Cambodia - Provincial and Peri-Urban Water and Sanitation Project

ISDS THE WORLD BANK GROUP AWorld Free ol Pavorty ItnfoShop Integrated Safeguards Data Sheet (Updated) Date ISDS Prepared/Updated: 12/23/2002 25100 Section I - Basic Information December 23, 2002 A. Basic Pro ect Data Country: CAMBODIA Project ID: P073311 Project: Provincial and Peri-Urban Water and Sanitation Task Team Leader: Vijay Jagannathan Project Authorized to Appraise Date: December 16, 2002 IBRD Amount ($m): Bank Approval: March 27, 2003 IDA Amount ($m): 29.90 Managing Unit: EASUR Sector: Water supply (50%); Sub-national Lending Instrument: Specific Investment Loan (SIL) government administration (25%); Sanitation (13%); Status: Lending Sewerage (12%) Theme: Water resource management (P); Access to urban services for the poor (P) I.A.2. Project Objectives: The Cambodia Provincial and Peri-urban Water Supply Project's development objectives are to assist the Kingdom of Cambodia move forward in fulfilling the Millennium Development Goals (MDGs) in water supply and sanitation by 2015. The project design aims at building partnerships with the private sector and user groups in financing, operating and maintaining constructed facilities, after designing specific instruments that ensure inclusion of low income communities residing in the service areas. The project will, therefore, continue the program of IDA assistance to the Royal Government of Cambodia (RGC) and Phnom Penh Water Supply Authority (PPWSA), so that consumers in Cambodian towns and rapidly growing peri-urban areas receive sustainable water supply and sanitation services. The project will finance water supply and sanitation investments targeting provincial towns and pern-urban communities that express demand for improved services. As a part of project preparation the RGC is assisting the RGC pilot innovative financing mechanisms through which low income communities can participate as full-fledged paying customers of piped water supply systems. IDA financing will support and strengthen existing entrepreneurship in the water sector, and encourage Cambodian and international firms to bid for design, build and operate water supply systems. I.A.3. Project Description: The project will be implemented through the Department of Potable Water Supply, Ministry of Industry Mines and Energy for provinces outside Phnom Penh (MIME component), the Phnom Penh Water Supply Authority for Phnom Penh province (PPWSA component), and the Municipality of Phnom Penh (MPP) component because the implementing agencies are different. These three components are described separately below.  2 ISDS MIME Component Water Supply: The major component of the project is to finance civil works and equipment in water supply infrastructures in participating provincial towns and districts. The component will be using two types of approaches for improving the effectiveness of service delivery to communities: (i) piloting Output-based Aid (OBA) approaches, and (ii) preparation of feasibility studies, preliminary design, and Design-Build and Lease contracts (DBL). In areas where bidding for DBLs do not lead successful bids from the private sector, the project will finance directly the construction of the systems for future operation by independent public enterprise. (i) Output-based aid pilot: In the pilot output-based aid (OBA) approach, the private sector operator will provide the financing for the trunk, primary and secondary networks in four pilot towns of Kampong Cham province. The Credit will finance a fixed dollar amount (approximately $500 per connection) per connection for (already) identified households below the poverty line in four participating towns. The fixed dollar amount has been derived from data available with PPWSA and SWSA on average connection costs. The poverty targeting was undertaken through a survey and community consultation process between March and May 2002, and validated against data from poverty mapping exercise conducted by the World Food Program, and more recent analysis undertaken as a part of the PRSP exercise. The lists are already prepared and approved by the communes. After construction of the trunk system, the operator can apply to the PMO-MIME for incremental financing to connect low income households, on submitting the list of new customer accounts generated in the previous month. As a part of project appraisal an assessment is being made of utilizing a financial intermediary to disburse the IDA Credit directly to the PSP operators. Project supervision will be conducted by the project supervision consultant financed by a cofinancier of the project. The lessons learned will be assessed at the project mid-term review, and modified if necessary for follow-up IDA operations, if any. Preparation of technical specifications and the output-based aid approach design have been financed by grants from the Australian Government and the PPIAF respectively. (ii) Design-build-lease arrangements: The preparation of preliminary feasibility studies and financial affordability analysis for the Design-Build-Lease (DBL) contracts are being conducted for a total of about 23 small towns in the provinces, and five peri-urban communities of Phnom Penh. The findings are currently being discussed with the local authorities and communities in order to select a technical option that matched the community willingness to pay for the services. After agreeing with the communities, the DBL contracts will be prepared for bidding. In response to the RGC