Document of The World Bank

FOR OFFICIAL USE ONLY Public Disclosure Authorized

Report No. 16650

IMPLEMENTATION COMPLETION REPORT

Public Disclosure Authorized INDIA

THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Loan 2769/Credit 1750-IN)

June 9, 1997 Public Disclosure Authorized

Agriculture and Water Operations Division Public Disclosure Authorized Country Department II South Asia Regional Office

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EOUIVALENTS Currency Unit = Rupees (RS.) At appraisal (1986) US$1 = Rs.13.0 Completion Year 1996 US$1 = Rs.34.50

WEIGHTS AND MEASURES mm = millimeter (1 millimeter = 0.039 inches) m = meter (1 meter = 3.28 feet) km = kilometer (1 kilometer = 0.62 miles) 1 liter (0.22 Imperial gallons or 0.264 US gallons) lcd = liters per capita per day Ml = million liters or 1,000 cubic meters Mld = million liters per day (0.220 million Imperial gallons per day or 0.264 million US gallons per day) mgd = million Imperial gallons per day (1 mgd = 4,545 m3/day)

FISCAL YEAR OF BORROWER 1 April to 31 March

ABBREVIATIONSAND ACRONYMS AMCP Additional Municipal Commissioner (Projects) BSDP Bombay Sewage Disposal Project (Ln/Cr 3923/2763-fN) BWSSP I-III Bombay Water Supply and Sewerage Projects (I, II and III) ERR Economic Rate of Return FAO/CP Food and Agriculture Organization of the United Nations/World Bank Cooperative Program FY Fiscal Year Gol Government of India GoM Government of Maharashtra HE Hydraulic Engineer of WSSD IBRD International Bank for Reconstruction and Development ICR Implementation Completion Report IDA International Development Association MCGB Municipal Corporation of Greater Bombay MMRDA Mumbai Metropolitan Region Development Authority OMS Operational Manual Statement PPAR Project Performance Audit Report PPCC Project Planning and Control Cell of WSSD PWD Public Works Department of Government of Maharashtra SAR Staff Appraisal Report WSS Water Supply and Sanitation/Sewerage WSSD Water Supply and Sewerage Department of MCGB

Vice President Mieko Nishimizu Director Robert S. Drysdale Division Chief Shawki Barghouti Staff Member Shyamal Sarkar IMPLEMENTATION COMPLETION REPORT FOR OFFICIAL USE ONLY

INDIA

THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Loan 2769-IN & Credit 1750-IN)

Table of Contents

PREFACE ...... i

EVALUATION SUMMARY ...... ii

PART I: PROJECT IMPLEMENTATION ASSESSMENT ...... 1

A. Project Objectives ...... 1l B. Achievement of Objectives ...... 2 C. Implementation Record and Major Factors Affecting the Project ...... 2 D. Project Sustainability ...... 6 E. Bank Performance ...... 7 F. Borrower Performance ...... 8 G. Assessment of Outcome ...... 10 H. Future Operation ...... 11 I. Key Lessons Learned ...... 1I

PART II: STATISTICAL TABLES

Table 1: Summary of Assessments ...... 13 Table 2: Related Bank Loans/Credits ...... 15 Table 3: Project Timetable ...... 17 Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual ...... 17 Table 5: Key Indicators for Project Implementation ...... 18 Table 6: Key Indicators for Project Operation ...... 19 Table 7: Studies Included in Project ...... 20 Table 8A: Project Costs ...... 22 Table 8B: Project Financing ...... 22 Table 9: Economic Costs and Benefits ...... 23 Table 10: Status of Legal Covenants ...... 24 Table 11: Compliance with Operational Manual Statements ...... 28 Table 12: Bank Resources: Staff Inputs ...... 28 Table 13: Bank Resources: Missions ...... 29

APPENDICES

A. Mission's Aide-Memoire ...... 30 B. Borrower's Evaluation ...... 54

Maps IBRD 18974R and 28833

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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IMPLEMENTATION COMPLETION REPORT

INDIA

THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Loan 2769-IN & Credit 1750-IN)

Preface

This is the ImplementationCompletion Report (ICR) for the Thrd Bombay Water Supplyand SewerageProject in India, for which Loan 2769-IN in the amount of US$40.0 millionand Credit 1750-IN in the amount of SDR105.5 million(US$145.0 millionequivalent) was approved on December 16, 1986 and became effectiveon January 29, 1988.

An increasein the disbursementpercentages was introducedby the Bank from September 1, 1990, followingthe Middle East crisis,and was continuedto the Credit closing. On April 9, 1996 the project was restructuredto permit financingof some additionalworks and some uncompleted works of the previous Second BomnbayWater Supplyand Sewerage Project (Cr. 842-IN) which was closed on March31, 1988.

The Loan was filly canceledin three steps: US$10.0 millioneach in June 1993 and on October 6, 1994, and US$20.0 millionon June 26, 1995. The Credit was closed on June 30, 1996 after two extensionsof one year each. Final disbursementtook place on November 22, 1996, at which time the balance of SDR15.1 million(US$21.6 millionequivalent) was canceled.

The ICR was prepared by Mr. ShyamalSarkar of the Bank's New Delhi Office with assistance from the FAO/World Bank CooperativeProgram and reviewedby Mr. Shawki Barghouti, Chief, Agricultureand Water OperationsDivision, Country Department 2, South Asia Region, and Mrs. Kazuko Uchimura, Project Adviser, Country Department 2, South Asia Region.

Preparation of this ICR was begun duringthe Bank's final supervision/completionmission from July 9-24, 1996. It is based on materialsin the project file. The Borrower and implementing agency contributed to preparation of the ICR by: providingdata and views, which are reflected in the mission's Aide-Memoireat AppendixA, preparing an evaluationof the project's initialpreparation and execution at AppendixB; and commentingon the draft ICR.

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IMPLEMENTATION COMPLETION REPORT

INDIA

THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Loan 2769-IN & Credit 1750-IN)

Evaluation Summary

Project Objectives

1. The objectivesof the project were to expandthe water supplyand sewerage facilitiesfor the city of Bombay and further strengthenthe Water Supply and SewerageDepartment's (WSSD) implementationcapacity and its financialand operationalperformance. These objectiveswere to be achieved by: (a) continuingand expandingon the efforts of previous projects in improvingsector efficiencythrough improvementsin project management,procurement, billing and collections,and leak detection and repair in the WSSD; (b) expandingwater supplyand sanitationfacilities for the urban poor; (c) increasingthe supplyof water to the MunicipalCorporation of Greater Bombay (MCGB) area by 455 millionliters per day (Mld) to help reduce Bombay's deficit;(d) expandingBombay's sewerage systemin the isolated developedareas; and (e) evaluatingoperational experience and developingappropriate design criteria and technicaloptions for future investmentsin sewage treatment.

2. The appraised project included:(a) the constructionof 52 km of trunk mains with diameters up to 3000 mm, 49 km of distributionmains up to 1800 mm diameter, 9 km of transmissiontunnels, and intemal cement mortar liningof 76 km of pipeline;(b) the provisionof leak detection equipment, control equipment and system instrumentationand about 32,000 water meters; (c) constructionof a 455 Mld water treatment plant, four servicereservoirs and pumping stations;(d) constructionof about 54 km of sewers and the buildingand installationof sewagepumping equipment; (e) provisionof water supplyand sanitationfor the urban poor in slums;and (f) training,consultancies and vehicles.

3. While project objectiveswere clear and importantfor the developmentof water supply and sewerage in Bombay, it would have been appropriateto have specified,as an overall perfomiance objective,the achievementof an uninterruptedwater supplyduring the project period. If, during execution, attention had been given to such a performanceobjective, higherpriority might have been given to rehabilitationand strengtheningof the water distributionsystem, control of leakage and waste, and metering, billingand collection. All of these measures would have assistedwith water conservation.

4. The Government of India (Gol) and the Govemment of Maharashtra (GoM) made a request to the Bank in October 1992 to financeleft over works from the second Bombay Water Supplyand Sewerage Project (BWSSP-II)and high priorityremedial works of the Bombay sewerage systemfrom the 'savings"from the Loan/Credit. 'Savings"had arisen due largelyto variation in the foreign exchange rates arisingfrom the Rupee depreciationand also due to low disbursementsover the initial three years due to delaysin award of contracts. The restructuringproposal was approved, and the legal agreementswere amendedin April 1996. -iii-

Implementation Experienceand Results

5. Project implementationstarted slowly. This was despite of completion of the major part of the designs and contractor prequalificationfor major criticalworks prior to negotiationsin April 1986. MCGB-WSSD took about three years from effectivenessto award the contracts

6. Project managementin WSSD was not adequately organizeduntil March 1991, when an AdditionalMunicipal Commissioner was put in charge of the project. Even then, the existingrigid procedures did not change by much and only marginalimprovements resulted and progress continued to be slow.

7. Important parts of the project were unfinished. The water treatment plant and the transmission pipelineworks were nearing completionby closing,but the sewerageworks were lagging. Improvementin procurement, leak detection and repairs,billing and collectiondid not receive adequate attention from MCGB. The envisagedpoverty alleviationfor the urban poor was only partly achieved, (and was financedapart from this project). GoM studiesconcluded that the development of Middle Vaitarnawould provide the least cost developmentfor the next water source (390 Mld) for Bombay, and would complete the logical developmentof the Vaitarna basin,and the Bank supported this idea and agreed to financesome additionalstudies. However, at the time of closing,the studies remained incomplete.

8. The estimatedtotal cost of the restructuredproject was Rs.6,953.5 million(76% more than appraisalestimate) and the expenditureat Credit closingwas Rs.3,994.8 million. A comparison of estimates and expenditureis given below:

Rs. million US$ million SAR Estimates 3,956.5 100% 304.3 100% Estimated CompletionCost of Restructured 6,953.5 176% 219.1 72% Project (Jan-96) Estimated Expenditure at Closing(Jul-96) 3,994.8 101% 145.3 48%

The US$/Rupee exchangerate varied from Rs. 13.00/US$at appraisalto Rs.34.50/US$ at closing, which contributedto 'tavings."

9. As a result of slow progress, the Loan amount of US$40.0 millionwas canceled in its entirety during executionof the project. SDR90.4 million(US$127.07 millionequivalent) of the Credit amount was utilized, which amounts to only 68.7% of the total Loan/Credit amount. The Credit was closed on June 30, 1996 after two extensionsof closing date by one year each (total of two years).

Key Factors That Affected Achievement of the Major Objectives

10. A number of factors contributedto the slow progress. These include: (a) the excessive time for approval of the Gol prior to enteringinto contracts involvingpayments in foreign exchange (this procedure was discontinuedin 1995); (b) inadequate project management,linked to limitedfinancial -iv- delegationsfor the MunicipalCommissioner; (c) the lack of resettlementplan for project affected persons; (d) slow preparation of engineeringand bidding documentsby WSSD; (e) the cumbersome intemal procedures for contract evaluationand arriving at award decisions;(f) the slow performance of contractors; (g) the non-cooperativerole of Indian Railwaysthat prevented the completionof two sections of the large diametertransmission mains over the railways;and (h) the difficultiesfaced by MCGB in obtainingsupport and cooperationfrom the GoM agencies such as the TrafficPolice (road excavation),the Public Works Department of GoM (PWD) (pipe laying along important roads), and Forest Department (Forest clearance).

Bank Performance

11. The Bank performancewas deficientduring preparation and supervision. The staffiweeks utilized between identificationand negotiationswere only about 50% of the amount normallyexpected for a complex and diverseproject of this kind. The Bank's Operational Manual Statement (OMS) 2.33 on Social Issues Associated with Involuntary Resettlement in Bank Financed Projects was not addressed at the time of preparation. This resulted in failure to identify and plan for the adverse impacts associated with land acquisition/resettlement. The implementationproblems (organization, management,procurement) experiencedby the previous project due to inadequate institutionalcapacity were not addressedat preparation and appraisalof this project although they were well known.

12. Supervisionwas conducted without a plan. The Bank supervisionmissions devoted a great deal of attention to activitiesrelated to the uncompletedworks of the BWSSP-IL and as a result spent less time on the BWSSP-fII. The Bank should have deployed more staff resources for this major effort; only 12 supervisionmissions were undertaken duringthe 8.5 years implementationperiod. MCGB commitmentfor water and sanitationworks of smallernature for the urban poor diminished considerablyover time, yet the Bank failedto identifyor reverse this trend. Procurement procedures were also inadequate as these did not provide for force account and direct contracting for smallworks which were appropriate to the circumstanceson the ground. Althoughthe Bank very promptly processed in October 1992 an 'in principle"approval of the project restructuringrequest, the restructuringwas delayed,and was only finalizedin April 1996.

Borrower Performance

13. The poor overallresult indicatesthat there were important deficienciesin Borrower performance. Internal coordinationamong the WSSD's various divisionsduring implementationand detailed forward planningdid not receive adequate attention. The monitoringindicators agreed at negotiationsfor reporting on a quarterlybasis were not followed. Critical works remainedunfinished, and some were not even started. MCGB was not committedto the use of technical assistancefor institutionalstrengthening . Technicalassistance was used mostly for the engineeringand environmentalstudies for the proposed Middle Vaitarnaproject, and engineeringpreparation and studiesfor the BSDP, and consultantsupervision of complexengineering works.

14. Procurement by WSSD was very slow due to generallyslow preparation of engineeringand bidding documents and the cumbersomeprocurement decisionmaking procedures of MCGB. The complex procedure of makingdecisions involving agreement and clearanceof every technicalaction by the accounting and legal staff proved to be the bane of efficientproject implementation.Procurement procedures were improved and streanmlinedand the biddingdocuments were improved after 1992. The impactswere visiblein varying degrees in the variousWSSD divisionsdue to lack of understanding of the differencebetween the mandatoryrequirements of the Bank and the recommendationsmade for reasons of good practice, and their inadequate internalcoordination. MCGB had littleclout with agenciessuch as the IndianRailways, PWD, Forest Department, and the Traffic Police,and no support was forthcomingfrom the GoM to remove bottlenecks.

15. There was compliancewith the financialcovenant that required MCGB to contribute40% of capital costs. Audit reports were submittedwithin the stipulatedsix months of the end of fiscal year consistently,and counterpart fundingwas never a problem.

Project Outcome

16. The project objectiveswere not achievedby closing. Slow progress and inadequate attention to important components resulted in the project remainingunfinished, even with two extensions of twelve months each. As a result, the project is rated 'hnsatisfactory."The unfinishedworks for water supplyand sewerage are being completedby WSSD using internalfunds and a loan from Mumbai Metropolitan RegionalDevelopment Authority (MBD1RDA).Most of the unfinishedworks are expected to be commissionedby end-June 1997, when the correspondingbenefits of the project will begin to be realized.

17. The Economic Rate of Return (ERR) was calculatedfor water supplyand sanitationto be 9.5% which compares with the Staff AppraisalReport (SAR) estimate of 12.3% (Table 9). The differencereflects lower than anticipatedbenefits, and delays in their realization.

Most Important Findings of the Project ImplementationExperience

18. The project would have achievedall its developmentobjectives by the extended closing date, and possiblywell before, had the institutionalweaknesses been addressedat preparation and appraisal by installinga good project managementand sound procurement administrationin WSSD. Greater supervisioneffort by the Bank in the early stages of implementationcould have identifiedand found solutionsto these weaknesses.

Future Operation and Sustainability

19. All the water and sewerage works of BWSSP-III will be integrated into Bombay's water and sewerage systems. Sustainabilityis likely. MCGB's technicalcapacity for water supplyoperations, especiallyin production and bulk transmission,is satisfactory. MCGB's technicalcapacity in sewerage is expected to improve through the various actions being taken under the on-goingBSDP. Generally, the track record of MCGB in financialperformance has been good. Water and sewerage tariffs were revised four times between negotiationsand closing. It is likely,therefore, that adequate O&M funds will be forthcoming. -vi-

Lessons for Future Projects

20. Many of the lessons from this project have alreadybeen accepted and incorporated into current Bank practices. Lessons alreadytaken on board includethe need to: prepare plans ahead of implementationfor involuntaryresettlement and procurement;obtain convincingevidence of the existenceof Borrower ownership;use standardbidding documents;and, have agreed monitoring reports submittedto the Bank quarterly. Below are additionallessons for future projects.

21. Long delays may occur if adequate attention is not given during preparationto the coordination of works and other tasks with other publicsector agencies.

22. The agreed TrainingPlan may be attached to the Minutesof Negotiations.

23. In order to allow sufficienttime to enablethe signingof contractsto occur, the evaluation of bids should be completed within the first half of the prescribedbid validityperiod.

24. Identificationof all important studies and preparationof consultantrecruitment documents should be completed by appraisaland the recruitmentof consultants shouldbe completed as per the procurement schedule agreed at negotiations. Consultantrecruitment for key studies should be completed before loan effectiveness.

25. By effectivenessthere should be in place a fullyfunctional management team, and management plan, which shallbe maintainedthroughout the project implementationperiod by the Borrower. Any change in the compositionof the managementteam during project implementationshould be made only in consultationwith the Bank. Project conditionalityshould include a minimumof three-year posting for senior staff and key staff unless otherwiseagreed with the Bank. The managementplan should include,inter alia: detailsof organizationand staffing;information management; lines of authority and delegations;and job descriptionsfor team members.

26. Prequalificationof contractors/suppliersbefore negotiationsis not an adequate assurance that award of the contracts will followimmediately after Loan/Credit effectiveness. The bidding documents for a substantialpart of the project (works to be carried out in the first two years of implementation period, and those works which are on criticalpath), shouldbe finalizedbefore appraisal. Loan/Credit effectivenessshould be conditionalupon contract awards for works on the criticalpath.

27. Sufficientdelegation of financialpowers to the MunicipalCommissioner and senior technical staff shouldbe put in place to implementworks without their actionsbeing routinely subjectedto approval by legal and accounting staff, and these delegationscovenanted.

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IMPLEMENTATION COMPLETION REPORT

INDIA

THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Loan 2769-IN & Credit 1750-IN)

PART I: PROJECTIMPLEMENTATION ASSESSMENT

A. PROJECT OBJECTIVES

1. The Third Bombay Water Supplyand SewerageProject (BWSSP III), which was implemented between 1988 and 1996, is the third successiveproject financed by the Bank for the improvementof water supplyand sewerage facilitiesfor the city of Bombay. The First Project (BWSSP I), implementedduring 1974 to 1981, includedthe constructionof works to treat all the water for supplyto Bombay, and each of the follow-on projects augmentedthe supplyby 455 Mld, abstractingwater from the Bhatsai river. Most of the water supply componentsin the first two projects were completed successfullyalthough with significantdelays. Most of the sewerage facilitiesincluded in these projects were incompleteat closing. The Project PerformanceAudit Report (PPAR)for BWSSP I rated the outcome satisfactorybut BWSSP II (Second Project) was rated unsatisfactory. There had been an earlier MaharashtraWater Supply and SanitationProject (1979-85) which had water supplyand sanitationcomponents for areas adjoining Bombay.

