Document of The World Bank
FOR OFFICIAL USE ONLY
Report No: 33881-MOR Public Disclosure Authorized
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED LOAN
Public Disclosure Authorized IN THE AMOUNT OF EURO 49.5 MILLION (US$60 MILLION EQUIVALENT)
TO
OFFICE NATIONAL DE L’EAU POTABLE (ONEP) (NATIONAL POTABLE WATER AUTHORITY)
WITH THE GUARANTEE OF THE
KINGDOM OF MOROCCO
Public Disclosure Authorized FOR A
RURAL WATER SUPPLY AND SANITATION PROJECT
November 23,2005
Water, Environment, Social Rural Development Department Public Disclosure Authorized and Middle East and North Africa Region
This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not be otherwise disclosed without World Bank Group authorization CURRENCY EQUIVALENTS
(Exchange Rate Effective June 10,2005) Currency Unit = Moroccan Dirham (DH) DH9.0 = US$1 US$O.1111 = DH1
FISCAL YEAR January 1 - December 31
ABBREVIATIONS AND ACRONYMS
AFD French Development AgencylAgence Franqaise de De'veloppement CAS Country Assistance Strategy CFAA Country Financial Accountability Assessment CR Rural District/ Commune Rurale DAM Department for Supplies and Contracts DEP Department for Universal Access to Potable Water (0NEP)lDirection Centrale de Ge'ne'ralisation de 1 'Eau Potable DGH General Department of HydraulicslDirection Ge'ne'rale de 1 'Hydraulique DPL Development Policy Loan DR ONEP's Regional DepartmentslDirections re'gionales EA Environmental Assessment EIB European Investment Bank EMF Environmental Management Framework ERR Economic Rate ofReturn EU European Union FMR Financial Monitoring Report GEP Program for Universal Access to Potable WaterlProgramme de Ge'nkralisation de 1 'Eau Potable GOM Government ofMorocco HC House connection ICR Implementation Completion Report INDH Initiative Nationale pour le De'veloppement Humain JBIC Japan Bank ofInternational Cooperation JICA Japan International Cooperation Agency Kfw Kreditanstalt fir Wiederaufbau MATEE Ministry ofLand Planning, Water and EnvironmentlMinistBre de 1 'Amknagement du Territoire, de 1 'Eau et de I'Environnement MDG Millennium Development Goals MEDA Euro-Mediterranean Partnership MNA Middle East and North Africa MSP Ministry ofHealthlMinistBre de la Santk Publique NCB National Competitive Bidding NPV Net Present Value O&M Operation and Maintenance OBA Output-Based Aid ONEP National Potable Water AuthoritylOffice National de 1 'Eau Potable PAGER Water Supply Program for Rural PopulationslProgramme d 'Approvisionnement Groupk en Eau Potable des Populations Rurales PESW Programmatic Economic Sector Work PPP Pub lic-Private Partnership SP Public Standpipe QBS Quality Based Selection QCBS Quality and Cost Based Selection ROSC Report on the Observance ofStandards and Codes RWS Rural Water Supply RWSS Rural Water Supply and Sanitation SDF Saudi Development Fund SFD Saudi Fund for Development SIL Specific Investment Loan SMT Social Mobilization Team SP Standpipe SRP Standard Request for Proposals TA Technical Assistance wss Water Supply and Sanitation WUA Water Users' Association
Vice President: Christiaan J. Poortman Country Director: Theodore 0.Ahlers Sector Director Inger Andersen Sector Manager: Vij ay Jagannathan Task Team Leader: Marie-Laure Laiaunie
MOROCCO Rural Water Supply and Sanitation Project
CONTENTS
Page
A . STRATEGIC CONTEXT AND RATIONALE ...... 1 1. Country and sector issues...... 1 2 . Rationale for Bank involvement ...... 3 3 . Higher level objectives to which the project contributes ...... 3
B. PROJECT DESCRIPTION ...... 4 1. Lending instrument ...... 4 2 . Project development objective and key indicators...... 4 3 . Project components ...... 4 4 . Lessons learned and reflected in the project design...... 6 5 . Alternatives considered and reasons for rejection ...... 7
C . IMPLEMENTATION ...... 7 1. Partnership arrangements ...... 7 2 . Institutional and implementation arrangements ...... 7 3 . Monitoring and evaluation (M&E) ofoutcomes/results ...... 8 4 . Sustainablhty...... 8 5 . Critical risks and possible controversial aspects ...... 10 .. 6 . Loadcredit conditions and covenants ...... 11 D. APPRAISAL SUMMARY ...... 13 1. Economic and financial analyses ...... 13 2 . Technical ...... 15 3 . Fiduciary ...... 15 4 . Social...... 16 5 . Environment...... 17 6 . Safeguard policies ...... 17 7 . Policy Exceptions and Readiness...... 18
ANNEXES: Annex 1: Country and Sector Background ...... 19 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ...... 23 Annex 3: Results Framework and Monitoring...... 25 Annex 4: Detailed Project Description ...... 29 Annex 5: Project Costs ...... 43 Annex 6: Implementation Arrangements ...... 44 Annex 7: Financial Management and Disbursement Arrangements ...... 46 Annex 8: Procurement ...... 52 Annex 9: Economic and Financial Analysis ...... 57 Annex 10: Safeguard Policy Issues...... 65 Annex 11 : Project Preparation and Supervision ...... 70 Annex 12: Documents in the Project File ...... 71 Annex 13: Statement of Loans and Credits ...... 72 Annex 14: Country at a Glance ...... 73
Map: IBRD 34331 MOROCCO
RURAL WATER SUPPLY AND SANITATION PROJECT
PROJECT APPRAISAL DOCUMENT
MIDDLE EAST AND NORTH AFRICA
MNSRE Date: November 23,2005 Team Leader: Marie-Laure Lajaunie Country Director: Theodore 0. Ahlers Sectors: General water, sanitation and flood Sector ManagedDirector: Narasimham Vijay protection sector (1 00%) Jagannathan Themes: Rural services and infrastructure (P); Pollution management and environmental health (S) Project ID: PO86877 Environmental screening category: Partial Assessment Lending Instrument: Specific Investment Loan Safeguard screening category: Limited impact
[XI Loan [ ] Credit [ 3 Grant [ ] Guarantee [ 3 Other:
For Loans/Credits/Others: Total Bank financing (US$m.): 60.00
Borrower: Office National de 1’Eau Potable (ONEP) Responsible Agency: ONEP Station de traitement Avenue Oued Akrach Rabat Morocco Tel: (212)-37-75-96-00
Project implementation period: Start January 3,2006 End: June 30,2012 Expected effectiveness date: March 20, 2006 Gxpected closing date: December 3 1,2012 Does the project depart from the CAS in content or other significant respects? [ ]Yes [XINO Re$ PAD A.3 Does the project require any exceptions from Bank policies? [ ]Yes [XINO Re$ PAD D. 7 Have these been approved by Bank management? [ ]Yes [ IN0 Is approval for any policy exception sought from the Board? [ ]Yes [XINO Does the project include any critical risks rated “substantial” or “high”? [XIYes [ ]No Re$ PAD C.5 Does the project meet the Regional criteria for readiness for implementation? [XIYes [ ]No Re$ PAD D. 7 Project development objective Re$ PAD B.2, Technical Annex 3 The Project development objective is to support the Government ofMorocco’s (GOM) program to increase sustainable access to potable water supply in rural areas, while promoting improved wastewater management and hygiene practices. Project description Re$ PAD B.3.a, TechnicalAnnex 4 Component 1. Water Production and Conveyance (total cost US94.35 million). This component will finance the delivery ofwater supply to villages through the construction of lateral mains from existing or planned ONEP regional trunk lines, storage tanks, and standpipes (SPs), and in some limited cases, water production facilities.
Component 2. Water distribution and Wastewater Management (total cost USU3.49 million). This component will finance the design, construction and supervision ofvillage distribution systems providing house connections (HCs) to users and the mitigation measures required to handle the resulting increase in wastewater flows. To facilitate the adoption ofHCs, the Project would offer a prefinancing mechanism ofup to DH 2,500 per connection.
Component3. Institutional Strengthening and Project Implementation Support (total cost US$4.63 million). This component will reinforce ONEP’s capacity to implement the project through the provision oftechnical assistance (TA) to: (a) implement an effective participatory approach, ensuring that facilities respond to community demand, with a choice ofservice level and management model, and that organizations responsible for operation and maintenance (O&M) are well trained; and (b) promote improved hygiene practices. Which safeguard policies are triggered, if any? Re$ PAD D. 6, Technical Annex 10 Environmental Assessment, OP 4.01 Involuntary Resettlement, OP 4.12
Significant, non-standard conditions, if any, for: Board presentation: None.
Loadcredit effectiveness: None.
