PUBLIC BRIEF. - Program: Sanitation and Hygiene Initiative for Towns - (SHIFT) in South West Sri Lanka - SRI LANKA -

Transcription

1 PUBLIC BRIEF - Program: Sanitation and Hygiene Initiative for Towns - (SHIFT) in South West Sri Lanka - SRI LANKA - Financing for phase 1 of the program 1

2 Table of contents I - SECTOR AND CHALLENGES The sanitation sector in Sri Lanka Government Policy Importance for the country Contribution to the strategic approach of French overseas aid and AFD Lessons learned from AFD s core activities within the sector Contributions to the strategic focus of French aid and AFD... 5 II - THE PROGRAM Objectives Project outline Implementation structure Costs and financing plan... 8 III - PROJECT IMPACT EVALUATION Contribution of the project to sustainable development Monitoring and evaluation mechanisms and indicators Monitoring and evaluation Impact indicators (for SHIFT 1)

3 I - SECTOR AND CHALLENGES The sanitation sector in Sri Lanka The population of Sri Lanka is around 21 million. By 2015, the country will have achieved the Millennium Development Goals (MDG) for water and sanitation. However, only 2.4 % of the Sri Lankan population is connected to a collective wastewater management system and the vast majority of the population uses individual sanitation systems. In reality most of the existing systems are outdated and poorly maintained. This has decreased their ability to function efficiently. Therefore, insufficiently treated wastewater is discharged into drainage channels with serious consequences for both public health and the environment. Sri Lanka is currently equipped with 28 small-scale collection systems for wastewater mini-networks linked to housing projects or industrial clusters. Colombo is the only city that has a large-scale waste water collection system. Main operators in the Sri Lankan water sector: The Ministry of Water Supply and Drainage (MWSD) is in charge of the development and monitoring of public policies for water management. The National Water Supply and Drainage Board (NWSDB) is in charge of the financial and operational management of the infrastructures. National water policy states that operational responsibilities are to be decentralised to the most appropriate local level. At the time of writing, however, the development and management of urban and suburban public water services continue to be provided by the NWSDB, with the exception of Colombo. There are no Public-Private Partnerships (PPPs) in Sri Lanka in the water sector. Sanitation tariff system: The NWSDB bills both drinking water and, where appropriate, wastewater collection. The most recent tariff increase for wastewater took place in January This new pricing structure involves a fixed monthly payment of LKR 200 (about EUR 1.3) over and above the standard fee for access to drinking water, to which a variable price linked to the number of cubic meters consumed is added 1. Generally, costs for connection to collective wastewater management systems are covered by the NWSDB Government Policy As set out in the Mahinda Chintana 2, the Sri Lankan government has set an ambitious goal for sanitation development. It anticipates that 7% of the Sri Lankan population will be connected to a collective wastewater management system by 2020 around 1.5 million more people than in NWSDB s sanitation department has laid out its sector strategy in the Public Investment Program on Sewerage Projects This investment program identifies priority zones for wastewater management according to multiple criteria, resulting in the prioritisation of 49 projects. The estimated total cost of the investment plan amounts to more than LKR 230 billion (around EUR 1.3 billion). Part of the prioritised projects is already being implemented with the assistance of international funding. 1 Domestic prices vary between 1 and 10 LKR/m 3. For businesses and industries, there is a fixed price of 40 and 65 LKR/m 3 respectively. 2 The Mahinda Chintana is the Sri Lankan development strategy for Based on an extensive consultation process, the plan sets out a broad macroeconomic framework. In effect, it details public policy for the next 10 years for various economic and public service sectors. 3

