes of the Credit, or the performance by BMC of its obligations under the PA and under the SLA. 3.01 5 C BMC shall cause WSSD to carry on its operations and conduct its MCGB staff was supplemented affairs in accordance with sound administrative, financial, engineering by consultants for engineering and public utility practices under the supervision of qualified and preparation and supervision of experienced management assisted by competent staff in adequate complex works. numbers. 3.02 5 C BMC shall cause WSSD at all times to operate and maintain its plant, Operation and maintenance machinery, equipment, and other property, and make all necessary study for sewerage is in repairs and renewals thereof all in accordance with sound engineering, progress. financial and public utility practices. 3.03(a) 5 C BMC shall, in respect of WSSD, take out and maintain with responsible insurers or make other provisions satisfactory to the association for insurance against such risks and in such amounts as shall be consistent with appropriate practice. 3.03(b) 5 C BMC shall cause WSSD to maintain its existing separate fire/accident I I I I - and third party insuraice  Original Revised Covenant Present fulfillment fulfillment Agreement Section type status date date Description of covenant Comments 3.04 5, 12 NC BMC shall consult the Association prior to making any material BMC did not consult IDA before modifications in the structure, organization, responsibilities and the subject of storm water was technical and financial operations of WSSD. transferred to WSSD. 3.05 5 C BMC shall consult the Association prior to the sale, lease, transfer or disposal of any of the properties or assets of WSSD except in the ordinary course of business. 4.01(a) I C BMC shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operation and financial condition. 4.01(b) 1, 2 C BMC shall have accounts and financial statements of WSSD for each (i) fiscal year audited by independent auditor acceptable to the Bank. 4.01(b) I C BMC shall furnish to the Association as soon as available, but in case (ii) not later than six months after end of each year: (a) certified copies of its financial statements of WSSD for such year as so audited; and (b) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested.. 4.01(b) I C BMC shall furnish to the Association such other information concerning (iii) said accounts and financial statements as well a the audit thereof and said records, as the Association from time to tome reasonably request. 4.01(c) I C For all expenditure to which withdrawals are requested form the Cr Acct. on the basis of SOE, BMC shall (i) maintain separate accounts reflecting such expenditures, (ii) retain records until one year after closing date, (iii) enable Association's representative to examine records, (iv) ensure such separate accounts are included in annual audits. 4.02(a) 2, 4 C BMC shall, with effect from April 1, 1987 and for each financial year WSS tariffs were revised on 05- thereafter, set and maintain for water supply and sewerage services to Apr-87, 01-Apr-93, 01-Apr-94 ensure operating revenues are sufficient to meet all WSSD operating and 01-Apr-95. expenses and debt service and, together with any internal funds of WSSD available for investment for, provide at least 40% of annual capital expenditure. 4.03 1, 2, 5 CD 31-Mar-87 31-Mar-89 By March 31, 1987 shall cause WSSD to: (a) establish a specific cash account for the eventual replacement or rehabilitation of capital assets, (b) ensure that all operating surpluses are allocated to the said account until the amount in the said account equal accumulated depreciation  Original Revised Covenant Present fulfillment fulfillment |Agreement Section type status date date Description of covenant Comments l ~~~~~~~~~~~~~~~~~charges. DCA - Development Credit Agreement with Government of India LA - Loan Agreement with Government of India MA - Maharashtra Agreement with State of Maharashtra PA - Project Agreement with Municipal Corporation of Greater Bombay (Mumbai) Covenant types: Present status: I = Accounts/audits 8 = Indigenous people C = Complied with 2 = Financial performance/generate 9 = Monitoring, review, and reporting CD = Compliance after delay revenue from beneficiaries 10 = Implementation NC = Not Complied with 3 = Flow and utilization of project funds 11 = Sectoral or cross-sectoral budgetary or CP = Complied with partially 4 = Counterpart funding other resource allocation 5 = Management aspects of the project or 12 = Sectoral or cross-sectoral policy/ of its executing agency regulatory/institutional action 6 = Enviromnental covenants 13 = Other 7 = Involuntary resettlement  - 27 - Table 11: Compliance with Operational Manual Statements The Bank's OMS 2.33: Social Issues Associated with Involuntary Resettlement in Bank-Financed Projects was not addressed at the time of preparation. This resulted in failure to identify the adverse impacts associated with land acquisition/resettlement and plan effective measures to address the issues. Table 12: Bank Resources: Staff Inputs Stage of project cycle Planned Revised Actual Weeks US$ Weeks US$ Weeks US$ Preparation to appraisal n.a. n.a. n.a. n.a. 23.2 50,400 Appraisal n.a. n.a. n.a. n.a. 34.0 76,800 Negotiations through n.a. n.a. n.a. n.a. 16.2 40,000 Board approval Supervision n.a. n.a. n.a. n.a. 146.5 369,400 Completion n.a. n.a. 16.0 55,780 18.4 58,300 TOTAL n.a. n.a. n.a. n.a. 238.3 594,900 Table indicate n.a where information is not available from Bank's MIS. Completion Actuals are final estimates.  - 28 - Table 13: Bank Resources: Missions Performance rating Stage of project Month/ Number Days in Specialized Implem- Develop- Types of year of field staff skills entation ment problems persons represented status objectives b/ Through Appraisal Jul-83 1 n.k. E Feb-84 2 11 E,F Jun-84 1 9 Oct-84 2 13 E,F Appraisal through Feb/Mar-85 4 13 E,F Board approval Aug-85 1 3 T Board approval Nov/Dec-86 3 21 a/ E,F through effectiveness May/Jun-87 2 24 a/ E,F Oct-87 2 7 a/ E,F Supervision Jul-88 2 6 a/ F,E 1 1 Feb-89 2 9 a/ F,E 1 1 Aug-89 2 n.k. a/ F,E 1 1 M,P Nov-89 2 6 a/ F,E 1 1 M Oct/Nov-90 2 11 a/ F,E 3 1 M,P,L Jul/Aug-91 2 12 a/ E 2 1 M,P Nov-91 3 12 a/ E,F 2 1 M,P May/Jun-92 3 15 a/ E,F 2 1 P Feb/Mar-93 5 11 a/ E,F,En,P 2 1 P May-94 3 8 a/ F,E 2 1 M,P Apr-95 3 13 E S S M Sep-95 3 4 E, S S S M Completion Jul-96 4 16 E,Ec/F U U a/ Combined with other projects. b/ P = procurement; M = project management; L = Legal Covenants Staff skills: F = Financial analyst; E = Engineer; Ec = Economist; En = Environmentalist; T = Training specialist; S = Social scientist; P = Procurement specialist; n.k. = not known.  - 29 - INDIA: THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Loan 2769-IN and Credit 1750-IN) Implementation Completion Reporting Mission July 10 to 24, 1996 AIDE-MEMOIRE Table of Contents I. INTRODUCTION .......................................... 30 II. THE PROJECT .......................................... 30 III. PROJECT IMPLEMENTATION STATUS AT CLOSING ........................................ 33 IV. VIEWS ON PROJECT IMPLEMENTATION ........................................... 36 Bank view on Project Implementation ........................................... 36 MCGM view on Project Implementation .......................................... 39 V. VIEWS ON FUTURE OPERATION, OPERATIONAL PLAN AND SUSTAINABILITY Future Operation .............................. 41 Operational Plan .............................. 41 Sustainability .............................. 42 VI. FOLLOW-UP AND AGREED ACTIONS .............................. 42 ANNEXES ANNEX 1 Project Cost Estimate and Status at Credit Closing .44 ANNEX 2 Procurement: Summary of Contracts Awarded .48 ANNEX 3 Performance Indicators .50 ANNEX 4 Guidance on Borrower's Contribution to the ICR .51 ANNEX 5 List of Key Persons Met .52  - 30 - INDIA: THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Loan 2769-IN and Credit 1750-IN) Implementation Completion Reporting Mission, July 9 to 24, 1996 AIDE-MEMOIRE L. INTRODUCTION 1.01 A mission comprising Shyamal Sarkar (World Bank - SA2RS, leader), R.G. Paterson (engineer, FAO/World Bank Cooperative Program), J. Fullbrook (economist/financial analyst, consultant) and B. Datta (engineer, consultant) visited Mumbai from 10 to 24 July 19961 to review the project status at the Credit closing and draw out lessons for future lending in the sector and to provide advice and support to MCGM for the preparation of the borrower's contribution to the ICR The Bank's letter of May 16, 1996 to MCGM copied to GoM and Gol, indicated the purpose of the ICR, the process involved in its production, the borrower contribution and the borrower responsibilities, and a letter of June 30, 1996 to MCGM indicated the data requirement by the ICR mission. 1.02 After an initial meeting with the Additional Municipal Commissioner, Projects (AMCP) and senior staff of the Water Supply and Sewerage Department (WSSD) the mission spent two days visiting Pise, Panjrapur and other water supply and sewerage sites. Implementation of the project was then discussed with both current Deputy Municipal Commissioners (DMC), the two previous AMCPs, previous DMCs, Chief Engineers and their staff, who provided valuable insights and information to the mission. The mission also met and discussed the project with the Principal Secretary, Water Supply and Sanitation Department of the Government of Maharashtra (GoM). A list of the key officials met by the mission is attached in Annex 5. The mission wishes to thank all concerned officials for their assistance, courtesy and hospitality. 