Covenants applicable to project implementation:
1. ONEP will, for each ofits fiscal years, meet a self-financing ratio ofits average yearly investment program equivalent to at least 15%, such ratio to be calculated on the basis ofa methodology agreed upon between ONEP and the Bank. In the event that ONEP does not meet the ratio, ONEP, after consultation with the Bank, will take all necessary measures agreed upon with GOM to meet the said ratio. 2. Prior to commissioning ofsub-projects under component 1 ofthe project, ONEP will put in place appropriate devices and take adequate measures to enable recording and analysis, at the level of, respectively, production, abstraction and distribution, ofthe volumes ofwater produced or abstracted from trunk mains and subsequently sold to distribution systems/SP operators at the village level.
3. ONEP will undertake all necessary measures to (a) not later than June 30,2008, upgrade its billing and collection system so as to ensure proper billing, collection and management of accounts receivable in relation to each sub-project completed under component 1; and (b) not later than December 31,2008, extend, upon initiation ofeach sub-project camed out under component 1, its cost accounting system to encompass cost accounting reporting pertaining to the management and operation ofeach sub-proj ect.
4. For purposes ofcomponent 1 ofthe Project, ONEP will ensure that each sub-project:
(a) does not exceed a construction cost per capita of DH 2,000 and a discounted operation cost per cubic meter of DH 5. In the event that the cost ofthe proposed sub-project exceeds either or both ceilings referred to herein, ONEP shall provide adequate information to the Bank confirming that the technical approach, to be followed under said sub-project, is the most cost- effective; (b) is selected following a participatory process involving the provinces, the rural districts (communes rurales) (CRs) and the water users: the field report ofthe participatory diagnostic and the proc2s verbaux (written agreement) confirming the commitment ofthe village committee should be available for at least 70% ofthe villages to be served by the sub-project before the works begin;
(c) is financially and technically sound and economically justified, based on prior studies acceptable to the Bank;
(d) has been subject to an adequate environmental and land acquisition screening and evaluation process in accordance with environmental, resettlement and social safeguards set forth in the Environmental Management Framework (EMF) and the Resettlement Policy Framework;
(e) receives a financing of at least 15% from the relevant municipality or other public entity and at least DH 500 per household concerned; and
(f) has been given a water withdrawal authorization by the relevant water basin agency in the event that additional water resources need to be exploited under the proposed sub-proj ect.
5. For purposes of Component 2 ofthe Project, ONEP shall ensure that:
(a) prior to the carrying out ofeach sub-project providing for the installation ofhousehold connections, adequate wastewater disposal facilities have been put in place; and
(b) each sub-project has been subject to an adequate environmental and land acquisition screening and evaluation process in accordance with environmental, resettlement and social safeguards set forth in the EMF and the Resettlement Policy Framework.
6. No sub-project involving involuntary resettlement shall be carried out under the Project.
A. STRATEGIC CONTEXT AND RATIONALE
1. Country and Sector Issues
1. Rural Poverty and Government Strategy. Approximately 15% of Morocco’s population, or 4.5 million people, is estimated to be below the poverty line. More than two-thirds ofthe poor are concentrated in rural areas where the average income is half that of city dwellers and where inadequate access to social services and basic infrastructure is the norm. Lack of opportunity continues to drive significant rural migration, as confirmed by 2004 census figures. Between 1994 and 2004, the urban population grew by 2.1 % per year, while the rural population stagnated at a growth rate ofonly 0.6%.
2. Accordingly, one of the priorities in the Government of Morocco’s (GOM) 2020 Rural Development Strategy is to improve conditions in rural areas by increasing access to basic infrastructure and social services. This includes reducing provincial disparities related to access. In addition, l’lnitiative Nationale pour le De‘veloppement Humain (INDH), launched by his Majesty the King in May 2005, aims at reducing poverty by targeting poor rural and peri-urban areas and vulnerable people.
3. Rural Water Supply and Sanitation (R WSS). While Morocco is on track to achieve the Millennium Development Goals (MDGs) for water and sanitation, it has one of the lowest RWSS access rates in the Middle East and North Africa (MNA) region (about 60% for Rural Water Supply’ and 35% for rural sanitation2 as of end 2004).
4. According to the Charte Communale of 1976, updated in 2000, RWSS is the responsibility of the CRs. The CR Council decides whether to manage the services on its own (Rkgie directe, Rkgie autonome) or to delegate them to an operator (ONEP, Water User Associations (WAS),private operator). Due to the limited financial and technical capacities of CRs, the average access rate to potable water supply in rural areas was only 14% in 1990.
5. In 1995, GOM decided to address the needs of rural water supply (RWS) through the Programme d ’Approvisionnement Groupk en Eau Potable des Populations Rurales (PAGER) program. From 1995 to 2004, the implementation of PAGER was the shared responsibility of the General Department of Hydraulics (Direction Gkne‘rale de 1 ’Hydraulique - DGH) and the National Potable Water Authority (OfJice National de 1 ’Eau Potable - ONEP).
6. DGH’s and ONEP’s approaches to RWS complemented each other. DGH developed local sources of water (wells, boreholes or spring catchments) serving one or more villages (douars) through public standpipes (SPs) and/or house connections (HCs) managed by WAS. ONEP focused on linking village SPs to its regional urban potable water supply trunk lines, with SPs and ancillary installations operated by a “gardien gkrant” (operator) designated by the population and trained by ONEP. ONEP covered areas situated near its regional trunk lines as well as villages with large populations; DGH was responsible for the remaining rural areas.
’ In Morocco, access to RWS is defined as a minimum service level of 20 liter per capita per day within a distance of 500 meters of households. * Rural sanitation consists mostly of latrines. 7. PAGER is considered a successful operation. The rural access rate reached about 60% at the end of 2004 with unquestionable public health, education and gender benefits. However, recent evaluations noted some shortcomings, including: (a) low water consumption in some places as users were not always provided the service level they wanted and were willing to pay for; (b) a limited choice of management models; (c) inadequate post-construction support to WAS; (d) insufficient attention to greywater management and hygiene promotion and; (e) unequal access rates between provinces, with those on the Atlantic coast as well as the Rif and Pr6-Rif regions lagging behind the national average. This was often due to the scarcity of good quality groundwater resources, making the development oflocal water points difficult.
8. In 2002, GOM decided to accelerate the pace of investments in RWS in order to achieve a 92% access rate by 2007. In January 2004 it made ONEP solely responsible for this Program for Universal Access to Potable Water Supply- Programme de Gknkralisation de 1'Eau Potable (GEP). ONEP has not been clearly mandated to assume responsibility for the roles the DGH and the CR played supporting WASestablished around DGH-built autonomous RWS systems. These systems supply 30% of the rural population. ONEP currently limits its role for these systems to answering official requests for emergency repairs. A goal and program have yet to be developed for rural sanitation.
9. ONEP and Morocco's Water Sector. ONEP is an autonomous public corporation, subject to the sectoral oversight ofthe Ministry of Land Use Planning, Water, and Environment (Minist2re de 1 'Amknagement du Territoire, de 1 'Eau et de 1'Environnement - MATEE). The GEP enlarged the scope of ONEP's activities, which had been limited to potable water production (80% of national production), transmission in bulk to large urban distribution utilities, and provision of water supply and sanitation (WSS) services to secondary urban and rural centers. A growing number of these centers are also turning over their failing sanitation services to ONEP. ONEP now represents the central sector planner and operator, combining a core industrial role (water production and distribution) with vast development mandates (RWS and upgrading ofsecondary center WSS operations).
10. ONEP draws its revenues from bulk and retail water sales, and to a minor extent, subsidies. Profitable bulk water sales to large city distributors (rkgies, concessions) allow internal transfers (pkre'quation) to sustain loss-making secondary center and rural operations.
11. Accelerating the pace of RWS as planned would require significant financing. Substantial tariff and subsidy increases, along with loans and grants, would be necessary to provide the financing while maintaining ONEP's financial viability. This, in turn, can impact the rest of the sector, as other public operators (Rkgies) run operational deficits and must invest in sanitation. To what extent this situation would be resolved depends to a large extent on both the successful conclusion ofthe contrat programme presently being negotiated by ONEP with GOM and the alternative financing mechanism through the proposed Development Policy Loan (DPL) the Bank is currently preparing with GOM.
12. ONEP has been restructured and decentralized to respond to its newly expanded RWS mission. A new Department for Universal Access to Potable Water (Direction Centrale de Gknkralisation de 1'Eau Potable - DEP) has been created with regional and provincial offices. To optimize its costs in rural areas and improve sustainability, ONEP relies increasingly on
2 small, local private operators. So far, this experience has been limited to sub-contracting the operation and maintenance (O&M) ofsmall distribution systems and pumping stations. ONEP is also considering sub-contracting the O&M of water conveyance systems while adopting more demand-driven and participatory approaches. In particular, ONEP has piloted giving users a choice between different service levels (SPs and/or HCs) and management models (gurdien gkrant, small private operators, cooperatives or WUAs).