4 In line with this investment plan, the NWSDB has submitted to AFD a request to provide funding for the construction of collective wastewater management systems in the municipalities of Negombo, Galle and Kelaniya/Peliyagoda. An integrated approach for those three projects has resulted in the establishment of the program SHIFT (Sanitation and Hygiene Initiative for Towns) in South West Sri Lanka. The present note covers the first phase of the program SHIFT in South West Sri Lanka Importance for the country In Sri Lanka, access to water is considered to be an inalienable right and the provision of water is a government priority. Sanitation has been less prioritized for a long time, but is now a core tenet of government policy, in terms of national-level strategy (Mahinda Chintana) and through the investment plan of the NWSDB. These include: Promoting projects in which the development of drinking water networks and wastewater collection networks are built together. Increasing household access to sanitation networks, focussing on the major cities where the population density is the highest. Promoting sustainable solutions for the treatment of wastewater and its discharge into the sea and rivers Contribution to the strategic approach of French overseas aid and AFD Lessons learned from AFD s core activities within the sector AFD has been mobilized in Sri Lanka in 2005 and was given a post-tsunami mandate. Since 2009, AFD is acting under a new mandate which aims at supporting a green and inclusive growth in Sri Lanka. In 2005, an integrated infrastructure development project costing EUR 79 million, including a water component with a total investment of EUR million, was initiated in the eastern district of Trincomalee. This water component aimed at allowing the supply of raw water to the treatment plant in Kantale and improving the plant s transportation and drinking water distribution networks. The project concluded at the end of In spite of numerous difficulties, the work was completed to a satisfactory standard. In December 2010, AFD granted a loan of EUR 35 million to fund, jointly with ADB, a project for water management in the northern district of Jaffna. Established in 2011, this project aimed at connecting 300,000 people to the drinking water network, as well as 80,000 people to a wastewater collection system. To date, project implementation is still pending because of technical and social constraints. Last but not least, AFD signed a Credit Facility Agreement (CFA) with the GoSL in October 2014 for a USD 70 m project for Ambatale Water Supply system Improvement and Energy Saving Project. The management of these funds has been delegated to the Asian Development Bank (ADB). The project includes Ambatale water treatment plant rehabilitation and water transmission works. 4

5 Contributions to the strategic focus of French aid and AFD This new project is an integral part of the AFD mandate for the promotion of green and inclusive growth in Sri Lanka: Green growth (protection of the environment): The surface water in Negombo s canal network is highly polluted at present. This is evidenced in the presence of eutrophication, with unpleasant odours in the city linked to the decomposition of algae. The pollution is largely due to wastewater in the storm drainage system (direct discharge of wastewater from septic tank in the environment). The chemical and biological composition of groundwater is classified as highly contaminated due to faecal matter. The situation becomes critical when the water level reaches ground level, because low areas of the city are flooded with polluted water. By diverting sewage and other wastewater from the drains and preventing it from seeping into the soil, the project will greatly reduce the degradation of both surface water and groundwater. Furthermore, the coastal ecosystems, most notably the mangroves, are threatened to a large extent by the absence of wastewater treatment prior to discharge. The same is true for the fisheries. Through its treatment of wastewater, the project will ensure the conservation of coastal and marine ecosystems. Inclusive growth (improvement in access to sanitation systems and reduction in health risks): In lessening the discharge of wastewater into drains and reducing seepage into the soil, the project will significantly decrease the population s exposure to pathogens caused by faecal matter contamination. This will have a significant positive impact on public health. The project will also contribute to job creation in the region. II - THE PROGRAM Objectives (1) Extend wastewater collection and treatment systems, and improve access to sanitation services for 73,000 people. (2) Clarify and enhance the water and sanitation sector framework. (3) Facilitate access to the service for disadvantaged households through the development of policies designed to fight poverty. (4) Preserve (coastal and marine) ecosystems, and maintain biodiversity Project outline Program context The NWSDB requested AFD funding for wastewater management infrastructures for three cities in the western and southern coasts of Sri Lanka: (1) Negombo is located 37 km to the north-west of Colombo and has a population of 183,000. It is one of the country s key fishing sites, with a high potential for tourism. (2) Galle is the capital of Sri Lanka s southern province. The city, with a population of over 110,000, is home to an important cargo port. The old town and its fortifications are classified as a UNESCO World Heritage site. (3) Kelaniya/Peliyagoda is a low-income industrial city located in the suburbs to the north of Colombo, with a population of 136,000 inhabitants. Feasibility studies were carried out for Galle and Negombo in In the case of 5

