PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: AB5283 Project Name Oum Er Rbia Sanitation Region MIDDLE EAST AND NORTH AFRICA

Public Disclosure Authorized Sector Sanitation (100%); Project ID P098459 Borrower(s) OFFICE NATIONAL DE L'EAU POTABLE (ONEP)

Implementing Agency ONEP – Morocco Office National de l'Eau Potable (ONEP) Station de Traitement Akrach Route des Zaers,-Akrach Rabat Morocco Tel: (212-537) 650-695 Fax: (212-537) 726-707 Environment Category [X] A [ ] B [ ] C [ ] FI [ ] TBD (to be determined)

Public Disclosure Authorized Date PID Prepared March 8, 2010 Date of Appraisal March 30, 2010 Authorization Date of Board Approval May 27, 2010

A. Country and Sector Background

1. With 700m3/capita/yr, of which 70 percent of withdrawals are from surface water and 30 percent from groundwater, Morocco has the highest water potential in the Maghreb. However, the water is unevenly distributed between different parts of the country and highly variable within and between years. Droughts are common. Ninety percent of economically accessible surface resources are already dammed, leaving few options for additional surface water storage. Public Disclosure Authorized Population and economic growth have increased demand even as supply has fallen. The country has seen a 30 percent drop in average precipitation since 1970, increasingly accepted as a sign of climate change. In recent years, the amount of surface water stored in dams has repeatedly fallen short of the amount expected. As a result, severe restrictions for irrigation water have been common. Wherever they can, farmers have been partially making up the shortfall in surface water by tapping into groundwater, and aquifer depletion is becoming more and more serious. The allocations for urban and municipal water are around 15 percent the total water abstracted in Morocco. Urban growth and further declines in average precipitation associated with climate change make it almost sure that the amount of water available for irrigation will decline over the next few decades in most basins of Morocco.

2. Strategic shifts in Morocco’s water sector. Morocco’s water policies have long focused on securing scarce and unevenly distributed resources for urban and agricultural needs, through Public Disclosure Authorized the development of dams, large scale irrigation perimeters, and urban water supply systems. While creating infrastructure and institutions, this supply-driven focus also led to neglecting investments for water conservation, sanitation and pollution control, and rural water supply. Since the late 90s, the Government of Morocco (GOM) has taken steps to bring about better

resource management and protection, as well as better access and efficiency in infrastructure service, with growing awareness of the need to advance demand management policies. The Bank and GOM elected water as a sectoral entry point for the 2005-2009 Country Assistance Strategy (CAS) objectives, and developed a CAS “water pillar” aimed at “improving water management and access to water and sanitation services”. This water partnership has been underpinned by substantial analytical work, policy dialogue, and innovation, and was recently articulated around a programmatic Water Sector Development Policy Loan (2007- 2009) supporting reform in sector governance, water resources management, irrigation, and water supply and sanitation. The new Country Partnership Strategy 2010 -2013 (finalized in December 2009) also highlights the need for continued efforts to increased service provision especially in wastewater collection and treatment”

3. Prioritizing Sanitation: The National Sanitation Program. Sanitation is substantially less developed than potable water which is quasi-universal in all urban areas in Morocco. The sanitation network connection rate is estimated 76% in large cities with a population of more than 100,000 and less than 40% for small and medium cities. Urban sanitation service is generally poorly maintained, with limited capacity, and many quite degraded – in need for rehabilitation. Sewer overflowing is commonplace during the rainy season. An extensive study1 shows negative impacts on public health, environment and economy due to poor sanitation and lack of adequate pollution control. Wastewater treatment covers only 5% of collected sewage and the reuse of wastewater is practiced in an uncontrolled manner. The National Sanitation Program (NSP) which was prepared in 2006 (and reviewed by a joint World Bank-KfW team2) upon the request of the Inter-ministerial Commission on Water provides a policy framework for investments to address the lagging coverage in sanitation (especially in small towns), pollution control, and highlighting the wastewater reuse potential in Morocco. The objective of the NSP by 2020 is to increase the overall rate of sanitation access to 80%, and wastewater treatment to 60%. The current (improved) sanitation coverage for urban areas is about 97% and 40% for small towns and rural areas. The National Sanitation Program targets 260 towns covering about 10 million people. The estimated costs of the program were put at 43 billion Dirhams (about US$5 billion).