2. Rationale for Bank Involvement
13. The Bank has had a long, successful involvement with Morocco’s water sector. Lending operations have included five water supply projects, several involving ONEP, and two sewerage projects. With its global RWSS experience and deep level ofinvolvement in the sector dialog in Morocco, the Bank can play a unique role supporting RWS development, particularly in:
(a) advising GOM and ONEP on ways to enhance the sustainability of RWSS investments, in particular through the strengthening of the demand-driven and participatory approach used thoughout the project cycle, in order to provide what users want and are willing to pay for. It also can play a crucial role in strengthening ONEP’s capacity in the areas of social and community development necessary for the implementation ofthis approach;
(b) playing a crucial role in strengthening ONEP’s capacity in hygiene education and assisting GOM and ONEP with the development ofsolutions for rural sanitation;
(c) promoting the participation oflocal private operators in managing RWSS;
(d) working with other donors towards a sector-wide approach; and
(e) helping foster the financial sustainability of ONEP, taking into account its operational and debt commitments related to the project, and to the GEP program as a whole.
3. Higher Level Objectives to which the Project Contributes
14. The project will contribute to achieving GOM’s objective of increasing access to RWS and in so doing improve living conditions in rural areas. In addition, the project responds directly to the fourth objective ofthe 2005-2009 Country Assistance Strategy (CAS): to improve water management and access to RWSS services. Furthermore, financing of RWS has been identified as the main lending priority in a recent review of Morocco’s WSS sector (World Bank, 2004: “Morocco, Recent Economic Developments in Infrastructure; Water Supply and Sanitation Sector”).
15. Improving RWS is essential to promoting social and economic development in rural areas. The GEP that the project supports will:
(a) increase beneficiary participation in educational and economic activities, in particular by reducing the time women and children spend fetching water;
3 (b) reduce prevalence ofwater-borne diseases, especially for children under five years of age;
(c) strengthen social cohesion and foster the emergence ofcommunity-based activities;
(d) create opportunities for job creation; and
(e) contribute to improving amenities in rural areas, thereby reducing incentives for rural- urban migration by low income families.
B. PROJECT DESCRIPTION
1. Lending Instrument
16. The lending instrument to be used for this project is a Specific Investment Loan (SIL).
2. Project Development Objective and Key Indicators
17. The project development objective (PDO) is to support GOM’s program to increase sustainable access to potable water supply in rural areas, while promoting improved wastewater management and hygiene practices. The achievement ofthe PDO will be monitored through the following performance indicators:
(a) rural access rate to potable water supply in the five provinces covered by the project increased by approximately 20% of the rural population (about 465,000 additional people);
(b) at least 90% ofthe water supply and wastewater facilities built under the project have functioning and sustainable management structures (e.g., WASor small/medium size private operators);
(c) at least 20% ofusers are served with HCs;
(d) at least 90% of users equipped with HCs have adequate facilities for wastewater management; and
(e) at least 20% ofusers have adopted improved hygiene practices.
3. Project Components
18. The proposed project would cover five priority provinces in: Essaouira, Safi and El Jadida on the Atlantic coast, and Taza and Taounate in the Rif and Pr’e-rif regions, and include three major components:
4 Component 1. Water Production and Conveyance (total cost USS94.35 million)
19. Implementation ofa program of sub-projects, consisting in the carrying out ofworks and the provision of technical assistance (TA) to deliver water supply to villages (“douar”), through construction of lateral mains from existing or planned regional trunk lines (“piquages”), storage tanks and SPs and, in limited cases, water production facilities such as water treatment plants, pumping stations and water intake structures connected to existing dams.
20. The 12 to 15 sub-projects to be financed under this component will: (a) contribute to improving rural access to potable water supply in a cost-effective manner; (b) be selected following a participatory process involving the provinces, the CRs and users; (c) have acceptable design standards; and (d) include environmental and social safeguards. Any sub-project meeting the above-mentioned criteria would be eligible for loan financing. Priority would be given, however, to sub-projects ready for implementation.
21. Sub-projects will require a financial contribution from users and local governments totaling approximately 20% of construction costs, the balance being financed by the IBRD/AFD loans. Design and supervision of works, estimated at 3% and 2% respectively of construction costs, would be entirely financed by ONEP.
Component 2. Water Distribution and Wastewater Management (total cost US$13.49 million)
22. This component would include: (a) the design, construction and supervision of village distribution systems with meters, providing HCs to users; and (b) the mitigation measures required to handle the resulting increase in wastewater flows. To facilitate the adoption ofHCs, ONEP would offer a prefinancing mechanism ofup to DH 2,500 per connection.
23. This component would be implemented through a demand-driven and participatory approach to service provision, offering users the choice between different levels of service such as HCs or SPs, based on their willingness to pay part of the investment cost and take fill responsibility for operating the systems. Adequate wastewater management will be an eligibility criterion for HCs.
24. Construction costs ofwater distribution systems would be borne by users. The costs for the measures to ensure adequate wastewater systems will be the responsibility of households opting for HCs, except for a few pilot wastewater collection systems that will be financed by the IBRD and AFD loans. In all cases, the design and supervision of systems will be financed directly by ONEP.
Component 3. Institutional Strengthening / Proiect Implementation Support (total cost US$4.63million)
25. This component will reinforce ONEP’s capacity to implement the project and provide support to the WUAs/local organizations responsible for O&M. It consists of: (a) implementation of an effective participatory approach, ensuring that facilities respond to community demand, with a choice of service level and management model; that various
5 community groups participate (women and men, poor and non-poor); and that organizations responsible for O&M are well trained and; (b) provision of hygiene promotion related to water supply and wastewater. The cost of this component covers mainly the social mobilizatiodhygiene education teams (SMTs) and TA for project coordination. It will be financed by ONEP and the IBRD/AFD loans.
26. Public-private partnership (PPP) and Output-Based Aid (OBA) pilots3. In parallel to the project, two to three pilot PPP involving OBA schemes will be implemented in order to leverage private investments, especially for the financing of HCs and wastewater management facilities. Grant financing for the proposed schemes will be sought with the Global Partnership for OBA. Pilot projects are described in Annex 4.
4. Lessons Learned and Reflected in the Project Design
27. Past experience in Morocco shows that the traditional supply-driven approach to RWS -- whereby GOM agencies decided which community should receive what service -- has generally not been sustainable. It has also revealed that adopting a demand-driven and participatory approach (PAGER-DGH) increases sustainability provided that: (a) local organizations receive sufficient training and support and; (b) the RWS scheme is simple to operate and maintain. WASface difficulties with water production (maintenance and repair of pumping stations, water quality control and treatment) and large multi-village systems, but they are efficient in organizing water distribution and collecting water fees. Accordingly, the project will: (a) utilize a demand-driven, participatory approach; (b) ONEP will ensure water production and conveyance to the villages, while local organizations (WAS,small private operators, gardens gkrants) will be responsible for distribution; and (c) SMTs will offer training and prolonged support to these local organizations to ensure that they are capable ofmanaging the water system both technically and financially.
28. SPs, the minimum service level, do not always meet user demand, especially where free alternative water sources are available nearby. This translates into low levels of water consumption in some areas, with average consumption as low as 10 litedpersordday (2004 figures). Users are often willing to pay the incremental cost to get HCs, but sometimes face difficulties in paying their contribution up front. The proposed project will offer a range of service levels to users, from SPs to HCs, and provide a prefinancing mechanism to facilitate the adoption ofthe higher service level.
29. Under the PAGER project, benefits for women and girls were high (time savings and increased school attendance by girls). However, benefits could have been higher if more rigorous attempts had been made to promote women’s full participation in project activities. This was difficult because of the lack ofwomen on the SMTs working in the communities, due to inadequate staffing of the implementation agency (DGH). The project addresses this constraint through Component 3, which includes SMTs composed ofone female and one male.
Output-Based Aid (OBA) seeks to improve effectiveness of subsidies by delegating service delivery to private sector entities, under contracts that tie payments to the outputs or results actually delivered to target beneficiaries (i.e. number of HCs installed). This is in contrast to more conventional subsidies which are mobilized for construction or ‘input’ finance rather than disbursed against specified pre-agreed outputs.
6 5. Alternatives Considered and Reasons for Rejection
30. Rural Infrastructure Project. Consideration was given to combining rural roads and water supply into one project. However, this alternative was rejected when these sectors were assigned to different ministries, and it was felt that under these circumstances, the project would become institutionally too complex to implement.
3 1. PAGER 11. A continuation of the PAGER approach was considered (that is, based on a local source of groundwater and a simple RWS system serving a limited number of villages and managed by a WUA). This alternative was discarded due to the fact that: (a) villages currently without access to potable water supply are mostly located in groundwater scarce areas where more complex RWS schemes need to be considered; and (b) ensuring potable water standards and sustainability ofwater resources was difficult under PAGER, whereas ONEP is in a position to ensure reliable water supply in terms ofquantity and quality.
C. IMPLEMENTATION
1. Partnership Arrangements
32. Project preparation, pre-appraisal, and appraisal were carried out in close partnership with the French Development Agency (Agence Franqaise de Dbveloppement) (AFD), which will co-finance the project with a loan amounting to € 20 million, scheduled for presentation to AFD’s Board in March 2006. The close cooperation of the two institutions in preparing this project with ONEP ensures that the project will follow the same methodological process, using the same eligibility criteria, and technical, environmental, social and economic guidelines.