1.03 This Aide-Memoire, which is based on information provided by MCGM and the mission's discussions has been prepared by the mission to record its findings and the views of the Bank and MCGM-GoM on project implementation and future operations. The findings and conclusions of the mission were reviewed on July 24, 1996 at a wrap-up meeting in Mumbai13/, chaired by the AMCP, and a copy of the draft Aide-Memoire was left in the field. However, these are subject to review and confirmation by the Bank management. II. THE PROJECT 2.01 The objectives of the project were to expand the water supply and sewerage facilities for the city of Bombay and further strengthen WSSD's implementation capacity and its financial and operational performance by: (a) continuing and expanding on the efforts of previous projects in improving sector efficiency through improvements in project management, procurement, billing and 12/ Shyamal Sarkar from July 9 to 12 and 21 to 23. 13/ Bombay is now known as Mumbai.  - 31 - collections, and leak detection and repair in the WSSD; (b) expanding water supply and sanitation facilities for the urban poor; (c) increasing the supply of water to the MCGM area by 455 Mld to help reduce Bombay's deficit; (d) expanding Bombays sewerage system in the isolated developed areas; and (e) evaluating operational experience and developing appropriate design criteria and technical options for future investments in sewage treatment. 2.02 The appraised project included: (a) the construction of 52 km of trunk mains with diameters ranging from 600 mm to 3000 mm; 49 km of distribution mains with diameter ranging from 150 mm to 1800 mm diameter; 9 km of transmission tunnels of 3000 mm dia.; internal cement mortar lining of 76 km of pipeline from 1200 mm to 3000 mm dia; the provision of leak detection, control equipment and system instrumentation and about 32,000 water meters; (b) construction of a 455 Mid water treatment plant; four service reservoirs with total capacity of 144,000 m3 and the building and installation of pumping capacity of 2,233 Mid; (c) construction of about 54 km of sewers with diameter ranging from 230 mm to 1000 mm dia; building and installation of sewage pumping equipment of 150 Mld capacity in 12 units; (d) provision of water supply and low-cost on-site sanitation for the urban poor in slums; (e) training for MCGMIWSSD staff in system maintenance and operations, and expansion of course curricula at MCGM's existing training center; (f) appointment of consultants to improve WSSD's project planning and implementation capacity, and to help implement the project and prepare preliminary designs for the next tranche of source development (Vaitarna) to meet future water supply needs, and review and develop design parameters in wastewater disposal systems, based on stabilization pond technology (Versova) and examine the possibilities for recycling wash water at the potable water treatment plants and to reduce distribution system water losses by application of improved techniques; and (g) supply of 83 trucks, four wheel drive vehicles, buses and other vehicles for project implementation and operations. 2.03 Based on GoM and Gol request, a project restructuring proposal was initiated in October 1992 to finance high priority remedial works of the Bombay sewerage systems from the savings from the Loan/Credit, which accrued due to variation of foreign exchange rates and also due to extremely poor withdrawals over the initial three years due to delays in the preparation of bid documents and award of contracts. The additional items were estimated to cost US$ 25 million and were planned for completion by 1996. However, the final shape of the restructuring proposal was delayed until April 9, 1996, when the amendment to the legal agreement was issued. The restructured project included several remedial works of the sewerage system, completion of some of the Bombay II uncompleted sewerage works, and a few new works, mostly related to rehabilitation of water distribution mains. These additional works were estimated to cost about US$ 7.7 million. Attached Annex 1 (Project Cost Estimates and Status at Credit closing) also provides a comparison of the project 'as-appraised' and the 'restructured project'. 2.04 The key dates related to the Loan/Credit, are as follows:  -32 - Date Elapsed Time (Month) from Appmval Appaia Feb-85 Negotiations 22-Apr-86 Board Approval 16-Dec-86 0.0 Agreement 12-May-87 5.0 Effective 29-Jan-88 13.5 Project Completion 3 1-Dec-96 84.5 Original Credit Closing 30-Jun-94 90.5 First Extension to 30-Jun-95 102.5 Project Restructuring 09-Apr-96 111.8 Second Extension & Credit closing 30-Jun-96 114.5 Agreements for an IDA Credit of SDR 105.5 million (equivalent to US$ 145.0 million at that time) and an IBRD Loan of US$ 40.0 million were signed on May 12, 1987. The Loan was fully canceled in three steps: US$ 10.0 million in June, 1993 and October, 1994 and US$ 20.0 million on June 26, 1995. The Credit closed on June 30, 1996 after two extensions of one year each, when US$ 112.6 million had been disbursed. Contracts 2.05 A combination of international and domestic procurement of goods and civil works was made by MCGM as agreed at appraisal. However, the processing of bidding document to award of contract took an inordinately long period which resulted in MCGM's not awarding/completing all the envisaged works by the closing date. Of the 212 goods and civil works contracts planned, 188 were awarded at closing and the remainder were at various stages of processing. The attached Annex 2 gives a summary of the contracts of each of the WSSD divisions. Except a few large contracts (one tunnel, one reservoir and one pumping station, some sewerage conveyance) and a few contracts which were taken-up near the end of the project implementation (mortar lining of distribution networks, uncompleted mechanical and electrical works of BWSSP-II, etc.), others were completed or substantially completed. The distribution (percent) of the value of ICB and LCB contracts for civil works and materials and equipment over the aggregate value of contracts awarded followed, more or less, the pattern forecast at appraisal and given at table 3.3 of SAR. The variation (see attached Annex 2) was caused by the increase in the consulting services from US$ 7.7 million to about US$ 26.1 million (Rs 776.3 million at an average exchange rate of Rs 29.7 to a US$). Project Cost Estimates 2.06 Based on information provided by MCGM, the project cost estimated at appraisal, the estimated cost of the restructured project, estimated cost to completion, and an estimated expenditure (an early estimate) at closing are shown in detail in Annex 1 attached with this Aide-Memoire. A summary of it is given below:  - 33 - Amount: Rs million Estimated Estimated SAR Completion Expendituires to Item Estimate Cost (*) 30-Jun-96 (*) Remarks Water supply: civil 1253.1 2805.6 1105.1 Actual cost of treatment equipment included in civil works. Water Supply: equipment 468.8 1026.8 922.4 One Pumping Station uncompleted Sewerage: civil 261.4 826.4 685.5 Includes carry over from BWSSP II Sewerage: equipment 13.6 479.7 124.3 Includes carry-over M&E works from BWSSP-11 Slum areas: water 31.3 0.0 0.0 Financed from other sources Slum areas: sanitation 17.0 0.0 0.0 Financed from other sources Vehicles 11.1 88.4 88.4 Staff quarters 10.9 53.6 53.6 Meters 16.4 34.3 8.3 Leak detection equipment 6.9 20.0 0.0 Telemetry & misc. equipment 12.1 332.0 2.4 Bids for SCADA not invited. Training & Tech. Assistance 31.9 12.9 12.9 Expenditure only on training infrastructure Studies 40.8 17.7 10.8 Included part of 3 major studies for BSDP Middle Vaitarna Site 5.5 178.9 84.8 Restructured project included feasibility and detailed investigation engineenng preparation Consultants 0.0 555.2 548.3 Included supervision consultants. BMC engineering 243.8 522.0 348.0 Land acquisition 2.4 NA NA Total Base Cost 2427.3 Contingencies: Physical 254.3 Contingencies: Price 1006.2 Contingencies: Total 1260.5 Total before Taxes & Duties 3687.8 l Taxes and Duties 268.7 l Total Project Cost 3956.5 6953.5 3994.8 (*) including contingencies, and taxes and duties. The increase in costs of sewerage works is largely due to the addition to the project of new works and works carried over from BWSSP II. MCGM has applied for a loan from Mumbai Metropolitan Regional Development Authority (MMRDA) for completion of the outstanding works and this is now under consideration by MMRDA. m1 PROJECT IMPLEMENTATION STATUS AT CLOSING 3.01 The implementation effort was largely concentrated in building the facilities for increasing water supply and expansion of sewerage conveyance. Improving sector efficiency through improvement in project management, procurement, billing and collection, leak detection and repairs did not receive adequate MCGM attention. 