6 Kelaniya/Peliyagoda, NWSDB carried out a pre-feasibility study. It is hence expected that the SHIFT program will focus on city centres where the population density is highest (over 100 people per km 2 ). In addition to high population density, the water tables are close to groundlevel, the septic tanks are defective and the soil has a limited filtration capacity. All of these suggest that the transition to collective waste water management in these areas is an urgent matter of ecological, economic, and social sustainability. The program SHIFT includes the financing for the three collective wastewater management systems (financed with soft loans) coupled with an ambitious technical assistance component which will be financed with a grant. Due to the substantial investment costs required, the program is split into several phases (a minimum of two). The first phase (SHIFT 1) will concern Negombo that the authorities have marked as the priority. The three cities Context to the sanitisation of Negombo: Negombo s toilets and sceptic tanks tend to overflow. The sludge treatment plant is no longer in operation and the sludge is discharged in areas adjacent to households or even directly into canals and drains, this leads to the spread of pathogenic agents which can create negative impacts on public health. The situation increasingly pollutes the underground water that is very close to the ground level (0.6 to 2.9 metres deep) while 40% of the population use boreholes or wells to get water. Furthermore, the city is a popular tourist site best known for beaches. There are 37 hotels and 16 restaurants in the city, the hoteliers discharge waste water into the sea through the existing malfunctioning in-house sanitation systems. This has long term consequences for the coastal eco system and Negombo s fishing industry, the city s other principal economic activity (Negombo fishery activity represents 16% of the country fishery production). 6

7 The three components of SHIFT 1 Component 1: Sanitation in Negombo This component includes complementary studies for Negombo (preliminary design, detailed design, drafting of tender documents) and construction work. The works include the construction of entire collective wastewater infrastructures in order to equip the central part of the city (73,000 people) including: (1) Sewer networks over 70 km long; (2) Pumping stations; (3) Water treatment plant with a capacity of around 12,500 m 3 /day; (4) Sea outfall pipe. This component will also finance the project NGO whose role will be to promote hygiene, best practices of water use and civil society participation. The component will also comprise a pro-poor fund that will ensure that all low incomes households could be connected to the reticulation system. Component 2: Technical assistance The NWSDB implement a very ambitious investment plan in the water and sanitation sector. However in order to bridge the gap between the current capacities of NWSDB and competencies required in future to manage the wastewater management system, a technical assistance component is sought to enhance the institutional capacity and skills development of the NWSDB. Therefore, a technical assistance will allow clarifying the sector policy, reinforce the institutional structure, develop better skills and support the NWSDB operation and investment skills. A consultant will be hired to support the NWSDB in managing contracts. This technical assistance will last 5 years and will be composed of three sub-components as described in Appendix 1. This component will be financed by a EUR 5.7 million grant provided by the European Union through its Asian Investment Facility (AIF). The management of the grant is delegated to AFD. Component 3: Preparation of subsequent phases This component will cover preliminary studies (up to the drafting of the tender document) for the cities of Galle and Kelaniya/Peliyagoda Implementation structure AFD will sign a financing agreement with the Ministry of Finance. An on-lending agreement will be signed between the Ministry and the NWSDB which will be responsible for overseeing the project. NWSDB will establish a project management unit (PMU) within the sanitation department; the PMU will be financed by the NWSDB and composed of NWSDB staff. A steering committee will meet twice a year to conduct a general review 3. 3 This committee will comprise the Minister for Water Supply and Drainage, the Minister of Finance, the Minister for Urban Development, the Negombo Authorities and representatives of civil society. AFD and EU delegation will be observing members. 7

8 2.4 - Costs and financing plan - SHIFT Phase 1 In million EUR AFD GoSL EU Component 1 Design and supervision consultancy 6.3 Wastewater treatment plant 18 Sea outfall pipeline 5 Reticulation system 26 Operations equipment and building 1 Pro-poor fund 1 NGO 0.2 Land purchases 1 Taxes 17 PMU costs 8 Total Component 2 PIEC 0.9 SMSDC 3.4 MSC 1.1 Contingencies 0.3 NWSDB headquarters building 2.5 Total Component 3 Preliminary studies for Kelaniya/Peliyagoda 3.5 Preliminary studies for Galle 2.5 Total 3 6 Risk and contingencies (15%) 10 Totals by contributor TOTAL SHIFT program (in EUR million) Donors GoSL AIF SHIFT SHIFT 2 (and 3) Galle Kelaniya/Peliyagoda Totals ,7 Grand total