B. Rationale for Bank involvement

4. The Bank is well positioned to support the project due to: (i) its long-standing partnership with ONEP; (ii) its continued efforts to support the GOM efforts on sectoral reforms under the 2005-2009 CAS and the recent Country Partnership Strategy (December 2009), building on its recent involvement in a programmatic Water Sector DPL, supporting reforms in sector governance, water resources management, irrigation, and water supply and sanitation; and (iii) its added value as a knowledge and innovation broker to support ONEP in its relatively new mandate of sanitation under the NSP. It is also worth noting that this sanitation project belongs to a package of integrated operations supported by the Bank in the Oum er Rbia river basin, including the Oum er Rbia Irrigated Agriculture Modernization project (under preparation), and

1 Banque Mondiale: Royaume du Maroc, Evaluation du Cout de la Dégradation de l’Environnement, Rapport 25992- MOR, Juin 2003 2 Revue Strategique du Programme National d’Assainissement”, Partenariat Banque Mondiale – KFW ; Rapport No. 40298-MA” May 2008: 2

grant-funded activities to build the capacity of the Oum er Rbia Basin Agency to adapt to climate change. Specifically the rationale for World Bank involvement includes:

5. Supporting a long-standing partnership with a key national operator. ONEP is the most important water supply operator in Morocco, responsible for serving over 500 medium to small towns, or about 35% of urban population3. Countrywide, ONEP is in charge of potable water production and transmission for bulk sale to distributors (“autonomous régies” and private operators), and of rural water supply development. Since 2004 ONEP’s mandate has been expanded to install, upgrade and operate sanitation systems in the towns where it distributes water. Under the new National Sanitation Program, ONEP’s role is essential in the expansion of coverage of sanitation in Morocco, particularly in small towns. This proposed operation will help ONEP fulfill its new mandate to increase the overall sanitation access rate, and wastewater treatment, and thus narrowing the service gap between large and small towns. ONEP has been supported by the Bank since its 1972 inception and has requested the World Bank to help pilot the implementation of the NSP while fulfilling its new role in sanitation.

6. Pursuing the water partnership with the GOM under the CPS. The Bank and GOM elected water as a sectoral entry point for the 2005-2009 Country Assistance Strategy, and developed a CAS “water pillar” aimed at “improving water management and access to water and sanitation services”. This water partnership is continued under the new CPS and is built on substantial analytical work, policy dialogue, and innovation4, and is articulated around reforms in sector governance, water resources management, irrigation, and water supply and sanitation.

7. Serving as a knowledge and innovation broker in urban sanitation. The Bank is not only providing financing to a long-established partner, but also brings into play its extensive knowledge on best practices from other countries especially on appropriate and cost effective technologies. The Bank has recently organized a study tour in Brazil for Moroccan sector professionals to exchange experiences on innovative wastewater management practices. It is expected that significant cost reductions (in the range of 30-40%) can be achieved through some well-tested technologies such as the “condominial sewers”, as used in Brazil. The feasibility and viability of this project can also be enhanced through the potential use of credit carbon related to the capture and use of methane gas generated in wastewater treatment plants. Furthermore, the experiences in other countries on using waste-generated biogas for domestic uses can prove beneficial in expanding the benefits of the project to poor households. These social and environmental considerations will also contribute to increase project sustainability. These practices together with sound social, economic, and environmental approaches, once proven successful, can be later scaled-up by ONEP within the framework of NSP.

C. Objectives

8. The project development objective is to improve the access to sustainable sanitation and pollution reduction services for the dwellers of ten medium and small towns in the Oum Er Rbia

3 Other operators include municipal régies, serving 13 large cities (31% of urban users), and 4 private concessionnaires (in Casablanca, Rabat, Tangiers and Tetouan, 34% of the urban market). 4 Evaluation on-going for 3 GPOBA-funded pilots in Casablanca, Tangiers and Meknés 3

river basin. This will be achieved through the construction of new wastewater collection networks and treatment plants.

9. The project is to pilot a number of innovative approaches to make the implementation of the larger National Sanitation Program more effective. Specifically, the project will help: a) introduce and pilot appropriate (low cost) technologies for wastewater collection and treatment for these towns; b) promote the reuse of treated wastewater in productive uses (agriculture or industry) by providing the information for the reuse potential and creating the space for the potential users to benefit from this resource; and c) reduce odors from existing wastewater treatment plants – while redirecting these gases for household uses - and the potential generation of carbon credits.

10. Benefits derived from water sanitation and pollution control service typically include improved living standards (convenience and clean living environment), public health benefits (reducing epidemic possibility and bad odors from open sewage discharges, reducing possibility of polluting surface and ground waters, and increasing safety of agricultural products by reducing direct drainage of wastewater into agricultural production), improved public goods and environment (less pollution of water resources, and potential reduction in emissions of greenhouse gases).