request, about 149 communities signaled their interest in participating. Of this list the RGC selected 23 areas in the provinces and 5 peri-urban areas of Phnom Penh for project participation. The project designs for the 29 communities (including tariffs agreed with the district chiefs and communities) are now being completed, financed by PHRD Grant Funds. Bidding documents will be ready by project appraisal in February 2003. Sanitation: This component has two parts. The first part will finance physical improvements at the household level, including the collection, treatment and disposal of wastewater flows because of augmented water supply. As these on-site investments in sanitation benefit households, the latter will pay back the financing costs on the basis of project rules that will be agreed to with the RGC at appraisal. While loans will be taken by households and repaid out of the water bill, the financing and administration  3 ISDS of the sanitation component will be developed in consultation with the Lease and OBA operators. Institutional capacity building in Clean Water Groups (CWGs) will be undertaken with grant financing received from the JSDF, so that hygiene education and the importance of safe disposal of human wastes is explained to the beneficiaries of water supply infrastructure. The implementation of this component will commence after the start-up of the water systems in the subproject areas. The second part will support an expansion of intermediate (or low cost) sewerage infrastructure in Phnom Penh city. As a part of the Sanitation Policy study consultations were undertaken with users in Phnom Penh, and a strategic sanitation plan for the city of Phnom Penh was completed. The recommended strategy envisages a demand responsive approach to sanitation provisioning, in which communities and households are provided the level of services they want and are willing to pay for. The strategy also provides incentives to service providers to invest in intermediate technologies (such as condominial sewers) that have worked effectively in several Latin American countries. Based on the data collected, an allocation of $4.5 million will finance a pilot program of sanitation investments to approximately 50,000 persons in Phnom Penh city. PPWSA will be the agency responsible for system operations and maintenance and for cost recovery from service users. The sanitation program will follow the Strategic Sanitation Plan prepared for PPWSA under the Policy component of the ongoing Cambodia Urban Water Supply Project. Institutional Capacity Building: This component will finance technical assistance to train and build knowledge among various stakeholders (Clean Water Groups, provincial and village governments, water utilities, etc.) to plan and manage the water utilities and local environmental concerns in a sustainable manner. This component will finance the building of institutional capacity in the proposed Water Regulatory Commission. A simplified public performance assessment system, in which independent third parties assess operator performance will also be financed under this component. Project Management Consultant: MIME has limited experience of managing decentralized construction contracts, and therefore consultants will be hired to assist MIME with construction management. The consultants will assist with the supervision during construction of all subprojects. The consultant will also be responsible for preparing the feasibility studies, community consultation, preliminary design and procurement documents for more areas interested in applying for donor financing. Procurement Advisor: MIME has limited experience of managing decentralized procurement and therefore a consultant will be hired to advise MIME during the procurement of OBA and DBL contracts. Peri Urban Water Supply and Sanitation in Phnom Penh - PPWSA Water Supply for Peri Urban Areas: The major component of the project will finance civil works and equipment in water supply infrastructure expansion in the peri-urban areas of Phnom Penh. Preliminary feasibility studies are being completed in five communities in the peri-urban areas of Phnom Penh municipality. A preliminary list of peri-urban communities has already been identified in areas of Phnom Penh city and its suburbs that are occupied by low-income families.The estimated population living in these areas is around 430,000 (data from 1998) and the project envisages improving access to about 30% of this population. The constructed systems will be operated and managed by PPWSA. Program for subsidizing domestic connections of low income residents: Phnom Penh's water distribution system in low income communities is characterized by single connections that serve several households.  