2. The objectivesof the project, as stated in the DevelopmentCredit Agreement,were to expand the water supplyand seweragefacilities for the city of Bombay and further strengthen the Water Supplyand Sewerage Department's (WSSD's) implementationcapacity and its financialand operationalperformance. These objectiveswere to be achievedby: (a) continuingand expandingon the efforts of previous projects in improvingsector efficiencythrough improvementsin project management,procurement, billing and collections,and leak detection and repair in the WSSD; (b) expandingwater supplyand sanitationfacilities for the urban poor; (c) increasingthe supplyof water to the MunicipalCorporation of Greater Bombay (MCGB)l area by 455 Mld to help reduce Bombay'sdeficit; (d) expandingBombays sewerage systemin the isolateddeveloped areas; and (e) evaluatingoperational experience and developingappropriate design criteria and technical options for future investmentsin sewage treatment.

3. As a follow-onfrom the two previous projects, BWSSP III formed part of a continuingprogram to improve project implementationand operationalperformance of the MCGB, and to expand the water

1 Bombayis nowknown as Mumnbai.In this report both names have been used. BMC has been used to refer to Bombay MunicipalCorporation, as it was knownat appraisal,Municipal Corporation of Greater Mumbai(MCGM), as it is knownnow and, also to MunicipalCorporation of GreaterBombay (MCGB), as it is mentionedin legal agreements. -2-

supplyand sewerage facilitiesfor the city of Bombay2,to keep pace with increasingdemand from populationgrowth and expansionof industrialand commercialactivities.

4. While project objectiveswere clear and important for the developmentof water supplyand sewerage in Bombay, it would have been appropriateto have specified,as an overallperformance objective, the achievementof an uninterruptedwater supplyduring the project period. If, during execution, attention had been given to such a performanceobjective, higher priority might have been given to rehabilitationand strengtheningof the water distributionsystem, control of leakage and waste, and metering, billingand collection. All of these measure would have assistedwith water conservation.

B. ACHIEVEMENT OF OBJECTIVES

5. Implementationeffort was largely concentratedin buildingthe facilitiesfor increasingwater supply and expansion of sewerage conveyance. However, due to slow progress, many works were unfinishedat closing. Improving sector efficiencythrough actions on procurement,leak detection and repairs, billing and collectiondid not receive adequate attention from MCGB. The envisagedpoverty alleviationfor the urban poor was only partly achieved (and was financedapart from the project). Accordingly,project objectiveswere not fully achievedat closing.

6. A financialperformance covenantrequiring MCGB to make 40% contributionto investments, after meeting the operation and maintenancecosts and the higher of the debt serviceand the depreciation, was consistentlymet by MCGB.

7. Of the unfinishedworks, the water treatment plant and the transmissionpipeline were nearing completionat Credit closing,but the sewerage works were lagging. The completionof these investments is being financedby MCGB from their internal sources and by borrowing from the Mumbai Metropolitan Region DevelopmentAuthority (MMIRDA)3 and they will, eventually,realize benefits.

C. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT

8. The Loan of US$40.0 millionand the Credit of SDR105.5 million(US$145.0 millionequivalent) were approved in December 1986 and became effectivein January 1988. The project implementation started slowly. The slow start was despite completionof the major part of the designs and contractor pre- qualificationfor major criticalworks prior to negotiationsin April 1986. MCGB-WSSD took about three years from effectivenessto award those contracts. Delay was due to slow preparation of bidding documents and cumbersomeprocurement decisionmaking procedures of MCGB and the unreasonably

2 The Operations Evaluation Department of the World Bank in its Report No. 15849: Impact Evaluation Report-Water Supply and Wastewater Services in Bombay (June 28, 1996) evaluated the impact of the three successive investments in water supply and wastewater. The impact evaluation concluded that (a) significant increases in gross water availability have allowed strong economic growth to continue in Bombay, but they did not translate into improved service levels because of rapid population growth and lack of system rehabilitation; (b) the intermittent nature of the service affect the low income population the most and increase health risks through water recontamination; (c) sanitation objectives were largely unmet; (d) institutional development was positive in that the WSSD is a moderately well run organization and its finances are sound; and (e) construction is often beset with delays and maintenance and rehabilitation are clearly not priorities.

3 MMRDA has set up a revolving fund from the proceeds of its income from sale of developed land for infrastructure development in the Mumbai Metropolitan Region and the local bodies are entitled to borrow under Government of Maharashtra guarantee. -3- long time taken for technical and foreign paymentclearance from the Gol (this was discontinuedin 1995). The project managementin WSSD was not adequatelyorganized until March 1991,when an Additional MunicipalCommissioner was given the responsibilityof coordinationand managementof the project. However, thereafter the rigid procedures did not change by much and only marginalimprovements occurred.

9. The Gol and GoM made a request to the Bank in October 1992 to financeleft over works from the BWSSP-II and high priority remedial works of the Bombay sewerage systemfrom the 'tavings"from the Loan/Credit. The Bank agreed to the use of savingsfor the above works and restructure the project as long as the works could be completed within the implementationperiod of the core elementsof BWSSP-III. 'Savings"had arisen due to variationin the foreign exchangerates arisingfrom the Rupee depreciation,and also low disbursementsover the initialthree years due to delays in award of contracts. The restructuringproposal was approved, and the legal agreementswere amended in April 1996. The closing date was extended twice for a total period of two years, and the Credit closed on June 30, 1996.

Implementation Record

10. Improving Sector Efficiency. Improvementsin sector performancethrough improvementin procurement, billingand collections,and leak detection and repairs did not occur. A stafftraining program to increasejob-skills and to improve operationaland managementefficiency, which was agreed at negotiations, was not implemented.

11. Expanding Water Supply and Sanitation Facilities for the Urban Poor. Only five small reservoirs with pumping stations and about 18 km of pipelineswere constructed to provide water supply to slum areas on high ground. MCGB has provided,apart from this project, a large number of water connectionsto the slumsduring the project implementationperiod. Sanitationfacilities have not been financedby this project, but have been provided under: the Bank assistedBombay Urban Development Project (Cr. 1544-IN), which closed on September30, 1994; Gol/GoMIsslum improvementprogram; and, since 1991, GoMs slum redevelopmentscheme. The agreed Bank procurement procedures for this project were consideredby WSSD to be inappropriatefor carrying out such smallworks.

12. Increasingthe Supply of Water by 455 Mld. Most of the treatment and transmissionworks were unfinishedbut nearing completionat closing. It was expected that by June 1997 the additional455 Mid of treated water would be available. However, due to lack of progress in the constructionof trunk distributionmains and reservoirs,the benefitto the city would not be realizedfully even then. Instead, benefitswill be availableto the water deficientareas of eastern and westerns parts of the metropolis.

13. The criticalworks relating to the distributionand storage reservoirsthat remainedincomplete are: (a) reservoirs at Malabar ill (estimated completionin December 1998) and Worli Hill (September 1999), where work has not begun due to delay in obtainingaccess to site; (b) a tunnel between E. Moses Road and Ruparel College,the contract for which had to be rebid (completionplanned for January 2000); and (c) pumping station and reservoirat Raoli,which were delayedby decisionson reservoir capacity and pump duty as well as unavailabilityof access to site which are expected to be completed by July 1998.

14. Expanding the Sewerage System in the Isolated Developed Areas. Progress on the sewerage works was slow. Althoughthe pumping station at Versova was completed and the one at A.S. Marg Powai was nearing completion,none of the sewerageworks includedin the project was operating by the -4- time of Credit closing. A substantialpart of the conveyanceworks willbe completed by June 1997. At about the same time all the four (Bhandup, Ghatkopar, Malad and Versova) waste water treatment facilities4 of the BWSSP-Il whichwere includedin the restructured projectwould be completed and commissioned. These will offer substantialopportunities to expand the number of sewer connectionsand would enable discharge of 685 Mld screenedand degritted sewage, of which 140 Mld will be treated at the aerated lagoon at Versova, into coastal waters.

15. Evaluation of operational experienceetc. of sewage treatment. The evaluationof operational perfornance to develop appropriate design criteria and technical options for future investment in sewage treatment was not completed. The lagoon constructionwhich was to provide the basis for this evaluation was delayedand is now expected to be commissionedin June 1997.

16. The total cost of the restructuredproject was estimated to be Rs.6,953.5 million(76% more than appraisalestimate) and the estimated expenditureat Credit closingwas Rs.3,994.8 million. A comparison of estimates and expenditureis given below:

Rs. million US$ million SAR Estimates 3,956.5 1000/o 304.3 1000/o Estimated CompletionCost of Restructured 6,953.5 176% 219.1 72% Project (Jan-96) Estimated Expenditure at Closing(Jul-96) 3,994.8 101% 145.3 48%

The US$/Rupee exchangerate varied from Rs.13.00/US$at appraisalto Rs.34.50/US$ at closing.

17. The Economic Rate of Return (ERR) was calculatedfor water supplyand sanitation(Table 9). When the same methodologyas that used for the SAR was appliedbut with actual or updated data, the ERR was calculatedto be 9.5%. This compares with the SAR estimate of 12.3%. The differencereflects lower than anticipatedbenefits, and delaysin their realization.

Major Factors Affecting the Project not Generally Subject to GovernmentControl

18. General shortage of diesel duringand immediatelyafter the Middle East crisis in 1990 affected transportation of materialsto work sites for a period of over two months.

19. Civildisturbances and the riots in the city in December 1992 and series of bomb blasts in early 1993 caused considerabledislocation in implementationfor a period of over four months.

20. There was poor contractor performancedespite procedures establishedfor qualifyingcontractors. There are only a few works, notablyPise-Panjrapur Main (W-6) and Staff quarters (W-18B), which have been completed without requiring extensionof contract duration.

4 The waste water treatment facility(WWTF) included only physicalunit operationslike screeningand degrittingof sewage. -5-

Factors Generally Subject to GovernmentControl

21. Excessive delays occurred in approvalby the Gol prior to enteringinto contracts involvingforeign exchangepayments (this was discontinuedin 1995), for example:contracts for Pumping Plant at Panjrapur (W-3M); TreatmentPlant at Panjrapur(W-5); Tunnel between Futka Tank and Sewree (W-19); and Tunnel between E. Moses Road and Ruparel (W-20).

22. Additionally,MCGB confronted major difficultiesin obtainingsupport and cooperation from the Railways (railway crossingsof transmissionpipeline and also sewerage conveyance),and GoM agencies (TrafficPolice [road excavation],Public Works Department [PWD - pipe laying along important roads], Forest Department [Forest clearance]). These problemsconsiderably delayed the completionof the transmissionpipeline.

Factors Generally Subject to Inplementing Agency Control

23. Inadequate Project Management. The project managementin WSSD was not adequately organized initiallyto implementa complexand extensiveproject of this kind includingmajor pumping and treatment facilities,conveyance works and tunnels, laying of sewers in busy congested areas, and creating water and sanitationfacilities for urban poor. Only marginalimprovements were made after March 1991. The limitedfinancial delegations for the MunicipalCommnissioner, which required that any decisionsthat involved a financialtransaction valued above about US$9,000 had to be referred to the Standing Commnitteeof the MunicipalCorporation, was an impedimentfor quick decisionmaking.

24. Lack of ResettlementAction Plan. There was failureto address the issues associatedwith land acquisition/resettlementand plan effectivemeasures for resettlementof affected familiesin respect of constructionof: (a) a length about 175 m of the transmissionline alignmentat Majiwadejunction (W-9) which was occupied by slum houses of temporaryconstruction; (b) inlets/outletsof reservoirsat Raoli and Worli (W-17 and W-1 8A) which were occupiedby slums;(c) a reservoir at Worli (W-18) due to reluctanceof MCGB tenants to move to an alternate equivalentaccommodation nearby; (d) a reservoir at Malabar Hill (W-15) due mainlyto the reluctanceby a privatelyowned primary school to move to adjoiningland provided by MCGB, and also due to slow action from a sub-post-officeand a smalloffice of PWD to move to adjoiningland.

25. Generally Slow Preparationof EngineeringDocuments and Bid Documents. For example: (a) the constructionof Raoli pumping station and reservoir (W-12&17) was delayedby a decision on reservoir capacity and pump duty; and (b) bids were not invitedby MCGB for Instrumentationand Telemetry(W-3 5E) during the project implementationperiod as the engineeringpreparation and bidding documents were completed only close to the Credit closing date.

26. Slow ProcurementPerformance. It took MCGB over three years from effectivenessto complete the procurement process and sign the contracts for the works for which contractor prequalificationwas completedbefore negotiationsin April 1986 and the bidding documents were prepared in mid-1987. The proceduresfor arrivingat decisionspertaining to technicalmatters that involvedthe accountants and legal officialsof MCGB, and finallythe AMCP - a process that took many months well beyond the bid validityperiod, before the issue was placed before the Standing Committee of MCGB -- were excessivelycumbersome. For example,the contractswere signedfor: Pump Station at Panjrapur (W-1) on March 15, 1991;Panjrapur TreatmentPlant (W-5) on October 30, 1992;Pise- -6-

Panjrapur Main (W-6) on June 27, 1991;Majiwade MGL/EEH junction Main (W-9) on January 16, 1991; Tunnelsbetween Futka Tank and Sewree (W-19) and between E. Moses Road and Ruparel (W-20) on October 1, 1990.

27. Inadequate PriorityAttached to the Implementationof the Sewerage Component. Weak organizationalarrangements and inexperiencedand untrainedstaff in the sewerage divisionaffected performance. This was exacerbatedby the frequent turnover in the post of the Chief Engineer. However, MCGB streamlinedthe organizationalarrangements in mid-1995to enable speedier execution of left-over BWSSP-II works which were includedin the restructuredproject, and this proved effective.

D. PROJECT SUSTAINABILITY

28. MCGB's technicalcapacity for water supplyoperations, especiallyin production and bulk transmission,is satisfactory. MCGB's technicalcapacity in operation and maintenanceis expected to improve in seweragethrough the various actions being taken under the on-going Bombay Sewage DisposalProject (BSDP - Ln/Cr 3923/2763-IN)5 . Generallythe track record of MCGB in financial performancehas been good and they consistentlycomplied with the financialperformance covenants. At present, WSSD generates sufficientrevenue to meet the costs of operatingand maintainingthe system and finances 35%6 of investmentsafter meetingthe debt service/depreciation.The WSSD financial performancehas been covenanted in the BSDP. Accordingly,it is expected that sufficientresources will be availablefor O&M:,and the operations are expected to be orderlyand sustained.

E. BANK PERFORMANCE

29. Identification. In broad terms the identificationwas satisfactory. The project concept was determinedby the conclusionsof previous studiesfor staged developmentof water sources and a gradual improvementof sewerage. Support to WSSD was appropriateto build on the previous experience and to expand water supply distributionand sanitationfacilities for the urban poor. This was consistentwith the Government's developmentstrategy of raisingservice levels and Bank's sector objectives of extending water and sanitationservices to a majorityof the population,and to assistin improvingin efficiencyand sector operations and distributionof services. However, higher priority should have been given at the identificationstage, and subsequently,to rehabilitationand strengtheningof the existingwater distribution system,control of leakage and waste, metering,billing and collection,which would have helped with the achievementof an uninterrupted water supply.

30. Preparation. There were three preparation missionsin February 1984, June 1984 and October 1984 (Table 13). Between identificationand negotiations57.2 staffweeks(Table 12) had been utilized against a typical 120 staffweeksfor a project of this type. Serious implementationproblems (organization, managementand procurement)faced by the previousprojects due to inadequate institutionalcapacity

5 BombaySewage Disposal Project(BSDP - Ln/Cr 3923/2763-IN)which becameeffective on March22, 1996has the following objectives: (a) strengtheningthe capacityof MCGB's WSSD in all aspectsof the managementof the provisionof sewerageservices; (b) sustainingthe financialviability of the provisionof watersupply and sewerageservices in Greater Mumbaithrough direct chargesto beneficiariesat appropriatelevels; and (c) improvingthe health and environmentalconditions in Greater Mumbaiincluding slum dwellers.

6 The covenantedcapital cost contributionfrom MCGB was reducedfrom 40% in respectof BWSSPm to 35% in BSDP. -7- were not addressed. No experts in organization/managementand procurementparticipated in the preparation missions. Bank failedto identifythe problemswhich would arise with land acquisition/resettlement.There was weak borrower ownershipof the institutionaldevelopment aspects and low levels of commitmentfor the provisionof water supplyand sanitationfor the urban poor. The suggested prequalificationof contractorsfor major contracts before invitingpriced bids as a measure to avoid delays in award of contract promptlyafter effectivenessdid not prove effective. The Bank preparation performanceis rated as 'deficient'.

31. Appraisal. Appraisaltook place in February 1985, about one and a half years after identification. Board presentationtook another one year and ten months. The appraisalwas thorough in assessingthe financialand engineeringaspects of major investmentitems concerningwater supplycapacity augmentationbut lagged in assessingthe institutionalcapacity (organization,management and procurement) and institutiondevelopment. Relocation and resettlementwas not formallyconsidered and plans to address the resettlementissues were not prepared. The appraisalalso inadequatelydealt with the approach towards preparationof the next tranche of investmentfor further improvement of water supply. Overall, the Bank's performance at appraisalis rated as 'deficient'.

32. Supervision. During the 8.5 year implementation(including two 12 month extensions),a total of 146.5 staffweeks(Table 12) was utilized to supervisethe project. 12 supervisionmissions (two missions in each of FY89 and FY90, three missionsin FY92; and one missionin each of the remainingfive years) were undertaken and about 45 staffweekswere utilized in the field (Table 13). Although supervisionwas close to the Bank average of 150-160 staffweeksfor a project of this nature, the missionsused a substantialpart of their time in discussingand reporting the uncompletedworks of the BWSSP-II. This left only about 100 staffweeks(estimate only) for supervisionof BWSSP-III of which about 25 staffweeks were in the field. This was certainlyinadequate to supervisea project of such complexityand diverse nature.

33. Supervisionwas conducted without any plan. The number of missionsundertaken was too few for effective supervision. WSSD's commitmentto the technicalassistance part of the project and the water and sanitationworks of smallernature for the urban poor, diminishedas the time elapsed, which the missionswere unable to address. Althoughthe Bank very promptlyprocessed in October 1992 an 'in principle"approval of the project restructuringrequest, the restructuringwas delayed, and was only finalizedin April 1996.

