Public Disclosure Authorized. Public Disclosure Authorized. Public Disclosure Authorized. Public Disclosure Authorized. Report No.

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1 Project Name Region: Sector Project ID Borrower Report No. PID9819 Guinea-Third Water Supply & Sanitation Project Africa Water & Sanitation GNPE73567 Republic of Guinea Date this PID was prepared March 26, 2001 Appraisal date February 2, 2001 Projected Board date May 31, 2001 Country and Sector Background DATU (Direction Nationale d'amenagement du Territoire et de l'hurbanisme B.P. 846, Conakry Contact: M. Amadou Diallo Tel.: Fax: The urban population in Guinea has grown from 14 percent in 1960 to 32 percent in 1999, and the population in Conakry, estimated at 1.3 million inhabitants in 1995, is growing at a rate of 4 percent per year. In spite of progress made in the past 10 years, only 30 percent of Conakry's inhabitants have private water connections. Another 40 percent of the population get water from neighbors and the remaining population depends on public standpipes, water vendors, and wells. On the sanitation side, even if a large number of plots are equipped with traditional and vault latrines, these facilities are under-designed, poorly built and badly maintained. Waste water and excreta disposal are highly inadequate and pose significant health and environmental threats to living conditions, particularly in densely populated areas, such as Kaloum, in Conakry. Activities under the proposed supplemental are consistent with the Country Assistance Strategy reviewed by the Board in November 1997, which highlighted the following as essential to poverty reduction: (i) service delivery improvements; (ii) access to basic public services; and (iii) effective human resource. The proposed Supplemental Credit will improve sanitary conditions in Kaloum by increasing access to appropriate sanitation services. The proposed Supplemental Credit is therefore coherent with the CAS. 2. The Third Water Supply and Sanitation Project was approved on May 5, 1997 and became effective on August 4, The original credit amount was SDR18.0 million, of which, approximately SDR6.0 million have been disbursed as of March 23, So far, about 65 percent of the funds have been committed. The current status of the project is the following: Water Resources Management: Parliamentary approval is expected on a National Water Resource Management Strategy and a new water legislation has been

2 prepared. It is expected that the process will be completed by June Urban Water Supply: The number of water connections and water consumption are increasing: 64,805 connections were in place by October 31, 2000 against the estimated 56,000 connections that were to be installed by December 31, Works for extending Conakry's water network are being implemented satisfactorily. To date, 60 percent of all works identified at appraisal have been completed, compared to 50 percent at appraisal. Rehabilitation of the water network to reduce water loss and a comprehensive program to improve water supply reliability is underway. On the management side of water operations, SEEG and SONEG have signed an interim, one-year lease contract, in effect since December 31, During this period, a 15-year lease contract was being negotiated, which would have become effective on January 1, Regrettably, negotiations were unfruitful, and consequently, Government decided to launch a competitive tender to recruit a new private operator. After more than 10 years of private management of water operations in Guinea, the outcome of these negotiations represents a serious drawback to one of the first established private public partnership in the sector, and in the region. Delays in paying Government's water consumption is still one of the main issues in the sector, even if the Ministry of Finance is now paying the Government's current consumption and has included payment of its arrears in the 2002 national budget. Even though there are some problems associated with the management of water operations, the Government has established a new transitional organization to take over the responsibilities of the previous operator. The Government is committed to taking appropriate measures, with regard to the management of the transition period, in recruiting a new private operator. In the mean time, the Government is seeking support from the Bank under the ongoing project to (i) recruit technical assistance to reinforce and manage the interim organization that has been already set up; and (ii) organize international competitive bidding to recruit a new private operator. The action plan developed by the Government is specific on the completion dates of these actions. Recruitment of technical assistance will be completed in the next three months and selection of the international private operator should take place within one year, long before the commissioning of the sewer network and the treatment plant. Sanitation: Detailed technical studies and bidding documents for the construction of the sewer network have been completed. Similar studies for the treatment plant are about to be completed. Studies on the most appropriate institutional arrangements for the management of the future sewer network and treatment plant have been completed, and private sector involvement is foreseen. Regarding on-site sanitation systems, the envisaged training for artisans in latrine construction and pit emptying has been carried out satisfactorily. Consultants have been selected to prepare strategic sanitation plans and detailed technical proposals to improve sanitation conditions in five of the most deprived districts of Conakry. Detailed technical studies for the construction of two septage treatment facilities have been completed and bids for works will soon be launched. It is expected that trained septic tank and latrine emptiers will play an important role in managing septage treatment facilities and that construction of these facilities will greatly reduce -2 -