33. In addition, discussions are ongoing with other donors with the objective of agreeing on basic sector approaches and procedures, thus initiating the implementation of a sector-wide- approach for RWS.
2. Institutional and Implementation Arrangements
34. The Borrower will be ONEP, who will implement the project with the support of its regional and provincial offices. GOMwould guarantee repayment ofthe IBRD/AFD loans.
35. ONEP already has experience with Bank-financed projects. Implementation would leverage existing ONEP structures and available staff will be strengthened by the TA component. Establishment of a special implementation unit is therefore not planned, and the project will support ONEP’s ongoing decentralization and outsourcing ofits services.
36. The Division Suivi, Etudes et Rbalisations (DEP/S) of the DEP will be responsible for overall project implementation. ONEP’s provincial and regional offices, with the support of the central departments, will oversee the technical, social and environmental studies, community mobilization, and the construction and supervision of works outsourced to consulting firms and other private sector companies. This will include the activities described under Component 3: TA for community mobilization, hygiene promotion, and support for project coordination. The
7 regional and provincial offices will also be responsible for issuing the call for bids and issuing contracts, with the support ofthe central departments.
37. The CRs, under the Ministry of Interior, are responsible for village WSS. They will participate along with users in financing approximately 20% ofwater production and conveyance construction costs and, in some cases, in financing water distribution and collective wastewater management infrastructure. They will approve the community’s choice of operator (Le., Gardien gkrant, WUA or private operator) as well as the tariff charged to water users. Contractual agreements will be signed between ONEP, the local operator and the CR, specifying the role and responsibilities ofeach party.
38. Village committees, representatives of users at the village level, will: (a) participate in project design (i.e., choice between HC or SP, location and type ofHC and SP); (b) collect user contributions to construction costs of water production, conveyance and distribution infrastructure, and to construction costs of collective wastewater management systems; and (c) participate in the selection of the type of local management organization (i.e., WUA, small private operator, or cooperative) in charge of O&M of water distribution and collective wastewater management systems.
3. Monitoring and Evaluation (M&E) of Outcomes/Results
39. ONEP will have overall responsibility for collecting data on the project. It will submit a semi-annual report to the Bank covering the status of implementation, outputs, outcomes, financial statements, procurement plans, environmental and social issues, and actions taken to ensure satisfactory project implementation. Village data will be collected by the SMTs using participatory techniques. Financial, technical and procurement data will be collected by the relevant ONEP departments, in collaboration, as needed, with the project manager. A participatory mid-term review and final evaluation will be conducted. Semi-annual reports will be shared among ONEP managers and policy makers to facilitate effective project management, reformulation ofproj ect strategy if needed, and lesson-sharing.
4. Sustainability
40. ONEP has demonstrated a strong commitment to achieving the goals of the project, as this will directly help ONEP achieve GOM’s rural water access targets.
41. Sustainability in the RWS sector should be considered at two levels: (a) sustainability of water supply and wastewater service provision at the village level; and (b) sustainability ofwater infrastructure (production and conveyance systems) developed by ONEP under the project, including ONEP’s capacity to fulfill its operational and debt commitments, as undertaken through the project.
8 (a) Sustainability at the village level rests on the following critical factors: e Sustainability of water souyces and adequate design and quality construction of water supply facilities. o RWS will be provided mainly from ONEP trunk lines that already supply urban centers, thus ensuring reliable supply in terms of quantity and quality. o Considering ONEP’s substantial experience in water production, conveyance and distribution, the quality ofdesign and construction should not be an issue. a Adequate O&M of R WS infrastructure by: o Ensuring strong ownership by users. This is essential to guarantee long-term sustainability and effective use of facilities. The project will follow a demand- responsive and participatory approach to service provision, focusing on what users want and are willing to pay for and sustain. The tariffs charged to users should cover the cost of operating and maintaining the investments at the distribution level. o Ensuring adequate capacity to operate and maintain RWS systems. WUAs have faced difficulties in ensuring all aspects of water production (operation and replacement of pumps, ensuring water quality). Also, experience has shown that local organizations need support until they are proficient in operating and maintaining their systems. Thus under the project, ONEP will ensure water production and conveyance to the villages, while WUAsAocal organizations will be responsible for distribution. SMTs will offer training and prolonged support to local organizations beyond the construction phase. A range of management models will be offered, in order to respond to user preferences, thus helping to ensure sustainable O&M. (b) Sustainability of water infrastructure (production and conveyance systems) developed by ONEP under the project, and ONEP’s capacity to fulfill its operational and debt commitments depends on the following: o The project will promote sustainability by striving to reduce investment and O&M costs through integrating the results of studies undertaken by ONEP to reduce its unit costs and by enforcing eligibility criteria on cost-effectiveness. In parallel, ONEP will continue to increase devolution of responsibility to the private sector for WSS management, in particular the distribution systems, which has already proven to be an effective way to reduce costs and improve affordability ofservices. o Besides reducing costs, appropriate tariffs should be applied at the water production and conveyance level. Water supply investments in rural areas and operational deficits in secondary centers are covered through cross-subsidies between urban and rural areas. The contrat-programme, currently being negotiated between GOM and ONEP, is expected to become a key instrument for improving and adjusting the water tariff structure and other financial support from GOM to ONEP, with a view to ensuring ONEP’s long-tern financial sustainability while making progress towards reaching GOM’s target for access to potable water. Dialog on these issues between GOM and the Bank has been ongoing during the water sector study and project preparation and will continue during implementation through the DPL.
9 5. Critical Risks and Possible Controversial Aspects
42. The overall risk rating for the project is modest. The project does not include any controversial aspects that would pose a reputational risk for the Bank or GOM. Risks that may affect achievement of the project’s PDO and each component’s results are summarized below, together with measures identified for minimizing these risks:
Risk Mitigation
Objectives Risk ofinadequate support from The following financial covenant is Significant GOM for enabling ONEP to included in the project’s legal maintain, through tariff documents: ONEP will, for each ofits adjustments or other measures, its fiscal years, meet a self-financing ratio long-term financial viability (as ofits average yearly investment required to ensure coverage of program equivalent to at least 15%, operational deficits resulting from such ratio to be calculated on the basis the RWS project and its of a methodology agreed upon between replication elsewhere). ONEP and the Bank. In the event that ONEP does not meet the ratio, ONEP, after consultation with the Bank, will take all necessary measures agreed upon with GOM to meet the said ratio.
Risk ofpoor management at the Increased ownership through a Modest village level resulting in demand-driven and participatory unsustainable distribution approach, with a service level systems. responsive to user demand and willingness to pay. The project will propose and explore several management models to accommodate local circumstances and community preferences. B Intensive training and prolonged support to WASand private operators in charge ofO&M.
Risk ofrushed implementation, B The TA component has been Significant with inadequate attention to both specifically designed to address this actual user demand and to risk. It includes a high level of hygiene promotion, due to appropriate technical expertise in political pressure to increase social mobilization and hygiene access rates rapidly, combined promotion, as well as social with ONEP’s limited experience mobilization teams who would
10 in participatory approaches. provide adequate training and support to communities throughout the sub- project cycle and beyond. rRisk ofdelayed or insufficient B In CRs with limited financial Vegligible availability ofCRs’ contribution capacities, the financial support of (15% ofthe construction costs of provincial and regional governments the water production and and/or ofthe Ministry ofInterior is conveyance infrastructure). critical. ONEP has mobilized the financial support ofthe provincial and regional GOMs for which access to potable water supply in rural areas is a priority (as the regions/provinces selected are lagging behind in terms of access). This support is formalized through the signature ofan agreement specifying the obligations of each party. In addition, the Ministry of Interior allocates a budget line to provide funding in case ofinadequate CR resources for RWS. b Demand for water supply is high Modest contributions to the construction among project users and the collection costs ofwater production and ofthe household capital cost conveyance infrastructure. contributions has not been a problem with past projects. that water users cannot SPs would be available for villages Modest afford the investment costs ofthe who cannot afford HCs. water distribution systems and D A prefinancing mechanism also will be available to assist those who want HC.
6. Loadcredit conditions and covenants
The project includes the following conditions and covenants:
43. ONEP will, for each of its fiscal years, meet a self-financing ratio of its average yearly investment program equivalent to at least 15%, such ratio to be calculated on the basis of a methodology agreed upon between ONEP and the Bank. In the event that ONEP does not meet the ratio, ONEP, after consultation with the Bank, will take all necessary measures agreed upon with GOM to meet the said ratio.