34. The procurement performancecould have been substantiallyimproved with missioninputs from a procurement specialist,providing clarification to WSSD questions and addressingtheir concems and explainingthe Bank requirements. This would have been an alternativeto the protracted written exchanges, as was realized much later, but a procurement specialistparticipated only in the supervision missionundertaken in February/March1993.

35. The Bank failedto respond to WSSD's lack of action to implementthe leak detection and waste preventioncomponent of the project, which may be consideredto be criticalin the developmentof the satisfactoryand efficientwater supplyfor Bombay. The Bank's performancein supervisionis rated as 'deficient'. -8-

F. BORROWERPERFORMANCE

36. The major engineeringpart of the project was well prepared. Consultantswere appointed, designs substantiallycompleted by appraisaland pre-qualificationof contractors for major contracts also completed before negotiations.However, only implementationof the physicalworks for increasingwater supply and expansionof sewerageconveyance were taken up by MCGB.

37. The institutionaldevelopment and trainingaspects of the project were not given sufficient attention by MCGB as they mostly concentratedon the large expenditureitems. This focus may have been in order to avoid repetition of the unsatisfactoryexperience in implementationof sewerage works in the Second Bombay Water Supplyand SewerageProject (Cr. 842-IN) 7. Technicalassistance was mainly used for: the engineeringand environmentalstudies concerningthe proposed Middle Vaitama water supplyproject; engineeringpreparation studiesfor the BSDP; and consultant supervisionof complex engineeringworks. Due to MCGB's slow processingof the recruitmentof a consultantto study the criticalaspects of metering and charging policies,the recruitmentcould not be completed before Credit closing.

38. Procurement perfornance by WSSD was very slow due to generallyslow preparation of engineeringand bidding documents and the cumbersomeprocurement decisionmaking procedures of MCGB. The complex procedure of making decisionsby involvingagreement and clearanceof every technicalaction by the accountingand legal staff proved to be the bane of efficientproject implementation. Only a few contracts were completed at closing. The qualityof constructionwas generallysatisfactory. Completiontook much longer than provided in the contracts due to WSSD's weak contract administration,inappropriate bidding conditions,and contractors' poor performance. Procurement procedures were considerablystreamlined lately in the later stages and the bidding documents were changed after 1992 by inclusionof improved conditionsof contract. The Gol amended in 1995 the procedures requiring clearancebefore award of contracts involvingforeign exchangepayments and thus removed a bottleneck. However, the impacts of these changeswere visiblein varyingdegrees in the various WSSD divisionsdue to lack of understandingof the differencebetween the mandatory requirementsof the Bank and the recommendationsmade for reasons of good practice, and their inadequate internal coordination. MCGM had littleclout with agenciessuch as the Indian Railways, PWD, Forest Department and the TrafficPolice, and no support was forthcomingfrom the GoM to help remove these bottlenecks.

39. The project successfullyintroduced to India an innovativetechnique for in-situ mortar liningof distributionpipelines. The project also introducedthe concept of trenchless sewer constructionwhich the WSSD will continueto use, where appropriate.

40. The need for improved coordinationand detailedforward project planningdid not receive adequate attention at the beginningof implementation.Project managementrequired a monitoringsystem providingfor an early warning of delays, measuresto overcomethe possibleimpending delays, and an indicationwhether the scope of the project was being implementedas agreed. Reports and analysis

7 The SecondBombay Water Supplyand SewerageProject (Cr. 842-IN)was effectiveon June 12, 1979 and closed on March31, 1988. The ProjectPerformance Audit Report(World Bank Report No. 9265,December 31, 1990)for the BWSSP-IInoted that the water supply componentsmet their objectives,and while there were modestachievements with regard to sewerage,in essencethis componentwas a failure. The outcomewas rated unsatisfactory,sustainability uncertain, and institutionaldevelopment moderate. -9- prepared by the Project Planningand CoordinationCell (PPCC) under the directionof an experienced consultantwas discontinuedin 1989 without making any effectivealtemative arrangements. This created a project managementvacuum until an AdditionalMunicipal Commissioner was given the responsibilityof coordinationand managementof the project in March 1991. With the earlier experienceof two similar projects, many of the problems encounteredwere foreseeableand could have been avoided or mitigated by adequate advance planning and coordination.

41. The indicatorsto be reported on quarterlybasis were agreed at negotiations. However, no progress reports were prepared. Apart from the requirementto report to the Bank, the systematic gathering and periodic reporting of key project informationwas essentialfor effectiveproject management by MCGB-WSSD.

42. MCGB created a separate unit in early 1995 headed by a Deputy Chief Engineer,which has proved effective,for completionof the left-overBWSSP-II mechanicaland electricalworks. These works will be commissionedin stages by June 1997 enablingpreliminary treatment of 545 Mld sewage, and preliminaryand biologicaltreatment to an additional 140 Mld sewagebefore discharge to coastal waters.

43. Failure by GoM to fully complywith the on-lendingcovenant (over Rs. 600 millionremained withheld at Credit closing)fortunately did not affectthe project implementationdue to MCGB's sound financialposition and their abilityto financethe gap from their own resources. Storm Water Drainage was temporarilytransferred to WSSD in 1991 without prior consultationwith the Bank. However, the Bank was informed soon after and did not object as at that time the financialperfomiance of WSSD was adequate to cover the extra costs without putting at risk compliancewith the cost recovery. Effective April 1, 1997, the Storm Water Drainage has been withdrawnfrom the WSSD functions.

44. The financialperformance of WSSD was generallysatisfactory despite no improvementin the efficiency'of collectionof charges for water supply,and increasein customer accounts receivable9 . MCGB-WSSD were revised had compliedwith all the financialcovenants (Table 10). Water and sewerage tariffs were revised in April 1987, April 1993, April 1994 and April 1996. MCGB consistently provided audited financialstatements relatingto the water and sewerageoperations within the stipulated six months from the end of fiscalyear.

45. Thus, the Borrower performanceon implementationwas mixed, but has been rated as 'deficient' overall.

G. ASSESSMENT OF OUTCOME

46. The project objectiveswere not achievedby closing. Slow progress and inadequate attention to important components resulted in the project remainingunfinished, even with two extensionsof twelve months each. As a result, the project is rated 'tinsatisfactory."The unfinishedworks for water supplyand

8 Collectionefficiency remained unchanged at 78% in 1994-95,compared with 1985-86. The SARenvisaged that billingsand especiallycollections performance would be improvedunder the project,specifically by the employmentof consultantsto assist in developingbetter computerizedprograms and procedures.No consultantwas appointedand there has been no discernible improvementin performance.

9 Customeraccounts receivable increased from Rs 630 millionin 1985-86to Rs 2408 in 1994-95. Some 46% of customer receivablesare three or more yearsold; someunpaid bills date back to the mid-i 960's. -10- sewerage are being completed by WSSD using internalfunds and a loan from Mumbai Metropolitan RegionalDevelopment Authority (MMRDA). Most of the unfinishedworks are expected to be commissionedby end-June 1997, when the correspondingbenefits of the project will begin to be realized.

47. The intentionof the project to reduce water shortage from 36% to 18% of demand will not be achieved even when production goes fully on stream. Demandhas risen in the interveningthree- year period between the scheduled completiondate and the likelycommissioning date of the water treatment plant and the transmissionsystem. A shortfallof about 26% is estimated. Further, although the quality of treated water is expected to meet acceptable standardswhen it enters the distributionsystem, there is a risk of contaminationbefore it reaches consumersbecause of internittent supplyand the poor conditionof distributionpipelines especially in the city area, whichthe project did not adequatelyaddress.

H. FUTURE OPERATION

48. All the water and sewerage works will be integrated into Bombay's systems. Sustainabilityis likely. MCGB has the capacity to operate the treatment plant and the various pumping plants installedfor water supply systems,but has limitednumber of skilledpersonnel to operate and maintainthe facilities being built for sewerage and sewagetreatment 10. However, with carefulplanning, MCGB would be in a position to redeploy skilledpersonnel from the existingcenters to the newlybuilt facilitiessuch as the sewage pumping plants, waste water treatment facilities" and the aerated lagoon. The operational capacity in respect of sewerage and sewage treatment is expectedto improve under the on-goingBSDP through various actions being taken up to upgrade skillsand preparation of routines, procedures, and manuals. Financialperformance has been exceptionallygood in the past and this is likelyto continue, so financefor O&M is not likelyto present problems.

49. It is appropriate that operationalindicators are generated for the WSSD as a whole, includingboth physical,financial and institutionalindicators. Indicators have been agreed with the Bank for the BSDP and are being prepared by MCGB and reported every quarter beginningfrom the December 1996 quarterly report.

L. KEY LESSONS LEARNED

50. Many of the lessons from this project have alreadybeen accepted and incorporated into current Bank practices. Lessons alreadytaken on board includethe need to: prepare plans ahead of implementationfor involuntaryresettlement and procurement; obtain convincingevidence of the existence of Borrower ownership;use standardbidding documents;and, have agreed monitoringreports submitted to the Bank quarterly. Below are additionallessons for future projects.

51. Long delays may occur if adequate attention is not given during preparationto the coordinationof works and other tasks with other public sector agencies.

10 The aerated lagoonbeing built at Versovawill be completedand commissionedin June 1997. The skills requiredto operate and maintain such sewagetreatment plant are regardedas modestand such skillsfor operationof mechanicaland electrical equipmentcould be developedquickly through the hands-ontraining of qualifiedpersonnel during the pre-commissioningtrial operation.

11 MCGB is operatingone WWTFat Colabaand has provenskills in operationof WWTF. The four new WWTFsare at Ghatkopar,Bhandup, Versova and Malad and these will be commissionedin stagesby June 1997. -11-

52. The agreed TrainingPlan may be attached to the Minutesof Negotiations.

53. In order to allow sufficienttime to enablethe signingof contracts to occur, the evaluation of bids shouldbe completed within the first half of the prescfibedbid validityperiod.

54. Identificationof all important studiesand preparationof consultantrecruitment documents should be completed by appraisaland the recruitmentof consultantsshould be completed as per the procurement schedule agreed at negotiations. Consultantrecruitment for key studies should be completed before loan effectiveness.

55. By effectivenessthere shouldbe in place a fullyfunctional management team, and management plan, which shall be maintainedthroughout the project implementationperiod by the Borrower. Any change in the compositionof the managementteam during project implementationshould be made only in consultationwith the Bank. Project conditionalityshould include a minimumof three-year posting for senior staff and key staff unless otherwise agreed with the Bank. The managementplan should include, inter alia: details of organizationand staffing;information management; lines of authority and delegations; and job descriptionsfor team members.

56. Prequalificationof contractors/suppliersbefore negotiationsis not an adequate assurance that award of the contracts will follow immediatelyafter Loan/Credit effectiveness. The biddingdocuments for a substantialpart of the project (works to be carried out in the first two years of implementation period, and those works which are on criticalpath), shouldbe finalizedbefore appraisal. Loan/Credit effectivenessshould be conditionalupon contract awards for works on the criticalpath.

57. Sufficientdelegation of financialpowers to the MunicipalCommissioner and senior technicalstaff shouldbe put in place to implementworks without their actions being routinelysubjected to approval by legal and accounting staff, and these delegationscovenanted. -12-

PART II: STATISTICAL TABLES

Table 1: Summary of Assessments

Not A. Achievement of objectives Substantial Partial Negligible Applicable

Macro policies LI :] EI EC

Sector policies FE FI EC LI

Financial objectives LI EIlI LI

Institutional development LI LI LI FI

Physical objectives LI [E11 LI L

Poverty reduction LI LI [7] F

Gender issues LI 7L LI

Other social objectives L LI LI ITE

Environmental objectives LI L LI FT

Public sector management K] K] El LI

Private sector development LI CI LI E]

Other (specify) L-I L LI L

B. Project sustainability Likely Unlikely Uncertain m.LI El -13-

Higbiy C. Bank performance satisfactory Satisfactory Deficient

Identification FT] LII

Preparation assistance LE [7]

Appraisal [I CI FT]

Supervision LI FE ]

Highy D. Borrower performance satisfactory Satisfactory Deficient

Preparation LI 7 FI

Implementation aI Cl L Covenant compliance LI El LI

Operation (if applicable) EI D LI

IEghlv Highly E. Assessment of outcome satisfactory Satisfactory Unsatisfactory unsatisfactory O OI [7 OI -14-

Table 2: Related Bank Loans/Credits

Loan/Credittitle Purpose Year of Status Approval Precedingoperations SecondBombay Water To construct455 Mld filterationplant and other allied 1979 Closed 31 Supply& Sewerage works,construction of balancing reservoirand large March Project (Cr. 842-IN) diametertransmission pipelines; improvement of 1988. distributionsystem and renovationof transmission PPAR mains, reservoirs,pumping stations, etc.; and December improvementof sewagecollection and conveyance 1990 systemin 5 zones;renovation of sewagetreatment plant. Punjab Water Supplyand To improvewater supplyand seweragein eight towns; 1979 Closed. SewerageProject (Cr. 848- and train staff and supplyof specializedequipment PCR isued IN) 9/16/87. Maharashtra Water To construct200 Mld water treatmentplant and allied 1979 Closed. Supplyand Sewerage works,rehabilitate existing water treatmentplant, PPAR Project(Cr. 899-IN) constructreservoirs, transmission mains and improve issued distributionsystem in fivetowns and villages;expand 4/13/88. sewagetreatment capacityand extendsewage collection system. RajasthanWater Supply To providewater supplyto problemvillages and 1980 Closed. and SewerageProject (Cr. improveand extendwater supplyto four major cities; to ICR issued 1046-IN) extend seweragesystem in three major cities;and 9/27/89. strengthenoperation and maintenance Gujarat Water Supplyand To bring water to rural communitieswhere water is 1983 Closed. SanitationProject (Cr. scarceor unsafefor human consumption;to ICR issued 1280-IN) improve/extendwater supplyand sewerageservices in 9/24/93. selectedurban centers;to extendand upgrade sewage collectionand disposalsystems in denselypopulated areas in major municipalities;to provide low-cost sanitationin medium-sizetowns; and to strengthenthe institutionalframework of the sectorthrough improved financialmanagement, accounting, billing and collectionpractices, and introductionof cost recovery targets and establishmentof training facilities. Tamil Nadu Water Supply To improvewater supply in larger urban areas and to 1984 Closed. and SanitationProject (Cr. providewater supplyto certain smallertowns and rural ICR issued 1454-In& SF-12-IN) areas; to providelow-cost sanitation to selectedurban 3/28/96. communitiesand to strengtheninstitutional, managerial, and financialpractices. Kerala Water Supplyand To strengtheninstitutions including financial 1986 Closed. SanitationProject (Cr. management;provide water supplyto rural areas and ICR issued 1622-IN) upgradeand extendwater distributionin one urban area; 6/30/95. provideLCS in 10 urban and selectedrural areas. -15-

Loan/Credit title Purpose Year of Status Approval Following Operations

Madras Water Supply and To augment water supply sources by 102 Mld and 1987 Closed. Sanitation Project ((Ln. improvement of water supply distribution system; and to ICR issued 2846-IN/Cr. 1822-IN) improve sewerage system and strengthen institution. 3/11/97. Hyderabad Water Supply To provide additional 135 Mld water to Hyderabad; and 1990 Ongoing and Sanitation project (Cr. to rehabilitate and strengthen the existing water system 2115-IN) and sewerage system; and to provide low-cost sanitation units to serve low-income people; and to strengthen institution. Maharashtra Rural Water To raise the standard of living in rural areas through 1991 Ongoing Supply and Environmental improved health and productivity, by expanding access Sanitation Project (Cr. to potable water systems and environmental sanitation 2234-IN) facilities. To develop replicable models for coordinating water, enviromnental sanitation and health communications program and strengthen the institutional capacity. Karnataka Rural Water To raise the standard of living in rural areas through 1993 Ongoing Supply and Environmental improved health and productivity, by expanding access Sanitation Project (Cr. to potable water systems and environmental sanitation 2483-IN) facilities. To develop replicable models for coordinating water, environmental sanitation and health communications program and strengthen the local institutional capacity. Second Madras Water Provide source works, transmission and treatment 1995 Ongoing Supply project (Ln. 3907- facilities for new water supply to city; continue program IN) of water distribution and conservation improvements, technical assistance. Bombay Sewage Disposal Construct 2 marine outfall sewers, and sewage pumping 1996 Ongoing Project (Ln/Cr 3923/2763- and treatment facilities; rehabilitation and improvements IN) to sewerage facilities and systems; low-cost sanitation in slums. Uttar Pradesh Rural Water Support to policy reforms in State Government; 1996 Ongoing Supply and Environmental construct water supply and environmental sanitation Sanitation Project (Ln. schemes in rural areas; undertake studies and awareness 4056-IN) campaigns. Note: Table 2 shows up to 10 years of preceding operations. Year of approval is Bank fiscal year. -16-

Table 3: Project Timetable

Steps in project process Date planned Date actual Identification(Executive Project Summary) Jul-83 Preparation:pre-appraisal Jan/Feb-84 Appraisal Nov/Dec-84;Feb-85 Feb-85 Negotiations Sep-85 22 to 30-Apr-86 Board presentation Jan-86 16-Dec-86 Signing 12-May-87 Effectiveness 10-Aug-87;10-Nov-87; 29-Jan-88 14-Jan-88 Projectcompletion 31-Dec-93 Dec-96 a/ Loan closing 30-Jun-94 30-Jun-96

a/ The main water supplyworks were expectedto be completeby end December1996. Somewater supplyworks and sewerageworks are programmedto be completedby January2000.

Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual (US$ millions)

FY87 FY88 FY89 FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 Appraisalestimate Total: 2.0 23.50 52.4 88.1 125.9 161.0 181.2 185.0 185.0 185.0 185.0 Actual Credit: 0 10.71 19.17 19.34 31.80 50.89 67.46 81.98 91.64 112.62 127.07 Loan: 0 0 0 0 0 0 0 0 0 0 0

Total: 0 10.71 19.17 19.34 31.80 50.89 67.46 81.98 91.64 112.62 127.07 Actualas % of estimate 0 46 37 22 25 32 37 44 50 61 69 Effectivenessdate : 29-Jan-88 Date of final disbursement : 22-Nov-96

Note: Loan of U$40 million was fully canceledin three steps: US$10 million each in June 1993 and October, 1994 and U$20 million in June, 1995. -17-

Table 5: Key Indicators for Project Implementation

Key implementationindicators in SAR SAR Estimate a/ Actual or ICR estimate Averagedaily production of treated water Mld 2820 (1991) 2474 (1995/96) Meteredconsumption: domestic Mld 1471 b/ 1406(1995/96) Meteredconsumption: commercial Mld ) 179(1995/96) ) 785 b/ Metered consumption:industrial Mid ) 145 (1995/96) Total meteredconsumption Mld 2256 bl 1730(1995/96) Estimatedunmetered consumption Mid n.a. 249 (1995/96) Total estimatedconsumption Mld 2256 (1991) 1979(1995/96) Numberof water connections Nos. 177,820(1986) 240,187 (1995-96) Numberof operatingstandpipes Nos. 52,959 (1986) 76,655(1995-96) New meters installed Nos. n.a. 62,959 Numberof sewer connections Nos. 242,815(1986) 265,000 Length of water mains laid for the urban poor Km n.a. 18.0 Numberof groundwater tanks constructedfor urban Nos. n.a. 5 poor Numberof tubewells Nos. n.a. 224 Major leaks repaired Nos. n.a. n.a. Numberof seats in sanitation facilities Nos. 30,400 (1986) 38,444 WSSDemployees at HQ Nos. n.a. 2,371 WSSDoperational employees Nos. n.a. 22,170 Averagecost/m3 of water delivered Rs/m3 0.84 (1992/93) 3.0 (1996/97) Averagerevenue/m3 of water delivered Rs./m3 1.08 (1992/93) 3.5 (1994/95) Quick currentratio 11.0(1995) 3.03 (1995) Averageage of customerreceivable Months 3.0 (1995) 7.0 (1995) Collectionefficiency % 85 (1995) 78 (1995) Debt:equityratio 0.29 (1995) 0.27 (1995) Debt serviceratio 4.2 (1995) 11.8(1995) Workingratio 0.40 (1995) 0.54 (1995) Populationserved by private connections Million n.a. 4.65 Populationserved by publicstandpipes Million n.a. 5.75 Total populationof served area Million n.a. 10.40 a/ The year to which estimateapplies is shownin parenthesis; b/ Unmeteredconsumption included with metered consumption; n.a. = not available

Indicators were not defined in the SAR separately for project implementationand project operation. SAR Annex 6 containedMonitoring Indicators which were to be monitoredon quarterlybasis during and after the execution of the project to measure the achievementof the technical,financial and administrativegoals set for the project. The aboveare the key implementationindicators. -18-

Table 6: Key Indicators for Project Operation

Key operatingindicators in SAR SAREstimate a/ Actual or ICR estimate Averagedaily productionof treated water Mid 2820 (1991) 2474 (1995/96) Metered consumption:domestic Mld 1471 b/ 1406(1995/96) Meteredconsumption: commercial Mld ) 179 (1995/96) ) 785 b/ Meteredconsumption: industrial Mld ) 145 (1995/96) Total meteredconsumption Mld 2256 b/ 1730(1995/96) Estimatedunmetered consumption Mld n.a. 249 (1995/96) Total estimatedconsumption Mld 2256 (1991) 1979 (1995/96) Numberof water connections Nos. 177,820(1986) 240,187 (1995-96) Numberof operating standpipes Nos. 52,959 (1986) 76,655 (1995-96) New meters installed Nos. n.a. 62,959 Numberof sewerconnections Nos. 242,815(1986) 265,000 Numberof tubewells Nos. n.a. 224 Numberof seats in sanitationfacilities Nos. 30,400(1986) 38,444 WSSD employeesat HQ Nos. n.a. 2,371 WSSD operationalemployees Nos. n.a. 22,170 Averagecost/m3 of water delivered Rs./m3 0.84 (1992/93) 3.0 (1996/97) Averagerevenue/m3 of water delivered Rs./m3 1.08 (1992/93) 3.5 (1994/95) Quick current ratio 11.0 (1995) 3.03 (1995) Averageage of customerreceivable Months 3.0 (1995) 7.0 (1995) Collectionefficiency % 85 (1995) 78 (1995) Debt:equityratio 0.29 (1995) 0.27 (1995) Debt serviceratio 4.2 (1995) 11.8(1995) Workingratio 0.40 (1995) 0.54 (1995) Populationserved by private connections Million n.a. 4.65 Populationserved by public standpipes Million n.a. 5.75 Totalpopulation of servedarea Million n.a. 10.40 a/ The year to which estimateapplies is shownin parenthesis; b/ Urumeteredconsumption included with metered consumption; n.a. = not available

Indicatorswere not defined in the SARseparately for project implementationand projectoperation. SARAnnex 6 containedMonitoring Indicators which wereto be monitoredon quarterlybasis during and after the executionof the project to measure the achievementof the technical,financial and administrativegoals set for the project. The aboveare the key operatingindicators. -19-

Table 7: Studies Included in Project

2. Performanceofaerated EvalPurposeas defined at. l Study appraisal/redefined Status Impact of study 1. Improved leak detection Train and show latest In progress. None so far. l technology. technology. Redefined forl l ~~~~~~~~reductionof contaniinationl l ~~~~~~~inC Ward.l

2. Performance of aerated Evaluate performance & Not done. None.l lagoon. appropriatenessfor future investment.

3. Filter washwaterrecycling Reducetreated water deficit. Not done. None.

4. Metering,billing and To make commercial Start expectedin None. tariff systems. operationsefficient, early 1997.

5. Financial modeling. Forecastneeds for funds. Completed. Forecastsare made in Decembereach year and tariff adjustmentsare worked out. 6. Upgradingaudit StrengthenMunicipal Completed. Audit reports are capability. auditing. producedon time.

7. Materials management Rationalizestores and Completed. Numberof stores materialsmanagement. reducedand inventory carrying costs are reduced.

8. MaterialsManagement - To make stores management In progress. None so far. Computerizationof stores efficient

9. Tansa dam strengthening Reviewspillway capacity Prelininary reports .Noneso far. design review and earthquakeresistance. presented recommending modificationof spillway and adding buttresses.

10. Upgradesewerage O&M UpgradeO&M and reduce In progress. To be None so far. services cost. Train staff. Monitor completedunder BSDP. performance.

11. Conditionassessment of Assess conditionof sewersto In progress. To be None so far sewers plan rehabilitation. completedunder BSDP.

12. Topographicalsurvey of Update networkmap. In progress. To be None so far. manholes& sewer lines Computerizemanhole data. completedunder BSDP. Eliminate stormwater drain connectionsto sewers. -20-

Purpose as defined at Study appraisal/redefined Status Impact of study 13. Site Investigation for Progress preparation of Complete. Detailed design could | Middle Vaitarn dam Bombay IV project. proceed once seismic | criteria agreed.l

14. EIA of proposedMiddle Progresspreparation of Complete. Furtherwork neededto Vaitarna dam BombayIV project. meet Bank requirements.

15. EIA of Middle Vaitarna Progresspreparation of In progress. Will permit progressing conveyance,treatment, BombayIV project. of Mid-Vaitamaproject. storage and distribution

16. Topographicalsurvey for Progresspreparation for In progress. None so far. BombayIV BombayIV project. -21-

Table 8A: Project Costs

Appraisalestirnate (US$M) Actual/latestestimate (US$M) Item Local Foreign Total Local Foreign Total costs costs costs costs 1. Water supply 167.0 48.1 215.1 81.9 38.0 119.9 2. Sewerage 30.6 4.3 34.9 28.6 12.9 41.5 3. Facilitiesfor slums 5.5 0.6 0.0 0.0 0.0 6.1 4. Commonservices 3.0 3.9 6.8 8.9 15.7 6.9 5. Other 38.7 2.1 41.4 133.2 26.1 42.0 TOTAL 244.6 59.7 304.3 133.2 85.9 219.1

NOTE: The Actual/latest estimate included expenditures to be incurred to complete all works under each item of restructuredproject.

Table 8B: Project Financing

Appraisalestimate (US$M) Actualllatestestimate (US$M) Source Local Foreign Total Local Foreign Total costs costs costs costs IBRD 32.2 7.8 40.0 0.0 0.0 0.0 A 116.5 28.5 145.0 77.2 49.9 127.1 Subtotal 148.7 36.3 185.0 77.2 49.9 127.1 MCGB 95.9 23.4 119.3 56.0 36.0 92.0 TOTAL 244.6 59.7 304.3 133.2 85.9 219.1

NOTE: The Actual/latestestimate for GOI contributionincluded expendituresto be incurred to complete all works of restructuredproject. Domesticcontribution to Credit closingwas US$ 18.2 million. -22-

Table 9: Economic Costs and Benefits The economicanalysis for this ICR employedthe same methodologyas was used in the SAR(Annex 18) with actual or updated data. Certain key assumptionswere modifiedwhere this seemedto be appropriate,as identified below. The economicrate of return (ERR)was calculatedfor water supplyand sanitationtaking into accountcapital costs, operatingcosts and projectbenefits, as measuredby the value of the water supply,expressed in constantprices.

Capital costs werethose relating to the whole projectand wereexpressed net of taxes and duties. The project was unfinishedat closingbut the estimatedcosts to completionat the end of December1996 have been taken into the analysis. A labor shadowprice for local labor of 70% was used, which wasapplied to 26.4%of the investmentcosts, representingthe estimatedlabor element. Annualincremental operating costs were estimatedand divided into local and foreign componentsassuming proportions of 85/15respectively. A standardconversion factor of 0.9 was used for the local component. Operating costs wereassumed to start to be incurredfrom January 1997, at the completionof investment,for a period of 25 years. (The SAR assumedoperating costs would start to flowfrom the secondyear of construction). The projectbenefits have been assumedequal to the product of the additional water sold to consumers, after losses in distribution,and the averagetariff. (The SARanalysis made no allowancefor lossesin distribution,and implicitlyassumed production and consumptionwere equal). There will be some supplementarybenefits associated with water conservationin Tansa and Vaitarna lakes but these are difficultto quantifyand are not included. Sewage benefitsare also difficultto estimate,and are not included. Benefitswere assumedto accrue from January 1997, at the completionof investment,for a period of 25 years. (The SARassumed benefits would start to flowfrom the second year of constmction).

Year Local Labor Plant & Foreign Incr. Total Incr. Incr. Value of Net cap. element of material element operating incr. water water mcr. economic (to expend. local cap. cap. of cap. costs economic supply supply supply benefits end expend. expend. expend. costs March) (Rs. m) (Rs. m) (Rs. m) (Rs. m) (Rs. m) (Rs. m) (mild) (m m3) (Rs. m) (Rs. m)

1989 116.88 21.60 64.80 20.94 107.34 -107.34 1990 33.32 6.16 18.47 5.97 30.60 -30.60 1991 302.33 55.87 167.61 54.17 277.65 -277.65 1992 483.18 89.29 267.87 86.57 443.73 -443.73 1993 460.32 85.07 255.20 82.47 422.74 -422.74 1994 850.56 157.18 471.55 152.39 781.12 -781.12 1995 643.34 118.89 356.67 115.26 590.82 -590.82 1996 759.97 140.44 421.33 136.16 697.93 -697.93 1997 1132.97 209.37 628.12 202.98 37.75 1078.22 113.75 41.52 207.59 -870.63 1998 650.71 120.25 360.75 116.58 151.00 748.59 455.00 166.08 830.38 81.79 1999 398.45 73.63 220.90 71.39 151.00 516.92 455.00 166.08 830.38 313.46 2000 74.18 13.71 41.13 13.29 151.00 219.12 455.00 166.08 830.38 611.25 2001 151.00 151.00 455.00 166.08 830.38 679.38 2002 151.00 151.00 455.00 166.08 830.38 679.38 2020 151.00 151.00 455.00 166.08 830.38 679.38 2021 151.00 151.00 455.00 166.08 830.38 679.38 Note: For the purposes of compactingthe presentation,years 2003 through 2019 are not shown.

Results

SAR estimated ERR = 12.3% ICR estimatedERR at benefitsvalued at averagetariff = 9.5%

The loweractual ERR comparedwith the SAR estimatereflects the delaysin the realizationof the WSSbenefits and lower than anticipatedrevenues. Benefitsmeasured by the consumers'willingness to pay for water wouldbe higher than the averagetariff. Table 10: Status of Legal Covenants

INDIA: Third Bombay Water Supply and Sewerage Project

Original Revised Covenant Present fulfillment fulfillment Agreement Section typ status date date Description of covenant Comments DCA 3.01(a) 10 C India to cause Maharashtra and MCGB to perform in accordance with the provisions of the Maharashtra Agreement and the Project ______.______Agreement respectively. 3.01(b) 10 C India to make the proceeds of the Credit available to Maharashtra. LA 3.01(a) 10 C India to cause Maharashtra and MCGB to perform in accordance with the provisions of the Maharashtra Agreement and the Project Agreement respectively. 3.01(b) 10 C India to make the proceeds of the Credit available to Maharashtra. MA 2.01(a) 10 C Maharashtra shall cause BMC to perform in accordance with the provisions of the Project Agreement. 2.01(b) 4 C Maharashtra shall relend the proceeds of the Credit and Loan to BMC under SLA with the following terms: (1) proceeds to be made available for 25 years including a grace period of 5 years; (2) interest to be charged at the rate of 8.75% per annum; and (3) proceeds to be made available quickly as required to enable BMC to meet expenditures required for the project.

2.01(c) 3,4 CP Maharashtra shall ensure that funds not less than 60% of the annual About Rs 600 million capital expenditures are available to BMC under the same terms and outstanding at Credit closing. conditions as given for 2.01(b). l 2.01(d) 4 C Maharashtra shall exercise its rights under the SLA and except as the Association shall otherwise agree, Maharashtra shall not assign, amend, abrogate or waive to SLA or any provision thereof. 2.02(a) 5, 9 C Maharashtra shall, at the request of the Association, exchange views with the Association with regard to progress of the project, etc. 2.02(b) 5 C Maharashtra shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of the project.

2.03 10 C 30-Jun-94 Maharashtra shall make available water from the Bhatsai reservoir as required for the project.

2.04 10 C Maharashtra shall take all actions to acquire as and when needed all Original Revised Covenant Present fulfillment fulfillment Agreement Section tp status date date Description of covenant Comments such land and rights in respect of land as shall be required for carrying out the project. PA 2.01(a) 5 C BMC shall carry out the project with due diligence and efficiency and shall provide promptly as needed, the funds, facilities, services and other resources required for the project. 2.01(b) 10 C BMC shall carry out the project in accordance with the Implementation Procedures set forth in SCH 2 to the PA and such Schedule may be amended form time to time by Agreement between the Association and BMC. 2.02 10 C Procurement of goods, works and consultants services required for the project and to financed out of the proceeds of Credit/Loan shall be governed by the provisions of Schedule I of PA. 2.04 4 C BMC shall duly perform all its obligations under the SLA. 2.05(a) 9 C BMC shall exchange views with the Association with regard to the progress of the Project, the performance of its obligations under the PA and under the SLA. 2.05(b) 5 C BMC shall promptly inform the Association of any condition which interferes or threatens to interfere with the progress of the project, the accomplishment of the purposes of the Credit, or the performance by BMC of its obligations under the PA and under the SLA. 3.01 5 C BMC shall cause WSSD to carry on its operations and conduct its MCGB staff was supplemented affairs in accordance with sound administrative, financial, engineering by consultants for engineering and public utility practices under the supervision of qualified and preparation and supervision of experienced management assisted by competent staff in adequate complex works. numbers. 3.02 5 C BMC shall cause WSSD at all times to operate and maintain its plant, Operation and maintenance machinery, equipment, and other property, and make all necessary study for sewerage is in repairs and renewals thereof all in accordance with sound engineering, progress. financialand public utility practices. 3.03(a) 5 C BMC shall, in respect of WSSD, take out and maintain with responsible insurers or make other provisions satisfactory to the association for insurance against such risks and in such amounts as shall be consistent with appropriate practice. 3.03(b) 5 C BMC shall cause WSSD to maintain its existing separate fire/accident I I I I - and third party insuraice Original Revised Covenant Present fulfillment fulfillment Agreement Section type status date date Description of covenant Comments 3.04 5, 12 NC BMC shall consult the Association prior to making any material BMC did not consult IDA before modifications in the structure, organization, responsibilities and the subject of storm water was technical and financial operations of WSSD. transferred to WSSD.

3.05 5 C BMC shall consult the Association prior to the sale, lease, transfer or disposal of any of the properties or assets of WSSD except in the ordinary course of business. 4.01(a) I C BMC shall maintain records and accounts adequate to reflect in accordance with sound accounting practices its operation and financial condition. 4.01(b) 1, 2 C BMC shall have accounts and financial statements of WSSD for each (i) fiscal year audited by independent auditor acceptable to the Bank. 4.01(b) I C BMC shall furnish to the Association as soon as available, but in case (ii) not later than six months after end of each year: (a) certified copies of its financial statements of WSSD for such year as so audited; and (b) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested.. 4.01(b) I C BMC shall furnish to the Association such other information concerning (iii) said accounts and financial statements as well a the audit thereof and said records, as the Association from time to tome reasonably request. 4.01(c) I C For all expenditure to which withdrawals are requested form the Cr Acct. on the basis of SOE, BMC shall (i) maintain separate accounts reflecting such expenditures, (ii) retain records until one year after closing date, (iii) enable Association's representative to examine records, (iv) ensure such separate accounts are included in annual audits. 4.02(a) 2, 4 C BMC shall, with effect from April 1, 1987 and for each financial year WSS tariffs were revised on 05- thereafter, set and maintain for water supply and sewerage services to Apr-87, 01-Apr-93, 01-Apr-94 ensure operating revenues are sufficient to meet all WSSD operating and 01-Apr-95. expenses and debt service and, together with any internal funds of WSSD available for investment for, provide at least 40% of annual capital expenditure. 4.03 1, 2, 5 CD 31-Mar-87 31-Mar-89 By March 31, 1987 shall cause WSSD to: (a) establish a specific cash account for the eventual replacement or rehabilitation of capital assets, (b) ensure that all operating surpluses are allocated to the said account until the amount in the said account equal accumulated depreciation Original Revised Covenant Present fulfillment fulfillment |Agreement Section type status date date Description of covenant Comments l ~~~~~~~~~~~~~~~~~charges. DCA - Development Credit Agreement with Government of India LA - Loan Agreement with Government of India MA - Maharashtra Agreement with State of Maharashtra PA - Project Agreement with Municipal Corporation of Greater Bombay (Mumbai)

Covenant types: Present status:

I = Accounts/audits 8 = Indigenous people C = Complied with 2 = Financial performance/generate 9 = Monitoring, review, and reporting CD = Compliance after delay revenue from beneficiaries 10 = Implementation NC = Not Complied with 3 = Flow and utilization of project funds 11 = Sectoral or cross-sectoral budgetary or CP = Complied with partially 4 = Counterpart funding other resource allocation 5 = Management aspects of the project or 12 = Sectoral or cross-sectoral policy/ of its executing agency regulatory/institutional action 6 = Enviromnental covenants 13 = Other 7 = Involuntary resettlement - 27 -

Table 11: Compliance with Operational Manual Statements

The Bank's OMS 2.33: Social Issues Associated with Involuntary Resettlement in Bank-Financed Projects was not addressed at the time of preparation. This resulted in failure to identify the adverse impacts associated with land acquisition/resettlement and plan effective measures to address the issues.

