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World Bank Document Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 66809-UY PROJECT APPRAISAL DOCUMENT ON A Public Disclosure Authorized PROPOSED LOAN IN THE AMOUNT OF US$42 MILLION TO THE NATIONAL WATER SUPPLY AND SANITATION COMPANY (OSE) WITH THE GUARANTEE OF THE ORIENTAL REPUBLIC OF URUGUAY FOR THE Public Disclosure Authorized OSE SUSTAINABLE AND EFFICIENT PROJECT May 30, 2012 Sustainable Development Department Argentina, Paraguay, and Uruguay Country Management Unit Latin America and the Caribbean Region Public Disclosure Authorized This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank's Policy on Access to Information. CURRENCY EQUIVALENTS Exchange Rate Effective [May 30, 2012] Currency Unit = Uruguayan Peso (UY$) UY$ 1.00 = US$0.0495 US$ 1.00 = UY$ 20.20 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS APL Adaptable Program Loan BMEI Business Management Efficiency Index DINAGUA Direcci6n Nacional de Aguas - National Directorate of Water DINAMA Direcci6n Nacional del Medio Ambiente - National Directorate for the Environment DMC District of Measurement and Control DNE Direcci6n Nacional de Energia - National Energy Directorate EA Environmental Assessment EMP Energy Management Plan ESMAP Energy Sector Management Assistance Program ESMP Environmental and Social Management Plan FBS Fixed Budget Selection FM Financial Management GoU Government of Uruguay GHG Greenhouse Gases GPFE Gerencia de Programascon FinanciamientoExterno - Management Unit for Programs with External Financing IAD Internal Audit Department IBMNET International Benchmarking Network for Water and Sanitation IBRD International Bank for Reconstruction and Development ICB Internal Competitive Bidding IWA International Water Association IWRM Integrated Water Resource Management MEF Ministerio de Economiay Finanzas- Ministry of Economy and Finance MGAP Ministerio de Ganaderia,Agricultura y Pesca - Ministry of Agriculture, Livestock and Fisheries MIEM Ministerio de Industria,Energia y Mineria - Ministry of Industry, Energy and Mining MVOTMA Ministerio de Vivienda, Ordenamiento Territorialy Medio Ambiente - Ministry of Housing, Land Management and Environment NCB National Competitive Bidding NRW Non-Revenue Water OM Operational Manual ii OSE Administraci6n de las Obras Sanitariasdel Estado - National Water Supply and Sanitation Company OPP Oficina de Planeamientoy Presupuesto - Office of Planning and Budget ORAF Operational Risk Assessment Framework RANC Reducci6n de Agua No Contabilizada- Reduction of Unaccounted for Water SBD Standard Bidding Document SFLAC Spanish Fund for Latin America and the Caribbean SIL Specific Investment Loan UGA Unidad de Gesti6n Ambiental - Environmental Management Unit URSEA UnidadReguladora de Servicios de Energiay Agua -Energy and Water Services Regulatory Unit WET Water Expert Team WSS Water Supply and Sanitation WSP Water Safety Plans WTP Water Treatment Plant Regional Vice President: Hasan A. Tuluy Country Director: Penelope J. Brook Sector Director: Ede Jorge Ijjasz-Vasquez Sector Manager: Wambui G. Gichuri Task Team Leaders: Carmen Yee-Batista and Carlos E. Velez 111 iv URUGUAY OSE SUSTAINABLE AND EFFICIENT PROJECT TABLE OF CONTENTS Page I. STRATEGIC CONTEXT ................................................................................................. 1 A. Country Context ...................... 1.......................... B. Sectoral and Institutional Context............................................ 1 C. Higher Level Objectives to which the Project Contributes ........... ........ 4 II. PROJECT DEVELOPMENT OBJECTIVES ........................................................... 4 A. Project Development Objectives..................4..... .............. 4 1. Project Beneficiaries ................................................... 5 2. PDO Level Results Indicators.......................................... 5 III. PROJECT DESCRIPTION ......................................................................................... 5 A. Project Components ..................................... ........ 5 B. Project Financing .......................................... ..... 8 1. Lending Instrument ........................................ ...... 8 2. Table on Project Costs and Financing Plan .............................. 8 IV. IM PLEM ENTATION .................................................................................................. 8 A. Institutional and Implementation Arrangements ..................... ..... 8 B. Results Monitoring and Evaluation ....................................... 9 C. Sustainability................................. ................. 