3.02 Improving sector efficiency. No importance was attached to the training needs despite agreeing at negotiations that MCGM will prepare and implement a staff training program encompassing various facets to increase job-skills and to improve operational and management efficiency. Only some expenditures were made in building limited training infrastructures such as accommodation at the Training Institute. No record of training conducted was readily available to the mission. The mission requested MCGM to provide information on the training provided.  - 34 - 3.03 Further strengthening of the operational efficiency of WS SD in the area of revenue collection has not been achieved, although MCGM met in each year the financial performance covenant of making 40% contribution to investments after meeting the operation and maintenance cost and meeting the higher of the debt service and the depreciation. A consultancy for metering, billing and tariff systems identified at the beginning of the project implementation is expected to start in October 1996. 3.04 A consultancy to demonstrate and train staff in the latest techniques in leak detection and make recommendations for future work was included in the project (para 3.17 of the SAR). This was deferred in 1991 because MCGM considered it to be more cost-effective to buy leak detection equipment and train staff separately. However, this was not done. Instead, a consultancy to study reduction of contamination in C Ward (one of 23 wards of MCGM) was awarded in 1995, financed from MCGM's own resources, and is nearing completion. The mission observed that the study results are not expected to be of any meaningful use to reduce the water losses due to leakage. 3.05 In March 1991, MCGM created a new post of AMCP to take overall responsibility for the implementation of BWSSP mII and related water and sewerage investments. WSSD claim that improvements in project management have been achieved by experience and a greater awareness of procedures and the likely problems. 3.06 Expanding water supply and sanitation facilities for the urban poor. Five small reservoirs with pumping stations and about 18 km of pipelines have been built to provide water supply to slum areas on high ground. MCGM provided a large number of water connections to the slums during the project implementation period. However, these were financed out of MCGM's own sources. The procurement procedures were found to be inappropriate for carrying out such small works. Amendment to the procurement procedures was delayed and thus, no further work was done by MCGM. Sanitation facilities have not been financed by this project, but have been provided under the Bank assisted Bombay Urban Development Project, GoI/GoM's slum improvement program and, since 1991, GoM's slum redevelopment scheme. A Slum Sanitation Program has been taken-up under the Bombay Sewage Disposal Project (BSDP) which became effective on March 22, 1996. 3.07 Increasing the supply of water by 455 Mld. By the time of credit closing most of the main water supply works were nearing completion. It is expected that by about December 1996 the additional 455 Mld of treated water will be available and most water supply works will be complete. The main exceptions are (a) reservoirs at Malabar Hill (estimated completion in December 1998) and Worli Hill (September 1999), where work has not yet begun due to delay in obtaining access to site, (b) a tunnel between E. Moses Road and Ruparel College, the contract for which had to be rebid due to cancellation of the original contract (completion planned for January 2000) and (c) Raoli pumping station and reservoir, which were delayed by decisions on reservoir capacity and pump duty as well as unavailability of access to site and are now expected to be complete by July 1998. 3.08 However, the increase in availability of water to Mumbai will be only 365 Mld after compensating for the losses occurred by the MCGM's turning-over the Ulhias river intake of 90 Mld capacity to Kalyan Municipality. Although the quality of treated water is expected to meet acceptable  - 35 - standards when it enters the distribution system, there is an unacceptable risk of contamination before it reaches consumers because of intermittent supply conditions. 3.09 Expanding sewerage system in the isolated developed areas. The progress on the sewerage works was slower. Although the pumping station at A.S. Marg was completed and the Versova pumping station is nearing completion, none of the sewerage works included in the project was complete and operating by the time of credit closing. However, substantial length of the conveyance works will be completed by May/June 1997. In about the same time all the four (Bhandup, Ghatkopar, Malad and Versova) waste water treatment facilities of the BWSSP-II which were included in the project at a latter stage would be completed and commissioned and would offer substantial opportunities to expand the number of connections and would enable discharge of degritted, screened sewage into coastal waters. The schedule of completion and commissioning of various important units is given below: Waste Water Treatment Facility at Bhandup December 1996 Sewage Pumping Station at Ghatkopar March 1997 Waste Water Treatment Facility at Ghatkopar March 1997 Waste Water Treatment Facility at Malad March 1997 Waste Water Treatment Facility at Versova June 1997 Aerated lagoon at Versova June 1997 Sewage Pumping Station at Matunga February 1997 3.10 The delays experienced by MCGM in laying the conveyance mains were due to: (a) difficulty in obtaining permission from traffic police to excavate in roads; (b) hard rock encountered at shallow depth; (c) slow procurement progress; (d) poor performance by contractors; and (e) refusal by railway authorities to permit open excavation across railway tracks. 3.11 Evaluation of operational experience etc. of sewage treatment. The aerated lagoon at Versova is not yet complete and as such the intended review of its operational performance to develop appropriate design criteria and technical options for future investment in sewage treatment was not done. The lagoon is now expected to be completed and commissioned by June 1997. No plan for evaluation of performance is being thought of by MCGM at present. 3.12 The development of Middle Vaitarna scheme as the next tranche of investment which was identified as the least cost development to provide next water source for Bombay remained unfulfilled despite completion of considerable preparation work due to lack of GoM and GoI interest. 3.13 Monitoring reports. WSSD has not complied with the action agreed at negotiations to report quarterly to the Bank the monitoring indicators (Annex 6 of the SAR), even though most of these indicators are easily available in WSSD. Thus, the underlying concept to have in place a set of records to assist the project agency and the Bank to monitor progress towards the achievement of 'development objectives"which are much broader than mere physical achievement was not met.  - 36 - 3.14 Compliance with Covenants. The Government of Maharashtra (GoM) has not fully complied with the on-lending covenant. An estimated amount of over Rs 600 million remained outstanding to MCGM at Credit closing. Storm Water Drainage was transferred to WSSD in 1991 without prior consultation with the Bank as is required by Section 3.04 of the Project Agreement. However, the Bank was informed soon after and did not object. Otherwise, compliance with covenants has been good. MCGM had consistently met all the financial covenants. The MCGM has without fail provided audited financial statements relating to the WSSD within the stipulated period of six months from the preceding financial year end. IV. VIEWS ON PROJECT IMPLEMENTATION Bank View on Project Implementation 4.01 Only implementation of the physical works for increasing water supply and expansion of sewerage conveyance was taken-up by MCGM. The institutional development aspects of the project were not given the required attention. MCGM-WSSD did not implement the leak detection and waste prevention component of the project nor the study for washwater recovery. 4.02 The need for improved coordination and detailed forward project planning did not receive enough attention to provide the project management with an early warning system. With the experience of two earlier similar projects, many of the problems encountered were foreseeable and could have been avoided or mitigated by adequate advance planning and coordination. A Project Management Manual was to be prepared and issued to all officials concerned with BWSSP III at the beginning of project implementation, but this was not done. 4.03 More than three years after effectiveness was taken to prepare the bidding documents and contracts award, even though the prequalification of contractors/suppliers was completed before negotiations for most of the major water supply works which accounted for about 40% of the estimated project costs. As a result, the project implementation effectively started about three years after the loan effectiveness. The implementation was generally slow. Contracts requiring foreign exchange payments needed Gol approval before award which on many occasions delayed award decisions. 