Table 12: Bank Resources: Staff Inputs

Stage of projectcycle Planned Revised Actual Weeks US$ Weeks US$ Weeks US$ Preparationto appraisal n.a. n.a. n.a. n.a. 23.2 50,400 Appraisal n.a. n.a. n.a. n.a. 34.0 76,800 Negotiationsthrough n.a. n.a. n.a. n.a. 16.2 40,000 Board approval Supervision n.a. n.a. n.a. n.a. 146.5 369,400 Completion n.a. n.a. 16.0 55,780 18.4 58,300 TOTAL n.a. n.a. n.a. n.a. 238.3 594,900 Tableindicate n.a where informationis not availablefrom Bank's MIS. CompletionActuals are final estimates. - 28 -

Table 13: Bank Resources: Missions

Performance rating Stage of project Month/ Number Days in Specialized Implem- Develop- Types of year of field staff skills entation ment problems persons represented status objectives b/ Through Appraisal Jul-83 1 n.k. E

Feb-84 2 11 E,F Jun-84 1 9

Oct-84 2 13 E,F Appraisal through Feb/Mar-85 4 13 E,F Board approval

Aug-85 1 3 T Board approval Nov/Dec-86 3 21 a/ E,F through effectiveness

May/Jun-87 2 24 a/ E,F Oct-87 2 7 a/ E,F Supervision Jul-88 2 6 a/ F,E 1 1

Feb-89 2 9 a/ F,E 1 1 Aug-89 2 n.k. a/ F,E 1 1 M,P Nov-89 2 6 a/ F,E 1 1 M

Oct/Nov-90 2 11 a/ F,E 3 1 M,P,L

Jul/Aug-91 2 12 a/ E 2 1 M,P Nov-91 3 12 a/ E,F 2 1 M,P May/Jun-92 3 15 a/ E,F 2 1 P Feb/Mar-93 5 11 a/ E,F,En,P 2 1 P May-94 3 8 a/ F,E 2 1 M,P Apr-95 3 13 E S S M

Sep-95 3 4 E, S S S M

Completion Jul-96 4 16 E,Ec/F U U a/ Combined with other projects. b/ P = procurement; M = project management; L = Legal Covenants Staff skills: F = Financial analyst; E = Engineer; Ec = Economist; En = Environmentalist; T = Training specialist; S = Social scientist; P = Procurement specialist; n.k. = not known. - 29 -

INDIA: THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Loan 2769-IN and Credit 1750-IN)

Implementation Completion Reporting Mission July 10 to 24, 1996

AIDE-MEMOIRE

Table of Contents

I. INTRODUCTION ...... 30

II. THE PROJECT ...... 30

III. PROJECT IMPLEMENTATION STATUS AT CLOSING ...... 33

IV. VIEWS ON PROJECT IMPLEMENTATION ...... 36 Bank view on Project Implementation ...... 36 MCGM view on Project Implementation...... 39

V. VIEWS ON FUTURE OPERATION, OPERATIONAL PLAN AND SUSTAINABILITY Future Operation ...... 41 Operational Plan ...... 41 Sustainability...... 42

VI. FOLLOW-UP AND AGREED ACTIONS...... 42

ANNEXES

ANNEX 1 Project Cost Estimate and Status at Credit Closing.44 ANNEX 2 Procurement: Summary of Contracts Awarded .48 ANNEX 3 Performance Indicators .50 ANNEX 4 Guidance on Borrower's Contribution to the ICR .51 ANNEX 5 List of Key Persons Met .52 - 30 -

INDIA: THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Loan 2769-IN and Credit 1750-IN) Implementation Completion Reporting Mission, July 9 to 24, 1996

AIDE-MEMOIRE

L. INTRODUCTION

1.01 A missioncomprising ShyamalSarkar (World Bank - SA2RS, leader), R.G. Paterson (engineer,FAO/World Bank CooperativeProgram), J. Fullbrook(economist/financial analyst, consultant)and B. Datta (engineer,consultant) visited Mumbai from 10 to 24 July 19961 to review the project status at the Credit closingand draw out lessonsfor future lending in the sector and to provide advice and support to MCGM for the preparationof the borrower's contributionto the ICR The Bank's letter of May 16, 1996 to MCGM copied to GoM and Gol, indicatedthe purpose of the ICR, the process involved in its production, the borrower contributionand the borrower responsibilities,and a letter of June 30, 1996 to MCGM indicated the data requirementby the ICR mission.

1.02 After an initialmeeting with the AdditionalMunicipal Commissioner, Projects (AMCP) and senior staff of the Water Supplyand SewerageDepartment (WSSD) the missionspent two days visitingPise, Panjrapur and other water supplyand seweragesites. Implementationof the project was then discussed with both current Deputy MunicipalCommissioners (DMC), the two previous AMCPs, previousDMCs, ChiefEngineers and their staff,who providedvaluable insights and informationto the mission. The missionalso met and discussedthe project with the Principal Secretary,Water Supply and SanitationDepartment of the Governmentof Maharashtra (GoM). A list of the key officialsmet by the missionis attached in Annex 5. The missionwishes to thank all concerned officialsfor their assistance,courtesy and hospitality.

1.03 This Aide-Memoire,which is based on informationprovided by MCGM and the mission's discussionshas been prepared by the missionto record its findingsand the views of the Bank and MCGM-GoM on project implementationand future operations. The findingsand conclusionsof the missionwere reviewed on July 24, 1996 at a wrap-up meeting in Mumbai13 /, chaired by the AMCP, and a copy of the draft Aide-Memoirewas left in the field. However, these are subject to review and confirmationby the Bank management.

II. THE PROJECT

2.01 The objectivesof the project were to expand the water supplyand sewerage facilitiesfor the city of Bombay and further strengthenWSSD's implementationcapacity and its financialand operational performanceby: (a) continuingand expandingon the efforts of previous projects in improvingsector efficiencythrough improvementsin project management,procurement, billing and

12/ Shyamal Sarkar from July 9 to 12 and 21 to 23.

13/ Bombayis now known as Mumbai. - 31 -

collections,and leak detection and repair in the WSSD; (b) expandingwater supplyand sanitation facilitiesfor the urban poor; (c) increasingthe supplyof water to the MCGM area by 455 Mld to help reduce Bombay's deficit;(d) expandingBombays sewerage systemin the isolateddeveloped areas; and (e) evaluatingoperational experienceand developingappropriate design criteria and technical options for future investmentsin sewagetreatment.

2.02 The appraised project included:

(a) the constructionof 52 km of trunk mains with diameters rangingfrom 600 mm to 3000 mm; 49 km of distributionmains with diameter ranging from 150 mm to 1800 mm diameter;9 km of transmissiontunnels of 3000 mm dia.; internalcement mortar liningof 76 km of pipeline from 1200 mm to 3000 mm dia; the provisionof leak detection, control equipment and system instrumentationand about 32,000 water meters; (b) construction of a 455 Mid water treatmentplant; four service reservoirswith total capacity of 144,000 m3 and the buildingand installationof pumpingcapacity of 2,233 Mid; (c) construction of about 54 km of sewers with diameter ranging from 230 mm to 1000 mm dia; buildingand installationof sewage pumpingequipment of 150 Mld capacity in 12 units; (d) provision of water supplyand low-cost on-site sanitationfor the urban poor in slums; (e) training for MCGMIWSSD staff in systemmaintenance and operations, and expansionof course curricula at MCGM's existingtraining center; (f) appointmentof consultantsto improve WSSD's project planningand implementationcapacity, and to help implementthe project and prepare preliminarydesigns for the next tranche of source development(Vaitarna) to meet future water supplyneeds, and review and develop design parameters in wastewater disposal systems,based on stabilizationpond technology (Versova) and examinethe possibilitiesfor recyclingwash water at the potable water treatment plants and to reduce distributionsystem water losses by applicationof improvedtechniques; and (g) supply of 83 trucks, four wheel drive vehicles,buses and other vehiclesfor project implementationand operations.

2.03 Based on GoM and Gol request, a project restructuringproposal was initiatedin October 1992 to financehigh priorityremedial works of the Bombay sewerage systemsfrom the savings from the Loan/Credit, which accrued due to variationof foreign exchangerates and also due to extremelypoor withdrawals over the initialthree years due to delays in the preparationof bid documents and award of contracts. The additionalitems were estimatedto cost US$ 25 millionand were planned for completionby 1996. However, the final shape of the restructuringproposal was delayed until April9, 1996,when the amendmentto the legal agreement was issued. The restructured project included several remedial works of the sewerage system,completion of some of the Bombay II uncompleted sewerage works, and a few new works, mostly related to rehabilitationof water distributionmains. These additionalworks were estimated to cost about US$ 7.7 million. Attached Annex 1 (Project Cost Estimates and Status at Credit closing) also provides a comparisonof the project 'as-appraised' and the 'restructured project'.

2.04 The key dates related to the Loan/Credit,are as follows: -32 -

Date Elapsed Time (Month) from Appmval Appaia Feb-85 Negotiations 22-Apr-86 Board Approval 16-Dec-86 0.0 Agreement 12-May-87 5.0 Effective 29-Jan-88 13.5 Project Completion 3 1-Dec-96 84.5 Original Credit Closing 30-Jun-94 90.5 First Extension to 30-Jun-95 102.5 Project Restructuring 09-Apr-96 111.8 Second Extension& Credit closing 30-Jun-96 114.5

Agreements for an IDA Credit of SDR 105.5 million(equivalent to US$ 145.0 millionat that time) and an IBRD Loan of US$ 40.0 millionwere signed on May 12, 1987. The Loan was fully canceled in three steps: US$ 10.0 millionin June, 1993 and October, 1994 and US$ 20.0 millionon June 26, 1995. The Credit closed on June 30, 1996 after two extensionsof one year each, when US$ 112.6 million had been disbursed.

Contracts

2.05 A combinationof internationaland domesticprocurement of goods and civilworks was made by MCGM as agreed at appraisal. However, the processingof bidding document to award of contract took an inordinatelylong period which resulted in MCGM's not awarding/completingall the envisaged works by the closing date. Of the 212 goods and civilworks contracts planned, 188 were awarded at closing and the remainderwere at various stages of processing. The attached Annex 2 gives a summary of the contracts of each of the WSSD divisions. Except a few large contracts (one tunnel, one reservoir and one pumpingstation, some sewerage conveyance)and a few contractswhich were taken-up near the end of the project implementation(mortar liningof distributionnetworks, uncompleted mechanicaland electricalworks of BWSSP-II, etc.), others were completed or substantiallycompleted. The distribution(percent) of the value of ICB and LCB contracts for civil works and materialsand equipmentover the aggregate value of contracts awarded followed, more or less, the pattern forecast at appraisaland given at table 3.3 of SAR. The variation(see attached Annex 2) was caused by the increasein the consultingservices from US$ 7.7 millionto about US$ 26.1 million(Rs 776.3 millionat an average exchangerate of Rs 29.7 to a US$).

Project Cost Estimates

2.06 Based on informationprovided by MCGM, the project cost estimated at appraisal,the estimated cost of the restructuredproject, estimated cost to completion,and an estimated expenditure (an early estimate) at closing are shown in detail in Annex 1 attached with this Aide-Memoire. A summaryof it is given below: - 33 -

Amount: Rs million Estimated Estimated SAR Completion Expendituiresto Item Estimate Cost (*) 30-Jun-96 (*) Remarks Water supply: civil 1253.1 2805.6 1105.1 Actual cost of treatment equipment included in civil works. Water Supply: equipment 468.8 1026.8 922.4 One Pumping Station uncompleted Sewerage: civil 261.4 826.4 685.5 Includescarry over from BWSSP II Sewerage: equipment 13.6 479.7 124.3 Includescarry-over M&E works from BWSSP-11 Slum areas: water 31.3 0.0 0.0 Financed from other sources Slum areas: sanitation 17.0 0.0 0.0 Financed from other sources Vehicles 11.1 88.4 88.4 Staff quarters 10.9 53.6 53.6 Meters 16.4 34.3 8.3 Leak detection equipment 6.9 20.0 0.0 Telemetry & misc. equipment 12.1 332.0 2.4 Bids for SCADAnot invited. Training & Tech. Assistance 31.9 12.9 12.9 Expenditureonly on training infrastructure Studies 40.8 17.7 10.8 Included part of 3 major studies for BSDP Middle Vaitarna Site 5.5 178.9 84.8 Restructured project included feasibility and detailed investigation engineenng preparation Consultants 0.0 555.2 548.3 Included supervision consultants. BMC engineering 243.8 522.0 348.0 Land acquisition 2.4 NA NA Total Base Cost 2427.3 Contingencies: Physical 254.3 Contingencies: Price 1006.2 Contingencies: Total 1260.5 Total before Taxes & Duties 3687.8 l

Taxes and Duties 268.7 l Total Project Cost 3956.5 6953.5 3994.8 (*) including contingencies, and taxes and duties.

The increase in costs of sewerage works is largely due to the addition to the project of new works and works carried over from BWSSP II. MCGM has applied for a loan from Mumbai Metropolitan Regional Development Authority (MMRDA) for completion of the outstanding works and this is now under consideration by MMRDA.

m1 PROJECT IMPLEMENTATION STATUS AT CLOSING

3.01 The implementation effort was largely concentrated in building the facilities for increasing water supply and expansion of sewerage conveyance. Improving sector efficiency through improvement in project management, procurement, billing and collection, leak detection and repairs did not receive adequate MCGM attention.

3.02 Improving sector efficiency. No importance was attached to the training needs despite agreeing at negotiations that MCGM will prepare and implement a staff training program encompassing various facets to increase job-skills and to improve operational and management efficiency. Only some expenditures were made in building limited training infrastructures such as accommodation at the Training Institute. No record of training conducted was readily available to the mission. The mission requested MCGM to provide information on the training provided. - 34 -

3.03 Further strengtheningof the operationalefficiency of WSSD in the area of revenue collection has not been achieved, althoughMCGM met in each year the financialperformance covenant of making 40% contributionto investmentsafter meetingthe operationand maintenancecost and meeting the higher of the debt service and the depreciation. A consultancyfor metering,billing and tariff systemsidentified at the beginning of the project implementationis expected to start in October 1996.

3.04 A consultancyto demonstrateand train staff in the latest techniquesin leak detection and make recommendationsfor future work was includedin the project (para 3.17 of the SAR). This was deferred in 1991 because MCGM consideredit to be more cost-effectiveto buy leak detection equipment and train staff separately. However, this was not done. Instead, a consultancyto study reduction of contaminationin C Ward (one of 23 wards of MCGM) was awarded in 1995, financed from MCGM's own resources, and is nearing completion. The missionobserved that the study results are not expected to be of any meaningfuluse to reduce the water losses due to leakage.

3.05 In March 1991, MCGM created a new post of AMCP to take overall responsibilityfor the implementationof BWSSP mIIand related water and sewerage investments. WSSD claim that improvementsin project managementhave been achievedby experienceand a greater awareness of procedures and the likelyproblems.

3.06 Expanding water supply and sanitation facilities for the urban poor. Five smallreservoirs with pumping stations and about 18 km of pipelineshave been built to provide water supplyto slum areas on high ground. MCGM provided a large number of water connectionsto the slums duringthe project implementationperiod. However, these were financedout of MCGM's own sources. The procurement procedures were found to be inappropriatefor carryingout such smallworks. Amendmentto the procurementprocedures was delayedand thus, no further work was done by MCGM. Sanitationfacilities have not been financedby this project, but have been provided under the Bank assistedBombay Urban DevelopmentProject, GoI/GoM's slum improvementprogram and, since 1991, GoM's slum redevelopmentscheme. A Slum SanitationProgram has been taken-up under the Bombay Sewage DisposalProject (BSDP) which became effectiveon March 22, 1996.

3.07 Increasingthe supply of water by 455 Mld. By the time of credit closing most of the main water supplyworks were nearing completion. It is expected that by about December 1996 the additional455 Mld of treated water will be availableand most water supplyworks will be complete. The main exceptionsare (a) reservoirsat Malabar Hill (estimated completionin December 1998) and Worli Hill (September 1999), where work has not yet begun due to delay in obtainingaccess to site, (b) a tunnel between E. Moses Road and Ruparel College,the contract for which had to be rebid due to cancellationof the originalcontract (completionplanned for January 2000) and (c) Raoli pumping station and reservoir, which were delayedby decisionson reservoir capacity and pump duty as well as unavailabilityof access to site and are now expected to be complete by July 1998.

3.08 However, the increase in availabilityof water to Mumbai will be only 365 Mld after compensatingfor the losses occurred by the MCGM's turning-overthe Ulhiasriver intake of 90 Mld capacity to KalyanMunicipality. Althoughthe qualityof treated water is expected to meet acceptable - 35 - standardswhen it enters the distributionsystem, there is an unacceptablerisk of contaminationbefore it reaches consumersbecause of intermittentsupply conditions.

3.09 Expandingsewerage system in the isolated developedareas. The progress on the sewerage works was slower. Althoughthe pumping stationat A.S. Marg was completed and the Versova pumping station is nearing completion,none of the sewerage works includedin the project was complete and operating by the time of credit closing. However, substantiallength of the conveyanceworks will be completedby May/June 1997. In about the same time all the four (Bhandup, Ghatkopar, Malad and Versova) waste water treatment facilitiesof the BWSSP-II which were includedin the project at a latter stage would be completed and commissionedand would offer substantialopportunities to expandthe number of connectionsand would enable discharge of degritted, screened sewage into coastal waters. The scheduleof completionand commissioningof various importantunits is given below:

Waste Water Treatment Facilityat Bhandup December 1996 Sewage Pumping Station at Ghatkopar March 1997 Waste Water Treatment Facilityat Ghatkopar March 1997 Waste Water Treatment Facilityat Malad March 1997 Waste Water Treatment Facilityat Versova June 1997 Aerated lagoon at Versova June 1997 Sewage Pumping Station at Matunga February 1997

3.10 The delays experiencedby MCGM in layingthe conveyancemains were due to: (a) difficultyin obtainingpermission from traffic policeto excavate in roads; (b) hard rock encountered at shallow depth; (c) slow procurement progress; (d) poor performanceby contractors; and (e) refusal by railway authoritiesto permit open excavation across railwaytracks.