4 ISDS This imposes a heavy burden on the poor because the existing block tariff structure increases the average water tariff as consumption moves from one consumption 'block' to another. A pilot program for extending house connections to the poor under the on-going Cambodia Urban Water Supply Project has demonstrated that the main reason for the relatively small number of individual house connections in low-income communities is the $100 connection fee. This upfront payment is unaffordable to most poor residents, who earn around $1 a day in the urban informal sector. In the pilot program financing was provided, so that the poor could repay through the water bill. As a result of that, coverage increased by approximately 50 per cent in the areas covered by the pilot. In the proposed project IDA financing will support subsidies that cover connection costs to all households below the poverty line, with the objective of securing 100 per cent coverage in the subproject areas. Intermediate sewerage expansion: This component will finance mainly civil works and equipment in sewerage infrastructure, including the connections, collection, treatment and disposal of sewer flows. The Municipality of Phnom Penh will implement the complementary work on drainage and surface improvements of roads in coordination with PPWSA in the districts included in the project. The complementary work will include the rehabilitation of the drainage system in the areas where PPWSA will construct the sewerage system. The sewerage component will be implemented according to the demand and willingness to pay of the communities (or Khans) within the metrocore of Phnom Penh city. PPWSA will recover the O&M costs using their existent water supply collection system and the sewerage tariffs to be agreed with the communities. This component will cover one districts (or sangkats) of Phnom Penh city, in accordance with the Strategic Sanitation Strategy Approach developed through the ongoing Cambodia Urban Water Supply Project (3041 KH). Institutional Capacity Building: This component will be utilized to build PPWSA capacity in financial management and operation of the sewerage system in a sustainable manner. PPWSA will continue to monitor the project through the existing PMO in order to ensure that implementation is conducted in accordance with the Credit Agreement. Proiect Management Consultant: PPWSA has limited experience in managing construction contracts that involve community participation and therefore will require consultants to assist with project preparation and construction management. The consultants will assist PPWSA in the preparation of the sewerage projects that involve community participation. The consultant will assist PPWSA supervise construction in both the sewerage and peri-urban components. The same consultant will assist MPP to supervise and implement the rehabilitation component of the drainage system. Intermediate Sewerage Advisor US$0.20 million: PPWSA has limited experience of managing intermediate sewerage solutions involving community consultation, and therefore a consultant will be hired to advise PPWSA during the implementation of the sewerage subproject. Municipality of Phnom Penh (MPP) Component The proposed pilot sewerage investments are being undertaken in the city of Phnom Penh with built-up areas. These areas are already facing significant environmental problems because of the collapse of drainage infrastructure constructed several decades ago during French colonial rule. Any plan for sewer construction will therefore necessitate parallel actions in terms of drainage rehabilitation. The component will finance the preparation of feasibility studies for drainage rehabilitation, institutional capacity building in MPP for project management (this has been identified as a major concern in both the procurement and FM assessments), and civil works and equipment. The estimates for civil works are likely to be higher than what has been provided for in the proposed allocations. A decision on the size of  5 ISDS the MPP component can only be taken when a clear idea of cofinancing is obtained. In case cofinancing is restricted only to consultancy work, the rehabilitation of drainage may have to be deferred to a subsequent, independent lending operation. The proposed MPP components are: Municipality of Phnom Penh - Rehabilitation of Drainage in Pilot Sewerage Area: US$4.00 million This component will finance the civil works and equipment required for rehabilitating drainage infrastructure in the Municipality of Phnom Penh that falls within the pilot sewerage area. MunicipalitY of Phnom Penh - Institutional Capacity Component: US$0.30 million This component will be utilized to build project management capacity in MPP, particularly in the areas of financial management and procurement administration, both of which have been identified as being weak in the assessments carried out by the project team Municipality of Phnom Penh - Preparation of Feasibility Studies and Project Management: US$3.00 million This component will finance consultants who will prepare the feasibility studies for rehabilitating the drainage in pilot sewerage areas, and supervise the actual rehabilitation. Municipality of Phnom Penh - Procurement Advisor: US$.20 million The Municipality of Phnom Penh has limited experience of managing ICB procurement, and therefore a consultant will be hired to advise MPP during procurement of contracts. Components: Provincial Towns and Districts - MIME Water Supply Sanitation Institutional Capacity Building, including Procurement Advisor Project Management Consultant Peri Urban Water Supply and Sanitation in Phnom Penh - PPWSA Water Supply Domestic Connections Sewerage Institutional Capacity Building, including Intermediate Sewerage Advisor Project Management Consultant and Community Consultation Municipality of Phnom Penh Component Rehabilitation of Drainage in the Sewerage Areas Institutional Capacity Building, including Procurement Advisor Preparation of FS and Project Management Consultant I.A.4. Project Location: (Geographic location, information about the key environmental and social characteristics of the area and population likely to be affected, and proximity to any protected areas, or sites or critical