D. Description

11. The project consists in 3 main components aimed at: i) upgrading and developing sanitation and pollution control systems in ten small towns, ii) piloting odor management in existing wastewater lagoons through covering the anaerobic ponds and capturing the methane for potential carbon credits and use in households, and iii) capacity building in ONEP, promotion of reuse, maintenance equipment and impact evaluation for replication. The details for each component is as follows (with total costs without contingencies):

 Component 1. Wastewater collection and treatment (US$61.9 million): This component will rehabilitate, and expand existing sanitation systems (collection networks and treatment plants) for ten medium and small centers (Afourer, , Boulanouar, Chemaia, , El Brouj, , , , and Youssoufia) covering four provinces in the Oum Er Rbia basin (, Benimellal, Safi, and Settat) and serving around 200,000 new dwellers. More importantly the component will introduce and test the applicability of appropriate sanitation technologies (e.g. condominial systems and decentralized wastewater treatment).5

 Component 2. Piloting Odor Control and methane capture in treatment plant (US$1.15 million): There are about 70 small treatment plants (mostly ponds) in Morocco – of which 40 are managed by ONEP. More than 40% of the plants in Morocco do not operate well, if at all. Many present odor problems. ONEP is considering the covering of the anaerobic ponds as a measure to reduce odor and capture the methane for potential productive uses. A pilot is considered for covering 2 to 3 ponds. [The preparation phase is looking into the feasibility of this approach and the minimum size project that would be necessary to further tap into carbon credits – under way].

5 During the Project’s preparation period, the Bank team has planned to have a study tour for Moroccan officials to familiarize themselves with these non –conventional options already in place in Latin America. 4

 Component 3. Technical Assistance and Support (US$4.7 million): This component is divided into 5 sub-components: o 3.A Capacity building: this sub-component will finance the services to be provided by a twinning partner that can support and bring practical experiences to ONEP in wastewater management; such partner is expected to be a utility that has developed substantial experience in non-conventional and appropriate technologies that will help ONEP reduce the costs of delivering wastewater services in small towns. This long- term South-South partnership and cooperation will provide ONEP with the needed expertise to expand services to small towns in an affordable and sustainable manner. Under this sub-component, ONEP will also disseminate this know-how to the local consulting industry through workshops and conferences. o 3.B Support to Project Implementation: This sub-component will finance consulting services for construction supervision, project management, monitoring and reporting activities. o 3.C Communications and Community mobilization support: This sub-component will finance consulting services to provide specialized inputs to ONEP in its communications campaign to raise awareness of project benefits among beneficiary communities and enhance community involvement in implementation. o 3.D Maintenance Equipment. This sub-component will fiancé the purchase of maintenance equipment for the collection networks and treatment plants to be built under the project. o 3.E. Promotion of Reuse Potential. This sub-component will provide consulting services to help ONEP identify the reuse potential in the projects under design and also act as the catalyst for developing reuse project – where feasible – with the interested parties (Min. of Agriculture, basin agencies, farmers associations, etc.).

E. Financing

Source: ($m.) Borrower 35.5 International Bank for Reconstruction and Development 40.0 Total 75.5

F. Implementation

12. The Borrower will be ONEP that has already experience with Bank-financed projects. ONEP will implement the project with the support of its regional and provincial departments. Implementation would leverage existing ONEP structures and the TA component will further strengthen relevant institutional and technical capacity for ONEP to implement the sanitation project. The project will also support ONEP’s ongoing decentralization and outsourcing process.

13. The Department of Environment and Sanitation (Direction Assainissement et Environnement, DAE) will be responsible for overall project implementation. ONEP’s regional departments 2 (Tensift) and 3 (Centre), with the support of the central departments, will oversee

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the technical, social and environmental studies, community mobilization, and the construction and supervision of works outsourced to consulting firms and other private sector companies. The regional Departments will also be responsible for issuing the call for bids and issuing contracts, with the support of the central departments. Technical assistance and training for ONEP under project Component 3 will also support project coordination.

14. The Communes Rurales (CR) under the Ministry of Interior are responsible for water supply and sanitation in towns and villages under their jurisdiction. An in principle agreement has been reached by all municipal councils covered by the project on the delegation of the management of sanitation services to ONEP. Formal delegated management conventions (conventions de gestion déléguée) will be signed between the CR and ONEP prior to the beginning of the works in each town. Through their own resources and with financial support from the Government, the CR will participate in financing up to 50% of sewerage and treatment construction costs.

G. Sustainability

15. The Project sustainability can be assessed through: (i) Government commitment towards Project goals, (ii) the Project’s potential beneficiaries' willingness to connect to the collection network and pay the tariffs, and (iii) the operator’s capacity to maintain the sanitation infrastructure.

16. Government commitment to the project goals can be seen through the close fit of the project with broader strategic goals of the government stated in the National Sanitation Program. The project is a pilot for ONEP to implement the NSP under its new mandate to take over the sanitation services in the small towns where it is also providing water. The Government will provide subsidies at the level of 50% for all investments that ONEP will make in wastewater. ONEP will borrow and finance the other 50% and will recover its costs through tariffs. The Government’s political will to address sanitation deficit has been reflected in the goals set up in the NSP which is to increase the overall rate of sanitation access to 80%, and wastewater treatment to 60% by 2020.