4.04 A review undertaken by the Bank of contracts over US$ 5.0 million awarded during FY95 showed that MCGM took an average of 567 days compared to a bid validity of 180 days. The requirement of GoI clearance of contracts involving foreign exchange payments was dispensed with in 1995 and this enabled saving of considerable time. However, the procedures for bid evaluation to signing the contracts are still cumbersome and contribute to delays. 4.05 The large number of delayed contracts (a tunnel, a pumping station, three reservoirs, some sewage conveyance), and some works which have not yet started more than eight years after the project became effective, indicates that there is still substantial room for improvement, particularly in  - 37 - acquiring vacant possession of sites, coordination with other authorities, and in the preparation of bid documents, procurement scheduling, procedures for awarding contracts, and contract management. 4.06 The bidding documents were improved after 1992 by inclusion of improved conditions of contract such as: price adjustment, arbitration procedures for foreign contractors, interest for late payments, foreign currency payments for local contractors, single-responsibility contracts, and sound technical information (specifications, bill of quantities, drawings). These elements were accepted in varying degrees in the various divisions of WSSD due to a lack of understanding of the difference between mandatory requirements of the Bank and recommendations made for reasons of good practice. 4.07 Construction of the complex works of water supply (water treatment plant, tunnels, pumping machinery) and sewerage (waste water treatment facility, pumping machinery) for which MCGM did not have the capacity was supervised by consultants, and the experience has been quite satisfactory and the quality of construction has generally been good. MCGM continued with the supervision of the uncompleted works by consultants even after the Credit closure. 4.08 Contract period was generally long, which helped undercapitalized contractors/suppliers to win contracts. Several contractors performed poorly due to cash flow problems and their own organizational weaknesses which confirms that stricter criteria for pre-and post-qualification of contractors including their financial standing and the bid capacity should have been adopted. 4.09 Staff continuity was generally maintained in water supply, whereas in the sewerage project the tum-over of senior staff was rapid and the relative poorer performance in sewerage is a reflection. Water Supply 4.10 Completion of part of the pipeline from Pise to Panjrapur in March 1993 enabled the existing pumps to deliver an additional 90 Mld of raw water to Panjrapur, which was then transferred through the existing system to Bhandup for treatment. Therefore, partial benefit of water supply investment was available quite early, although this got neutralized in July 1994 when MCGM tumed-over the Ulhas river intake (90 Mld) to Kalyan Municipality. Thus, the incremental water supply that will be available for Mumbai when the Panjrapur water treatment plant and transmission main are commissioned would be only 365 Mld. 4.11 MCGM's slow action in recruiting a consultant to study the metering and charging policies would indicate that this was not sincerely pursued. Despite agreeing to act promptly in May/June 1992, consultant recruitment could not be completed. This being an important item to further improve MCGM's commercial performance (metering, billing and collection), MCGM should actively pursue the proposed study (consultant recruitment is reported to be completed by October 1996) and participate in the process of the analysis of existing situation and implement its recommendations. 4.12 There are examples whereby the prelininary engineering reports were prepared without proper engineering calculations and also without site investigations (availability of land and site conditions).  - 38 - For example, the decision on the capacity of the reservoir at Raoli took inordinate long period involving resolution of some issues between the consultant and MCGM engineers, and the availability of less land area at Malabar Hill than is required to install the originally designed reservoir capacity. Another example of slow preparation is the documents for Instrumentation and Telemetry (W-3 5E) for which bids could not be invited by MCGM as the engineering preparation and the preparation of the bidding documents are completed only near about the Credit closing date. 4.13 The need for the leak detection remained partly understood and no action was taken to implement any leak detection. MCGM contends that the losses are only 20%. However, what is not being realized is that the loss accounts for over 500 Mld treated water and occurs in a space of about of 3 hours (average daily water supply duration). On a 24 hour per day supply basis, the losses would be 160%. The negative pressure condition in the distribution pipe allowed contamination of water through the leakage in some 'wards' of Bombay. Given the overall water availability situation, MCGM should implement the leak detection and waste prevention, first by developing an action plan and then by implementing the action plan. This should certainly be considered as the most important part of future development of water supply for Mumbai. 4.14 Provision for use of force account, direct contracting, construction by community, and priced quotations in the procurement procedures would have provided implementation flexibility for the repairs and rehabilitation of the local water supply systems in the slum areas. Sewerage 4.15 Some important uncompleted works of the BWSSP-II which were included in the project at a latter stage are scheduled for completion by June 1997. These will enable MCGM to desilt and degrit an additional 685 MId (240 Mid at Malad; 140 Mid at Versova; 130 Mid at Ghatkopar; and 185 Mid at Bhandup) sewage before disposal. 4.16 Several works of sewerage conveyance could not be completed because of failure to take into account the adverse effect of the extraneous factors on implementation schedule. A thorough planning, a sound geo-technical investigation and coordination with the traffic police and the respective utility operators (water supply, telephone, electricity) should be completed and a schedule worked out before the bids are invited for all works, especially those needing open excavation. 4.17 The project successfully introduced to India an innovative technique for in-situ mortar lining of distribution pipelines. The project also introduced the concept of trenchless sewer construction which MCGM will pursue. Financial Aspects 4.18 There had been no improvement in the efficiency of collection of charges for water supply, which was still 78% in 1994-95, the same as in 1985-86. Customer accounts receivable (i.e. unpaid) had risen from Rs 630 million in 1985-86 to Rs 2408 million in 1994-95. During the same period, the consumer price index had increased by 123% and the domestic water tariffs by only 100%.  - 39 - 4.19 The financial performance of MCGM-WSSD is generally satisfactory but is too dependent on a narrow revenue base, made up of commercial and industrial users and taxes. MCGM had consistently met all the financial covenants and revised water and sewerage tariffs in April, 1987, . April 1993, April, 1994 and April 1995. Furthermore, it continued to meet operation and maintenance costs and to contribute 40 percent (now 35% in BSDP) of capital investment costs from its own resources. 4.20 The MCGM has provided audited financial statements relating to the water and sewerage operations within the stipulated period of six months from the preceding financial year-end. The audit practices followed by MCGM have shown further improvement and reports were produced promptly. MCGM Views on Project Implementation 4.21 Although all the physical works have not been completed fully and the envisaged benefits are not available at closing and are estimated to be available three/four years later, MCGM feels that the project has partially achieved its main objectives. 455 Mid water will be available to Mumbai in December 1996, and the transmission and trunk distribution and the reservoirs already built/being built will enable MCGM to expand water supply by another 455 Mld by constructing only a water treatment plant and improving upon the intake and raw water transmission. 4.22 Although the water supply benefits will not be available immediately to the city area, the additional water that will be available in December 1996 will meet the demand of the eastem and western part of the metropolis where high potential for additional consumer connections exists and is expected to improve the revenue base of MCGM. 4.23 Further, the accelerated completion of the mechanical and electrical works of the various wastewater treatment facilities, pumping station and pumping plants, and Versova lagoon, will enable MCGM to screen and degrit an additional 685 Mid capacity sewage which will provide environmental benefit. Were these works to be financed entirely from MCGM's own sources, these would have lingered on for a longer period, mainly for the reasons of difficulty in making foreign exchange payments for domestic finance contracts. MCGM has expressed appreciation of the Bank for agreeing to finance these facilities by restructuring the project. 