Project Information Document (Pid) s31

PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: AB3362 Project Name RY-RURAL WATER SUPPLY - ADDITIONAL FINANCING Region MIDDLE EAST AND NORTH AFRICA Sector Water supply (65%); Sub-national government administration (15%); Central government administration (10%);Other social services (5%);Health (5%) Project ID P107142 Borrower(s) GOVERNMENT OF YEMEN Implementing Agency MINISTRY OF WATER AND ENVIRONMENT SANA’A, REPUBLIC OF YEMEN FAX: 967 1 235 113 Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared December 5, 2007 Date of Appraisal November 26, 2007 Authorization Date of Board Approval January 15, 2008

1. Country and Sector Background

Water scarcity in Yemen is serious and getting worse. Per capita availability of water in Yemen is at 2 % of the world and 10 % of the regional averages. One of Yemen’s major development challenges is, hence, how to better manage water resources while simultaneously increasing access to water and sanitation services for both agricultural and potable uses for the under-served population. The rural population in Yemen is 15.5 million with 42% having access to safe water at the end of 2006. The population is projected to rise to 19.3 million in 2015. Thus, 6.2 million people will need to get access to safe water if the target of 65% coverage by this year is to be met. This means that annually, about 700,000 people need to be served over the period 2007 to 2015.

For better management of water resources and its related services, Government of Yemen (GoY) over the past years has established three national-level agencies: National Water Resources Authority (NWRA) for water resources management, National Water and Sewerage Authority (NWSA) for urban water supply, General Authority for Rural Water Supply Projects (GARWSP) for rural water supply, and General Directorate of Irrigation (GDI) for irrigation infrastructure. In 2003, a new Ministry of Water and Environment (MWE) was established and the three agencies, NWRA, NWSA and GARWSP now report to the same minister. Following the creation of this ministry, GoY prepared its national action plan and investment program, the National Water Sector Strategy and Investment Program (NWSSIP, 2005) which is the approved national strategy and investment program for the water sector in Yemen. It defines objectives, policies, approaches as well as action plans in short and mid-term horizons (2005-2009). NWSSIP has provided valuable inputs into Yemen’s Development Plan for Poverty Reduction (DPPR) 2006- 2010. This DPPR has also incorporated the objectives of the Agricultural Long-term Plan (AGSIP) 2006-2015, which has significant bearing on issues of rural livelihoods and sustainable water use. 2. Objectives The original objective of the on-going project is to expand sustainable rural water supply and sanitation coverage to about 400,000 people in rural areas in six governorates. This is to be achieved by: (i) introducing to Yemen a worldwide proven demand responsive, decentralized community-managed RWSS development approach; (ii) assisting the Government in building and strengthening local RWSS capacity; and (iii) helping the Government to translate the agreed demand responsive approach (DRA) principles into a coherent RWS strategy and to prepare a long-term (10-15 years) national RWSS investment program that could be supported by the Bank and other donors. A slight modification to the objective to take account of actual activities and impact realized by the project thus far is proposed. The newly worded objective is to expand sustainable rural water supply and sanitation coverage to an additional 270,000 people in rural areas in six governorates. This will be achieved by: (i) mainstreaming the tested and successful implementation approach into governorate water activities; (ii) aligning project activities with the National Water Sector Strategy and Investment Program (NWSSIP) including strengthening capacity for sanitation and hygiene promotion activities; and (iii) supporting preparation of studies and development of capacities for transition to SWAP.

