Sri Lanka - Water Supply and Sanitation Rehabilitation Project

 Watersupply and sanitation rehabilitation project Report No: ; Type: Report/Evaluation Memorandum ; Country: Sri Lanka; Region: South Asia; Sector: Urban Water Supply; Major Sector: Water Supply & Sanitation; ProjectID: P010259 The Sri Lanka Water Supply and Sanitation Rehabilitation Project, supported by Credit 1700-CE for SDR 32.1 million equivalent, was approved in FY86. The Credit closed, fully disbursed, in FY96, one year behind schedule. The Implementation Completion Report (ICR) was prepared by the South Asia Regional Office. The Borrower's evaluation of the project is included as an annex. This project followed two previous Bank supported operations and was prepared on the basis of a sector study in 1985. The objectives of the project were to: (a) increase utilization of existing water supply and sanitation systems; (b) improve the National Water Supply and Drainage Board’s (NWSDB) technical, managerial and operational practices; and (c) improve public health. The physical components included: in the Greater Colombo area: (i) rehabilitation and extension of the existing transmission and distribution mains, construction of new service reservoirs and installation of new pumping capacity; (ii) on-site waste disposal facilities; and (iii) construction of stormwater drainage facilities; and in seven towns outside the Colombo area: (i) construction of transmission and distribution mains and service reservoirs, (ii) installation of new pumping capacity; and (iii) rehabilitation of water treatment plants. The institutional components included technical assistance to undertake studies on tariffs, a water resources inventory, O&M efficiency, leak detection, training of NWSDB staff in O&M and project management, and vehicles for operations. The project failed to fully meet both its physical and institutional objectives. Its physical components were only partially completed. The project suffered from an inadequate design that caused initial implementation delays. Later troubles included slow progress on procurement, civil disturbances, and a shortage of counterpart funding. Project costs escalated and the scope of the project was scaled down by dropping the towns outside the Colombo area. In the Colombo area, the number of service connections was increased by 70 percent and total water production by about 50 percent, thus meeting the revised targets. After initial difficulties, the on-site sanitation improvements exceeded the appraisal estimates by providing nearly 23,000 latrines in poor neighborhoods, places which were difficult to serve with public sewerage. The institutional components were poorly implemented. All scheduled studies were completed and the planned staff training took place, but the recommendations of the studies on institutional improvements were not carried out. Thus, the impact of the studies on improving institutional performance was negligible. As a result, NWSDB continues to be over-staffed, but has a serious shortage of middle level management especially in the operations area. Billing and collection improved (collection is currently at 95 percent), but tariff increases were inadequate, and often late. In view of these shortcomings, and the persistently high ratio of water losses (at about 50 percent), NWSDB's finances are weak. The project's recalculated economic rate of return is negative compared to the appraisal estimate of 12 percent because of the reduced and delayed benefits which were achieved at higher than estimated costs. OED rates project outcome as unsatisfactory, the sustainability of benefits as uncertain, and institutional development impact as negligible. Bank performance is rated as unsatisfactory because project design was weak and supervision was hampered by frequent changes of task manager although this improved later. These ratings are consistent with those in the ICR.  This project is an example of inadequate project preparation. In this case, it led to major delays, cost increases and eventually delayed and reduced benefits. The project design was complex and overly ambitious for an entity that had serious capacity problems to start with. Better sequencing of capacity building efforts with new investment programs should have been considered. Appropriately, NWSDB is now considering engaging the private sector to improve the efficiency of water and sanitation services in Sri Lanka. The quality of the ICR is good. No audit is planned.