4.24 MCGM acknowledges that inadequate attention was given to capacity development and training. In view of failures in the previous project, MCGM's attention was largely concentrated on completing the physical works as far as possible within the project time-frame. MCGM also felt that had the Bank supervision missions provided more attention and guidance on these topics, better results would have been achieved. 4.25 The initial hesitation and difficulty to accommodate the changes required to the bidding documents arose from Bank's inadequate explanation of the mandatory requirements and the recommendations made for reasons of good practice. Bank's insistence on changing some of the clauses in the bidding document took considerable time to finalize the documents. However, from the good experiences of using Bank documents, MCGM has decided to use these documents for the  - 40 - proposed Bombay 3-A Project, which is estimated to cost Rs 6600 million (about US$ 185 million) and financed from MCGM sources. 4.26 MCGM was seriously concemed and disappointed with the delay (delayed by about three and half years) on the part of the Bank in amending the project description to accommodate especially the uncompleted mechanical and electrical works of BWSSP-II. Their concem was that they proceeded with awarding these ICB contracts with the encouragement given by the supervision missions, from time to time, since mid-1992, and with the required procurement reviews by the Bank, and continued to finance these in the expectation of receiving reimbursement. Had this expectation not materialized, the financing of BWSSP-III could have faced serious problems. The delayed amendment and restriction imposed on the withdrawal by limiting the retroactive financing of expenditures only for a period of one year was against the understandings MCGM had with the supervision missions, and did not allow MCGM to claim withdrawal of some expenditures. 4.27 The procurement procedures given at Schedule 1 of Project Agreement were inappropriate for works of small nature, especially for site-specific facilities in slum areas. Bank action on MCGM request to amend the procurement procedures to include the use of force account, direct contracting and priced quotations, etc. to implement the additional water supply schemes for slum areas was far too late to be acted upon. 4.28 The delays in implementation were caused by various factors. These are: (a) late submission of designs, technical specifications and draft bidding documents by consultants, and protracted discussions required between the MCGM and the consultant to reach conclusion on most of these; (b) poor support and cooperation from agencies like the traffic police, State PWD, State Forest Department, and the Railways; (c) difficulties in obtaining vacant possession of construction sites (a length about 175 m of the transmission line alignment at Majiwade junction, inlets/outlets of reservoirs at Raoli and Worli were occupied by slums; and the site for reservoir at Worli was occupied by MCGM staff and tenants of which the tenants were reluctant to move to an altemate equivalent accommodation nearby; and at the site for reservoir at Malabar Hill due to the reluctance of institutions such as a primary school, a sub-post-office and a small office of PWD to move to adjoining land provided by MCGM); (d) poor contractor performance despite procedures established for qualifying contractors prior to award (some suffered from severe cash flow and organizational problems); and (e) procurement delays. 4.29 All the incomplete works will be completed by MCGM. However, MCGM was not sure whether payments in foreign currency for the ICB contracts (7 contracts with aggregate estimated cost of Rs 486.5 million) which remained to be awarded at closing would be permitted by the Gol.  - 41 - V. VIEWS ON FUTURE OPERATION, OPERATIONAL PLAN AND SUSTAINABILITY Future Operation 5.01 The additional water that will be available in December 1996 is proposed to be provided to water-deficient areas of eastern and western parts of the metropolis in lieu of the envisaged transmission to the city, due to non-completion of the trunk distribution main (3000 mm dia tunnel between E. Moses Road and Ruparel) and the reservoirs at Raoli, Malabar and Worli. MCGM has planned to allocate 360 MId water to the suburban areas as follows: SI No, Reservoir at Allocation l_____ ________________________________ in Mld 1 Bhandrawada HMl 25 ................... ............................................................................................... ...................................... l 2 VeravaliHill I, I, I 75 .................... ................. ......................................... ...... ......................................l 3 Malad Hill I, nI 45 4 Bonivali Hill ,11 70 ................... ............................................................................................... ....................................... 5 Powai Low Level & High Level II 15 .................... ................................................ ............................................. ......................................l 6 Ghatkopar Low Level& High Level 10 7 TmbyLow Lev.el and Hfigh Level 80 .................... .. ..... ............... .................................................... ......................................l 8. Bhandup I,1I and Bhandup (BUDP) 40 5.02 The proposed transmission to the eastern/western parts, according to MCGM, will not require augmentation of the existing arrangements (inlets to reservoirs, reservoir capacity, distribution network, etc.) in their respective command areas of the reservoirs. The proposed Bombay 3-A Project which is planned for completion by the year 2000 with MCGM's own finance will augment the water availability by another 455 Mld and using the facilities (transmission and trunk distribution) both existing and those being built with BWSSP III, would distribute water to the city. 5.03 MCGM has the capacity to operate the treatment plant and the various pumping plants installed for water supply systems, but have limited number of skilled personnel to operate and maintain the facilities being built for sewerage and sewage treatment. The mission's discussions with the senior management staff of WSSD confirmed that MCGM is in a position to redeploy skilled personnel from the existing centers to the newly built facilities such as (sewage pumping plants, waste water treatment facilities, aerated lagoon, etc.). The aspect of operation and maintenance of the sewerage facilities will be reviewed from time to time by the Bank while supervising the BSDP. Operational Plan 5.04 All the water and sewerage works of BWSSP-III will be integrated into Bombay's water and sewerage system and thus individual operations of a water treatment plant or a waste water treatment facility or a pump house cannot be considered in isolation. Accordingly, it is appropriate that operational indicators are generated for the WSSD as a whole, including physical, financial and institutional indicators. In fact, the indicators agreed with the Bank for the BSDP are being reviewed  - 42 - by MCGM and these will be reported in the September 1996 quarterly report to the Bank. However, the mission suggested indicators as in Annex 4 of this Aide-Memoire. Sustainabiity 5.05 Sustainability of WSSD operations largely depends on its financial performance since technical capacity for water supply operations exists and is expected to improve in sewerage by the various actions proposed to be taken under the BSDP. WSSD at present generates sufficient income to meet the costs of operating and maintaining the system and finances 35% of investments after meeting the debt service/depreciation. However, the current resistance from the Corporation to raising domestic tariffs, if not overcome, will make future operations of WS SD unsustainable. The track record of MCGM in financial performance has been good and the mission hoped that MCGM will be able to improve the revenues by restructuring and revising the water and sewerage tariffs. The WSSD's financial performance has been covenanted in the BSDP and gives confidence that MCGM will comply with the covenant and operations will continue in an orderly and efficient manmer. VI. FOLLOW-UP AND AGREED ACTIONS 6.01 Mr. C.D. Kotnis, Deputy Municipal Commissioner (Special Engineering) has been assigned to coordinate the inputs from the various WSSD wings and the draft ICR contribution which will be included as Appendix B of the ICR. As agreed with the mission, WSSD will provide by July 26, 1996 to the Bank: (a) details of incremental operating costs of BWSSP III pumping stations and water treatment works; (b) a revised staffing plan for the plan of operation; (c) a completed table of quantities of project works completed by the Hydraulic Engineer's department; and (d) details of training courses and number of staff trained using the resources of the project. 