Ghana - Accra Tema Water Supply and Sewerage Project

InvY RESTRI CTED "it COP Report No. PU-12a This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION APPRAISAL OF TIIE ACCRA-TEMA WATER SUPPLY AND SEWERAGE PROJECT GHANA July Z5, 1969 Public Utilities Projects Department  CURRENCY EQtTIVALENTS Currency Unit - New Cedi (NO) One New Cedi NO - 100 new Pesewa US$ 1 - NO 1.02 US$ 1 million - NO 1,020,000 NO 1 - US$ 0.98 NO 1 million - US$ 980,000 ABBREVIATIONS GWSC - Ghana Water and Sewerage Corporation Metropolitan Area - The Accra-Tema Metropolitan Area WHO - World Health Organization UNDP (Special Fund) - United Nations Development Program (Special Fund) PAS - Public Administration Service Gallon - Imperial gallon (1 gallon = ).5 litres or 1.2 lJ.S. gallons) 3Mgd - million imperial gallons per day (1 IMgd = 4,54h cubic meters/day) gpcd - gallons per capita per day (1] r;d = h.5b litres/day) L4g - million imne--i2l glqlons FISCAL YEAR July 1 - June 30  GHANA APPRAISAL OF THE ACCRA-TE4A WATER SUPPLY AND SEWERAGE PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS i 1. INTRODUCTION 1 2. WATER SUPPLY AND SEWERAGE SECTOR IN GHANA 2 A. Relation to Ghanaian Econozy 2 B. Present Position 2 C. Existing Facilities in Accra-Tema Area 4 D. Sewerage and Sewage Disposal 5 E. Development Program 5 3. THE PROJECT 7 A. Description 7 B. Cost Estimates 7 C. Design, Construction and Supervision of Construction 8 D. Procurement and Disbursement 9 4. JUSTIFICATION 10 5. THE BORROIER AND BENEFICIARY 12 A. The Borrower 12 B. The Beneficiary 12 C. Financial Position and Earnings 13 Accounting 13 Audit 14 Balance Sheet 14 Past Income 16 D. Water Rates 16 Billings and Collection 18 Sewerage Rates 19 6. FUTURE FINANCES 20 A. Financing Plan 20 B. Financial Projections 21 7. AGREESEN1TS REACHED DURING NEGOTIATIONS 23  LIST OF ANNEXES ANINEX 1 Existing Water Supply and Sewerage Facilities in the Metropolitan Area 2 Detailed Description of Proposed Project 3 Cost Estimates of Proposed Project 4 Construction Schedule 5 Population and Water Consumption Statistics and Projections 6 Incremental Return on Proposed Water Supply Project 7 Organization Chart of Ghana Water and Sewerage Corporation 8 Balance Sheet as of June 30, 1968 9 Income Statement for September 1, 1966 to June 30, 1968 10 Schedule of Existing Water Rates and Proposed Wiater Rates 11 Estimated Income Statements 1968-1978 12 Estimated Sources and Application of Funds 1968-1978 13 Estimated Balance Sheets 1968-1978 14 Assumptions for Financial Projections 15 Debt Service Schedule on previous projects financed by Suppliers' Credits MAPS 1 Ghana - Existing Piped Water Supplies 2 Accra Watermains and Sewerage 3 Tema Watermains  APPRAISAL OF THE ACCRA-TENA WATER SUPPLY & SEWERAGE PROJECT SUMMARY AND CONCLUSIONS This report covers the appraisal of a water distribu- tion system and sewerage project in Ghana for which an IDA credit of US$3.5 million equivalent is proposed. The project seeks to improve the organization and operations of the Ghana Water & Sewerage Corporation (GWSC), a semi-autonomous agency responsible for water supply and sewerage services in the country. ii. GWSC is a new agency created in September 1966. Management consultants provided under a UNDP (Special Fund) project assisted in the initial establishment and functioning of GWSC. Special attention has been given to the Accra-Tema area organization of GWSC which would be responsible for the proposed project, to correct inherited defi- ciencies in organization, management and accounting. GWJSC is in need of further management assistance and has agreed to employ consultants acceptable to IDA for improving its management and operations. iii. The project represents GWSC's water supply and sewerage development program for Accra-Tema area for 1970-1973 and consists of (a) laying new water mains in Accra, the capital of Ghana, and Tema, Ghana's main port, provision of service connections and installation of water meters and (b) construction of a new sewerage system in central Accra and arrangements for disposal of sewage into the ocean. iv. The project has been prepared by consultants financed under a UJNDP (Special Fund) project. Detailed engineering is underway. The project is estimated to cost about US$5.9 million equivalent, including contingencies. Contracts would be awarded on the basis of international competitive bidding. The foreign exchange conpon- ent of the project is estimated to be US$3.5 million. v. The project has the highest priority in the water supply and sewerage sector in Ghana. Water supply to West Accra has become precarious since the failure of the Weija Dam, the main source of supply to Accra, in mid-1968. Interconnection of the distribution systems which would permit diversion of water from another source is urgently required. Extensions to the distribution network in Accra and Tema are also required to meet demand in the newly develop- ing areas. Accra lacks a sewerage system at present. The proposed sewerage system would cover the most critical areas of Accra and could later be expanded in stages to serve other areas.  - ii - vi. A principle issue arising under the project is GWSC's financial position. GWSC's current earnings position is quite adverse. In order to improve the financial position and place operations in the Accra-Tema area on a self supporting basis, the water rates in the Accra-Tema area were increased on July 1, 1969. Based on the new rates, the rate of return on incremental invest- ment on the water supply facilities would be about 25%. GWSC also proposes to introduce a sewerage rate when the sewerage pro- ject is brought into service and maintain the rate at a level to cover at least the operating costs including depreciation. A study of the water rates in other major urban areas is in progress and a study to recommend a program for rational utilization of existing staff of GWSC and reducing operating costs would be com- pleted within one year of the proposed credit. IDA can play a useful role in helping in the development of GWSC and in support- ing this young organization and its management in establishing sound policies. vii. Wlith the agreements reached during negotiations (see para. 7.01) the project is suitable for an IDA credit of US$3.5 million equivalent to the Government of Ghana. Government would relend the proceeds of the credit to GWSC at an interest rate of 6L4 to be repaid in 34 semi-annual installments commencing June 15, 1973. The credit would cover about 59% of the total project cost, equal to the estimated foreign exchange component. The balance of finance would be provided by GlWSC from its internal cash generation.  GHANA APPRAISAL OF THE ACCRA-TEMA WJATER SUPPLY AND SEZERAGE PROJECT 1. INTRODUCTION 1.01 The Government of Ghana has requested a credit of US$3.5 million equivalent from IDAtD finance the anticipated foreign exchange cost of a project for extending the water distribution system in the Accra-Tema area and the construction of a sewerage system for Central Accra. The Government would relend the proceeds of the credit to the Ghana Water and Sewerage Corporation (GWfSC). 1.02 The project, estimated to cost N06.o million (US$5.9 million), is part of a Master Plan for water supply and sewerage facilities in the Accra-Tema area and covers the investment needs for the plan during 1970-73. An IDA credit of US153.5 million is proposed to cover the foreign cost component comprising about 59% of the project cost. Local currency costs would be financed by funds generated from internal operations of GW4SC. 1.03 The project is based on consultants' studies of the water supply and sewerage needs of the Accra-Tema area under a UNDP (Special Fund) project started in 1963 wfith the World Health Organization (WHO) as the executing agency. The first phase of the UNDP project included the preparation of a Master Plan for water supply and sewerage of the area, assistance in the organization and initial functioning of a National Water and Sewerage Authority and the training of Ghanaian staff. The plan of operations was extended in 1965 to include the preparation of a feasibility study covering the first stage of construction of the Master Plan. 1.04 The Bank's first contact wfith the project was in August 1966 when the Bank reviewed the draft feasibility report and recommended changes in the design and phasing of the construction of the project. 1.05 The Government of Ghana established GWSC in September 1966 and under the UNMDP (Special Fund) project management assistance was provided to G-.JSC. In December 1967, UNDP approved the second phase of the project which included a leakage survey and analysis of the existing distribution system in Accra, preparation of detailed design and contract documents for the water supply and sewerage works covered by the earlier feasibility study, continuing management assistance to GW4SC and the training of staff. The works included in the proposed project are among the items for which detailed designs are being prepared. 1.06 This report is based on information furnished by GIJSC, consultants' reports and findings of a mission to Ghana in November 1968 by Messrs. V. Rajagopalan and P.F. Lu.  - 2 - 2. WATER SUPPLY AND SEVERAGE SECTOR IN GHANlA A. Relation to Ghanaian Economy 2.01 The area of Ghana is about 92,100 square miles, approximately the size of the United Kingdom. The present population of the country is estimated at 8 million. About 75% of the population lives in some 30,000 rural communities having less that 5,000 persons in each. The economy is primarily agricultural, with 60% of the labor force engaged in agricultural pursuits. The coast and forested areas in southern Ghana have experienced more rapid economic advance than the north, where subsistence agriculture predominates. Living standards, levels of education and life expectancy are all higher in the southern part of the country; the major areas of dense population are likewise in the south, where there are economic opportunities. 