44. Prior to commissioning of sub-projects under component 1 ofthe project, ONEP will put in place appropriate devices and take adequate measures to enable recording and analysis, at the level of respectively, production, abstraction and distribution, ofthe volumes of water produced
11 or abstracted from trunk mains and subsequently sold to distribution systemdstandpipe operators at the village level;
45. ONEP will undertake all necessary measures to (a) not later than June 30, 2008, upgrade its billing and collection system so as to ensure proper billing, collection and management of accounts receivable in relation to each sub-project completed under component 1; and (b) not later than December 31, 2008, extend, upon initiation of each sub-project carried out under component 1, its cost accounting system to encompass cost accounting reporting pertaining to the management and operation ofeach sub-project;
For purposes ofComponent 1 ofthe Project, ONEP will ensure that each sub-project:
does not exceed a construction cost per capita of DH 2,000 and a discounted operation cost per cubic meter of DH 5. In the event that the total cost of the proposed sub-project exceeds either or both ceilings, ONEP shall provide adequate information to the Bank confirming that the technical approach, to be followed under said sub-project, is the most cost-effective;
is selected following a participatory process involving the provinces, the CRs and the water users: the field report of the participatory diagnostic and the proc2.s verbaux (written agreement) confirming the commitment of the village committee should be available for at least 70% ofthe villages to be served by the sub-project before the works begin;
is financially and technically sound and economically justified, based on prior studies acceptable to the Bank;
has been subject to an adequate environmental and land acquisition screening and evaluation process in accordance with environmental, resettlement and social safeguards set forth in the EMF and the Resettlement Policy Framework;
receives a financing of at least 15% from the CRs or other public entity and at least DH 500 per household concerned; and
has been given a water withdrawal authorization by the relevant water basin agency in the event that additional water resources need to be exploited under the proposed sub-project.
For purposes ofComponent 2 ofthe Project, ONEP shall ensure that:
prior to the carrying out of each sub-project providing for the installation of HCs, adequate wastewater disposal facilities have been put in place; and
each sub-project has been subject to an adequate environmental and land acquisition screening and evaluation process in accordance with environmental, resettlement and social safeguards set forth in the EMF and the Resettlement Policy Framework.
12 48. No sub-project involving involuntary resettlement oflocal population shall be carried out under the Project.
D. APPRAISAL SUMMARY
49. This project follows a framework approach, in which actual sub-projects are not known in advance, but only after community demand has been verified along with other eligibility criteria. The analysis below is based on a sample of sub-projects selected on the basis of the financial envelope to be provided by IBRD and AFD.
1. Economic and Financial Analyses
Economic Analysis
50. An economic analysis has been carried out for a sample of 13 RWS schemes or sub- projects, and for the project as a whole. Project benefits have been estimated conservatively on the basis of: (a) time savings arising from reduced time spent collecting water, expected to translate into increased time allocation to productive activities and hence increased incomes; and (b) health benefits resulting from a reduction in health expenditures on waterborne diseases and in corresponding losses of output due to morbidity or premature death. Costs included in the analysis are: (a) costs ofconstruction, feasibility studies and works supervision; and (b) costs of project management and implementation as well as O&M of water supply and wastewater schemes constructed under the project.
51. Economic internal rates of return (ERR) of the 13 sub-projects range from 6% to 34%, with an average return for the entire project estimated at 13%, and a net present value (NPV) of DH 229 million (equivalent to about US$25 million) at 10% estimated opportunity cost of capital. Further information is provided in Table 1 of Annex 9. Table 2 in Annex 9 summarizes implications of various risk scenarios. The sensitivity analysis indicates that ERRS are fairly robust to deviations from the base case assumptions. Under an assumption of a 20% increase in total costs, the ERR would be reduced to 11%. The ERR is fairly sensitive to the magnitude of project benefits (times savings and health benefits). A 20% decrease in benefits would reduce the ERR to 10%. However, this is unlikely to happen since benefits have been estimated conservatively in the base case scenario. A one-year delay in project benefits (e.g., delays in construction costs and effective realization of distribution systems) would reduce the ERR to 12% and a two-year delay to an ERR of 10%.
Financial Analysis
Past Performance
52. In the past, ONEP has achieved acceptable financial results with adequate operating income and an acceptable cash flow which financed about one third of its investments. Tariff increases require the approval of a special inter-ministerial tariff commission presided over by the Ministry ofGeneral Affairs. Their inclusion in the contratprogramme, the policy framework laying down the goals and respective obligations of ONEP and GOM, is no guarantee that these
13 increases will take place. Past experience shows that tariff increases have hardly materialized as originally planned. The 2000-2004 contrat programme foresaw annual increases of 8%. However, an increase of 6.75% took place in 2000 followed by another increase ofonly 4.5% in April 2003. Although this situation has delayed the implementation of investment programs, it has not adversely impaired ONEP’s operational and financial performance.
53. Future annual investments are assumed to triple in 2006 and 2007, in comparison to earlier years. To what extent these will actually be implemented depends partly on ONEP’s securing the necessary funding.
Cost Recovery
54. Cost recovery arrangements will be different for the two main components, the water production and conveyance systems, and the distribution systems.
55. ONEP will operate the water production and conveyance systems and sell water to the standpipe operators and water distribution operators. Associated tariffs do not cover O&M expenses of the water production and conveyance systems. The resulting deficit will be increased by the substantial debt service for the IBRD and AFD loans that finance about 74% of investments. It will grow from DH 15.87 million in 2007 to DH 110.9 million by 2014 when the maximum debt service payment level is reached.
56. In the absence of a clear financing policy for the potable water sector that would include strategies for financing and operating rural water systems, these deficits will, for the time being, be supported by ONEP. This, however, is not sustainable in the long term. Therefore, in order to prevent these deficits impairing ONEP’s financial viability, one ofthe loan’s financial covenants foresees that ONEP will, for each of its fiscal years, meet a self-financing ratio of its average yearly investment program equivalent to at least 15%, such ratio to be calculated on the basis of a methodology agreed upon between ONEP and the Bank. In the event that ONEP does not meet the ratio, ONEP, after consultation with the Bank, will take all necessary measures agreed upon with GOM to meet the said ratio.
57. Cost recovery for the operation, maintenance and replacement of the distribution system can be achieved if the operators charge tariffs in line with those tariffs presently applied by WASelsewhere. The sample ofthe 13 sub-projects on which the project was evaluated shows that a tariff ofDH 9/m3 will be sufficient.
Cost Accounting, Billing, and Bill Collection
58. ONEP’s operations, which have until recently focused on the sale and distribution of water in urban and secondary rural centers, are now developing rapidly in the RWS sub-sector. In order to better monitor its rural operations, ONEP needs to modify and extend its systems: to monitor the volumes of water produced and delivered through the conveyance systems and the billing and bill collection, and to extend its cost accounting system. Actions covering modifications to these systems are included in the Loan Agreement and will cover the sub- projects constructed under the project.
14 2. Technical
59. Selection of project area. Selection of priority provinces was based on choosing those with a lower than average rural access rate to potable water supply and a large rural population. About one third ofthe rural population without access is located in the project area, equivalent to 1.6 million people.
60. Water production and conveyance. The technical solution involves primarily the construction of a web oflateral mains from ONEP regional pipelines. This “large web” approach is justified by the lack of local quality groundwater resources in the project area, the availability of impounded water in the dams within respective water basin agencies, and by the objective of limiting the number of water sources to better ensure the sustainability and quality of the water supply. This solution results in significant investment and operating costs and should not be considered as a general model for RWS systems nationwide.
6 1. Water distribution and wastewater management. This component responds to the demand of an increasing share of the rural population for higher service levels, such as HCs. In order to protect people’s health and comply with environmental safeguards, adequate wastewater management will be an eligibility criterion for those requesting HCs. In most cases, on-site household level solutions, such as soak-away pits, will be sufficient. Where population density is high and geological conditions do not favor on-site household solutions, small bore or simplified sewerage systems would be put in place to address the increase in wastewater flows. The project does not include promotion of latrines because this would exceed ONEP’s current mandate. The activities proposed here correspond to the urgent measures needed to mitigate the adverse health impact on users that could be caused by the increase in wastewater.
3. Fiduciary
Procurement
62. An assessment was conducted of the Borrower’s public procurement system which concluded that it is solid and operates in a structured and reliable control environment and does not present major fiduciary risk. ONEP follows the national legislation on procurement, which is generally in line with the Bank’s guidelines, with some exceptions. To address these exceptions, the project will utilize the appropriate procedures (please refer to Annex 8).
63. Procurement capacity was found to be satisfactory at the central level of ONEP’s Department for Supplies and Contracts (DAM). At the decentralized level, the Regional Departments’ (DRs) capacity was found to be fair. As procurement mainly will be handled at decentralized level by DRs, the overall risk is assessed to be moderate. This risk could lead to some non-compliance and delays during project implementation but these will be mitigated by an agreed upon set ofactions, as outlined in Annex 8.
Financial Management
64. A Country Financial Accountability Assessment (CFAA) was conducted in 2003 to diagnose the legal and legislative framework as well as the practices of rules and procedures
15 governing public financial management in Morocco. A Report on the Observance of Standards and Codes (ROSC) was also conducted in 2003, covering the management and the rules of financial management and accounting in the private sector. Both reports concluded that fiduciary risk, both public and private, is low in Morocco. The areas ofweaknesses observed are being corrected based on recommendations from those reports. ONEP, as a result of its own experience and sound accounting and reporting systems, does not represent a major risk.