17. The beneficiaries' involvement is vital. The project ensures their involvement at two stages. First, the feasibility studies understood needs and concerns of dwellers in terms of sanitation services and reflected users’ needs into the project design and thus facilitate the household connections to future sanitation services. Second, the project has been working on a very proactive communication strategy to facilitate the ownership of the sanitation services, including how to better meet end-users needs, particularly women’s needs as major users of household sanitation service.

18. Scarcity and degradation of water resources have reached serious levels in Morocco, and thus wastewater reuse provides a regular alternative based on increasing supplies due to

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expanding urban, tourist and industrial development in Morocco6. This has justified the proposed wastewater reused and will further ensure sustainability of this project which will promote the piloting of wastewater reuse. The sustainability of the project relates to potential demands from farmers, golf watering, and industrial uses.

19. Operation and maintenance of sanitation and wastewater reuse will be ensured by ONEP which is a high-capacity agency, ranking among the best performing public operators in the region and nowadays competing on sub-Saharan public-private partnership markets. ONEP is the most important water supply operator in Morocco, responsible for providing water supply service to over 400 medium to small towns, or about 35% of urban population7. Besides its responsibility for potable water, ONEP’s mandate has been expanded to install, upgrade and operate sanitation systems in the towns where it distributes water since 2004. ONEP receives virtually no government subsidies for infrastructure and operations, achieving adequate cost recovery and infrastructure financing through tariffs and connection fees, urban/rural, production/distribution and electricity/water cross-subsidy flows, and operational efficiency gains. Under the National Sanitation Programme ONEP’s role is key in expanding the coverage of sanitation in Morocco.

H. Lessons Learned from Past Operations in the Country/Sector

20. The project has been designed based on lessons learned from different sources, particularly analytical work, ongoing and completed operations, as well as international best practices.

21. At the operational level, this sanitation project will address the slow pace of household connections to the future sanitation services - the problems encountered by earlier sanitation projects. There was an overestimation of the rate of household connection before the project. Once the project was completed, less than 40% households were ready to pay for the service. Specific mitigation measures have been now considered to address the problems, to include: i) needs assessments of end users, and reasons of not willing to pay for the connection; ii) communication campaigns about the benefits of the sanitation services which involved clients, local parliamentarians, as well as local governments; iii) the need to shorten the period between the completion of the infrastructure construction and fee collection (extensive delays in the past had sent the message that the service would be provided for free); and iv) improved coordination and communication between ONEP and the beneficiary communities.

22. At the technical level, the project aims to pilot and promote appropriate, practical, and low cost technologies for wastewater collection and treatment to ensure that the cost to the beneficiaries are affordable and remain sustainable from the operational perspective. Collection systems – as the “condominial” system in use in some cities in Brazil and decentralized wastewater treatment are already being considered as practical and of low cost. The ONEP

6 See Identification et Elimination des Goulets d’Etranglement pour l’Utilisation des Eaux Usees dans le Cadre de l’Irrigation ou Autres Usages – Maroc –Rapport National, AHT Group AG, Management & Engineering, April 2009, page 49. 7 Other operators include municipal régies, serving 13 large cities (31% of urban users), and 4 private concessionnaires (in Casablanca, Rabat, Tangiers and Tetouan, 34% of the urban market). 7

experts who participated in recent study tour on wastewater collection and treatment technologies in Brazil have found many of the innovations to be of relevance to the Moroccan context. The Project will support follow-up activities including the organization of international workshops in Morocco, the initiation of a twinning partnership between ONEP and an innovative utility abroad, and the provision of technical training programs.

I. Safeguard Policies (including public consultation)

Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [ X] [ ] Natural Habitats (OP/BP 4.04) [ ] [ X] Pest Management (OP 4.09) [ ] [ X] Physical Cultural Resources (OP/BP 4.11) [ ] [ X] Involuntary Resettlement (OP/BP 4.12) [X ] [ ] Indigenous Peoples (OP/BP 4.10) [ ] [X ] Forests (OP/BP 4.36) [ ] [ X] Safety of Dams (OP/BP 4.37) [ ] [ X] Projects in Disputed Areas (OP/BP 7.60)* [ ] [ X] Projects on International Waterways (OP/BP 7.50) [ ] [ X

J. List of Factual Technical Documents N/A

K. Contact point Contact: Alexander E. Bakalian Title: Lead Water Resource Specialist Tel: (202) 473-5319 Fax: Email: [email protected]

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

* By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas 8