Project Name Angola-Luanda Water Supply and Sanitation (+)

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Report No. PID6060 Project Name Angola-Luanda Water Supply and Sanitation (+) Region Sector Project ID Borrower Implementing Agencies Africa Water Supply and Sanitation AOPE50280 Government of Angola Government of the Province of Luanda Date Of PID September 13, 1997 Projected Appraisal Date September 1998 Projected Board Date March 1999 A. Country and Sector Background: The combination of the rapid growth of Angola's major urban centers and inadequate urban services has produced cities suffering from some of the worst health and environmental problems in Africa. The conditions in many of these cities are now at or near emergency levels. The use of contaminated water, the insufficient volumes of water, the inadequate stormwater drainage, and the lack of adequate sanitation (see 1/) have resulted in high and steadily increasing rates of water and excreta related diseases. Malaria and cholera, for example, are endemic and have accounted for 64% of the mortality rate in recent years. Over the last ten years, the rates of infant and child mortality for example, have increased rapidly mostly due to diarrhea and, at 196 and 364 per thousand live births (roughly 20% and 36%) respectively, are now among the highest in the world. These emergency conditions resulted from the poorly maintained infrastructure and the weak governmental operating agencies being overwhelmed by the rapid and significant growth of the urban population in the last twenty years, primarily due to civil strife and the resulting insecurity in the countryside. This rural exodus has resulted in approximately 50% of Angola's population living in urban areas, and about 50% of that urban population lives in Luanda where the population has grown from about 500,000 in 1974 to approximately 2.5 million today. The lack of urban services is most common in the poorer communities that have developed in recent years on the periphery of the cities. In Luanda, not only do the residents pay many times more for the services than residents in other parts of the City, but the services that they receive are usually inferior. Luanda's water supply system is in very poor condition and the operating company, Empresa Provincial de Agua de Luanda (EPAL), is unable to perform the normal functions of a company, such as providing regular maintenance, issuing bills, making collections, and maintaining accounts and records. The two water production plants and the treatment plants, in Luanda, produce about 50% and 30% of their respective nominal capacity, and the distribution network supplies water to about 25% of the residents. The majority of the population, and virtually all of the poorer communities depend on private suppliers of truck-distributed water that is frequently untreated and can cost up to 10,000 times more than the water distributed by EPAL. The situation is similar with regard to sanitation, including the removal of solid waste where the responsible company, Empresa de Limpeza e Saneamento de Luanda

2 (ELISAL), is only able to service a small portion of the City. As a result, solid waste and wastewater have accumulated for many years throughout Luanda, leading to a downward spiral of poor health and environmental degradation, and to increasing levels of poverty. The failure of EPAL, ELISAL and the other responsible agencies to maintain the systems and to provide adequate levels of water supply and sanitation services can be attributed to many factors, including the lack of capital investment and an effective tariff system, and a lack of technical and administrative expertise. The problems related to water supply, physical and institutional, are now so severe that the Government has indicated in its recently adopted Water Supply and Sanitation Sector Policy, that it will seek private sector firms to operate the water supply systems in the major urban centers. B. Project Objectives. The proposed project is the first in a series of urban water supply and sanitation projects designed to contribute to a reduction in the level of poverty in Luanda. The project development objectives are to: (i) reduce the level of urban poverty in Luanda and improve the general level of public health by increasing the quantity and quality of water available to the residents and by rehabilitating portions of the combined sewerage system; and (ii) increase the efficiency of the Luanda water supply and sanitation system by introducing private sector operators to manage the system. C. Project Description. The objectives stated above will be realized through the implementation of the following integrated investments over a five year period from 1998 to 2003: a. Rehabilitate Luanda Water Supply and Sanitation System. A medium-term investment strategy for water supply and sanitation has been prepared to meet the city's estimated demand until the year The investment program proposed by this plan is presented in three phases. The proposed project would assist in the implementation of the high priority investments proposed in the first phase of the plan, including the rehabilitation of the water treatment plant at Margal, the replacement of one water reservoir, the rehabilitation of the water reservoirs and the related pumping stations, the replacement of portions of one of the two main water transmission lines, and the replacement of about 35 km and the extension of about 82 km of the primary water distribution network to the periphery of the city. This rehabilitation would increase the water pressure and flow in the system. The project would also begin to address the issue of waste water in Luanda by rehabilitating portions of the combined sewerage system. b. Private Sector Participation in the Luanda Water Supply and Sanitation System. To allow the Government sufficient time to gradually implement its recently adopted water tariff system and permit the water supply company to recover its costs and be financially self-sufficient, the project would finance, on a declining scale over a period of five years, a portion of the recurrent costs and the PSP contract with the private sector firm operating the water supply system. The extent of financing and the schedule required will be determined based on the technical assistance provided to the Government to prepare the proposed PSP contract. This contract would specify significant milestones to be achieved, such as the implementation of a billing and collection system, preparation of proper books of accounts, and financial statements and operating results to enable the Government to accurately - 2 -