natural habitats, or any other culturally or socially sensitive areas.) Provincial and pern-urban areas of Cambodia and the Municipality of Phnom Penh  6 ISDS B. Chteck Environmental Classification: B (Partial Assessment) Comments: The environmental and resettlement impacts caused by the sub-projects can be readily mitigated either through design adaptation or requiring partial environmental assessments (similar to initial environmental examination). This approach is used as a standard practice for projects of this nature in the sector. Since this is the first investment in this sector for nearly 20 years, the need to do a sector-wide environmental assessment will be reviewed during project preparation. C Safeguard Policies Triggered Policy Applicability Environmental Assessment (OP/BP/GP 4.01) 0 Yes C No Forestry (OP/GP 4.36) C Yes * No Natural Habitats (OP/BP 4.04) C Yes * No Safety of Dams (OP/BP 4.37) C Yes * No Pest Management (OP 4.09) C0 Yes 0 No Involuntary Resettlement (OP/BP 4.12) 0 Yes C' No Indigenous Peoples (OD 4.20) * Yes O No Cultural Property (OP 4.1 1) O Yes * No Projects in Disputed Territories (OP/BP/GP 7.60)* C Yes 0 No Projects in International Waterways (OP/BP/GP 7.50) C Yes 0 No *By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties'claims on the disputed areas Section II - Key Safeguard Issues and Their Management D. Summary of Key Safeguard Issues. Please fill in all relevant questions. If information is not available, describe steps to be taken to obtain necessary data. II.D.la. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts. The impacts will be localized to the neighborhoods seeking assistance from the project and in most instances reversible through appropriate mitigation measures. The impacts will occur during the construction and operational phases of the sub-projects. The range of impacts include: inadequate/unsafe water source, over-exploitation of water source, waste caused by inadequate sanitation facilities, temporary excavation causing stagnant water pools, dust and noise caused during construction, rehabilitation of affected properties, etc. II.D. I b. Describe any potential cumulative impacts due to application of more than one safeguard policy or due to multiple project component. As mentioned previously, impacts will be localized and no cumulative impacts are anticipated. Appropriate assessments will be undertaken to ensure that watersources identified have long-term sustainable yields to support project and other beneficiaries within the service area. II.D. I c Describe any potential long term impacts due to anticipated future activities in the project area. Improved access to safe water and sanitation is likely to catalyze upgrading of houses and in-migration. These are likely to exert environmental pressures on the neighborhoods. As part of the sub-project specific environmental assessments, projects will be made of future expansion of a neighborhood. The indirect impacts include increased human activity as a result of service expansion.  7 ISDS II.D.2. In light of 1, describe the proposed treatment of alternatives (if required) ll.D.3. Describe arrangement for the borrower to address safeguard issues II.D.4. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. The project-supported activities will involve the participation of primary beneficiaries (households willing to secure a water supply connection and ready to pay user fee) in improving the network of water supply through community mobilization. This will be done through the establishment of Water Users Groups (WUGs), and the empowerment of these groups to speak on behalf of the communities. Capacity building support will enable the WUGs to (i) target the needs of especially vulnerable groups such as poorer households, children and women in their participation in the project cycle; (ii) promote greater participation and transparency in planning and decision making at the grass roots; (iii) create a sense of community ownership and responsibility over infrastructure by establishing a dialogue and information dissemination mechanism with water utility operator, and (iv) enhance their basic understanding to maintain oversight over the system operators. A Community Mobilization Process - or Outreach Program - will be used to assist WUGs to engage in a dialogue with the provincial project office of the PMU and the selected private operator, be engaged through the project cycle, and oversee the implementation of the sanitation component of the project. In addition, the community mobilization process will serve to guide the larger community involvement in decision making by linking the above outputs with activities of information dissemination, consultation, collective decision making, and delegation of responsibilities. In this way, residents will be the main interlocutors with the private operators, and will directly coordinate with him/her. Simultaneously, the institutional capacity of other key stakeholders such as the Provincial Offices of the Ministry of Industry, Mines and Energy (P-DMIME), and local NGOs intending to work on water-related issues to respond to priorities expressed by the households will also be improved through interaction with the WUGs. In support of the project's emphasis on community participation and sustainability of the water supply facilities to be created, MIME (under the project) will make the following efforts: * Provide the beneficiary communities with close guidance at the time of preparation, selection of the operator and during implementation of the project; * Enable community representatives will participate in the bid evaluation committees for selection of the operator; * Ensure that community oversight of the private operator is recognized in the regulatory framework that is currently under development, and * Engage in regular post-hand over monitoring visits, so that the lessons learned are observed and utilized to strengthen project design in APLs 2 and 3. During the project preparation stage, four steps will ensure beneficiary involvement in the project. These are: Step I (Completed): A letter of intent signed by the Provincial Govemor and District Chief were submitted to the CC signifying the interest of the province and community to participate in the proposed project;  8 ISDS Step 2 (July-August. 