3.11 Evaluationof operationalexperience etc. of sewage treatment. The aerated lagoon at Versova is not yet complete and as such the intendedreview of its operationalperformance to develop appropriate design criteria and technicaloptions for future investmentin sewage treatment was not done. The lagoon is now expected to be completed and commissionedby June 1997. No plan for evaluationof performanceis being thought of by MCGM at present.

3.12 The developmentof Middle Vaitarna scheme as the next tranche of investmentwhich was identifiedas the least cost developmentto provide next water source for Bombay remained unfulfilled despite completion of considerablepreparation work due to lack of GoM and GoI interest.

3.13 Monitoring reports. WSSD has not compliedwith the action agreed at negotiationsto report quarterlyto the Bank the monitoringindicators (Annex 6 of the SAR), even though most of these indicators are easily availablein WSSD. Thus, the underlyingconcept to have in place a set of records to assist the project agency and the Bank to monitor progress towards the achievementof 'development objectives"whichare much broader than mere physicalachievement was not met. - 36 -

3.14 Compliancewith Covenants. The Governmentof Maharashtra (GoM) has not fully complied with the on-lendingcovenant. An estimated amount of over Rs 600 millionremained outstandingto MCGM at Credit closing. Storm Water Drainage was transferredto WSSD in 1991 without prior consultationwith the Bank as is requiredby Section 3.04 of the Project Agreement. However, the Bank was informed soon after and did not object. Otherwise,compliance with covenants has been good. MCGM had consistentlymet all the financialcovenants. The MCGM has without fail provided audited financialstatements relating to the WSSD withinthe stipulatedperiod of six months from the precedingfinancial year end.

IV. VIEWS ON PROJECTIMPLEMENTATION

Bank View on Project Implementation

4.01 Only implementationof the physicalworks for increasingwater supply and expansionof sewerage conveyancewas taken-up by MCGM. The institutionaldevelopment aspects of the project were not given the required attention. MCGM-WSSD did not implementthe leak detection and waste preventioncomponent of the project nor the study for washwaterrecovery.

4.02 The need for improved coordinationand detailedforward project planning did not receive enough attention to provide the project managementwith an early warning system. With the experience of two earlier similarprojects, many of the problems encounteredwere foreseeableand could have been avoided or mitigatedby adequate advanceplanning and coordination. A Project ManagementManual was to be prepared and issued to all officialsconcerned with BWSSP III at the beginningof project implementation,but this was not done.

4.03 More than three years after effectivenesswas taken to prepare the biddingdocuments and contracts award, even though the prequalificationof contractors/supplierswas completed before negotiationsfor most of the major water supplyworks which accounted for about 40% of the estimated project costs. As a result, the project implementationeffectively started about three years after the loan effectiveness. The implementationwas generallyslow. Contracts requiring foreign exchangepayments needed Gol approvalbefore award which on many occasions delayed award decisions.

4.04 A review undertaken by the Bank of contracts over US$ 5.0 millionawarded during FY95 showed that MCGM took an average of 567 days compared to a bid validity of 180 days. The requirement of GoI clearanceof contracts involvingforeign exchange paymentswas dispensedwith in 1995 and this enabled savingof considerabletime. However, the procedures for bid evaluationto signingthe contracts are stillcumbersome and contributeto delays.

4.05 The large number of delayed contracts (a tunnel, a pumping station,three reservoirs,some sewage conveyance),and some works which have not yet started more than eight years after the project became effective,indicates that there is stillsubstantial room for improvement,particularly in - 37 - acquiringvacant possessionof sites, coordinationwith other authorities,and in the preparation of bid documents, procurement scheduling,procedures for awardingcontracts, and contract management.

4.06 The biddingdocuments were improvedafter 1992 by inclusionof improved conditionsof contract such as: price adjustment,arbitration proceduresfor foreign contractors,interest for late payments, foreign currency payments for local contractors, single-responsibilitycontracts, and sound technicalinformation (specifications, bill of quantities,drawings). These elementswere accepted in varying degrees in the various divisionsof WSSD due to a lack of understandingof the difference between mandatoryrequirements of the Bank and recommendationsmade for reasons of good practice.

4.07 Constructionof the complexworks of water supply(water treatment plant, tunnels, pumping machinery)and sewerage (waste water treatment facility,pumping machinery)for which MCGM did not have the capacity was supervisedby consultants,and the experiencehas been quite satisfactoryand the qualityof construction has generallybeen good. MCGM continuedwith the supervisionof the uncompleted works by consultantseven after the Credit closure.

4.08 Contract period was generallylong, which helped undercapitalizedcontractors/suppliers to win contracts. Several contractors performed poorly due to cash flow problems and their own organizationalweaknesses which confirmsthat stricter criteria for pre-and post-qualificationof contractors includingtheir financialstanding and the bid capacity should have been adopted.

4.09 Staff continuitywas generallymaintained in water supply,whereas in the sewerage project the tum-over of senior staff was rapid and the relativepoorer performancein sewerage is a reflection.

Water Supply

4.10 Completion of part of the pipelinefrom Pise to Panjrapur in March 1993 enabledthe existing pumps to deliveran additional90 Mld of raw water to Panjrapur, whichwas then transferred through the existingsystem to Bhandup for treatment. Therefore,partial benefit of water supplyinvestment was availablequite early, althoughthis got neutralizedin July 1994 when MCGM tumed-over the Ulhas river intake (90 Mld) to KalyanMunicipality. Thus, the incrementalwater supplythat will be availablefor Mumbai when the Panjrapur water treatment plant and transmissionmain are commissionedwould be only 365 Mld.

4.11 MCGM's slow action in recruitinga consultantto study the metering and charging policies would indicate that this was not sincerelypursued. Despite agreeingto act promptlyin May/June 1992, consultantrecruitment could not be completed. This being an importantitem to further improve MCGM's commercialperformance (metering, billing and collection),MCGM should activelypursue the proposed study (consultantrecruitment is reported to be completed by October 1996) and participate in the process of the analysisof existingsituation and implementits recommendations.

4.12 There are exampleswhereby the prelininary engineeringreports were prepared without proper engineeringcalculations and also without site investigations(availability of land and site conditions). - 38 -

For example,the decision on the capacity of the reservoirat Raoli took inordinate long period involvingresolution of some issues between the consultantand MCGM engineers, and the availability of less land area at Malabar Hill than is required to installthe originallydesigned reservoir capacity. Another example of slow preparation is the documents for Instrumentationand Telemetry(W-3 5E) for which bids could not be invitedby MCGM as the engineeringpreparation and the preparation of the bidding documents are completed only near about the Credit closing date.

4.13 The need for the leak detection remainedpartly understood and no action was taken to implementany leak detection. MCGM contends that the losses are only 20%. However, what is not being realized is that the loss accounts for over 500 Mld treated water and occurs in a space of about of 3 hours (average daily water supplyduration). On a 24 hour per day supplybasis, the losses would be 160%. The negativepressure conditionin the distributionpipe allowed contaminationof water through the leakage in some 'wards' of Bombay. Given the overallwater availabilitysituation, MCGM should implementthe leak detection and waste prevention,first by developingan action plan and then by implementingthe action plan. This shouldcertainly be consideredas the most important part of future developmentof water supplyfor Mumbai.

4.14 Provision for use of force account, direct contracting,construction by community,and priced quotationsin the procurement procedureswould have provided implementationflexibility for the repairs and rehabilitationof the local water supplysystems in the slum areas.

Sewerage

4.15 Some important uncompletedworks of the BWSSP-II which were includedin the project at a latter stage are scheduled for completionby June 1997. These will enableMCGM to desilt and degrit an additional685 MId (240 Mid at Malad; 140 Mid at Versova; 130 Mid at Ghatkopar; and 185 Mid at Bhandup) sewage before disposal.

4.16 Several works of sewerage conveyancecould not be completed because of failureto take into account the adverse effect of the extraneous factors on implementationschedule. A thorough planning, a sound geo-technicalinvestigation and coordinationwith the trafficpolice and the respective utility operators (water supply,telephone, electricity)should be completed and a scheduleworked out before the bids are invited for all works, especiallythose needing open excavation.

4.17 The project successfullyintroduced to India an innovativetechnique for in-situ mortar liningof distributionpipelines. The project also introducedthe concept of trenchless sewer constructionwhich MCGM will pursue.

FinancialAspects

4.18 There had been no improvementin the efficiencyof collectionof charges for water supply, which was still 78% in 1994-95, the same as in 1985-86. Customer accounts receivable(i.e. unpaid) had risen from Rs 630 millionin 1985-86 to Rs 2408 millionin 1994-95. During the same period, the consumer price index had increasedby 123% and the domesticwater tariffs by only 100%. - 39 -

4.19 The financialperformance of MCGM-WSSD is generallysatisfactory but is too dependent on a narrow revenue base, made up of commercialand industrialusers and taxes. MCGM had consistently met all the financialcovenants and revisedwater and seweragetariffs in April, 1987, . April 1993, April, 1994 and April 1995. Furthermore,it continuedto meet operation and maintenancecosts and to contribute 40 percent (now 35% in BSDP) of capital investmentcosts from its own resources.

4.20 The MCGM has provided audited financialstatements relating to the water and sewerage operations within the stipulatedperiod of six months from the precedingfinancial year-end. The audit practices followed by MCGM have shown further improvementand reports were produced promptly.

MCGM Views on Project Implementation

4.21 Although all the physicalworks have not been completed fully and the envisaged benefits are not availableat closingand are estimated to be availablethree/four years later, MCGM feels that the project has partially achievedits main objectives. 455 Mid water will be availableto Mumbai in December 1996, and the transmissionand trunk distributionand the reservoirsalready built/being built will enable MCGM to expand water supplyby another 455 Mld by constructingonly a water treatment plant and improvingupon the intake and raw water transmission.

4.22 Although the water supplybenefits will not be availableimmediately to the city area, the additionalwater that will be availablein December 1996will meet the demand of the eastem and western part of the metropoliswhere high potentialfor additionalconsumer connections exists and is expected to improve the revenue base of MCGM.

4.23 Further, the acceleratedcompletion of the mechanicaland electricalworks of the various wastewater treatment facilities,pumping station and pumpingplants, and Versova lagoon, will enable MCGM to screen and degrit an additional685 Mid capacity sewage which will provide environmental benefit. Were these works to be financedentirely from MCGM's own sources, these would have lingered on for a longer period, mainlyfor the reasons of difficultyin makingforeign exchange payments for domestic financecontracts. MCGM has expressedappreciation of the Bank for agreeing to financethese facilitiesby restructuringthe project.

4.24 MCGM acknowledgesthat inadequate attentionwas given to capacitydevelopment and training. In view of failuresin the previousproject, MCGM's attentionwas largelyconcentrated on completingthe physicalworks as far as possiblewithin the project time-frame.MCGM also felt that had the Bank supervisionmissions provided more attention and guidanceon these topics, better results would have been achieved.

4.25 The initialhesitation and difficultyto accommodatethe changes required to the bidding documents arose from Bank's inadequate explanationof the mandatoryrequirements and the recommendationsmade for reasons of good practice. Bank's insistenceon changing some of the clauses in the bidding documenttook considerabletime to finalizethe documents. However, from the good experiencesof usingBank documents,MCGM has decided to use these documents for the - 40 - proposed Bombay 3-A Project, which is estimated to cost Rs 6600 million(about US$ 185 million) and financedfrom MCGM sources.

4.26 MCGM was seriouslyconcemed and disappointedwith the delay (delayedby about three and half years) on the part of the Bank in amendingthe project descriptionto accommodate especiallythe uncompleted mechanicaland electricalworks of BWSSP-II. Their concem was that they proceeded with awarding these ICB contracts with the encouragementgiven by the supervisionmissions, from time to time, since mid-1992,and with the required procurementreviews by the Bank, and continued to financethese in the expectationof receivingreimbursement. Had this expectationnot materialized, the financingof BWSSP-III could have faced serious problems. The delayedamendment and restriction imposed on the withdrawalby limitingthe retroactive financingof expendituresonly for a period of one year was against the understandingsMCGM had with the supervisionmissions, and did not allow MCGM to claim withdrawalof some expenditures.

4.27 The procurement procedures given at Schedule 1 of Project Agreementwere inappropriate for works of smallnature, especiallyfor site-specificfacilities in slum areas. Bank action on MCGM request to amend the procurement procedures to includethe use of force account, direct contracting and priced quotations,etc. to implementthe additionalwater supplyschemes for slum areas was far too late to be acted upon.

4.28 The delays in implementationwere caused by variousfactors. These are:

(a) late submissionof designs, technicalspecifications and draft bidding documents by consultants, and protracted discussionsrequired between the MCGM and the consultantto reach conclusion on most of these; (b) poor support and cooperationfrom agencieslike the traffic police, State PWD, State Forest Department, and the Railways; (c) difficultiesin obtainingvacant possessionof constructionsites (a length about 175 m of the transmissionline alignmentat Majiwadejunction, inlets/outletsof reservoirsat Raoli and Worli were occupiedby slums;and the site for reservoir at Worli was occupiedby MCGM staff and tenants of which the tenants were reluctant to move to an altemate equivalentaccommodation nearby; and at the site for reservoirat Malabar Hill due to the reluctanceof institutionssuch as a primary school, a sub-post-officeand a smalloffice of PWD to move to adjoiningland provided by MCGM); (d) poor contractor performancedespite procedures establishedfor qualifyingcontractors prior to award (some sufferedfrom severe cash flow and organizationalproblems); and (e) procurement delays.

4.29 All the incompleteworks will be completedby MCGM. However, MCGM was not sure whether payments in foreign currency for the ICB contracts (7 contracts with aggregate estimated cost of Rs 486.5 million)which remainedto be awarded at closingwould be permitted by the Gol. - 41 -

V. VIEWS ON FUTURE OPERATION,OPERATIONAL PLAN AND SUSTAINABILITY

Future Operation

5.01 The additionalwater that will be availablein December 1996 is proposed to be provided to water-deficientareas of eastern and western parts of the metropolisin lieu of the envisaged transmissionto the city, due to non-completionof the trunk distributionmain (3000 mm dia tunnel between E. Moses Road and Ruparel) and the reservoirsat Raoli,Malabar and Worli. MCGM has planned to allocate 360 MId water to the suburban areas as follows:

SINo, Reservoirat Allocation l______in Mld

...... 1 ...... BhandrawadaHMl ...... 25 l ...... 2 ...... VeravaliHill I, I,...... I ...... 75 l 3 MaladHill I, nI 45

...... 4 ...... BonivaliHill ,11 ...... 70 ...... 5 ...... PowaiLow Level & High ...... Level II ...... 15 l 6 GhatkoparLow Level& High Level 10 7 TmbyLow Lev.eland Hfigh Level 80 ...... l 8. BhandupI,1I andBhandup (BUDP) 40

5.02 The proposed transmissionto the eastern/westernparts, accordingto MCGM, will not require augmentationof the existingarrangements (inlets to reservoirs,reservoir capacity, distribution network, etc.) in their respectivecommand areas of the reservoirs. The proposed Bombay 3-A Project which is planned for completionby the year 2000 with MCGM's own financewill augment the water availabilityby another 455 Mld and using the facilities(transmission and trunk distribution)both existingand those being built with BWSSP III, would distributewater to the city.

5.03 MCGM has the capacity to operate the treatment plant and the various pumping plants installedfor water supplysystems, but have limitednumber of skilledpersonnel to operate and maintain the facilitiesbeing built for sewerage and sewage treatment. The mission's discussionswith the senior managementstaff of WSSD confirmedthat MCGM is in a position to redeploy skilledpersonnel from the existingcenters to the newly built facilitiessuch as (sewage pumpingplants, waste water treatment facilities,aerated lagoon, etc.). The aspect of operationand maintenanceof the sewerage facilitieswill be reviewed from time to time by the Bank while supervisingthe BSDP.

OperationalPlan

5.04 All the water and sewerage works of BWSSP-III will be integrated into Bombay's water and sewerage system and thus individualoperations of a water treatment plant or a waste water treatment facilityor a pump house cannot be consideredin isolation. Accordingly,it is appropriatethat operational indicatorsare generated for the WSSD as a whole, includingphysical, financial and institutionalindicators. In fact, the indicatorsagreed with the Bank for the BSDP are being reviewed - 42 -

by MCGM and these will be reported in the September 1996quarterly report to the Bank. However, the missionsuggested indicatorsas in Annex 4 of this Aide-Memoire.

Sustainabiity

5.05 Sustainabilityof WSSD operations largelydepends on its financialperformance since technical capacity for water supplyoperations exists and is expected to improve in sewerage by the various actions proposed to be taken under the BSDP. WSSD at present generates sufficientincome to meet the costs of operatingand maintainingthe systemand finances35% of investmentsafter meeting the debt service/depreciation.However, the current resistancefrom the Corporation to raising domestic tariffs, if not overcome,will make future operations of WS SD unsustainable. The track record of MCGM in financialperformance has been good and the missionhoped that MCGM will be able to improve the revenues by restructuringand revisingthe water and seweragetariffs. The WSSD's financialperformance has been covenantedin the BSDP and gives confidencethat MCGM will comply with the covenant and operations will continue in an orderly and efficientmanmer.

VI. FOLLOW-UP AND AGREED ACTIONS

6.01 Mr. C.D. Kotnis, Deputy MunicipalCommissioner (Special Engineering) has been assignedto coordinate the inputs from the various WSSD wings and the draft ICR contributionwhich will be included as AppendixB of the ICR. As agreed with the mission,WSSD will provide by July 26, 1996 to the Bank: (a) details of incrementaloperating costs of BWSSP III pumping stations and water treatment works; (b) a revised staffingplan for the plan of operation; (c) a completedtable of quantities of project works completed by the HydraulicEngineer's department; and (d) details of training courses and number of staff trained using the resourcesof the project.