3 measure the success of the contract. C. Technical Assistance. This component would: (i) finance the Sambazanga pilot project designed to test low cost sanitation and solid waste management in peri-urban areas; (ii) prepare a new community based program to introduce permanent cost effective solutions for improved sanitation and solid waste removal to the peri-urban areas in Luanda utilizing the lessons learned from Sambazanga; (iii) develop the necessary plans and procedures to improve the solid waste collection system in Luanda and to reduce the level of government subsidies needed to provide these services to the residents by implementing a system of user charges; (iv) design the cleaning and rehabilitation of portions of the combined sewerage system - the works to be financed by the proposed project; (v) finance the preparation of the detailed engineering for the Second Luanda Water Supply and Sanitation Project; (vi) finance the equipment and any local and/or international consultants needed to assist the local staff responsible for the implementation of the project in the PIU; (vii) assist the GPL in monitoring and controlling the PSP contracts in the Luanda water supply and sanitation system through the use of independent auditors; (viii) assist the GPL in monitoring and controlling the financial aspects of the project by financing annual independent audits of the project accounts; and (ix) finance the development and implementation of a public information campaign to explain the need for the introduction of private operators to the Luanda water supply system and the importance of a tariff system to recover the cost of operations from the users. D. Project Financing Plan. IDA would finance 100l of the foreign exchange costs of the project and about 90- of the total project costs. The Government would finance approximately 10. of the total costs primarily in the form of locally procured labor and building materials. The estimated costs are net of local taxes and duties. E. Project Implementation. The project would have a Project Implementation Unit (PIU) to monitor and facilitate the implementation of the project under the responsibility of the Vice Governor for Technical Matters in the Provincial Government of Luanda (GPL). The PIU will be responsible for the preparation of an Annual Project Implementation Plan (APIP) to be reviewed by the Bank. Based on the APIP and the current situations in the country, the Government and the Bank will agree on the program and targets to be used for the following year. The PIU will work closely with the private operator of the water supply -3 -

4 and sanitation system in monitoring and controlling the implementation of the project, however, the responsibility for the implementation of the project and the operation of the system will be with the operator. The procurement of the contracts (goods and works) needed to rehabilitate the water supply and sewerage system will be the responsibility of the private operator, but the procurement will be done using IDA procedures. The PIU would be supported by a team of local consultants which would provide full-time assistance in the implementation of the project. In addition, international consultants would provide periodic technical and specialized support based on specific needs. This would supplement the support provided by the local consultants and it would decline over the life of the project. Special attention would be given to transferring skills and knowledge to the local consultants to enable them to start to form a nucleus of national expertise for the sector. The project would finance formal and on-the-job training to develop skills and knowledge of a technical and managerial nature, for the implementation of projects, with the objective of phasing out expatriate technical assistance in future projects. F. Project Sustainability. Two key actions have been identified as being critical to successfully creating a sustainable and efficient water supply and sanitation company in Luanda: (i) private sector management of the operating systems, and (ii) a tariff system designed to recover the cost of providing the service. Both of these issues will be addressed as part of this project. The sustainability of the proposed investments would be enhanced by increasing the involvement of the local government in the design, operation, and maintenance of the system, and by developing an autonomous operating company managed by an experienced private sector operator. G. Lessons Learned from Previous Bank/IDA Involvement. Bank experience in the infrastructure sector in Angola consists of work done in Luanda as part of the Infrastructure Rehabilitation and Engineering Project (IRE) and in Lobito- Benguela as part of the Lobito-Benguela Urban Environmental Rehabilitation Project (LBUER). Both projects were approved in early Even though these projects have not been completed, the lessons - limited institutional capacity of the governmental agencies to introduce realistic reforms, the lack of an adequate financing structure, and limited human resource capacity - reinforce the experience from similar projects in other countries. In addition, to be sustainable, the operationalization of national sectoral policies and investment programs should be implemented locally to reflect the needs, and constraints, of the local communities and institutions and to ensure their economic viability. The most significant of these lessons is the need for the Government to develop the local human resource capacity through training programs and to implement a policy and regulatory framework for the water supply sector that encourages replacing existing inefficient water supply institutions with administratively and financially autonomous utilities and, where appropriate, with experienced private sector firms. A second lesson is the need for the Government to consistently implement a tariff policy designed to recover the cost of the operations from the users. Additional lessons learned concern the need to involve communities in designing and managing the delivery of services, that the implementing capacity of the Government, of the various agencies and the local NGOs is very weak, and to use "appropriate technology" in order to minimize the life cycle cost of providing water and other urban - 4 -

5 services to the users. As a result, efforts must be made to increase the human resource and institutional capacity in the sector and where possible, to begin to transfer as many operational responsibilities to private companies, and to provide assistance to the NGOs and communities to improve their capacity to develop and manage urban services. The above lessons have been incorporated in the design of the proposed project. H. Poverty Category. The primary focus of the project is the rehabilitation and/or development of sustainable water supply and sanitation systems in order to increase the quantity and quality of water supply and sanitation services to the population at the lowest possible price and to ensure that the urban poor gain access to these services.. In this regard, the project has a strong poverty alleviation focus. I. Program Objective Categories. The primary project objective is to reduce the level of poverty by improving the general level of public health (PA). Secondary project objectives are environmentally sustainable development (EN) and improved economic management (EA). 1/ The term sanitation as used in this report, refers to solid and liquid waste. Contact Point: The InfoShop The World Bank 1818 H Street, N.W. Washington, D.C Telephone No.: (202) Fax No.: (202) Note: This is information on an evolving project. Certain activities and/or components may not necessarily be included in the final project. Process by the InfoShop week ending March 6,

6 ANNEX Environmental Environmental Aspects. The project would internalize environmental management by approaching environmental rehabilitation as part of each project component, and by assisting the responsible agencies to incorporate environmental sustainability in the development of legislation/regulations for the water and sanitation sector. The project would significantly improve public health and environmental conditions by at the same time increasing the availability of water for the low income population. The project's physical investments would primarily consist of the rehabilitation and/or reconstruction of existing systems. Therefore, the project has been rated as a B for environmental purposes. In addition, the rehabilitation of the water supply systems would consider the use of environmentally safe technology to decrease environmental degradation. The project would also make provisions for minimizing the project's environmental impact during construction, and would assist in the development of criteria to be applied to other work in the sector to minimize any adverse environmental impacts. -6-