3. Rationale for Bank Involvement Yemen has been implementing a Demand Responsive Approach (DRA) in rural water supply and sanitation which shows great promise in supporting the achievement of MDG targets. The ongoing Rural Water Supply and Sanitation Project (RWSSP) which is the main Bank vehicle for support to achievement of RWSS MDGs, is well on its way to meeting its development objective because 140 water sub-projects serving a population of 320,000 are complete while 23 sub-projects to serve a population of 82,000 are under construction. Service coverage at planned project closure on December 31, 2007 will represent 106% of the original target. In addition, (i) the Demand Responsive Approach (DRA) has been mainstreamed into all sub-sector interventions throughout the country and is used in all governorates; (ii) a rural water strategy has been finalized, agreed upon by all stakeholders and only awaits cabinet approval, and (iii) the National Water Sector Strategy and Investment Program (NWSSIP) rural water supply component is being supported by most donors.

The project is to close on December 31, 2007. After closure, Bank support to the sub-sector is to be through a SWAP focusing on water planned for 2009 consistent with the current Country Assistance Strategy (CAS) for Yemen (dated May 17, 2006). Pillar two of the CAS focuses on improving human development through more efficient service delivery and improved safety nets and, under this pillar, one of the four priority outcomes is improving water supply and sanitation.

The Government of Yemen (GoY) has thus requested additional financing to bridge the gap between the ongoing Rural Water Supply and Sanitation Project closure on December 31, 2007 and the start of the SWAP. The additional funds would finance activities under the three components of the project as defined in the original PAD and scale up the achievement of MDGs in the project areas of intervention. Yemen is known to be lagging behind in achievement of RWSS MDGs coverage targets and activities to support this are consistent with the current the CAS. Apart from supporting achievement of RWSS MDGs coverage targets, the additional financing will provide an opportunity to mainstream the current project leadership and experiences in scaling up RWSS coverage into country systems. This would lay the basis for support to the sub-sector through a SWAP framework that harmonizes inputs by all sector donors.

4. Description The additional financing under this proposal is to be used to extend and deepen activities under the project components detailed in the PAD and outlined below. a. Under the water supply component, coverage is to be extended to 270,000 new consumers through construction of about 80 water supply systems in the six governorates. The currently tested and successful implementation mechanisms will be used but governorate water branch offices will be more closely involved to ensure alignment to the branch office water program and prepare for future use of country systems. b. The environmental sanitation component will provide improved sanitation through up to four small sewerage systems in selected communities to serve 15,000 people, continue support to communal and household sanitation and strengthen capacity to carry out hygiene promotion activities. The component will also support the Government to finalize its sanitation strategy within the framework of the national rural water and sanitation strategy, by addressing issues that have apparently delayed cabinet approval of the current strategy. c. Under the institutional strengthening, project management, studies and training component, the funds will be used to support the Government to provide training on the newly approved procurement systems in the water sector, support project management, and provide institutional support to the six branch offices of project operation. Studies identified as key to successful transition to SWAP as well as implementation of sub-sector M&E systems will also be supported. All activities will be carried out in close collaboration with the sector lead agency as part of the alignment and harmonization process.

5. Financing Source: ($m.) BORROWER/RECIPIENT 2.73 International Development Association (IDA) 20.00 Local Governments. (Governorate, District) of Borrowing Country 1.00 Total 23.73

6. Institutional and Implementation Arrangements Project institutional and implementation arrangements will basically remain the same under the additional financing as for the ongoing project. However, one of the key objectives of the additional financing is to provide inputs to the water SWAP preparation process by aligning project activities with the implementation framework of the General Authority for Rural Water Supply Projects (GARWSP) which is the agency responsible rural water in Yemen. This will be done without in any way undermining the current service delivery mechanisms which have been shown to work effectively. The main features of this alignment are outlined below.

(a) The PMU shall continue to operate independently under the auspices of the Oversight Committee. The GARWSP chairman will be a key member and deputy chairman of this committee but the PMU will remain administratively accountable to Ministry of Water and Environment (MWE).

(b) PIU and GARWSP branch offices will align their activities more closely at governorate level. Community outreach and mobilization, WUA formation and training and hygiene education will be carried out jointly on all projects planned in the governorate during the year. This is expected to help reduce the financing gap for sociological activities identified by GARWSP and better prepare communities for eventual project management.