9 III - PROJECT IMPACT EVALUATION Contribution of the project to sustainable development Economic impact: The estimated economic return primarily reflects an increase in real estate values (for reasons of land scarcity, population increase, and heightened economic activity) and tourism growth. The healthcare costs linked to water-borne diseases are not taken into account, even though their reduction as a result of sanitation services being deployed is generally considered to be the main economic gain of a project such as this. Moreover, fishing activity is seriously threatened by the wastewater pollution of coastal areas. The project hence contributes to the preservation of this major economic activity. The impact assessment anticipates that the construction phase of the Negombo project will require the recruitment of between 250 and 300 labourers. In the operational phase, a minimum of 30 people will be employed. Environmental impact: Nowadays, surface waters are highly polluted in Negombo. Nitrogen and phosphorous excess lead to algae blooms which generate bad smells in the city. Pollution is mainly due to direct discharge of wastewater into rainwater drains. Groundwater is highly polluted due to faecal contamination by leaking sceptic tanks and latrines. The situation is particularly bad in low land areas which often get flooded. The project allows this wastewater to be collected and treated, thus increasing the general water quality. Moreover, marine and coastal ecosystems will be protected, therefore protecting the mangrove and fish reserves. Climate impact: Available projections show that the west coast of Sri Lanka is set to experience increasingly heavy rainfall, especially during the monsoon season between May and September. Combined with the anticipated rise in sea levels, this climatic change increases the flood vulnerability of the coastal area to the south-west of the island. The implementation of a community sanitation system in the city of Negombo hence brings secondary benefits regarding adaptation to climate change. By replacing the defective toilets and septic tanks with a system that collects and treats wastewater before discharging it into the sea, the spread of pathogens in the event of flooding is reduced. Furthermore, the purification of water discharged into the sea will contribute to the preservation of the mangroves ecosystems and the coastal protection they provide, particularly in the case of extreme weather events. Negombo lagoon, Muthurajawela swamp and the Hamilton historic canal make an integral part of the Negombo s eco-system which influences the socioeconomic connections with the capital Colombo 30kms south of Negombo. Social impact: The project will reduce population exposure to fecal pathogens and lead to public health improvements. The project will also create jobs and gender equality will be taken in account in the NWSDB in the technical assistance programme. In addition, NGOs in charge of civil society participation will make sure that women are included in the project implementation. Institutional impacts: The technical assistance programme should have a long lasting impact of the NWSDB, on the restructuration of the institution, on the NWSDB HR policy and on financial management. On the latter, the technical assistance will work on the preparation of a financial model that will be a tool allowing better investment and management decision. 9

10 Sustainability of project impacts: The infrastructures created as part of this project have a lifespan of over 50 years. The NWSDB is an institution that is recognised for the quality of it technical management. Certain water purification plants in the country are already over 100 years old. Maintenance will have to be carried out on a daily basis and the AFD has required that a technical assistance programme should be implemented together with the project. Last but not least, the policy and regulation recommendation, as well as the financial model should have a very long term impact on the water sector Monitoring and evaluation mechanisms and indicators Monitoring and evaluation The NWSDB Project Management Unit (PMU) with the support of consultants will be in charge of monitoring the progress of the project. They will be required to produce bi-annual reports monitoring the performance indicators set out below. AFD will also ensure that formal supervision missions are regularly carried out, and will issue no-objections at each stage of the project. An ex-post evaluation will be organised at the completion of the project, in accordance with AFD s standard procedures Impact indicators (for SHIFT 1) People benefiting from an improved sanitation system Volume of treated waste water produced People benefiting to hygiene education Indicator value Unit of measurement 73,000 Number of people 12,500 m3/day 183,000 Number of people 10