6.02 The mission advised MCGM on their contribution to the ICR (see Annex 4 to this Aide- Memoire) and agreed on the following program for ICR preparation: Agreed Action ~ yWo yWhen ....... . ...................................-.............I................................... ....................................................... ,r.... ................................... ....... Data requested by the Mission (para 6.01 above) and not supplied at the MCGM 26-Jul-96 time of the mission to be forwarded to the Bank. Draft ICR (Bank portion including tables) to be forwarded to Borrower for Bank 30-Sep-96 comment. ..................... M .... ..................................................... ................................................................................. ................................................ ........................................... Borrower's Evaluation to Bank. I MCGM 30-Set Cm eton draft ICR to be forwarded to the Bank. MCGMVGoM 15-Oct-96 ~~~~~~~~~~~~~~~............................................................................................. ................................................;.... ....................... Final draft of ICR (complete version including Borrower's Evaluation) to Bank 3 1-Oct-96 ~~~~~~~~~...................... ...... .............................................................................................. ................................................ ................................................ Distribution of Final ICR Bank 30-Nov-96 6.03 The mission also advised MCGM of the project obligations during the post-closure period. These are:  - 43 - (a) Further disbursements from the Credit will be made for withdrawal applications received by the Bank by October 31, 1996 in respect of eligible expenditures made before June 30, 1996. (b) audit report for 1995-96 should be submitted in accordance with the covenant by September 30, 1996; (c) audit report for 1996-97 should be submitted by September 30, 1997, although this is also a requirement of the Agreements of the Bombay Sewage Disposal Project; (d) comply with covenants, as appropriate, during this period; and (e) assist in preparation of the ICR in accordance with the actions agreed with the mission and, additionally, prepare Borrower Evaluation for inclusion in the ICR.  Annex 1 INDIA: THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Ln/Cr 2769/1750-IN) PROJECT COST ESTIMATE AND STATUS AT CREDIT CLOSING Amount Rs. Million Original Project (per SAR Annex 4) Restructured Project Estim. Estim. SI. Description Estim. Description Estim. Cost to Expen. at Status at Credit Closing No. Cost Cost Compln Closing WATER SUPPLY: Civil Works WATER SUPPLY: Civil Works l I. Transmission main Pise-Panjrapur, 7.65 Km long, 41.3 Transmission main Pise-Panjrapur, 7.65 K long, 35.3 26.3 23.0 Complete. 2235 mm dia including mortar lining 2235 mm dia (Mortar lining in separate item) _ 2. Pump house at Panjrapur 52.8 Pump house at Panjrapur 86.3 84.3 80.8 Complete. 3. Panjrapur Treatment Plant 84.4 Panjrapur Treatment Plant 273.3 239.3 182.0 In Progress. Expected completion by 31-Dec-96. 4. Transmission main Panjrapur to MGL/EEH 322.4 Transnission main Panjrapur MGL/EEH Junction, 371.8 332.8 235.0 In Progress. Expected Junction, 27.2 Km, 3000 mm diameter including 27.2 Km, 3000 mm diameter (Mortar lining in completion by 31-Dec-96. mortar lining. separate item) 5. Mortar lining of 7.65 Km long 2235 mm dia and 140.7 117.2 67.2 In Progress. Expected 27.2 Km long 3000 mm dia transmission mains. completion by 04-Nov-96. 6. Modification pump house at Bhandup 0.6 Modification pump house at Bhandup 30.8 26.8 20.7 Complete. Includes equipment. 7. Transmission connection MGL/EEH to Bhandup, 29.8 Transmission connection MGL/EEH to Bhandup, 51.8 51.1 51.1 In Progress. Expected 3.3 Km long, 1800 mm dia. 3.3 Km long, 1800 mm dia. completion by 31-Dec-96. 8. Distribution tunnel 9 Km long, 3000 mm diameter 356.6 Distribution tunnel 9 Km long, 3000 mm diameter 784.2 836.2 76.2 In Progress. Futka Tank - Sewree to be completed by 3 1- Dec-96 and E Moses Road to Ruparel by Jan-2000. 9. Reservoir inlet/outlet connections 12.8 Km long, 55.6 Reservoir inlet/outlet connections about 20 Km 118.7 108.8 50.6 Except for Worli where work is 600-1200 mm dia long, 600-1200 mm dia yet to start, remaining completed. 10. Cement mortar lining, 6.3 Km of 1200 mm dia. 47.5 Cement mortar lining, 6.3 Km of 1200 mm dia., 27 216.7 217.8 32.0 In Progress. Lining of mains in and 27 Km of 1450 mm dia. Km of 1450 mm dia and about 114 Km Bombay Central and Kalvadevi distribution mains of smaller sizes mainly 150 mm. Zones completed. Bids in _____________________________________ ________ evaluation for D ward. 11. Distribution system extensions 49 Km long, 150- 130.1 Distribution system extensions 49 Km long, 150- 260.5 243.3 103.3 Distribution system extensions 1800 mm dia. 1800 mm dia and rehabilitation of about 5 Km of completed. Works not started for mains, diameter range 1200 mm to 1500 mm. rehabilitation of large mains. 12. Reservoirs at Malabar (I1.25 Ml), Borivali (36 119.2 Reservoirs at Malabar (11.25 Ml), Borivali (36 608.7 521.7 183.2 In Progress/Process. Borivali to Ml), Raoli (80 Ml) and Worli (16.34 Ml) Ml), Raoli (80 Ml) and Worli (16.34 Ml) be completed by 31-Dec-96 & Raoli by 31 -Jul-98. Malabar and Worli reservoirs in bidding stage  Original Project (per SAR Annex 4) Restructured Project Estim. Estim. Sl. Description Estim. Description Estim. Cost to Expen. at Status at Credit Closing No. Cost Cost Compln Closing to be completed by Dec-98 and __Sep-99 respectively. 13. Raoli Pump station 12.8 Raoli Pump station Included in contract at SI. 12. Sub-Total: Water Supply Civil Works 1253.1 Sub-Total: Water Supply Civil Works 2978.8 2805.6 1105.1 WATER SUPPLY: Materials and Equipment WATER SUPPLY: Materials and Equipment 14. Transmission Mains 220.1 Transmission Mains 504.9 503.0 495.0 Complete. 1 Pumping Plant at Pise (M&E) 31.6 Pumping Plant at Pise (only mechanical) 54.6 50.6 49.0 Complete. 16 Pumping Plant at Panjrapur (M&E) 38.0 Pumping Plant at Panjrapur (only mechanical) 102.7 77.7 68.5 Complete. 17. Electrical equipment at Pise and Panjrapur 56.4 50.3 40.3 Complete. 18. Pumping Plant at Bhandup 3.1 Pumping Plant at Bhandup Included in contract at S1. 6. Complete. 19. Pumping Plant at Raoli 20.3 Pumping Plant at Raoli 75.6 75.6 0.0 In Evaluation. Works are to be completed by Nov-98. 20. Panjrapur Treatment Plant Equipment 88.4 Panjrapur Treatment Plant Equipment Included in contract at Sl. 3. In Progress. Expected completion by 31-Dec-96 21. Reservoir Inlet/Outlet Pipeworks 18.6 Reservoir Inlet/Outlet Pipeworks Included in contract at SI. 14. Complete. New works such as Worli is being offered on single- responsibility basis. 22. Distribution system extensions 42.3 Distribution system extensions 269.6 269.6 269.6 Complete. Included butterfly l valves. 23. Tunnel lining 6.4 Tunnel lining Included in contracts at Sl. 8. Sub-Total: Water Supply-materials and equip. 468.8 Sub-Total: Water Supply-materials and equip. 1063.8 1026.8 922.4 SEWERAGE: Civil Works SEWERAGE: Civil Works 24. Conveyance sewerage, 54 Km, dia range 230 mm 235.9 Conveyance sewerage, about 100 Km dia range 682.6 321.5 306.3 In Progress. All works to 1000 mm. 230 im to 1800 nun identified at SAR are due for I ________________________________I______ ________ completion by 31-M ay-97. 25. Pump stations, 12 units of aggregate 150 Mld 25.5 Pump stations, 20 units of aggregate capacity of 65.3 35.6 18.9 PS at A.S. Marg completed and capacity. 2460 Mld. others are in progress. Wadala PS dropped due to land problem. 26. Repair and rehabilitation of conveyance system, 66.5 66.5 0.0 Not Done. and pumping facilities in the entire service area. 27. Completion of balance civil works at four 459.4 402.8 360.3 In Progress. Completion of all wastewater treatment facilities, two aerated works is expected by 30-Jun-97. lagoons and three pumping stations. Sub-Total: Sewerage - Civil Works 261.4 Sub-Total: Sewerage - Civil Works 1273.8 826.4 685.5  Original Project (per SAR Annex 4) Restructured Project Estim. Estim. Si. Description Estim. Description Estim. Cost to Expen. at Status at Credit Closing No. Cost Cost Compin Closing SEWERAGE: Materials and Equipment SEWERAGE: Materials and Equipment l 28. Pumping plant at Wadala, A.S. Marg and 13.6 Pumping plant at Wadala, A.S. Marg, Versova and 26.0 14.1 8.9 PS at A.S. Marg completed and Versova pump stations Malavani pump stations others are in progress. Wadala PS dropped due to land problem. 29. Construction and completion of electrical and 465.6 465.6 115.4 In Progress. Completion of all mechanical works at the three wastewater works is expected by 30-Jun-97. treatmnent facilities, two aerated lagoons, threel pumping stations and other facilities in the entirel service area. Sub-Total: Sewerage - Materials and Equip. 13.6 Sub-Total: Sewerage - Materials and Equip. 