65. A financial management capacity assessment of ONEP was conducted in accordance with the Bank Guidelines for “Assessment of Financial Management Arrangements in World Bank-financed Projects” (Guidelines to staff dated October 15, 2003). The main conclusion is that ONEP has adequate accounting and financial practices and capacities to meet, on a timely basis, the Bank financial reporting requirements, including the production of the Project Monitoring Report (FMR) and disbursement of resources. The audit of the project will be conducted annually by IGF and will be submitted to the Bank within six months after the end of each fiscal year. Furthermore, an audit of ONEP is conducted annually by an external independent auditor and will be submitted to the Bank after approval by ONEP’s Administrative Council. The format and content ofthe FMRs have been discussed and agreed upon.
4. Social
66. Social impacts. The project will have substantial social benefits and no adverse social impacts. The beneficiary survey from the mid-term review of a previous RWSS project confirmed results of other studies in Morocco which showed that providing access to potable water supply has positive social impacts, including reducing the drudgery ofwater collection for women and girls, and improvement of living conditions in the household and within the village. Specific benefits include: (a) time savings leading to increased participation in educational and economic activities, in particular by women and girls; (b) reduced prevalence of water-borne diseases, especially among children under five; (c) strengthening social cohesion and fostering the emergence of community-based activities; and (d) slowing down the strong trend in rural to urban migration heled by the increase ofpoverty in rural areas. Poor people are often the most affected by lack of access to improved, community water systems, as they cannot afford the cost of the coping strategies used by the non poor (water vendors, private wells). The poor are therefore likely to receive significant benefits from this project.
67. Participation and Gender. The project strategy is based on a partnership between various sector stakeholders: ONEP, communities, the CRs, the private sector, etc. sub-project participation will be at two levels: (a) at the level of local, elected representatives for the provincial and communal RWS planning process and cost sharing of investments in water production and conveyance; and (b) at the community level for cost sharing of investments in water production and conveyance; for the design, construction and O&M of the water distribution systems; and wastewater management at the village level. In addition, the project will promote women’s participation through at least two mechanisms: (a) each SMT will include a female member; and (b) the SMTs will promote the inclusion of women in the WUA administrative committee.
16 5. Environment
68. Environmental considerations will be an integral part of the design, implementation, and O&M of sub-projects. During preparation, an environmental assessment (EA) was conducted, and an EMF was prepared. The framework establishes the process and institutional requirements for environmental management, particularly the screening process as well as the monitoring mechanism. It ensures that sub-projects are subjected to an adequate EA process, that they do not create any serious adverse impacts on the local environment, and that appropriate mitigation measures are included in designs and cumulative impacts are duly taken into consideration.
69. Although environmental risks are relatively minor for the components financed under the project, environmental monitoring will be part ofthe construction supervision activities to ensure the application of the required mitigation measures. Monitoring of environmental impacts will be undertaken by ONEP’s Direction r
70. DRs with TA provided by the project. The Bank will receive regular reports from ONEP on progress achieved regarding the implementation ofthe EMF.
6. Safeguard Policies
Safeguard Policies Triggered by the Project Yes No Eiiviroiiniental Assessment (OP/BP/GP 4.01) [XI [I Natural Habitats (OP/BP 4.04) [I [XI Pest Management (OP 4.09) [I [XI Cultural Property (OPN 1 1.03, being revised as OP 4.1 1) [I [XI Involuntary Resettlement (OP/BP 4.12) [XI [I Indigenous Peoples (OD 4.20, being revised as OP 4.10) [I [XI Forests (OP/BP 4.36) [I [XI Safety ofDams (OP/BP 4.37) [I [XI Projects in Disputed Areas (OP/BP/GP 7.60)* [I [XI Projects on International Waterways (OP/BP/GP 7.50) [I [XI
71. During project preparation, environmental and social screening was conducted as per the Bank’s Operational Policy 4.01, Annex Cyand the project has been classified as “Category B” regarding environment, considering that it is not expected that any particular sub-project will qualify as “Category A” due to their size and expected impact. The safeguard policies on EA and involuntary resettlement would apply. The EA conducted during project preparation indicates that there are reversible environmental issues that can be mitigated. There will not be involuntary resettlement, but there is likely to be permanent and temporary land acquisition. Since the individual sub-projects will only be identified during project implementation, a framework approach was adopted for managing environmental and social impacts. The EA, EMF, and the Resettlement Policy Framework were disclosed at the World Bank’s InfoShop and Public Information Center and in-country on September 16,2005, prior to appraisal.
* By supporting the proposedproject, the Bank does not intend to prejudice thefinal determination of the parties’ claims on the disputed areas.
17 7. Policy Exceptions and Readiness
72. No policy exceptions are required.
18 Annex 1: Country and Sector Background MOROCCO: Rural Water Supply and Sanitation Project
Rural Poverty
1. The results ofthe official 2004 census indicate that the total rural population is 13 million people, accounting for half of Morocco’s inhabitants. Over two-thirds of the country’s poor are concentrated in rural areas, where the average income is half that of city dwellers and where inadequate access to social services and basic infrastructure is the norm. Lack of opportunity continues to drive significant rural migration, as confirmed by 2004 census figures. Between 1994 and 2004, the urban population grew by 2.07% per year, while the rural population stagnated at a 0.59% growth rate. The poverty rate in the provinces covered by the project ranges from 18% ofthe population in Taounate to 29.7% in Essaouira, according to the Morocco “Rapport sur la pauvrete‘: comprendre les dimensions ge‘ographiques de la pauvrete‘ pour en ame‘liorer I ’appre‘hension 2 travers les politiques publiques (World Bank, September 2004)”.
2. Hence, one of GOM’s priorities, as stated in its 2020 Rural Development Strategy, is to improve living conditions of the rural population by increasing their access to basic infrastructure and social services. This strategy includes reducing the imbalance between the provinces better off in terrns of accessibility, and those worse off. It also promotes the use of participatory approaches and the effective integration ofwomen into the development process.
The Rural Water Supply and Sanitation Sector
Potable Water
3. GOM’s goal is to increase rural access to potable water from 50% in 2002 to 92% by 2007. A recent census on the status of potable water supply in rural areas shows that access to RWS reached 60% at the end of 2004. Those villages without access to potable water have to rely on traditional water sources, such as rivers, irrigation canals, water tanks, wells, or non- developed water points. At the end of 2004, about 458,000 people were equipped with HCs. Most of these HCs were installed thanks to the initiative ofWUAs.
4. At the technical level, two main approaches were used for increasing access to potable water supply. The first approach involved providing water to villages by developing water points from ONEP’s regional urban potable water supply trunk lines. Under this scenario, villages were provided access to water through SPs operated by a gurdien gkrant (operator) designated by the population and trained by ONEP. The second approach involved providing water to villages from local groundwater resources, wells, deep wells or protected wells. Most of these water supply systems were developed by DGH and are managed by the WAS. The majority ofvillages receiving water through HCs were developed under the second approach.
19 Sanitation
5. Contrary to RWS schemes in rural areas, GOM has no specific objectives in the field of village sanitation, nor does it have a national strategy for rural sanitation. Experience in this domain is, consequently, very limited. Moreover, there is little public sector assistance in this area and the majority ofwork is undertaken by the households themselves.
6. Except for a few two-story houses and public buildings, sanitation is managed separately in villages:
(a) Dry or pour-flush latrines are used for excreta, but these facilities are not used on a regular basis and people often defecate in the open. The rate of coverage which has been consistently used in various studies stands at around 35% for the country as a whole.
(b) Wastewater is poured directly onto the ground.
The Institutional Framework and Organization of Water Supply Service Delivery
7. According to the Communal Charter of 1976, updated in 2000, the CRs are responsible for planning, organizing and managing public services, including RWSS , within their jurisdiction. They can either provide such services directly (rkgie directe), establish an autonomous public utility (&gie autonome) or delegate the service to ONEP, to a private operator or to a WUA.
8. The most common management system for service delivery at the village level is that of the WUAs (accounting for 40% ofthe total population), followed by ONEP (19%), and the CRs (18%).
9. Direct Management by the CRs (rkgie directe). Direct management involves autonomous control of public WSS services by the local GOM. The CRs’ role is limited to budget issues. This is the most common management model used by more than 500 rural centers. However, the quality of service is not adequate due to lack offinding in this field.
10. Rkgies autonomes. Autonomous municipal authorities provide water to 50 rural centers with a population of about 135,000 persons and 10,300 registered users, more than half ofwhich reside in communal headquarters. The rkgie autonome is created through communal council deliberations or through the communal syndicate and oversees a governing board, through a management committee and director ofdaily operations.
11. Delegated Authority. Several models ofdelegated authority exist, namely: management, concession, affermage and auto-management.