6.02 The missionadvised MCGM on their contributionto the ICR (see Annex 4 to this Aide- Memoire) and agreed on the followingprogram for ICR preparation:

Agreed Action ~ yWo yWhen ...... -...... I...... ,r...... Data requestedby the Mission(para 6.01 above)and notsupplied at the MCGM 26-Jul-96 time of the missionto be forwardedto theBank. DraftICR (Bankportion including tables) to be forwardedto Borrowerfor Bank 30-Sep-96 comment...... M ....Borrower's ...... Evaluation to Bank...... I MCGM ...... 30-Set Cmeton draft ICRto be forwardedto the Bank. MCGMVGoM 15-Oct-96 ~~~~~~~~~~~~~~~...... ;...... Final draftof ICR (completeversion including Borrower's Evaluation) to Bank 31-Oct-96

~~~~~~~~~...... Distributionof FinalICR Bank 30-Nov-96

6.03 The missionalso advisedMCGM of the project obligationsduring the post-closure period. These are: - 43 -

(a) Further disbursementsfrom the Credit will be made for withdrawal applicationsreceived by the Bank by October 31, 1996 in respect of eligibleexpenditures made before June 30, 1996.

(b) audit report for 1995-96 shouldbe submittedin accordance with the covenant by September 30, 1996;

(c) audit report for 1996-97 shouldbe submittedby September30, 1997, although this is also a requirement of the Agreementsof the Bombay SewageDisposal Project;

(d) comply with covenants, as appropriate, duringthis period; and

(e) assist in preparation of the ICR in accordancewith the actions agreed with the missionand, additionally,prepare Borrower Evaluation for inclusionin the ICR. Annex 1 INDIA: THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Ln/Cr 2769/1750-IN) PROJECT COST ESTIMATE AND STATUS AT CREDIT CLOSING Amount Rs. Million Original Project (per SAR Annex 4) RestructuredProject Estim. Estim. SI. Description Estim. Description Estim. Cost to Expen. at Status at Credit Closing No. Cost Cost Compln Closing WATER SUPPLY: Civil Works WATER SUPPLY: Civil Works l I. Transmissionmain Pise-Panjrapur,7.65 Km long, 41.3 Transmissionmain Pise-Panjrapur,7.65 K long, 35.3 26.3 23.0 Complete. 2235 mm dia including mortar lining 2235 mm dia (Mortar lining in separate item) _ 2. Pumphouse at Panjrapur 52.8 Pump house at Panjrapur 86.3 84.3 80.8 Complete. 3. Panjrapur Treatment Plant 84.4 Panjrapur Treatment Plant 273.3 239.3 182.0 In Progress. Expected completion by 31-Dec-96. 4. Transmissionmain Panjrapur to MGL/EEH 322.4 Transnission main Panjrapur MGL/EEH Junction, 371.8 332.8 235.0 In Progress. Expected Junction, 27.2 Km, 3000 mm diameter including 27.2 Km, 3000 mm diameter (Mortar lining in completionby 31-Dec-96. mortar lining. separate item) 5. Mortar lining of 7.65 Km long 2235 mm dia and 140.7 117.2 67.2 In Progress. Expected 27.2 Km long 3000 mm dia transmissionmains. completionby 04-Nov-96. 6. Modificationpump house at Bhandup 0.6 Modificationpump house at Bhandup 30.8 26.8 20.7 Complete. Includesequipment. 7. Transmissionconnection MGL/EEH to Bhandup, 29.8 Transmissionconnection MGL/EEH to Bhandup, 51.8 51.1 51.1 In Progress. Expected 3.3 Km long, 1800 mm dia. 3.3 Km long, 1800 mm dia. completionby 31-Dec-96. 8. Distributiontunnel 9 Km long, 3000 mm diameter 356.6 Distributiontunnel 9 Km long, 3000 mm diameter 784.2 836.2 76.2 In Progress. Futka Tank - Sewree to be completedby 31- Dec-96 and E Moses Road to Ruparel by Jan-2000. 9. Reservoir inlet/outlet connections 12.8 Km long, 55.6 Reservoir inlet/outletconnections about 20 Km 118.7 108.8 50.6 Except for Worli where work is 600-1200 mm dia long, 600-1200 mm dia yet to start, remaining completed. 10. Cement mortar lining, 6.3 Km of 1200 mm dia. 47.5 Cement mortar lining, 6.3 Km of 1200 mm dia., 27 216.7 217.8 32.0 In Progress. Liningof mains in and 27 Km of 1450 mm dia. Km of 1450 mm dia and about 114 Km BombayCentral and Kalvadevi distribution mains of smaller sizes mainly 150 mm. Zones completed. Bids in

______evaluation for D ward. 11. Distributionsystem extensions 49 Km long, 150- 130.1 Distribution systemextensions 49 Km long, 150- 260.5 243.3 103.3 Distributionsystem extensions 1800 mm dia. 1800 mm dia and rehabilitation of about 5 Km of completed. Works not started for mains, diameter range 1200 mm to 1500 mm. rehabilitation of large mains. 12. Reservoirsat Malabar (I1.25 Ml), Borivali(36 119.2 Reservoirs at Malabar (11.25 Ml), Borivali (36 608.7 521.7 183.2 In Progress/Process.Borivali to Ml), Raoli (80 Ml) and Worli (16.34 Ml) Ml), Raoli (80 Ml) and Worli (16.34 Ml) be completedby 31-Dec-96& Raoli by 31-Jul-98. Malabar and Worli reservoirsin bidding stage Original Project (per SAR Annex 4) Restructured Project Estim. Estim. Sl. Description Estim. Description Estim. Cost to Expen. at Status at Credit Closing No. Cost Cost Compln Closing to be completedby Dec-98 and __Sep-99 respectively. 13. Raoli Pump station 12.8 Raoli Pump station Includedin contract at SI. 12. Sub-Total:Water Supply Civil Works 1253.1 Sub-Total: Water SupplyCivil Works 2978.8 2805.6 1105.1 WATER SUPPLY: Materials and Equipment WATER SUPPLY: Materials and Equipment 14. TransmissionMains 220.1 TransmissionMains 504.9 503.0 495.0 Complete. 1 PumpingPlant at Pise (M&E) 31.6 Pumping Plant at Pise (only mechanical) 54.6 50.6 49.0 Complete. 16 PumpingPlant at Panjrapur (M&E) 38.0 Pumping Plant at Panjrapur (only mechanical) 102.7 77.7 68.5 Complete. 17. Electrical equipment at Pise and Panjrapur 56.4 50.3 40.3 Complete. 18. Pumping Plant at Bhandup 3.1 Pumping Plant at Bhandup Included in contract at S1.6. Complete. 19. Pumping Plant at Raoli 20.3 Pumping Plant at Raoli 75.6 75.6 0.0 In Evaluation. Works are to be completedby Nov-98. 20. Panjrapur Treatment Plant Equipment 88.4 Panjrapur Treatment Plant Equipment Included in contract at Sl. 3. In Progress. Expected completionby 31-Dec-96 21. Reservoir Inlet/OutletPipeworks 18.6 Reservoir Inlet/Outlet Pipeworks Included in contract at SI. 14. Complete. New works such as Worli is being offered on single- responsibility basis. 22. Distribution systemextensions 42.3 Distribution systemextensions 269.6 269.6 269.6 Complete. Included butterfly l valves. 23. Tunnel lining 6.4 Tunnel lining Included in contractsat Sl. 8. Sub-Total:Water Supply-materialsand equip. 468.8 Sub-Total:Water Supply-materialsand equip. 1063.8 1026.8 922.4

SEWERAGE:Civil Works SEWERAGE:Civil Works 24. Conveyancesewerage, 54 Km, dia range 230 mm 235.9 Conveyancesewerage, about 100 Km dia range 682.6 321.5 306.3 In Progress. All works to 1000 mm. 230 im to 1800 nun identified at SAR are due for I ______I______completion by 31-M ay-97. 25. Pump stations, 12 units of aggregate 150 Mld 25.5 Pump stations, 20 units of aggregate capacity of 65.3 35.6 18.9 PS at A.S. Marg completedand capacity. 2460 Mld. others are in progress. Wadala PS dropped due to land problem. 26. Repair and rehabilitation of conveyancesystem, 66.5 66.5 0.0 Not Done. and pumpingfacilities in the entire service area. 27. Completionof balance civil works at four 459.4 402.8 360.3 In Progress. Completion of all wastewatertreatment facilities,two aerated works is expected by 30-Jun-97. lagoons and three pumping stations. Sub-Total: Sewerage - Civil Works 261.4 Sub-Total: Sewerage - Civil Works 1273.8 826.4 685.5 Original Project (per SAR Annex 4) Restructured Project Estim. Estim. Si. Description Estim. Description Estim. Cost to Expen. at Status at Credit Closing No. Cost Cost Compin Closing SEWERAGE: Materials and Equipment SEWERAGE: Materials and Equipment l 28. Pumping plant at Wadala, A.S. Marg and 13.6 Pumpingplant at Wadala, A.S. Marg, Versova and 26.0 14.1 8.9 PS at A.S. Marg completedand Versova pump stations Malavani pump stations others are in progress. Wadala PS dropped due to land problem. 29. Constructionand completionof electrical and 465.6 465.6 115.4 In Progress. Completionof all mechanicalworks at the three wastewater works is expected by 30-Jun-97. treatmnent facilities, two aerated lagoons, threel pumping stations and other facilities in the entirel service area. Sub-Total: Sewerage- Materials and Equip. 13.6 Sub-Total:Sewerage - Materials and Equip. 491.6 479.7 124.3

SITE SPECIFIC FACILITIES FOR SLUM SITE SPECIFIC FACILITIES FOR SLUM AREAS AREAS 30. Water services improvementsat Shivaji nagar, 31.3 Water services improvementsat Shivaji nagar, 46.8 0.0 0.0 Not Done. Baiganwadi, and Chembur Baiganwadi, and Chembur l 31. Sanitation facilities in outlyingareas 17.0 Sanitationfacilities in outlyingareas 17.0 0.0 0.0 Not Done. Financed from other sources used. Sub-Total: Site Specific facilities for Slums 48.3 Sub-Total: Site Specific facilities for Slums 63.8 0.0 0.0

COMMON SERVICES COMMON SERVICES 32. Vehicles (83 nos.) 11.1 Vehicles (140 nos.) 88.4 88.4 88.4 Completedexcept for Cesspool Vehiclesto be completed by 25- ______Nov-96. 33. Staff Quarters 10.9 Staff Quarters 53.6 53.6 53.6 Complete. 34. Meters 16.4 Meters 34.3 34.3 8.3 Balance to be procured following completion of Metering study. 35. Leak Detection Equipment 6.9 Leak DetectionEquipment 20.0 20.0 0.0 Bids in evaluation. 36. Telemetry and MiscellaneousEquipment and 12.4 Telemetryand MiscellaneousEquipment and 332.0 332.0 2.4 User requirements,specifications valves valves and bidding documentprepared for SCADA. Bids not invited. Sub-Total:Common Services 57.7 Sub-Total:Common Services 528.3 528.3 152.7 OTHERS OTHERS I 37. Training 27.4 Training 12.9 12.9 12.9 Includes only training infrastructure. Original Project (per SAR Annex 4 RestructuredProject Estim. Estimn. SI. Description Estim. Description Estim. Cost to Expen. at Status at Credit Closing No. Cost Cost Compin Closing 38. TechnicalAssistance 4.5 TechnicalAssistance 20.0 17.7 10.8 Consultant studies other than those at SI 39, 40 & 41 below. 39. Site Investigationfor Middle Vaitarna 5.5 Feasibility studies and preliminary design for the 155.0 17.0 5.6 In Progress. To be completedby 31 - reservoir next tranche of source development(middle Dec-96. Vaitarna) 40. Feasibility and operational studies for water 253.7 161.9 79.2 Expenditures from 01-Jul-96 for supply,sewerage and sanitation services. Topographicalstudy, Condition assessment and O&M for sewerage will be financed from BSDP. 41. Consulting services 40.8 Consulting services for detailed engineering 536.3 555.2 548.3 Water Supply is scheduled for designs, bidding document and supervision. completionby 31-Oct-96. Sewerage expenditures effective 01-Jul-97 will be financed from BSDP. 42. BMC Engineering 243.8 BMC Engineering 522.0 522.0 348.0 Rs 914.5 million for WSSD during

______1987-88to 1994-95. 43. Land Acquisition 2.4 Land Acquisition NA NA NA Land acquired prior to the Loan effectiveness. Informationis not l- available. Sub-Total:Others 324.4 Sub-Total: Others 1499.9 1286.7 1004.8

1985 Base Cost 2427.3 _-

CONTINGENCIES .. l Physical 254.3 Price 1006.2 l Sub-Total: Contingencies 1260.5 _

Total before Taxes and Duties 3687.8 ______TAXES AND CUSTOMS DUTIES 268.7 Sub-Total 268.7

TOTAL PROJECTCOST 3956.5 TOTALPROJECT COST 7900.0 6953.5 3994.8 100.0% I 199.7 175.7% 100.1% . 50.1% 100.0 88.0% 50.6% Annex 2 INDIA: THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Ln/Cr 2769/1750-IN)

PROCUREMENT: CONTRACTS AWARDED Amount:Rs. Million INTERNATIONAL COMPETITIVE BIDDING LOCAL COMPETITIVE BIDDING Civil Works Goods & Equipment Civil Works Goods & Equipment Services Total Contract MCGM Division No. Contract No. Contract No. Contract No. Contract No. Contract Value Value Value Value Value Value Water Supply Project 13 2349.0 6 586.3 6 34.3 3 89.9 7 79.7 3139.2 50.8% Hydraulic Engineer 3 145.3 - - 17 182.8 - - 1 6.2 334.3 5.4% Sewerage Project - Civil - - - - 66 832.8 - 1 459.6 1292.4 20.9% Sewerage Project-M&E - - 12 446.1 - - 3 21.2 - - 467.3 7.6% Sewerage Operation ------4 220.8 220.8 3.6% Common Services - - 27 658.1 32 51.3 1 10.0 719.4 11.7%

Contract Value: 16 2494.3 45 1690.5 89 1049.9 38 162.4 13 776.3 6173.4 100.0% % over Total Contract 40.4% 27.4% 17.0% 2.6% _ 12.6% 100% % as in SAR Table 3.3 43.0% 29.3% 18.8% ____ 2.3% 4.5% 1

Summary:

Value of ICB Value of LCB Contracts Total Number of Contracts Aggregate Contract Value Contracts Contracts Civil Works 105 52.2% 3544.2 57.4% 2494.3 1049.9 Goods & Equipment 83 41.3% 1852.9 30.0% 1690.5 162.4 Services 13 6.5% 776.3 12.6% - Total: 201 100.0% 6173.4 100.0% 4184.8 1212.3 ______I__ ~(67.8%) (19.7%) PROCUREMENT: CONTRACTS NOT AWARDED (In Planning/Tendering/Evaluation Stage) Amount: Rs. Million INTERNATIONAL COMPETITIVE BIDDING LOCAL COMPETITIVE BIDDING Civil Works Goods & Equipment Civil Works Goods & Equipment Services Total Estimated MCGM Division No. Estimated No. Estimated No. Estimated No. Estimated No. Estimated Cost _ Cost Cost _ Cost Cost Cost Water Supply Project - - 2 405.2 3 187.4 592.6 Hydraulic Engineer 1 20.0 2 29.4 1 4.0 1 NA 53.4 Sewerage Project - Civil - - - - 12 189.1 189.1 Sewerage Project - M&E I- 11.9 - - 11.0 Sewerage Operation - - Common Services - 1 20.0 - - 1 6.0 -- 26.0 Total: 1 20.0 6 466.5 16 380.5 1 6.0 1 NA 873.0 Summary: Estim. Cost of Estim. Cost of LCB Contracts Total Number of Contracts Aggregate Estimated Cost ICB Contracts Contracts Civil Works 17 400.5 20.0 380.5 Goods & Equipment 7 472.5 - 466.5 6.0 Services 1 NA _ __ Total: 25 873.0 486.5 386.5

PROCUREMENT SUMMARY AND COMPARISON WITH SAR TABLE 3.3 (SAR Page 24 INTERNATIONAL COMPETITIVE BIDDING LOCAL COMPETITIVE BIDDING Civil Works Goods & Equipment Civil Works Goods & Equipment Services Contract Value/ No. Contract No. Contract No. Contract No. Contract No. Contract Estimated Cost Value/Estim Value/Estim Value/Esti Value/Estim Value/Esti ______l -ated Cost ____-ated Cost ____mated Cost |___-ated Cost mated Cost

Contracts Awarded 16 2494.3 45 1690.5 89 1049.9 38 162.4 13 776.3 6173.4 87.6% Contracts not Awarded but in Planning/ Tendering /Evaluation 1 20.0 6 1 466.5 16 380.5 1 6.0 1 NA 873.0 12.4% Total 17 2514.3 51 2157.0 105 1430.4 39 168.4 14 776.3 7046.4 100.0

% over Total Cost 35.7% |___ 30.6% | | 20.3%/ 2.4% 11.0% 100.0% | as in SAR Table 3.3 ____ 43.0% _ | 29.3% 1 | 18.8% 2.3% 4.5% - 50 -

ANNEX 3

INDIA: THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Ln/Cr 2769/1750-IN)

PERFORMANCE INDICATORS

WSSD total employees No. of Engineering/Technicalstaff No. of Finance/Accountsstaff Staff participatingin training (Nos.)

AverageWater Tariff - Domestic(Rs/1000 liters) -Non-domestic(Rs/1000 liters) Averagecost of water Rs/1000liters delivered Averagewater revenueRs/1000 liters delivered RevenueBilling (Rs million) RevenueCollection (Rs million) Collectionefficiency Averageage of customerreceivables (months) Workingratio Operating ratio

Populationof Greater Bombayin million Water supply coverage(% population) Averagedaily productionof treated water (Mld) Averageduration of water supply(Hrs.) Unaccounted-forwater (%) Total number of private connections Total number of meteredconnections Domesticconnections with working meters(%) Non-domesticconnections with workingmeters (%) Populationserved by private connectionsin million Numberof standpipesoperating Populationserved by standpipesin million Staff/lOOOwater supplyconnections (Nos) Numberof sewerconnections Sewerage/Sanitationcoverage (% population) Populationbenefited by sewerconnections (million) Numberof seats in conmmunalsanitation facilities Populationbenefited by communalsanitation facilities (million) StaffllOOOsewer connections (Nos) - 51 -

ANNEX 4

INDIA: THIRD BOMBAY WATER SUPPLYAND SEWERAGEPROJECT (Ln/Cr 2769/1750-IN) IMPLEMENTATION COMPLETION REPORTING MISSION

GUIDANCE ON BORROWER'S CONTRIBUTIONTO THE ICR

1. The Borrower's evaluationof the project implementationis an importantpart of an ICR. It is attached, unedited, to the ICR. It can be selectivein its coverage and should address issues and lessons learned in project implementation,from the borrower's perspective. Topics covered can be the same as in the ICR, namely,project design and appraisal,implementation, and project results and sustainability. At each stage of the project the contributionshould comment on the performanceof both the Bank\IDA and the implementingagencies, with the observations,where possible,supported by evidence or reasoned argument.

2. For project design and appraisalthe contributioncould address such questions as the appropriatenessof the project's objectives,the size of the project and scope of the investments proposed, aspects of design leadingto easy (or difficult)implementation and the effect on government institutionsand implementingagencies.

3 . Project implementationexperience should be divided into an assessmentof the performance of the Bank\IDA in supporting and supervisingthe project and the performancesof the implementing agencies.

4. Project results and sustainabilityshould includean assessmentof the benefits arisingfrom the project. Since financialand economic re-analysisof the project will be undertaken by the FAO/World Bank missionas part of the ICR, it is suggestedthat the contributioncould most usefullycomment on the effects of the project from the borrower's perspective. Such an analysiswould be a most useful contributionto the ICR.

5. Based on the foregoing sections,the contributionshould list the main lessons learned from the implementationexperience.

6. If the contributionis more than ten pages, it should includea summary.The latter is recommendedfor all but the shortest contributions. - 52 -

ANNEX 5

INDIA: THIRD BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Ln/Cr 2769/1750-IN)

ICR Mission,July 10-24, 1996 List of Key Persons Met by the Mission

Government of Maharashtra(GoM)

Mr. V. Ranganathan,Principal Secretary, Water Supplyand SanitationDepartment

Municipal Corporation of Greater Mumbai (MCGM)

Ms. Sharwaree Gokhale, AdditionalMunicipal Comnmissioner (Projects) Mr. V.K. Kadam, Chief Accountant,WSSD Mr. P.C. Pisolkar,Municipal Chief Auditor, MCGM Mr. A.B. Burute, Chief Engineer, Common Services

Mr. C.D. Kotnis, Deputy MunicipalConmmissioner (Special Engineering) Mr. V.R. Khatkhate, Chief Engineer,Water SupplyProject Mr. D.B. Nirantar, Deputy Chief Engineer,Water SupplyProject Mr. S.N. Turkar, HydraulicEngineer Mr. R.K. Naik Deputy HydraulicEngineer

Mr. I.C. Gandhi,Deputy MunicipalConmnissioner (Engineering) Mr. S.S. Dubal, Chief Engineer, SewerageProject Mr. V.D. Majumdar, Chief Engineer, Sewerage Operation Mr. S.N. Phatnani, Deputy Chief Engineer(M&E), Sewerage Project Mr. H. Laad, Deputy Chief Engineer, Sewerage Project

Former/RetiredMCGM Officials

Mr. A. Dasgupta, Secretary,Department of Atomic Energy (Former AdditionalMunicipal Commissioner, MCGM) Mr. B.B. Sharma,Managing Director, State Co-operativeCotton Growers Marketing Fed. Ltd. (Former AdditionalMunicipal Commnissioner, MCGM) Mr. A.B. Maduskar, AdditionalMunicipal Commissioner (retd.) and former Chief Accountant Mr. Totade, HydraulicEngineer (retd.) Mr. M.K. Gokhale, Chief Engineer,Water SupplyProject (retd.) - 53 -