491.6 479.7 124.3 SITE SPECIFIC FACILITIES FOR SLUM SITE SPECIFIC FACILITIES FOR SLUM AREAS AREAS 30. Water services improvements at Shivaji nagar, 31.3 Water services improvements at Shivaji nagar, 46.8 0.0 0.0 Not Done. Baiganwadi, and Chembur Baiganwadi, and Chembur l 31. Sanitation facilities in outlying areas 17.0 Sanitation facilities in outlying areas 17.0 0.0 0.0 Not Done. Financed from other sources used. Sub-Total: Site Specific facilities for Slums 48.3 Sub-Total: Site Specific facilities for Slums 63.8 0.0 0.0 COMMON SERVICES COMMON SERVICES 32. Vehicles (83 nos.) 11.1 Vehicles (140 nos.) 88.4 88.4 88.4 Completed except for Cesspool Vehicles to be completed by 25- ____________________________________________ Nov-96. 33. Staff Quarters 10.9 Staff Quarters 53.6 53.6 53.6 Complete. 34. Meters 16.4 Meters 34.3 34.3 8.3 Balance to be procured following completion of Metering study. 35. Leak Detection Equipment 6.9 Leak Detection Equipment 20.0 20.0 0.0 Bids in evaluation. 36. Telemetry and Miscellaneous Equipment and 12.4 Telemetry and Miscellaneous Equipment and 332.0 332.0 2.4 User requirements, specifications valves valves and bidding document prepared for SCADA. Bids not invited. Sub-Total: Common Services 57.7 Sub-Total: Common Services 528.3 528.3 152.7 OTHERS OTHERS I 37. Training 27.4 Training 12.9 12.9 12.9 Includes only training infrastructure.  Original Project (per SAR Annex 4 Restructured Project Estim. Estimn. SI. Description Estim. Description Estim. Cost to Expen. at Status at Credit Closing No. Cost Cost Compin Closing 38. Technical Assistance 4.5 Technical Assistance 20.0 17.7 10.8 Consultant studies other than those at SI 39, 40 & 41 below. 39. Site Investigation for Middle Vaitarna 5.5 Feasibility studies and preliminary design for the 155.0 17.0 5.6 In Progress. To be completed by 31 - reservoir next tranche of source development (middle Dec-96. Vaitarna) 40. Feasibility and operational studies for water 253.7 161.9 79.2 Expenditures from 01-Jul-96 for supply, sewerage and sanitation services. Topographical study, Condition assessment and O&M for sewerage will be financed from BSDP. 41. Consulting services 40.8 Consulting services for detailed engineering 536.3 555.2 548.3 Water Supply is scheduled for designs, bidding document and supervision. completion by 31-Oct-96. Sewerage expenditures effective 01-Jul-97 will be financed from BSDP. 42. BMC Engineering 243.8 BMC Engineering 522.0 522.0 348.0 Rs 914.5 million for WSSD during _______1987-88 to 1994-95. 43. Land Acquisition 2.4 Land Acquisition NA NA NA Land acquired prior to the Loan effectiveness. Information is not l- available. Sub-Total: Others 324.4 Sub-Total: Others 1499.9 1286.7 1004.8 1985 Base Cost 2427.3 _- CONTINGENCIES .. l Physical 254.3 Price 1006.2 l Sub-Total: Contingencies 1260.5 _ Total before Taxes and Duties 3687.8 _ _____ _ TAXES AND CUSTOMS DUTIES 268.7 Sub-Total 268.7 TOTAL PROJECT COST 3956.5 TOTAL PROJECT COST 7900.0 6953.5 3994.8 100.0% I 199.7 175.7% 100.1% . 50.1% 100.0 88.0% 50.6%  Annex 2 INDIA: THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Ln/Cr 2769/1750-IN) PROCUREMENT: CONTRACTS AWARDED Amount: Rs. Million INTERNATIONAL COMPETITIVE BIDDING LOCAL COMPETITIVE BIDDING Civil Works Goods & Equipment Civil Works Goods & Equipment Services Total Contract MCGM Division No. Contract No. Contract No. Contract No. Contract No. Contract Value Value Value Value Value Value Water Supply Project 13 2349.0 6 586.3 6 34.3 3 89.9 7 79.7 3139.2 50.8% Hydraulic Engineer 3 145.3 - - 17 182.8 - - 1 6.2 334.3 5.4% Sewerage Project - Civil - - - - 66 832.8 - 1 459.6 1292.4 20.9% Sewerage Project-M&E - - 12 446.1 - - 3 21.2 - - 467.3 7.6% Sewerage Operation - - - - - - 4 220.8 220.8 3.6% Common Services - - 27 658.1 32 51.3 1 10.0 719.4 11.7% Contract Value: 16 2494.3 45 1690.5 89 1049.9 38 162.4 13 776.3 6173.4 100.0% % over Total Contract 40.4% 27.4% 17.0% 2.6% _ 12.6% 100% % as in SAR Table 3.3 43.0% 29.3% 18.8% ____ 2.3% 4.5% 1 Summary: Value of ICB Value of LCB Contracts Total Number of Contracts Aggregate Contract Value Contracts Contracts Civil Works 105 52.2% 3544.2 57.4% 2494.3 1049.9 Goods & Equipment 83 41.3% 1852.9 30.0% 1690.5 162.4 Services 13 6.5% 776.3 12.6% - Total: 201 100.0% 6173.4 100.0% 4184.8 1212.3 ___________________________________ I__ ~(67.8%) (19.7%)  PROCUREMENT: CONTRACTS NOT AWARDED (In Planning/Tendering/Evaluation Stage) Amount: Rs. Million INTERNATIONAL COMPETITIVE BIDDING LOCAL COMPETITIVE BIDDING Civil Works Goods & Equipment Civil Works Goods & Equipment Services Total Estimated MCGM Division No. Estimated No. Estimated No. Estimated No. Estimated No. Estimated Cost _ Cost Cost _ Cost Cost Cost Water Supply Project - - 2 405.2 3 187.4 592.6 Hydraulic Engineer 1 20.0 2 29.4 1 4.0 1 NA 53.4 Sewerage Project - Civil - - - - 12 189.1 189.1 Sewerage Project - M&E I- 11.9 - - 11.0 Sewerage Operation - - Common Services - 1 20.0 - - 1 6.0 -- 26.0 Total: 1 20.0 6 466.5 16 380.5 1 6.0 1 NA 873.0 Summary: Estim. Cost of Estim. Cost of LCB Contracts Total Number of Contracts Aggregate Estimated Cost ICB Contracts Contracts Civil Works 17 400.5 20.0 380.5 Goods & Equipment 7 472.5 - 466.5 6.0 Services 1 NA _ __ Total: 25 873.0 486.5 386.5 PROCUREMENT SUMMARY AND COMPARISON WITH SAR TABLE 3.3 (SAR Page 24 INTERNATIONAL COMPETITIVE BIDDING LOCAL COMPETITIVE BIDDING Civil Works Goods & Equipment Civil Works Goods & Equipment Services Contract Value/ No. Contract No. Contract No. Contract No. Contract No. Contract Estimated Cost Value/Estim Value/Estim Value/Esti Value/Estim Value/Esti ______________________ l -ated Cost ____-ated Cost ____mated Cost |___-ated Cost mated Cost Contracts Awarded 16 2494.3 45 1690.5 89 1049.9 38 162.4 13 776.3 6173.4 87.6% Contracts not Awarded but in Planning/ Tendering /Evaluation 1 20.0 6 1 466.5 16 380.5 1 6.0 1 NA 873.0 12.4% Total 17 2514.3 51 2157.0 105 1430.4 39 168.4 14 776.3 7046.4 100.0 % over Total Cost 35.7% |___ 30.6% | | 20.3%/ 2.4% 11.0% 100.0% | as in SAR Table 3.3 ____ 43.0% _ | 29.3% 1 | 18.8% 2.3% 4.5%  - 50 - ANNEX 3 INDIA: THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Ln/Cr 2769/1750-IN) PERFORMANCE INDICATORS WSSD total employees No. of Engineering/Technical staff No. of Finance/Accounts staff Staff participating in training (Nos.) Average Water Tariff - Domestic (Rs/1000 liters) - Non-domestic (Rs/1000 liters) Average cost of water Rs/1000 liters delivered Average water revenue Rs/1000 liters delivered Revenue Billing (Rs million) Revenue Collection (Rs million) Collection efficiency Average age of customer receivables (months) Working ratio Operating ratio Population of Greater Bombay in million Water supply coverage (% population) Average daily production of treated water (Mld) Average duration of water supply (Hrs.) Unaccounted-for water (%) Total number of private connections Total number of metered connections Domestic connections with working meters (%) Non-domestic connections with working meters (%) Population served by private connections in million Number of standpipes operating Population served by standpipes in million Staff/lOOO water supply connections (Nos) Number of sewer connections Sewerage/Sanitation coverage (% population) Population benefited by sewer connections (million) Number of seats in conmmunal sanitation facilities Population benefited by communal sanitation facilities (million) StaffllOOO sewer connections (Nos)  - 51 - ANNEX 4 INDIA: THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Ln/Cr 2769/1750-IN) IMPLEMENTATION COMPLETION REPORTING MISSION GUIDANCE ON BORROWER'S CONTRIBUTION TO THE ICR 1. The Borrower's evaluation of the project implementation is an important part of an ICR. It is attached, unedited, to the ICR. It can be selective in its coverage and should address issues and lessons learned in project implementation, from the borrower's perspective. Topics covered can be the same as in the ICR, namely, project design and appraisal, implementation, and project results and sustainability. At each stage of the project the contribution should comment on the performance of both the Bank\IDA and the implementing agencies, with the observations, where possible, supported by evidence or reasoned argument. 2. For project design and appraisal the contribution could address such questions as the appropriateness of the project's objectives, the size of the project and scope of the investments proposed, aspects of design leading to easy (or difficult) implementation and the effect on government institutions and implementing agencies. 3 . Project implementation experience should be divided into an assessment of the performance of the Bank\IDA in supporting and supervising the project and the performances of the implementing agencies. 4. Project results and sustainability should include an assessment of the benefits arising from the project. Since financial and economic re-analysis of the project will be undertaken by the FAO/World Bank mission as part of the ICR, it is suggested that the contribution could most usefully comment on the effects of the project from the borrower's perspective. Such an analysis would be a most useful contribution to the ICR. 5. Based on the foregoing sections, the contribution should list the main lessons learned from the implementation experience. 6. If the contribution is more than ten pages, it should include a summary. The latter is recommended for all but the shortest contributions.  - 52 - ANNEX 5 INDIA: THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Ln/Cr 2769/1750-IN) ICR Mission, July 10-24, 1996 List of Key Persons Met by the Mission Government of Maharashtra (GoM) Mr. V. Ranganathan, Principal Secretary, Water Supply and Sanitation Department Municipal Corporation of Greater Mumbai (MCGM) Ms. Sharwaree Gokhale, Additional Municipal Comnmissioner (Projects) Mr. V.K. Kadam, Chief Accountant, WSSD Mr. P.C. Pisolkar, Municipal Chief Auditor, MCGM Mr. A.B. Burute, Chief Engineer, Common Services Mr. C.D. Kotnis, Deputy Municipal Conmmissioner (Special Engineering) Mr. V.R. Khatkhate, Chief Engineer, Water Supply Project Mr. D.B. Nirantar, Deputy Chief Engineer, Water Supply Project Mr. S.N. Turkar, Hydraulic Engineer Mr. R.K. Naik Deputy Hydraulic Engineer Mr. I.C. Gandhi, Deputy Municipal Conmnissioner (Engineering) Mr. S.S. Dubal, Chief Engineer, Sewerage Project Mr. V.D. Majumdar, Chief Engineer, Sewerage Operation Mr. S.N. Phatnani, Deputy Chief Engineer (M&E), Sewerage Project Mr. H. Laad, Deputy Chief Engineer, Sewerage Project Former/Retired MCGM Officials Mr. A. Dasgupta, Secretary, Department of Atomic Energy (Former Additional Municipal Commissioner, MCGM) Mr. B.B. Sharma, Managing Director, State Co-operative Cotton Growers Marketing Fed. Ltd. (Former Additional Municipal Commnissioner, MCGM) Mr. A.B. Maduskar, Additional Municipal Commissioner (retd.) and former Chief Accountant Mr. Totade, Hydraulic Engineer (retd.) Mr. M.K. Gokhale, Chief Engineer, Water Supply Project (retd.)  - 53 - BRIHANMUMBAI MUNICIPAL CORPORATION INDIA- BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Cr/Ln: 1750/2769 IN) APPENDIX B. BORROWER'S EVALUATION 1. INTRODUCTION: The World Bank [the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD)] first associated with Municipal Corporation of Greater Bombay (MCGB) in 1974 with a credit for the First Bombay Water Supply and Sewerage Project (BWSSP-I). BWSSP-I consisted of impounding of water of the Bhatsa river, its conveyance, distribution and treatment facilities and the expansion of the city's sewerage system. BWSSP-I was implemented from 1974-75 to 1979-80. It augmented the city's water supply by 455 rnillion litres per day. The Second Bombay Water Supply and Sewerage Project, (BWSSP-II) was implemented between 1979-80 and 1987-88. It augmented water supply by a further 455 Mld as well as improved sewage conveyance, collection and disposal facilities in the city and its suburbs. The water supply component of the II-BWSSP was satisfactorily implemented. However, due to several reasons the sewerage component could not be fully completed. The Third Bombay Water Supply and Sewerage Project (BWSSP-III), was a logical extension of BWSSP-I and BWSSP-II, each of which envisaged bringing 455 Mld of water and extending the sewerage system in Greater Bombay. BWSSP-III, as appraised in early 1985, provided for a credit of 105.5 million special drawing rights (SDRs) amounting to approximately US$145.0 million and a loan of US$40.0 million, the total tranche amounting to US$185.0 million. The SAR envisaged the implementation period of BWSSP-III from 1987-88 through 1994-95. The devaluation of the rupee in 1991 resulted in enlarging the total quantum of money available for the project. The World Bank agreed to let MCGB take up extra works to utilise this surplus. To enable utilization of funds, the original credit closure date of 30 June, 1994 for BWSSP-III was extended twice, first to 30 June, 1995 and then to 30 June, 1996. Yet MCGB surrendered US$40.0 million in three steps - US$10.0 million each during May, 1993 and October, 1994 and US$20.0 million during June, 1995. The final disbursements from the World Bank were to the tune of SDR90.4 million. 2. PROJECT OBJECTIVES: In brief, the objectives of the BWSSP-III were to - (a) Continue and expand on the efforts of previous projects in improving sector efficiency. (b) Expand water supply and sanitation facilities for the urban poor. (c) Increase the supply of water to the MCGB area by another 455 Mld bringing it to a total of 2900 MId.  - 54 - (d) Expand the sewerage conveyance facilities in isolated developed areas of the City which were not already served. (e) Evaluate operating experience and develop appropriate design criteria and technical options for future investments in sewage treatment. 3. THE PROJECT: 3.1 The Project components were- (1) The construction of 52 km of trunk mains, 3 pumping stations, 49 km of distribution mains and two tunnels of 3000 mm diameter, internal mortar lining of pipes and leak detection. (2) The construction of 455 Mld water treatment plant and four service reservoirs with a collective capacity of about 144 million litres. (3) The construction of about 54 km of sewers and building and installation of three sewage pumping stations. (4) The construction of low cost sanitation facilities, training of WSSD staff, consultancy services and supply of vehicles for operational purposes. 3.2 The exchange rate was Rsl 3.00 per US$ when the agreements were signed. However, during implementation period of BWSSP-III, the exchange rate of the Re to the US$ shot up to more than double, due, mainly to the devaluation of the Rupee and partly to market forces. Although the costs of the works included in the III BWSSP had gone up simultaneously, the doubling effect would still have left large funds surplus. Therefore, the Bank at the instance of the MCGB included certain additional BWSSP-II works which were incomplete on the credit closure date for BWSSP-II. 4. ACHIEVEMENT OF PROJECT OBJECTIVES: The Project objectives in both Water Supply and Sanitation Sectors were only partially fulfilled during the project period. 4.1 Water Supply Sector: 4.1.1. The sector efficiency envisaged by increasing per capita availability of water of 137 litres per day for the projected population of 10.37 million in the year 1991, could not be fulfilled during the project period. Of the planned 455 Mld water, 90 Mld of raw water was brought in March, 1992. This was treated at the existing treatment plant at Bhandup. Since this move conserved water in the Vaitarna and Tansa lakes, there was no additional quantity of water supplied to the city. On completion of certain priority works, 130 Mld additional water was brought to the city from December, 1996 and remaining 225 Mid is expected to be brought to the city by June, 1997 on completion of the last link of the conveyance system.  - 55 - 4.1.2 During the period from 1992 till the closure date, i.e. June, 1996. 30,838 water connections were given to improve water supply for the urban poor. Five small reservoirs with pumping stations and eighteen kilometers of pipeline were laid to provide water to slum areas situated at high levels. 4.1.3. The water supply component was divided into 27 sub projects and one consultancy assignment aggregating in all to 28 sub projects. The projected additional supply of 455 Mld of treated water could not be brought to Mumbai by the extended credit closure date of 30 June, 1996, although fifteen sub projects were completed out of the 23 awarded by the credit closure dated. Of the remaining eight sub projects, two are completed in December, 1996, three are expected to be completed by June, 1997, and two can only be completed by the year 2000. Of the remaining five sub projects that were at the planning stage, two have been since awarded and are in progress. These works consist of service reservoirs, (one each at Malabar Hill and Worli). The sub projects for inlet/outlet mains at Worli, Raoli Pumping Station and Instrumentation are being undertaken. These are mainly distribution works and will not adversely affect the bringing of additional 455 MId of water to the city by June, 1997. 4.i Sanitation Sector 4.2.1 In BWSSP-III, during the project period, 57 kilometers of sewer lines were laid to progressively convert unsewered areas into sewered ones. These include some sewer lines covered under the original SAR as well as the additional works appended later. 7 kilometers are in progress, and 6 kilometers were deferred because development of the area did not take place as expected. 4.2.2 Three pumping stations were included in the SAR, and four (balance work left over from BWSSP-II) were added later. None were at a stage as to be ready for commissioning by the project completion date. The existing pumping stations were updated and additional pumping and treatment facilities provided. This, coupled with removal of accumulated silt in the conveyance system, by using newly acquired sewer cleaning equipments and the development of contracting agencies to clean sewers, the operation and maintenance of the conveyance system was greatly improved. In BWSSP-III, systematic planning and maintenance of the collection, conveyance and pumping treatment facilities were improved. 4.2.3 Originally forty seven works were included in the sewerage component of BWSSP-III. Because of large savings in the credit amount due to rupee devaluation as mentioned in para 1, additional works comprising thirty two contracts were added. The status of these contracts is as follows:- Total Completed In Fore- At Deleted/ Progress closed/ Planning deferred. terminated -st7Le