(a) Management contract with ONEP. This contract mainly covers service delivery. Service subscribers incur charges which are collected on behalf of the community as a
20 a
whole. In Morocco, water service management for 3 16 centers was delegated to ONEP as stipulated in the management contract drawn up by the communal councils. The total population using this system is 3.1 million persons, of which 23% are from rural areas (161 centers) and 77% from urban areas (155 centers). The contract arrangements are as follows: (i)to develop communal potable water distribution systems; (ii)implementation of a separate accounting system overseen by ONEP for (ge'rances); and (iii)the application of an agreed and official tariff structure established by official entities. Moreover, the terms ofthe contract used under this system have been revised based on a new model developed but not yet implemented which will protect the interests of both parties involved.
(b) Concession is a contract drawn up between a responsible individual and the commune to guarantee potable water service provision at his own risk" in exchange for the payment of water charges from the users. This type ofcontract has long existed in Morocco but is not governed by any law. However, a draft law has now been submitted to Parliament for ratification. In rural areas, these concessions are widely used in rural centers and communities, affecting a total population of 60,000 persons.
(c) Community Management. This is the most common management method in most villages under which WASmanage 40% of the RWS systems in the villages; the gardiens ge'rants of the SPs installed by ONEP in 15% of villages; and cooperatives and Jmag in 8% ofvillages.
ONEP and Morocco's Water Sector
12. ONEP is a financially autonomous, state-owned water and sewerage enterprise. Its activities are governed by a Framework Agreement with GOM (Contrat programme), updated annually, that sets ONEP's goals, means, and priority interventions. A 20-member board, headed by the Prime Minister and comprising representatives of GOM ministries and agencies and ONEP customers, supervises its activities. GOM control covers major decisions relating to investments, operating budgets, borrowing, tariff levels, the code of employment, and major procurement.
13. ONEP receives its bulk water from the main dams and canals operated by DGH. Its vast infrastructure includes treatment plants and transmission pipelines which provide a reliable delivery ofpotable water to the urban RWS distribution systems. Since its inception, ONEP has also been entrusted by GOM with the management of RWS systems in 61 secondary towns. Since then, the CRs have delegated the management of RWS systems to ONEP for around 300 small urban and rural centers.
14. Finally, ONEP's mission to bring potable water to Moroccans has in recent years been expanded to encompass rural areas, and this represents a substantial and transforming challenge for the institution.
21 Overall Challenges in the Water Sector
15. Financing bottlenecks and sector inefficiencies. To achieve GOM objective of 92% access to RWS by 2007, sector agencies estimate that about DH 30.7 billion (US$3.3 billion) of investments would be needed between 2004 and 2007. This would be double the level of investment over the previous four years, and there are serious questions as to whether these objectives are feasible and can be implemented in a sustainable manner. It does not seem possible for Morocco's water sector to finance all the investment needed, and addressing significant policy, regulatory, operational, institutional, and allocational inefficiencies is a prerequisite for achieving the level of self-financing and performance implied by GOM's sector objectives.
16. Policy inefficiencies. A highly fragmented institutional framework has hindered the formulation of a comprehensive sector-wide vision and the establishment of coherent policy objectives. This has led to some inefficiency in the allocation offunding for capital investments, and misalignment between new sector priorities and infrastructure investment. In an effort to enhance coordination among the several policy stakeholders in the water sector, a new ministry responsible for water management was created in the fall of 2002 - the MinistBre de 1 'ame'nagement du territoire, de I'eau et de 1 'environnement (MATEE). Other GOM entities performing key policy and regulatory roles in the water sector include the ministries of Interior, Agriculture, General and Economic Affairs, and Finance. Coordination oftheir multiple roles in policy definition and application could be improved in order to achieve optimal allocation of water resources and funds.
17. Morocco's regulatory framework is incomplete and inconsistent, with different rules for each of the three operator categories. At present, no single agency performs a comprehensive regulatory role. More structured and uniform legal and contractual rules, strengthened capacity of staff, and sub-sector regulators are needed for increased transparency, accountability, and competition among operators, leading ultimately to increased sector efficiency. A unified block tariff structure applies to all retail water sales, with tariff levels varying locally. Not only are tariffs generally insufficient to cover operating and depreciation costs, but their subsidized components are not effectively benefiting the poor. There is, nevertheless, room to increase tariff levels, since household surveys indicate that the present cost of water and sanitation services is well within the affordable range, even for low-income households.
22 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies MOROCCO: Rural Water Supply and Sanitation Project
1. The following on-going or recently completed Bank-financed projects have objectives related to rural development and rural infrastructure:
Sect o r/Issue Project Ratings Rural development/low access to social Rainfed Agriculture Development IP : S infrastructure Project DO : HS Rural development/low access to social Irrigation-based Community IP : S infrastructure Development Project DO : S Access to rural water PAGER Project (completed) OED: S
2. The following on-going projects are financed by other development agencies, and support RWS activities.
~__ Project Agency ONEP6 - Water supply in 4 rural Agence Franqaise de sanitation services in rural centers and peri-urban areas and Dkveloppement (AFD) areas sanitation in 4 rural centers (loan: €10 million). Water supply project I1 in villages Kredit anstalt fur close to ONEP regional pipeline Wiederaufbau (KfW) (grant amount: € 11.2 million) Water supply project I in villages close to ONEP regional pipeline (grant amount: € 24.6 million) Water supply in two rural centers (loan amount: € 13.6 million) ONEP I11 (loan amount : € 10 million) European Investment Bank (Em) 0 Water supply project in 20 rural BID centers (loan amount: US$20.3 million) 0 Water supply project in villages in Saudi Fund for the province of A1 Hoceima (loan Development (SFD) amount: US$11.9 million) 0 MEDA - Water supply in rural areas European Union (grant amount: € 9.6 million)
0 Water supply in rural areas (loan: 5 JBIC million Yen) 0 RWS in M’Noud (grant : € 783,000) Cooperacih Espanola
23 0 RWS in Ferkhana (grant: million) Improve water supply and Water supply project in Tlat Cooperation Belge sanitation coverage in rural Lakhsass rural town and surrounding areas villages (grant amount: € 7.2 million) Water supply project in five rural towns (Grant amount: € 1.7 million) 0 Water supply project in 72 villages in the provinces ofChtouka Ait Baha and Agadir Ida Outanane (Grant amount: € 2.96 million) 0 Water supply project in 20 villages in the provinces of Ouarzazate and Zagora (Grant amount € 1.33 million) Improve water supply and Water supply project in the PrC-Rif JICA sanitation coverage in rural Region, Phase I for YEN 255 areas. million. 0 Water supply project in the Pre-Rif Region (Phase 11) for YEN 371 million.
24 Annex 3: Results Framework and Monitoring MOROCCO: Rural Water Supply and Sanitation Project
Results Framework
PDO Outcome Indicators Use of Outcome Information Support GOM program to increase - Access rate to potable water - ONEP will track progress towards sustainable access to potable water supply in the five provinces meeting national targets on rural supply in rural areas, while increased by about 18% oftheir access to potable water supply promoting improved wastewater rural population (or about 465,000 management and hygiene practices. additional rural people);
- At least 90% ofthe water supply - verify impact on increased and wastewater facilities built sustainability ofaccess under the project have well functioning and sustainable - verify compliance with management structures; environmental mitigation plans
- At least 20% ofusers have adopted improved hygiene - verify impact on personal hygiene practices. ng
Component One: Component One: Component One: Water production and conveyance - number ofpeople and villages - assess progress with providing infrastructure sub-projects given access to potable water water access to the rural constructed and functioning supply (by type ofservice) per population, and if project strategy province; for increasing access is working properly - cash deficits ofONEP in operating water production - assess whether systems functioning systems in an efficient, sustainable manner, one that does not adversely affect - % oflocal GOMs contributing the viability ofONEP required financial contributions - assess participation oflocal GOMs in capital investment
Component Two: Component Two : Component Two: Water distribution systems (HC) - % ofvillages in project given - assess progress with providing HC constructed under the project, in access to HC per province or whether approach needs order to respond to target modification populations’ level ofservice preferences - % ofvillages provided with HC Effective mitigation measures in that have adequate mitigation - check compliance with EMF place to address increase in measures for increased wastewater wastewater flows flows I
Component Three: Component Three: Component Three:
Implementation of demand driven, - % ofvillages contributing to - assess success ofactivities and Participatory approaches according capital costs for production and make any needed adjustments in
25 to project nom conveyance approach - % offemale members on WUAs
- % ofproject villages with - assess prospects for sustainability Effective and sustainable functioning water systems ofthe RWSS investments or management ofwater distribution whether changes in strategy and and wastewater facilities - % ofWUA with tariff adequate implementation are needed for O&M and replacement costs for distribution system and village wastewater facilities
- % ofproject villages with HCs that have functioning wastewater management systems
- assess progress ofthe hygiene Hygiene promotion - % households with adequate water education activity and adjust as quality in household water storage needed facilities
- % oftarget population undertaking hand washing at critical times
ONEP’s M&E department will have overall responsibility for M&E. ONEP will submit a semi- annual report to the Bank covering the status of implementation, outputs, outcomes, financial statements, procurement plans, environmental and social issues, and actions taken to ensure satisfactory project implementation. Village data will be collected by the SMTs using participatory techniques. The SMTs will train community groups in basic participatory M&E, to build their capacity to fulfill their roles in system management. Financial, technical and procurement data will be collected by the relevant ONEP departments, in collaboration as needed with the project coordinator. A participatory mid-term review and final evaluation will be conducted. Semi-annual reports will be shared among ONEP managers and policy makers to facilitate effective project management, reformulation of project strategy if needed, and lesson- sharing.
