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World Bank Document Document of The World Bank FOR OFFICIAL USE ONLY Report No: 67396 - MA Public Disclosure Authorized RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF IMPROVED ACCESS TO WATER AND SANITATION SERVICES PROJECT Public Disclosure Authorized GPOBA TF GRANT NUMBERS 057598 AND 057599 Dated January 29, 2007 TO THE KINGDOM OF MOROCCO SOCIETE DES EAUX ET DE L’ELECTRICITE DU NORD LYONNAISE DES EAUX DE CASABLANCA Public Disclosure Authorized REGIE AUTONOME DE DISTRIBUTION D’EAU ET D’ELECTRICITE DE MEKNES December 21, 2010 Public Disclosure Authorized 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. 1 ABBREVIATIONS AND ACRONYMS FM Financial Management GPOBA Global Partnership on Output Based Aid INDH National Initiative for Human Development LYDEC Lyonnaise des Eaux de Casablanca RADEM Régie Autonome de Distribution d’Eau et d’Électricité de Meknès Vice President: Shamshad Akhtar Country Director: Simon Gray Sector Manager: Francis Ato Brown Task Team Leader: Xavier Chauvot de Beauchene 2 RestructuringStatus: Restructuring Type: Level two Last modified on date : 12/08/2009 1. Basic Information Project ID & Name P102527: GPOBA W3-Morocco Urban WS&S Access Pilot Country Morocco Task Team Leader Xavier Chauvot De Beauchene Sector Manager/Director Francis Ato Brown Country Director Simon Gray Original Board Approval Date 01/29/2007 Original Closing Date: 12/31/2009 Current Closing Date 12/31/2010 Proposed Closing Date [if applicable] 12/31/2011 EA Category C-Not Required Revised EA Category C-Not Required-Not Required EA Completion Date Revised EA Completion Date 2. Revised Financing Plan (US$m) Source Original Revised BORR 0.00 0.00 GPBA 7.00 7.00 Total 7.00 7.00 3. Borrower Organization Department Location 4. Implementing Agency Organization Department Location SOCIETE DES EAUX ET DE Commercial name: Amendis- Morocco LLECTRICITE DU NORD Tanger LYONNAISE DES EAUX DE Morocco CASABLANCA REGIE AUTONOME DE Morocco DISTRIBUTION D’EAU ET D’ELECTRICITE DE MEKNES 3 5. Disbursement Estimates (US$m) Actual amount disbursed as of 12/06/2010 2.12 Fiscal Year Annual Cumulative 2010 3.18 5.30 2011 1.70 7.00 Total 7.00 6. Policy Exceptions and Safeguard Policies Does the restructured project require any exceptions to Bank policies? N Does the restructured projects trigger any new safeguard policies? If yes, please select N from the checklist below and update ISDS accordingly before submitting the package. 7a. Project Development Objectives/Outcomes Original/Current Project Development Objectives/Outcomes Objective of the project is to provide sustainable access to combined water and sewerage services to peri- urban "quartiers" with high levels of "vulnerable" households, i.e. with household incomes falling under 295US$/month (150% of the poverty line of Dh1687) or about US$60/cap/month. 7b. Revised Project Development Objectives/Outcomes [if applicable] 4 MOROCCO Improved Access to Water and Sanitation Services Project CONTENTS Page A. Summary ........................................................................................................................................ 6 B. Project Status .................................................................................................................................. 6 C. Proposed Changes .......................................................................................................................... 8 D. Appraisal Summary ........................................................................................................................ 8 ANNEXES ANNEX 1: Action Plan submitted by LYDEC (in the French language) ........................................... 9 ANNEX 2: Unofficial English translation of the Action Plan submitted by LYDEC ....................... 15 5 A. Summary 1. This memorandum seeks the approval of the Regional Vice President (MNAVP) to extend the Closing Date of the Improved Access to Water and Sanitation Services Project (P102527) by 12 months from its current closing date of December 31, 2010 to December 31, 2011 as requested by the three operators implementing the project, namely Lyonnaise des Eaux de Casablanca (LYDEC), Amendis-Tanger and Régie Autonome de Distribution d’Eau et d’Electricité de Meknès (RADEM), through letters dated respectively November 29, 2010, November 16, 2010 and October 22, 2010. Written confirmations were received from the Ministry of Interior and from the Ministry of Finance on December 6, 2010 (Letter and written confirmation are attached to this Paper). This is the second extension of closing date. A first extension was processed to change the closing date from the original closing date of December 31, 2009 to December 31, 2010. The