2002): Validation of community interest in the project towns by an IDA-financed project team Step 3 (September 2002-March 2003): Results of the feasibility study and socioeconomic surveys i.e. technical options, management options, financial assessment and cost recovery options will be presented to the communes and districts to inform them of the technical and pricing options available. The agreements and decisions made will be embodied in a formal resolution, confirming the local administration's willingness to: (i) delegate the day-to-day management of the water utilities through supervision contracts to professional water management organizations; (ii) adopt water tariff rates to levels that will ensure system sustainability; (iii) undertake specific investments to ensure that there are no adverse environmental impacts from augmented water supply, and (iv) borrow from a commercial bank on terms and conditions specified by the RGC. Step 4 (March 2003): The provisions of the District/Commune Resolution will be presented and discussed in a series of meetings at the commune that will be served by the project. The result of the commune meetings is the signing of the Willingness-to-Connect (WTC) form by individual households. The WTC is a clear measure of demand at the household/community level. At least 60% of the target households to be served by the water supply project should sign and submit this document so that the project will proceed to implementation. If a number below 60% is reached, the project will not be implemented even if there is a demand at the provincial or district level. The results of the commune meetings, WTC and the detailed engineering design will be presented to the district and provincial level for final approval. All of the four activities mentioned above will undergo an iterative process of (i) information dissemination; (ii) discussions; (iii) decision-making; and (iv) commitment and responsibility, summarizes the participatory process adopted by the project team. Indigenous People: Proposed sub-projects that affect the customary rights of indigenous people are not eligible for financing and it will be included in the Project Operations Manual as one of the subproject criteria. In other situations where indigenous people live in participating towns, the Operational Manual requires that decisions of service levels and tariffs are taken after adequate consultation and participation of households at the community level. A strategy for the informed participation of and consultation with indigenous peoples will be included in the Operations Manual. E. Safeguards Classif cation. Category is determined by the highest impact in any policy. Or oni basis of cumulative impacts from multiple safeguards. Whenever an individual safeguard policy is triggered the provisions of that policy apply. [ ] S1. - Significant, cumulative and/or irreversible impacts; or significant technical and institutional risks in management of one or more safeguard areas [X] S2. - One or more safeguard policies are triggered, but effects are limited in their impact and are technically and institutionally manageable [ ] S3. -No safeguard issues [ ] SF. - Financial intermediary projects, social development funds, community driven development or similar projects which require a safeguard framework or programmatic approach to address safeguard issues. F. Disclosure Requirements  9 ISDS Environmental Assessment/Analysis/Management Plan: Expected Actual Date of receipt by the Bank 8/15/2002 Date of "in-country" disclosure 9/19/2002 Date of submission to InfoShop 10/16/2002 Date of distributing the Exec. Summary of the EA to the ED 10/16/2002 (For category A projects) Resettlement Action Plan/Framework. Expected Actual Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop Indigenous Peoples Development Plan/Framework. Expected Actual Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop Pest Management Plan: Expected Actual Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop Dam Safety Management Plan: Expected Actual Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop If in-country disclosure of any of the above documents is not expected, please explain why. Signed and submitted by Name Date Task Team Leader: Vijay Jagannathan 11/05/02 Project Safeguards Specialists 1: Patchamuthu Illangovan/Person/World Bank 11/05/02 Project Safeguards Specialists 2: Lars C. Lund/Person/World Bank Project Safeguards Specialists 3: Approved by: Name Date Regional Safeguards Coordinator: Glenn S. Morgan 11/06/02 Sector Manager/Director: Keshav Varma 11/05/02 For a list of World Bank news releases on projects and reports, click here ' SEAR8H _ , FEE oD8CN -- f - j_ . ],HbIACAE