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World Bank Document Document of The World Bank Public Disclosure Authorized FOR OFFICIAL USE ONLY Report No: 59188-PE PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN Public Disclosure Authorized IN THE AMOUNT OF US$54.5 MILLION TO THE REPUBLIC OF PERU FOR THE OPTIMIZATION OF LIMA WATER AND SEWERAGE SYSTEMS PROJECT March 9, 2011 Public Disclosure Authorized Sustainable Development Department Bolivia, Chile, Ecuador, Peru and Venezuela Country Management Unit Latin America and the Caribbean Region This document has a restricted distribution and may be used by recipients only in the Public Disclosure Authorized performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective December 31, 2010) Currency Unit = Nuevos Soles US$1.00 = S./2.81 US$0.36 = S./1.00 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS IFR Interim Unaudited Financial Reports ANA National Water Agency (Agencia Nacional INC National Institute of Culture (Instituto del Agua) Nacional de Cultura) BOT Build Operate Transfer IPSAS International Public Sector Accounting BP Bank Procedures Standards CAF Andean Development Corporation IRR Internal Rate of Return (Corporacion Andina de Fomento) JICA Japanese International Cooperation Agency CO Country Office KfW German Cooperation (Kreditanstalt fur CPS Country Partnership Strategy Wiederaufbau) CQS Consultant Qualifications Selection LCS Least Cost Selection DA Designated Account MDG Millennium Development Goals DC Direct Contracting MEF Ministry of Finance (Ministerio de EA Environmental Assessment Economía y Finanzas) EGAm Environmental Management Team (Equipo MINAM Ministry of Environment (Ministerio del de Gestión Ambiental) Ambiente) EMP Environmental Management Plan MVCS Ministry of Housing, Construction and EPS Sanitation Services Provider (Empresa Sanitation (Ministerio de Vivienda, Prestadora de Servicios de Saneamiento) Construcción y Saneamiento) FBS Fixed Budget Selection NCB National Competitive Bidding FM Financial Management NGO Non Government Organization FONAFE State Companies‟ National Fund (Fondo NPS National Procurement System Nacional Empresarial del Estado) NPV Net Present Value FY Fiscal Year NRW Non Revenue Water GDI Research and Development Management O&M Operation and Maintenance (Gerencia de Desarrollo Institucional) OM Operations Manual GDP Gross Domestic Product OP Operational Policy GIS Geographical Information System PAD Project Appraisal Document GoP Government of Peru PAPT Water for All Program (Programa Agua HQ Headquarters para Todos) HR Human Resources PDO Project Development Objective IADB Inter-American Development Bank POA Annual Operational Program (Plan IBRD International Bank for Reconstruction and Operativo Annual) Development PP Procurement Plan ICB International Competitive Bidding PPIAF Public Private Infrastructure Facility IDA International Development Association PROMESAL Lima Marginal Areas Sanitation SEPA Procurement Plans Execution System Improvement Project (Proyecto (Sistema de Ejecución de Planes de Mejoramiento Sanitario de las Áreas Adquisiciones ) Marginales de Lima) SIL Specific Investment Loan PRONASAR National Rural Water Supply and Sanitation SNTA Sub National Technical Assistance Project (Proyecto Nacional de Saneamiento SOE Statement of Expenses Rural) SSS Sole Source Selection PVC Polyvinyl Chloride SUNASS National Superintendence of Sanitation QBS Quality Based Selection Services (Superintendencia Nacional de QCBS Quality Cost Based Selection Servicios de Saneamiento) SBD Standard Bidding Document TORs Terms of Reference SCADA Supervisory Control and Data Acquisition UFW Unaccounted for Water SEDAPAL Lima‟s Water and Sewerage Service UNSGAB United Nations Secretary General Advisory (Servicio de Agua Potable y Alcantarillado Board on Water and Sanitation de Lima) WSP Water and Sanitation Program SEIA System for Environmental Impact WSS Water Supply and Sanitation Assessment WWTP Wastewater Treatment Plant Regional Vice President: Pamela Cox Country Director: Laura Frigenti Sector Director: Laura Tuck Sector Manager: Guang Zhe Chen Sector Leader: Ousmane Dione Task Team Leader: Miguel Vargas-Ramirez Table of Contents I. Strategic Context ...............................................................................................................1 A. Country Context ..........................................................................................................1 B. Sectoral and Institutional Context ................................................................................1 C. Higher Level Objectives to which the Project Contributes ............................................5 II. Project Development Objectives ........................................................................................6 A. PDO ...........................................................................................................................6 1. Project Beneficiaries................................................................................................6 2. PDO Level Results Indicators ..................................................................................6 III. Project Description .........................................................................................................6 A. Project components .....................................................................................................6 B. Project Financing ........................................................................................................8 1. Lending Instrument ..................................................................................................8 2. Project Cost and Financing .....................................................................................8 C. Lessons Learned and Reflected in the Project Design ...................................................8 IV. Implementation...............................................................................................................9 A. Institutional and Implementation Arrangements ...........................................................9 B. Results Monitoring and Evaluation ..............................................................................9 C. Sustainability ............................................................................................................ 10 V. Key Risks and Mitigation Measures ................................................................................. 10 VI. Appraisal Summary ...................................................................................................... 10 A. Economic and Financial Analysis .............................................................................. 10 B. Technical .................................................................................................................. 12 C. Financial Management .............................................................................................. 13 D. Procurement .............................................................................................................. 13 E. Social (including safeguards) ..................................................................................... 13 F. Environment (including safeguards) .............................................................................. 15 Annex 1: Results Framework and Monitoring .......................................................................... 17 Annex 2: Detailed Project Description .................................................................................... 19 Annex 3: Implementation Arrangements ................................................................................. 28 Annex 4 Operational Risk Assessment Framework (ORAF) ..................................................... 49 Annex 5: Implementation Support Plan ................................................................................... 52 Annex 6: Team Composition ................................................................................................... 55 Annex 7: Economic and Financial Analysis ............................................................................. 56 PAD DATA SHEET Peru Optimization of Water and Sewerage Systems Project PROJECT APPRAISAL DOCUMENT LATIN AMERICA AND CARIBBEAN Urban, Water and Disaster Risk Management Unit (LCSUW) Date: March 9, 2011 Sectors: Water supply (50%); Sewerage (50%) Country Director: Laura Frigenti Themes: Access to urban services and housing Sector Director: Laura Tuck (90%); Other public sector governance (10%) Sector Manager: Guang Zhe Chen EA Category: B – Partial Assessment Sector Leader: Ousmane Dione Team Leader: Miguel Vargas-Ramirez Project ID: P117293 Lending Instrument: Specific Investment Loan (SIL) Project Financing Data: Proposed terms: Variable spread loan with a final maturity of 18 years, including a grace period of 17 years. [X] Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other: Source Total Amount (US$M) Total Project Cost: 64.9 Cofinancing: Borrower /SEDAPAL: 10.4 Total Bank Financing: IBRD 54.5 IDA New Recommitted Borrower: Republic of Peru Responsible Agency: SEDAPAL Contact Person: Jorge Barco Telephone No.: +511 317 3000 Fax No.: +511 362 5148 Email: [email protected] i Estimated Disbursements (Bank FY/US$ m) FY 2012 2013 2014 2015 2016 2017 Annual 2.00 8.00 10.00 13.50 16.00 5.00 Cumulative 2.00 10.00 20.00 33.50 49.50 54.50 Project Implementation Period: July 4, 2011 – March
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