BRIHANMUMBAI MUNICIPAL CORPORATION

INDIA- BOMBAY WATER SUPPLY AND SEWERAGE PROJECT (Cr/Ln: 1750/2769 IN)

APPENDIX B. BORROWER'S EVALUATION

1. INTRODUCTION:

The World Bank [the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD)] first associated with Municipal Corporation of Greater Bombay (MCGB) in 1974 with a credit for the First Bombay Water Supply and Sewerage Project (BWSSP-I). BWSSP-I consisted of impounding of water of the Bhatsa river, its conveyance, distribution and treatment facilities and the expansion of the city's sewerage system. BWSSP-I was implemented from 1974-75 to 1979-80. It augmented the city's water supply by 455 rnillion litres per day. The Second Bombay Water Supply and Sewerage Project, (BWSSP-II) was implemented between 1979-80 and 1987-88. It augmented water supply by a further 455 Mld as well as improved sewage conveyance, collection and disposal facilities in the city and its suburbs. The water supply component of the II-BWSSP was satisfactorily implemented. However, due to several reasons the sewerage component could not be fully completed.

The Third Bombay Water Supply and Sewerage Project (BWSSP-III), was a logical extension of BWSSP-I and BWSSP-II, each of which envisaged bringing 455 Mld of water and extending the sewerage system in Greater Bombay. BWSSP-III, as appraised in early 1985, provided for a credit of 105.5 million special drawing rights (SDRs) amounting to approximately US$145.0 million and a loan of US$40.0 million, the total tranche amounting to US$185.0 million. The SAR envisaged the implementation period of BWSSP-III from 1987-88 through 1994-95. The devaluation of the rupee in 1991 resulted in enlarging the total quantum of money available for the project. The World Bank agreed to let MCGB take up extra works to utilise this surplus. To enable utilization of funds, the original credit closure date of 30 June, 1994 for BWSSP-III was extended twice, first to 30 June, 1995 and then to 30 June, 1996. Yet MCGB surrendered US$40.0 million in three steps - US$10.0 million each during May, 1993 and October, 1994 and US$20.0 million during June, 1995. The final disbursements from the World Bank were to the tune of SDR90.4 million.

2. PROJECT OBJECTIVES:

In brief, the objectives of the BWSSP-III were to -

(a) Continue and expand on the efforts of previous projects in improving sector efficiency. (b) Expand water supply and sanitation facilities for the urban poor. (c) Increase the supply of water to the MCGB area by another 455 Mld bringing it to a total of 2900 MId. - 54 -

(d) Expand the sewerage conveyance facilities in isolated developed areas of the City which were not already served. (e) Evaluate operating experience and develop appropriate design criteria and technical options for future investments in sewage treatment.

3. THE PROJECT:

3.1 The Project components were-

(1) The construction of 52 km of trunk mains, 3 pumping stations, 49 km of distribution mains and two tunnels of 3000 mm diameter, internal mortar lining of pipes and leak detection.

(2) The construction of 455 Mld water treatment plant and four service reservoirs with a collective capacity of about 144 million litres.

(3) The construction of about 54 km of sewers and building and installation of three sewage pumping stations.

(4) The construction of low cost sanitation facilities, training of WSSD staff, consultancy services and supply of vehicles for operational purposes.

3.2 The exchange rate was Rsl 3.00 per US$ when the agreements were signed. However, during implementation period of BWSSP-III, the exchange rate of the Re to the US$ shot up to more than double, due, mainly to the devaluation of the Rupee and partly to market forces. Although the costs of the works included in the III BWSSP had gone up simultaneously, the doubling effect would still have left large funds surplus. Therefore, the Bank at the instance of the MCGB included certain additional BWSSP-II works which were incomplete on the credit closure date for BWSSP-II.

4. ACHIEVEMENT OF PROJECT OBJECTIVES:

The Project objectives in both Water Supply and Sanitation Sectors were only partially fulfilled during the project period.

4.1 Water Supply Sector:

4.1.1. The sector efficiency envisaged by increasing per capita availability of water of 137 litres per day for the projected population of 10.37 million in the year 1991, could not be fulfilled during the project period. Of the planned 455 Mld water, 90 Mld of raw water was brought in March, 1992. This was treated at the existing treatment plant at Bhandup. Since this move conserved water in the Vaitarna and Tansa lakes, there was no additional quantity of water supplied to the city. On completion of certain priority works, 130 Mld additional water was brought to the city from December, 1996 and remaining 225 Mid is expected to be brought to the city by June, 1997 on completion of the last link of the conveyance system. - 55 -

4.1.2 During the period from 1992 till the closure date, i.e. June, 1996. 30,838 water connections were given to improve water supply for the urban poor. Five small reservoirs with pumping stations and eighteen kilometers of pipeline were laid to provide water to slum areas situated at high levels.

4.1.3. The water supply component was divided into 27 sub projects and one consultancy assignment aggregating in all to 28 sub projects. The projected additional supply of 455 Mld of treated water could not be brought to Mumbai by the extended credit closure date of 30 June, 1996, although fifteen sub projects were completed out of the 23 awarded by the credit closure dated. Of the remaining eight sub projects, two are completed in December, 1996, three are expected to be completed by June, 1997, and two can only be completed by the year 2000. Of the remaining five sub projects that were at the planning stage, two have been since awarded and are in progress. These works consist of service reservoirs, (one each at Malabar Hill and Worli). The sub projects for inlet/outlet mains at Worli, Raoli Pumping Station and Instrumentation are being undertaken. These are mainly distribution works and will not adversely affect the bringing of additional 455 MId of water to the city by June, 1997.

4.i Sanitation Sector

4.2.1 In BWSSP-III, during the project period, 57 kilometers of sewer lines were laid to progressively convert unsewered areas into sewered ones. These include some sewer lines covered under the original SAR as well as the additional works appended later. 7 kilometers are in progress, and 6 kilometers were deferred because development of the area did not take place as expected.

4.2.2 Three pumping stations were included in the SAR, and four (balance work left over from BWSSP-II) were added later. None were at a stage as to be ready for commissioning by the project completion date. The existing pumping stations were updated and additional pumping and treatment facilities provided. This, coupled with removal of accumulated silt in the conveyance system, by using newly acquired sewer cleaning equipments and the development of contracting agencies to clean sewers, the operation and maintenance of the conveyance system was greatly improved. In BWSSP-III, systematic planning and maintenance of the collection, conveyance and pumping treatment facilities were improved.

4.2.3 Originally forty seven works were included in the sewerage component of BWSSP-III. Because of large savings in the credit amount due to rupee devaluation as mentioned in para 1, additional works comprising thirty two contracts were added. The status of these contracts is as follows:-

Total Completed In Fore- At Deleted/ Progress closed/ Planning deferred.

terminated -st7Le . . . … Original 47 22 9 11 2 3 - 56 -

Additional 32 -- 5 - 15- 1 111 - Total 79 27 24 12 13 3

The balance of the original works are expected to be completed by March, 1997. Most of the above works are conveyance works for laying sewers in unsewered area.

4.2.4 The BWSSP- III also included a provision for low cost sanitation facilities in selected areas not covered by water borne sewerage. Unlike normal engineering components, the low cost sanitation component also requires a sociological and community based approach. The skills required to undertake such a scheme were obviously unavailable with the WSSD project staff of the MCGB. Besides, low cost sanitation facilities were being provided by the MCGB's Slum Improvement Cell headed by a Deputy City Engineer and under the overall control of the City Engineer this Cell under the Bombay Urban Development Project (BUDP), the Government of India/Government of Maharashtra's slum improvement programmes and the latter's slum re- development scheme. Adequate attention was not paid to the Low Cost Sanitation component of the BWSSP-III which, therefore, remained unutilized. A comprehensive slum sanitation programme is now being implemented under the BSDP.

4.2.5 O&M Consultants for improving the sewerage sector efficiency were appointed. Their report would be available during the period of BWSSP-III's successor project, viz. the Bombay Sewage Disposal Project (BSDP).

4.3 The project envisaged improvement of WSSD's project planning and implementation capacity, upgrading operation and maintenance of sewage system, geotechnical investigations, topographical studies, detailed engineering for Middle Vaitarna Project and feasibility studies of future water supply source.

4.4 . The MCGB's Project Planning and Control Cell monitored project implementation. The contract for upgrading Operation and Maintenance (O&M) of sewerage system did fairly well. These O&M studies are being funded partly from BWSSP-III and partly from the ongoing Bombay Sewage Disposal Project. Feasibility studies were carried out and completed for Middle Vaitarna Dam and consultants have submitted feasibility report.

4.5 The MCGB has a well-established training institute namely the Civic Training Institute & Research Centre (CTIRC). The CTIRC organises regular training programmes including the WSSD departmental employees of the MCGB. However, training component of BWSSP-III was largely unutilized.

5. IMPLEMENTATION OF THE PROJECT AND THE MAJOR FACTORS AFFECTING THE PROJECT:

5.1 As stated in para 4.0 the impact of the rupee devaluation by more than 100% was the single most important factor affecting the project as a whole. - 57 -

5.2 The cost of BWSSP-III was originally estimated at Rs3956 million, with Rs3180 million as the local component and Rs776 million to be spent in foreign exchange. The exchange rate of rupee which was Rs13.00 per US$ more than doubled during the project implementation period. Certain additional works from BWSSP-II as well as some new works were added in the project. As a result the project cost went up to Rs6124 million.

5.3 The works included under BWSSP-III could not be completed by the scheduled date and even by extended date of completion due to a variety of factors which are listed below:-

(1) Administrative delays, both within and outside the Municipal Corporation, which resulted in a) delays in foreign exchange payments. b) delays in getting permission from other external agencies like the Highway Authorities, Public Works Department, City Traffic Police; etc. c) delays in finalizing tender documents.

(2) Riots in Mumbai in December, 1992 and bomb blasts in March, 1993.

(3) Diesel shortage during the gulf war,

(4) Poor performance or failure of contractors,

(5) Adverse physical conditions encountered,

(6) Court Injunctions.

Besides these, specific factors affecting Water Supply Works were:

1) Delays in the completion of railway bridges by the Central Railway,

2) Physical resistance and obstruction of the local population to carrying out work.

Those affecting Sewerage Works were:

(1) Restricted permission from City Traffic Police,

(2) High premiums charged by tenderers, thus leading to reinvitation of tenders and resultant delays,

(3) Refusal by Railway Authorities to allow open excavation across Railway tracks,

(4) Inadequacy of the proper specifications in tender documents: the engineering staff did not have adequate training and experience in the preparation of bid documents and supervision of works - documents were prepared without adequate site investigations which led to - 58 -

claims for variations, particularly, in respect of rock excavations and provision of adequate quantities for shoring,

(5) Delay in terminating contracts that failed to deliver in time,

(6) There were also frequent transfers of personnel above the level of Chief Engineer because of superannuation and voluntary retirement. This resulted in lack of continuous leadership.

6.0 PERFORMANCE OF CONSULTANTS:

6.1 Water Supply Sector: Extensive services of consultants were utilised in three stages of project. For the first time they were asked to prepare feasibility and detailed engineering studies. Their services were also used for construction supervision on some of the more complex works. Overall performance of the consultants, with respect to delivery of the documents, scrutiny of bids, vendor drawings' review was satisfactory. They also tendered timely advice during the evaluation and construction stages.

6.2 Sanitation Sector: Overall performance of the consultants for BWSSP III was by and large satisfactory, especially in the light of the performance of the consultants engaged during BWSSP-II. Due to deficiencies in tender documents and detail design prepared by the earlier consultants, a large number of modifications had to be proposed by the new consultants. This resulted in an increase in the cost of some works by nearly 60 to a 100 percent. However, as far as construction supervision was concerned, consultant performance did not match the quality of their design work.

7.0 SUSTAINING PROJECT WORKS IN FUTURE:

7.1 WSSD has its own separate accounting unit and separate funds and accounts are established for the WSSD. The present tariff structure yields sufficient funds for meeting operation and maintenance costs and debt-redemption charges. The tariff is revised at intervals to meet additional demands. There is, however, need to restructure tariff to charge appropriate cost to domestic consumers who are at present heavily subsidised.

7.2 The operation and maintenance staff of Hydraulic Engineers Department is fully trained and adept at meeting needs. Consultants are appointed to improve 0 & M in facilities in Sewerage Operations Department.

8.0 BANK PERFORMANCE:

8.1 The long association that the MCGB has had with the World Bank has brought intangible benefits along with finance. The Municipal Corporation and its engineers gain from the constant interaction with Bank staff, learning of methods and technologies as well as upgrading their documentation, records and management skills. During BWSSP-III, advanced technology in the field of water treatment, large pumping plants, driving tunnels with a tunnel boring machine - 59 -

(TBM), upgrading of instrumentation, cement mortar lining to water mains and trenchless technology for sewer laying, were some of the innovations introduced.

8.2 MCGB acknowledges the guidance and support it received from the Bank officials in implementation of BWSSP-III. Personal visits by Bank officials as a part of various Missions were also fruitful for discussing and sorting out a number of pending issues across the table. MCGB appreciates the Bank's gesture in including financing of left over Bombay II Sewerage Project works under III BWSSP. Relations between Bank and the MCGM were cordial throughout the implementation of III BWSSP.

8.3 However, frequent changes in bidding documents by the World Bank contributed to delays as the documents prepared in accordance with previous prescriptions had to be redrafted after submission to the Bank. In certain cases, Bank approvals were not received in time. In case of the bid document for contract 35E, the Bank took 28 months to approve the documents.

8.4. MCGB does realise that the World Bank management makes continuous efforts to promote quality improvement in the bidding documents to ensure effective project implementation, but this contributed to the delay of some works in the BWSSP-III. This also resulted in different conditions operating for different contractors on works that were on-going simultaneously, and which were sometimes similar in nature. It is hoped that in future the Bank will adopt a policy not changing bid documents during the pendency of a credit/loan.

9.0 BORROWER PERFORMANCE

9.1 The constraints adversely affecting project implementation have already been described in details in para 5 above. Within those constraints, MCGM has spared no efforts in implementing the Project. Actual achievements have been detailed in para 4. It has to be admitted, that in spite of dedicated and sincere efforts, project objectives could only be partially fulfilled. The implementation team of sewerage component of the BWSSP-III remained weak throughout. However, substantial progress has been made during the project period towards attaining project goals. Sectoral efficiencies have improved in both water supply and sanitation sectors. MCGB has today a greater appreciation of its organizational deficiencies, and has already taken steps to improve performance.

9.2 The infrastructure within BMC for project procurement & implementation needs to be substantially improved by imparting extensive training to the staff. The provision for training in BWSSP-III remained grossly under utilized. Unfortunately, this aspect has also been overlooked in the current project namely, the BSDP.

10.0. CONCLUSION:

Although the objectives of the project were not fully achieved during the project period, substantial work has been done towards attaining them. MCGB has already taken steps to maintain the momentum already gained to complete the remaining work. Some of the lessons learnt during implementation of BWSSP-III reflect back to the mistakes in implementing BWSSP- - 60 -

II, the effects of which were felt during the project period of BWSSP-III. The selection of right consultants and right contractors are the key to satisfactory and speedy completion without too many cost over-runs. The role of the former has to be defined after carefully assessing in-house capabilities. MCGB engineers need training on contract management.

MCGB thanks the World Bank for its financial assistance, as well as the constant encouragement, technical advise and support given during the implementation of BWSSP-III, and looks forward to continuing the association for future enhancement of water supply and sanitation service to citizens. MAP SECTION

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ReportNo.: 16650 Type: ICR