3 indiscriminate dumping of septage in the urban environment. Project objectives 3. The objectives of the supplemental credit are to (i) improve sanitary conditions in the district of Kaloum (in Conakry) by increasing access to sewer services; and (ii) reduce pollution of the marine ecosystem from wastewater discharge and septage dumping. The Supplemental Credit will enable the construction of a sewer network and a wastewater treatment plant, which will stop sewage being discharged into the sea. Project description 4. Consistent with the original development objective, the supplemental credit would finance: (i) construction of a sewer network in Kaloum (Conakry) and installation of connections; (ii) construction of a wastewater treatment plant; (iii) supervision of works; (iv) community awareness and hygiene education activities to facilitate connections and better hygiene practices; and (v) training for staff and institutional capacity to regulate the management of the sewer network and the treatment plant. Project financing 5. Total project cost (based on the engineering design) is estimated to be US$27.50 million; of which, IDA financing of US$25 million is proposed. The Government's contribution is estimated to be US$2.50 million equivalent, representing 9 percent of the total project cost. Project implementation 6. The Directorate of Land Development and Urbanism (DATU) is the agency in charge of the sanitation component under the existing credit. This unit has performed satisfactorily and will oversee the execution of the supplemental credit. Staff from DATU will continue to be trained and DATU's institutional strengthening will also continue. The Supplemental Credit will be executed in three years and a concomitant extension of the closing date from December 31, 2002 to December 31, 2004 is proposed. Procurement and disbursement activities will follow procedures outlined in the original Credit. All civil works contracts totaling US$22.70 million will be awarded through International Competitive Bidding. Consulting activities related to project supervision, institutional support and training, and Community awareness program, totaling US$1.05 million, will be awarded on a Quality-Cost-Based Selection. Project sustainability 7. Sustainability of activities to be financed by the Supplemental Credit will be achieved by ensuring maximum involvement of various stakeholders at national, decentralized and local levels during project implementation. A sanitation surcharge on water bills will finance operation and maintenance of the facilities. Handing over of operation and maintenance responsibilities to a private operator (also responsible for water supply operations) is key to sustainable sanitation services. Funding of sanitation operations and maintenance, through surcharges on water bills, is a trend in the region and has been applied in C te d'ivoire, Burkina Faso and Senegal. Implementation -3 -

4 of a sanitation surcharge, acceptable to IDA will be a condition of Effectiveness of the Supplemental Credit. Selection of a competent technical assistance, under conditions acceptable to IDA, will also be a condition of Effectiveness. Lessons learned from past operations in the country/sector 8. Major risks are related to (i) inability to recruit, on time, the private operator to manage water and sanitation operations; (ii) lack of commitment from Government to set the sanitation surcharge at a rate that will generate adequate funds to finance operation and maintenance of the facilities; (iii) continuous arrears on Government water bills, reducing at the same time funds for sanitation operations; and (iv) counterpart funding. Government is committed to the project and improvement of the water network is underway. Government has agreed to (i) put in place a sanitation surcharge on the water tariff at a rate satisfactory to finance operation and maintenance of the facilities; (ii) have the funds generated by the sanitation surcharge collected by the water operator to finance operation and maintenance of the facilities. Government is in the process of launching bids for selecting the private operator and such recent tenders have attracted attention from the industry. Current track record in terms of counterpart funding is encouraging, even if security concerns at the southern border of the country are draining financial resources from the national budget. Deposit of an initial allocation of GF500 million in the project account will be a condition of effectiveness. Environmental aspects 9. A National Environmental Plan has been prepared, which focuses primarily on the green environment and natural resource management. Conakry's Strategic Sanitation Program (PADEULAC) reviewed all aspects related to the improvement of environmental conditions in the city, including the rehabilitation of sewers, development and promotion of on-site sanitation, solid waste management and drainage, training of artisans, community and private sector participation, and cost recovery. The environmental and social classification for the Supplemental Credit is B. An environmental impact assessment (Category B) of the Third Water and Sanitation Project was prepared in In addition, an environmental assessment of the sanitation component, including wastewater treatment facilities, was updated in 1999 and concluded that its implementation will have a positive environmental impact on living conditions in Kaloum (Conakry) by (i) limiting creation of wastewater ponds in streets and wastewater and excreta in plots, (ii) reducing BOD discharge in the marine ecosystem, and (iii) halting indiscriminate dumping of septage in the urban environment. Contact Point The InfoShop The World Bank 1818 H Street, NW Washington, DC Telephone: (202) Fax: (202) Yao Badjo -4-

5 Task Manager (202) Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. This PID was processed by the InfoShop during the week ending April 6,