(c) Design for all projects, planned and qualifying for implementation in the governorate during the year will be carried out by branch staff supported by RWSSP project incremental operating expenses budget and other resources including human. This arrangement will help fill the existing financing gap in these resources at branch level while reducing the RWSSP design consultant costs. GARWSP branches will, however, continue to seek Local council and community contributions to these mobilization, training and design costs in order to establish long term cost sharing arrangements for the activities.

(d) When a number of projects are ready for implementation, the branch and the PIU will agree on the component(s) of the project to be financed from GARWSP governorate budget and those for RWSSP financing. GARWSP will implement its components using its existing arrangements if it considers this still appropriate while RWSSP will use its current implementation arrangements. In order to ensure that there is no gap in project component implementation, a joint implementation plan that will require the branch to complete 80% of its component before RWSSP begins its part will be drawn up.

(e) Project supervision will be carried out by branch office staff where these exist, with resource support from RWSSP, and by RWSSP hired supervision consultants where the branch doesn’t have the capacity.

(f) The above incremental operating expenses (paragraphs b, c and e) are to be budgeted in the RWSSP and the relevant expenditure category allocation in the DCA increased to support this activity. This arrangement serves to solve the problem of shortage of this budget item in GARWSP in the short-term (project period) but needs to be addressed differently and permanently for the longer term.

(g) Branch managers will, while preparing monthly implementation progress report, include all projects in the governorate and indicate progress on the different implementation stages of each. This will be in accordance with a reporting format under preparation by GARWSP with support from the RWSSP as part of the sub-sector M&E system. However, payments for contracts and purchases will not be made under RWSSP financing unless the PIU manager has confirmed that work was carried out or goods delivered. h) Where the Branch has adequate facilities, common office accommodation will be arranged. This currently applies to Abyan but other governorates will be evaluated to assess the feasibility of such arrangements during the implementation period. 7. Sustainability The project has established good capacity for implementation and is capable of disbursing up to $10 million per year. Sustainability of completed systems is also likely because trained water user associations are maintaining the systems and collecting adequate revenue to meet operation and maintenance costs. Sustainability of the implementation capacity presents a substantial risk related to success in capacity transfer to GARWSP. Mitigation against this will be achieved by better harmonizing and aligning project implementation with that of the GARWSP branches. It is, however, not expected that this will completely eliminate the risk. A big part of the GARWSP implementation capacity constraints are caused by inadequacies in overall financial planning and implementation policies in the sub-sector as these seem to require piecemeal allocation of resources to many sub-projects in order to satisfy perceived equity requirements. It will also depend on success of the overall government reform program in attracting the trained and qualified PMU and PIU staff to GARWSP rather than to other sector actors. After mitigation, the risk is expected to reduce to moderate during the project and become low sometime after start of the SWAP.

8. Lessons Learned from Past Operations in the Country/Sector The on-going project applied lessons learnt from previous Bank and other stakeholder projects as indicated in the PAD. The newly financed activities will, in addition, rely on experiences from the on-going project and mainstream these into country systems in preparation for the SWAP.

9. Safeguard Policies (including public consultation) The environmental classification of the ongoing project is Category B. The additional financing is to fund activities similar in scale and scope to those implemented under the original project, covering the same governorates but in new communities. The environmental mitigation and monitoring plan has been reviewed and updated and will be applied by the governorate units to assess, mitigate and monitor negative environmental impacts of sub-project investments.

10. List of Factual Technical Documents 1 Revised Project Operation Manual (to be available by December 15, 2007) 2 Republic of Yemen E-349, Rural Water Supply and Sanitation Project, Summary of the Environmental Review, November 2007 Update.

11. Contact point Contact: Andrew Makokha Title: Senior Water & Sanitation Specialist. Tel: (202) 4585384 Fax: (202) 477 1374

12. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Email: [email protected] Web: http://www.worldbank.org/infoshop

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