2.02 Due to the difficulties the country's economy experienced from 1964 to 1966, there has been little growith in the per capita real income during the 1960s. Only in 1967-68 growth in real dom- estic product is noticeable. However, during the sixties Ghana's population has grown at an estimated 2.6% per annum. More signifi- cant is the growth of the urban population, due to natural increase and migration from rural areas, especially to the large towns. It is estimated that between 1961 and 1967 the average annual rate of growth of population in the Accra-Tema area was about 7%. This is the most urbanized area in Ghana and contains about 25% of the total urban population. It has a population density of about 600 persons per square mile, whereas the national average is about 88. 2.03 The Accra-Tema area encompasses Accra town, the capital of Ghana and its largest city and administrative center, and the town of Tema, a planned new industrial center and Ghana's main port. This area is the chief location of modern manufacturing industry in Ghana, and Temna is the fastest growing industrial center in the nation. The Government of Ghana has given high priority to the provision of infrastructure facilities, such as water supply and sewerage in the metropolitan area. In Tema, construction of new houses in accordance with Tema's development plan is in progress. In other parts of the metropolitan area, a number of houses are being built by the Ghana Housing Corporation and under housing schemes financed by the Federal Republic of Germany. The provision of water supply and sewerage facilities must keep pace with these developments. B. Present Position 2.04 It is estimated that 25% of Ghana's total population is served by safe water supplies. Of the 100 urban communities with a population of more than 5,000 each, 63 including all the principal cities and towns have piped water supplies. Of the other communities (about 30,000) with less than 5,000 population each, only 433 have  - 3 - piped water supply systems; the rest depend upon wells, natural water courses, rain water, etc. GISC is Ghana's principal supplier of water, operating 54 water supply systems serving 360 communities. Local councils operate 102 small water supply systems serving 136 communities. Various mining properties provide industrial and domestic water for their own needs. There are also small private systems, operated by institutions, in various parts of Ghana. The existing water supply systems are shown in Map 1. 2.05 Generally, capital expenditures for construction of water supply projects are met from development funds provided for in the annual budget and used for projects approved by the government. In recent years, however, suppliers' credits amounting to about US$55.4 million have been used to finance the development of source and treat- ment facilities for urban water supply projects and to procure water treatment units, pipes and pumps for rural areas. By and large this has led to costly projects with excess capacities requiring further investments on distribution systems in order to utilise the source and treatment facilities created. Economic and financial considerations do not seem to have been considered in many of these projects. 2.o6 Several of the existing water works systems are unable to meet the demand for water and require extensions. In some instances, lack of adequate maintenance has impaired normal service and improve- ments are necessary. Except in the main urban areas where domestic house service connections exist, the supply is mainly through public taps. Average per capita consumption from public water supply sys- tems is about 30 gped in the larger towns, about 10 gpcd in smaller towns and about 5 gpcd in the rural areas. 2.07 Unsafe drinking water is a major cause of typhoid, dysentery, bilharziasis and dracontiasis (Guinea Worm) in Ghana. Recognizing that the greatest danger is usually contamination of the source of drinking water, and that even the simplest water supply systems can lead to far better levels of general health, the Government of Ghana has given high priority to this aspect of environmental health ser- vices. Special emphasis is being placed on the improvement of rural water supplies. 2.08 Wlater rates are uniform throughout the country except in the Accra-Tema area. A general water rate based on rental value of property and a water charge are used in some nine urban areas. The general water rate is collected by the local authorities and the water charge by the GMSC. Domestic consumers having house service connec- tions are assessed a fixed monthly charge not based on consumption. Industrial as well as most of the commercial connections are metered and charged for actual consumption. In several cases GIWSC supplies wzater in bulk to the local authorities who distribute it through public taps. A part of the supply is also through mobile water tankers maintained by GWSC. Special rates are levied in these cases.  - 4 - C. Existing Facilities in Accra-Tema Area 2.09 The Accra-Tema area extends for about 24 miles along the coast and covers an area of about 120 square miles. The area's existing water supply is derived from two sources; the Weija Works located some 14 miles west of Accra, using the Densu River Water, and the Kpong W-ater Works in the northeast, using Volta River Wiater. The Weija supply is by gravity and is intended primarily to meet the requirements of Accra city. The Kpong Works were developed to supply water to Tema town and supplement the water strpply to Accra. The supply from Kpong Works is pumped through a 34 mile long pipeline to a service reservoir in Tema, from which point it is distributed. The existing facilities at Kpong have capacity to supply 32 IMgd but utilization is only 50% at present. Treatment facilities and transmission mains are available for supplying about 10 Ilgd from Wfeija Works. However, since the failure of the Wfeija Dam in July 1968, due to heavy floods, the supply has to be drawn from the run of the river and it may vary from 0 to 10 IMgd. During the 1968-1969 dry season emergency measures had to be taken to maintain supply from this source. The reduction in supply from the Weija source is propo- sed to be compensated by diverting surplus water from Kpong lWorks to Accra. The pipelines necessary for this purpose form a part of the proposed project. Details of existing facilities are given in Annex l Athe locations of the water works are shown in Maps 1 and 2. 2.10 In the Accra-Tema area there are no private water supply systems and GWSC has authority to control the development and use of water sources in the area. W4ater for domestic, industrial and commercial purposes is drawn entirely from G'WSC's piped water system in the area. 2.11 An estimated population of about 679,000 (597,000 in Accra, 82,000 in Tema) is supplied with water through 17,000 service connec- tions (about 15,2C0 in Accra, 1,800 in Tema) and some 283 public stand- pipes in Accra. Approximately 50% of Accra's population derives its supply of water from public standpipes, whereas in Tema the supply is through house service connections only. Reliable statistical data on consumption by different categories of consumers are not available. Consultants have estimated that about 2/3 of the consumption is by domestic users and the rest by commercial and industrial users, govern- ment agencies and others. Consumption has increased from about 18 gpcd to 27 gpcd in Accra and from about 36 gpcd to 60 gpcd in Tema during the years 1961 to 1968. 2.12 At Weija and Kpong Works, for quality control, GWiSC main- tains well equipped laboratories, supervised by qualified chemists and biologists. The Weija Wlorks are equipped to deal with problems of algae control which periodicaUy arise and at Ipong Works the treatment process is adjusted to deal with excess manganese, occa- sionally found in the Volta River water. In general, water of uniformly good quality is supplied.  - 5 - 2.13 The service is continuous and normally adequate pressures are maintained in the distribution system. In the areas not served by the distribution system, GWSC's mobile water tankers supply water. In some of these areas water is also supplied by water vendors wiho secure the water from public taps. D. Sewerage and Sewage Disposal 2.14 The only public sewerage system in Ghana serves the city of Tema and is operated by the Tema Development Corporation, a govern- ment enterprise created to develop the Tema housing areas and related facilities. The collected sewage is treated in a primary sewage treatment plant before disposal in the ocean. Recently a small area in central Accra where government offices are located (Ministries Area) has been sewered and a small sewage treatment plant has been installed. In some areas septic tanks are used, but the majority of the population, particularly in the densely populated sections, uses bucket latrines for human wastes. The Accra municipality operates a waste collection and septic tank emptying service and collects a fee for this service. The collected wastes are discharged into the ocean. In many parts of Accra the waste waters from dom- estic dwellings find their way into storm water drains and ultimately reach the lagoons within the metropolitan area, creating offensive conditions. E. Development Program 2.15 Wlith the establishment of GWSC, a planning and programming department has been organized to develop long-term plans: for water supply and sewierage and to coordinate developments in this sector. An expatriate planning adviser assists this department. At present master plans for water supply and sewerage are available only for the Accra-Tema area (see para. 1.03) and Kumasi. For a number of other cities preliminary technical reports prepared by consultants in the past are available. Among these, GWSC has selected the urban areas of Cape Coast, Wimneba, Koforidua, Wa, Sekondi-Takoradi and Bawku to complete the economic and technical feasibility studies for water supplies in these areas. These studies are being made by a British firm of consultants. 2.16 GWSC itself has made preliminary studies of rural water supply needs in the country and has prepared a tentative program for development of rural water supplies. A two year program for provid- ing piped water supplies to 33 communities at an estimated cost of about N