9 V. KEY RISKS AND MITIGATION MEASURES...................................................... 9 VI. APPRAISAL SUM M ARy ............................................................................................... 11 A. Economic and Financial Analysis .......................... ............. 11 B. Technical .............................................. ......... 11 C. Financial Management....................... ................ 12 D. Procurement ......................................... ......... 13 E. Social ...................................................... 13 F. Environment................................................... 14 v Annex 1: Results Framework and Monitoring .................................................................... 16 Annex 2: Detailed Project Description .................................................................................. 21 Annex 3: Implementation Arrangements ............................................................................. 32 Annex 4: Operational Risk Assessment Framework (ORAF)..............................................43 Annex 5: Implementation Support Plan ................................................................................ 46 Annex 6: Team Composition...................................................................................................48 Annex 7: Financial and Economic Evaluation.......................................................................49 Annex 8: Map (IBRD 39245) .................................................................................................. 63 Vi URUGUAY OSE SUSTAINABLE AND EFFICIENT PROJECT PROJECT APPRAISAL DOCUMENT LATIN AMERICA AND THE CARIBBEAN LCSUW Date: May 30, 2012 Sector(s): General water, sanitation and flood Country Director: Penelope J. Brook protection (WZ) Sector Director: Ede Jorge Ijjasz- Theme(s): City-Wide Infrastructure and Service Vasquez Delivery (73%); Water Resources Management Sector Manager: Wambui G. Gichuri (9%); Vulnerability Assessment and Monitoring Team Leaders: Carmen Yee-Batista and (9%); Pollution Management and Environmental Carlos E. Velez Health (9%) Project ID: P118064 EA Category: B Lending Instrument: SILI Project Financing Data: Proposed terms: [X] Loan [ ] Credit [eGuarantee [Other: cGrant IFL-Variable spread Loan for US$42million, repayment schedule linked to commitment, level repayment with a total maturity of 23 years, including 5 years of grace period. All conversion options (interest, currency, caps/collar), and Front-end Fee capitalized. Source Total Amount (US$84 million) Total Project Cost: US$84 million Cofinancing: Borrower: US$42 million Total Bank Financing: US$42 million IBRD US$42 million IDA New Recommitted Borrower: National Water Supply and Sanitation Company (OSE) Responsible Agency: National Water Supply and Sanitation Company (OSE) Contact Person: Natan Wajner Telephone: +598 2 1952 4050 Email: www.ose.com.uy Estimated Disbursements (Bank FY/US$42 m) FY 2013 2014 2015 2016 2017 2018 Annual 2.00 8.00 14.50 9.75 3.75 4.00 Cumulative 2.00 10.00 24.50 34.25 38.00 42.00 vii Project Implementation Period: 2013-2018 Expected effectiveness date: December 15, 2012 Expected closing date: February 28, 2018 Does the project depart from the CAS in content or other [ ] Yes [X] No significant respects? If yes, please explain: Does the project require any exceptions from Bank policies? [ ] Yes [X] No Have these been approved/endorsed (as appropriate by Bank [ ] Yes [ ] No management? Is approval for any policy exception sought from the Board? [ ] Yes [X] No If yes, please explain: Does the project meet the Regional criteria for readiness for [X] Yes [ ] No implementation? If no, please explain: Project Development Objective ref PAD B. 1, TechnicalAnnex 2 The Project Development Objective (PDO) is to increase the sustainability of OSE by improving the reliability and resilience of its water supply and sanitation systems, enhancing its efficiency, and strengthening its management capacity. Project description [one-sentence summary of each component] Component 1, Investing in Reliable Water Supply Infrastructure, will finance the construction, expansion and rehabilitation of water facilities to increase the reliability of OSE's water systems and adapt to future climatic challenges. Component 2, Managing Water and Energy More Efficiently, will finance water and energy conservation programs by optimizing OSE's current and future operational performance. Component 3, Preparing for the Future: Management, Planning and Risk, will finance management, planning and risk assessment activities to improve OSE's social reach, environmental management, and economic efficiency.
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