cumulative extension period is thus 2 years, requiring Regional Vice President’s approval. B. Project Status 2. According to Schedule 1 of the Grant Agreement dated January 29, 2007, the Project development objective is to promote, following an output-based approach, the connection to water and sanitation services of about 11,300 low income beneficiary households selected in disadvantaged peri-urban and rural INDH neighborhoods in the urban centers of Casablanca, Tangiers and Meknes in the territory of the Kingdom of Morocco. The project thus aims at providing sustainable access to combined water and sewerage service to peri-urban areas with high levels of low income households while demonstrating replicable OBA mechanisms to target sector funds and potential donor monies in support of the Government of Morocco’s challenge to extend water supply & sewerage (WS&S) service in poor and vulnerable communities, within the framework of King’s National Initiative for Human Development (INDH). To that effect, the project is targeted towards three municipalities keen on piloting OBA approaches for improved water and sanitation access, i.e. Casablanca, Meknes and Tangiers, under conditions representative of Morocco’s WS&S market. Two international private sector incumbents (Amendis in Tangiers and LYDEC in Casablanca), and a public sector incumbent (RADEM in Meknès) are the service providers in their respective service areas. While the details of the schemes vary, the common objective of the pilots is to expand access to water and sanitation to the poor living in recently legalized informal settlements in peri-urban areas. 3. Based on the current USD/MAD exchange rate, the pilots are expected to extend water supply services to about 10,400 households, or approximately 52,000 people, and sanitation services to 9,500 of these households, or approximately 47,500 people. The estimated total cost of the project is estimated to be USD22.2 million, including USD 7 million GPOBA subsidies (USD 3.5 million Casablanca, USD 2 million Tangiers and USD 1.5 million Meknès) and about 15.2 millions of user’s contribution. 4. The outputs for which OBA subsidies are disbursed are individual household network connections for standard potable water and/or sewerage utility service, in previously unserved informal and predominantly poor peri-urban neighborhoods, recently regularized. The disbursement profile of the individual subsidy is as follows: (i) 60% of unit subsidy is released upon verification of eligible water and sewerage household connection, and (ii) 40% of unit subsidy is released upon verification of sustained service for a period of 6 months. 6 5. Subsidy targeting is geographical in nature: The target neighborhoods are recognized among the poorest in urban Morocco, and are part of the Government of Morocco INDH’s shortlist of 160 most disadvantaged urban and peri-urban communities. All households in the selected pilot areas are eligible to participate in the connection subsidy program. The eligibility criteria for social connections as determined at the level of each operator are described in the table below. Table 1: Summary of eligibility criteria of beneficiary households per city / operator: Eligibility Criteria Casablanca Meknès Tangiers Beneficiary Household’s MAD 30 for water MAD 55 in rural areas for water supply MAD 105.26 for commitment to pay a supply (USD 3.3 and sanitation (USD 6.1 eq.) * water and monthly contribution of : equivalent) * MAD 110 in urban/peri-urban areas for sanitation MAD 30 for sanitation water and sanitation (USD12.2 eq.) * (USD 11.1 eq.) * (USD 3.3 equivalent) * Maximum number of Urbain: 84 for water and sanitation; months for repayment 84 31 for water alone, 53 for sanitation alone. 120 Rural: 62 for water alone Maximum Household MAD 9,240 for W+S in urban area; contribution MAD 5,040 W+S MAD 3,410 for water alone; 12,631.2 W+S MAD 5,830 for sanitation alone Location in OBA targeted Yes Yes Yes quarters Authorization to connect Yes Yes Yes from the municipality *Exchange rate at the time of Appraisal (USD 1 = MAD 9). 6. The US$ 7 million grant was executed on January 29, 2007. It experienced a slow start with the first disbursement taking place in early 2008. Implementation accelerated in 2008, with the operators reaching between 14 and 39% of their planned number of connections to water supply and between 19 and 44% of their planned number of connections to sewerage. At the end of 2008, the pilot had delivered overall 24% of the planned connections to water supply and 27% of the planned number of connection to sanitation. In 2009, progress relied on increases in the number of connections delivered in Meknès and Tangiers, as
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