11 Appendix 1: SHIFT proposed technical assistance The NWSDB has an ambitious investment plan for the sector but the institution will have to strongly enhance its management capacities to face challenges that will come up with such evolutions. Therefore, in order to support the NWSDB in this development, and to ensure sustainability of investment made under the Sanitation and Hygiene Initiative for Towns (SHIFT) in South West Sri Lanka, it will include an important technical assistance, described thereafter, which is expected to last 5 years. The technical assistance will be composed of 3 components: 1- Political and institutional enhancement consultancy (PIEC): A consulting firm will be recruited to provide detailed analyses of NWSDB requirements in order to ensure the best institutional environment for NWSDB further expansion. This will consist in two missions: i) Water and sanitation sector policy and institutional environment review There is no water law in Sri Lanka that defines the way tariffs are set. Tariffs are therefore negotiated between the Ministry of water supply and drainage, the Ministry of Finance and the NWSDB. In parallel, the financial steering of the NWSDB is not properly defined in accordance with financial modelling. Indeed, currently no exhaustive business plan has been provided by the institution. In addition, many reforms should come up to streamline the NWSDB balance sheet (especially relating to debt management and asset amortization) but many doubts remain on the next ways forward. 20 years ago, the NWSDB had undertaken important reforms following a technical assistance from USAID, which had results in building NWSDB provincial branches. Henceforth, the NWSDB requires embarking on a new institutional reform to absorb all current and future expansions. The sewerage department organization also requires to be enhanced to ensure a better managerial structure, the best possible efficiency and more visibility. Therefore, the PIEC will undertake an exhaustive review of those matters and will formulate recommendations to the Government and the NWSDB to clarify the sector framework, ensure its sustainable financing, and make evolve the board structure according to future achievements. ii) Design and monitor an exhaustive sewerage management skills development work plan Working on day-to-day basis within the NWSDB, the PIEC will identify all needs to ensure the para-statal agency will have sufficient skills to implement expected evolutions in the sanitation sector. It will thus design a work plan for the sewerage 11

12 management skills development consultancy (SMSDC), thereafter the second TA component. It will then assist the NWSDB in drafting terms of reference of each mission to be given under the SMSDC (the PIEC will give a particular attention to ensure that training is provided in a fair balance to women and men). It will support the NWSDB in procurement and will ensure that competent consultants will undertake identified tasks. It will also be in charge of annual progress review to monitor the SMSDC implementation in line with a monitoring and evaluation framework that will be built during the design phase. 2- Sewerage management skills development consultancy (SMSDC) Up to now, there are no concrete experiences in Sri Lanka in managing conventional large-scale wastewater management scheme. In line with the investment plan, it is forecasted that the NWSDB sewerage department should recruit approximately 400 staff in the next 6 years. The NWSDB strongly needs to enhance its competency to be able to face challenges from new sewerage project management and monitoring as well as of sewerage facilities operation and maintenance requirements. The sewerage management skills development consultancy will thus consist in a whole human resources development strategy. It will comprise a support in human resources recruitment and management, a day-to-day on ground training at both level of management and technicians (comprising activities for electromechanical equipment management, wastewater treatments processes, chemicals management, laboratory tests, designs, etc ), financing for master degrees for key sewerage department staff (specific contracts will be proposed to employees willing to participate in such training in order to ensure that they will stay in the NWSDB for several years after the training) and a training centre development component. For the latter, the current Colombo water training centre lacks means in general as it is mainly dedicated to water supply rather than on sewerage. It is therefore timely to increase the centre means and develop specific wastewater management courses. The consulting firm selected to undertake the PEIC mission will not be allowed to participate in the tender for the SMSDC. The SMSDC will have an equipment fund available to finance required operation and maintenance equipment and small works to ensure that the NWSDB has all sufficient means to undertake its tasks. 3- Management support consultancy (MSC): An international consultant shall be appointed to support the project management unit (PMU) in charge of SHIFT implementation. He will assist the PMU in daily monitoring of the programme, technical supervision, procurements and financial monitoring. 12