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I I Annex 4: Detailed Project Description MOROCCO: Rural Water Supply and Sanitation Project
1. The Project will support GOM's program to increase sustainable access to potable water supply in rural areas (Programme de Ge'ne'ralisation a I 'Eau Potable - GEP), while promoting improved wastewater management and hygiene practices.
The National Program, GEP
2. The National Program, which the project supports, follows the PAGER, launched in 1995 and which had a target of increasing the rural water access rate from 14% in 1990 to 80% in 2010. During this period, 31,000 localities were to be covered, i.e. 11 million people. In 2002, GOM decided to accelerate the pace of investments in RWS in order to achieve a 92% access rate by 2007. In January 2004 it made ONEP solely responsible for GEP. To prepare the program, provincial master plans were carried out. The provincial master plans are based on exhaustive village surveys. They identified technical solutions to supply each village with sustainable potable water supply, along with investment and development costs.
GEP in the Five Priority Provinces Targeted by the Proiect
3. The proposed Project would cover five priority provinces: El Jadida, Safi, and Essaouira on the Atlantic coast, and Taounate and Taza in the Rif and Prk-rif regions. The selection of these five provinces was based on the following criteria: (a) a significantly lower access rate to potable water supply than the national average; and (b) a large rural population. About a third of the rural population without access is located in the Project area, equivalent to about 1.6 million people.
Province Population in 2004 Access Rate Population without access El Jadida 804,294 37% 506,705 Safi 357,378 26% 264,459 Essaouira 465,665 32% 3 16,652 Taounate 600,277 54% 276,127 Taza 492,936 48% 256,326 Total for 5 Provinces 2,720,550 40% 1.620.269 I Total for Morocco 13,425,413 61% 5,101,657
4. Low access rates in the five provinces are explained by the scarcity of good quality groundwater resources in the area, which hampered rural water investment under the former PAGER program (1995-2004). The PAGER program was based on two technical solutions, none of which were able to tackle the challenges of extended areas with scarce groundwater resources: the first, the ONEP approach, involved supplying SPs to villages located in the vicinity ofits main pipelines and in the vicinity ofrural centers and cities. The second, the DGH approach, provided water to remote villages by developing water points from local groundwater resources.
5. Priority program cost. The cost of the preliminary GEP program in the five priority provinces is estimated at about DH 3.8 billion (US424 million), as shown in Appendix 4-A. 29 The Project
Component 1. Water Access: Water Production and Conveyance (total cost US$94.35 million)
6. This component’s objective is to provide sustainable access to potable water supply to about 1,000 villages, home to 465,000 people. It will finance the delivery of water supply to villages through the construction of lateral mains from existing or planned ONEP regional trunk lines (piquages), storage tanks, and SPs. In a limited number of cases, it may also be necessary to build water production facilities (water treatment stations or water intakes on existing dams).
7. The technical solution, as defined in the five provincial master plans, involves primarily the construction of a web of lateral mains from ONEP regional pipelines. This “large web” approach is justified in the project area by the lack of local quality groundwater resources, the availability of impounded water in the dams within respective water basins, and by the objective of limiting the number of water sources to better ensure the sustainability and quality of the water supply. This solution results in important investment and operating costs and should not be considered as a general model for RWS systems nationwide.
8. The sub-projects to be financed under this component would have to meet the following eligibility criteria:
(a) Cost-effectiveness criteria. The sub-projects would have to contribute to improving rural access to potable water supply in a cost-effective manner, in order to supply a maximum number ofbeneficiaries within the project’s limited financial envelope and to mitigate the financial risks to ONEP associated with investments in rural areas:
i. Investment cost per capita: to be eligible, a sub-project should have a per capita construction cost below DH 2,000. The following assumptions will be used for calculation: base cost without taxes but including 10% physical contingencies divided by the 2004 population for the sub-proj ect area.
ii. Discounted operating; cost per m3: to be eligible a sub-project should have a discounted operating cost below DH 5/m3. The following assumptions will be used for calculation: O&M cost ofthe sub-project, excluding depreciation, excluding the price of water at the piquage, actualization rate of 10% over 20 years, water consumption at the SPs increasing from 10 to 20 lcd over 20 years; water consumption at the HCs increasing from 30 to 50 lcd over 20 years, percentage of households served with HCs increasing over 20 years to reach 50% in the Rif and PrC-Rif regions and 60% in the Atlantic region, and water losses of5%.
iii. In the event that a sub-project exceeds one of the cost ceilings, ONEP will provide to the Bank information proving that the proposed technical solution is the most cost-effective.
30 (b) Other Eligibility Criteria: Sub-projects Must:
i. be selected following a participatorv process involving the provinces, the rural municipalities (communes) and the water users: the field report of the participatory diagnostic and the procgs verbaux (written agreement) confirming the commitment of the village committee should be available for at least 70% of the villages to be served by the sub-project before the works begin.
ii. have acceptable desim standards: the competitive bidding documents should integrate the results of the validated optimization studies and each sub-project’s feasibility studies should be submitted to the Bank for review.
iii. include resettlement, environmental and social safeguards:
0 attestation from ONEP’s environmental division on the requirements for environmental assessment and land acquisition;
withdrawal authorization from the water basin agency in the event that additional water resources have to be exploited.
9. Cost-sharing Arrangements. All sub-projects would require a financial contribution from users and local governments totaling approximately 20% of construction costs, the balance being financed by the IBRD/AFD loans. Design and supervision of works, estimated at 3% and 2% respectively ofconstruction cost, would be financed entirely by ONEP.
10. Design standards will be consistent with the guidelines currently being prepared as part of the on-going study “Directives pour la conception et le dimensionnement des systimes d YEP en milieu rural”: (4 water consumption in the year 2025 is estimated at 20l/person/day for public standpipe and 50llpersonlday for HCs;
the ratio for SPs versus HCs is, respectively, 30%/70’%0 (it is assumed that the share of water users served by HC will increase by 5% a year starting from the date the sub-project is operational);
technical losses in the water production and conveyance infrastructure: 5%;
technical losses in the distribution systems: 20%;
daily peak rate = 1.5 ; hourly peak rate = 2 ;
minimum pressure where water is delivered to the villages : 1.5 or 2 bars
31 (g) pipeline materials: D<80mm : PEHD; 80-300mm; PVC; >300mm: concrete. The bidding documents will allow flexibility in the choice of materials; and
(h) digging of trenches and civil works will be done according to ONEP standards which are currently being revised to reduce investment and development costs.
11. Preliminary Program for Project Financing. A preliminary program of 13 sub- projects was discussed with ONEP during Bank missions (Appendix 4-B). These sub-projects total DH 900 million (US$lOO million) and would provide access to water to about 1,200 villages or 530,000 people. The list is still indicative and subject to conformity with the eligibility criteria.
Component 2. Water Distribution and Wastewater Management (total cost: US13.49 million)
12. This component was introduced to respond to the demand of an increasing share of the rural population for HC. It will be implemented through a demand-driven and participatory approach to service provision, focusing on what users are willing to pay for and sustain. It will include design, construction and supervision of an estimated 265 village distribution systems, and ofthe mitigation measures required to handle the resulting increased wastewater flows.
(a) Water Distribution
13. Based on data regarding population density and the type of habitat, it is expected that over the duration of the project, about 25% of villages in the Atlantic area and 20% of the villages in the Rif and Prk-Rif regions (equivalent to about 90,000 people) will opt for HCs. This percentage will continue to rise once the project is completed, reaching 70% and 60% respectively in 2025, as an increasing number ofhouseholds will shift to a higher service level.
14. Construction costs of water distribution systems will be borne by users with possible support from CRs, while design and supervision ofworks would be financed by ONEP.
15. To facilitate the adoption of HCs, ONEP will offer a prefinancing mechanism of up to DH 2,500 per connection (repayment period: 7 years, interest rate: 5%).
16. In order to protect people’s health and respond to environmental safeguards, adequate wastewater management will be an eligibility criterion for HCs.
(b) Wastewater Management
17. Present situation of sanitation in the project area: with the exception of a few two-level houses or public buildings, wastewater is managed separately in villages:
0 15% ofhouseholds are equipped with dry or pour-flush latrines. Latrines are used for excreta, but these facilities are not used on a regular basis and people often defecate in the open;
0 Wastewater is poured directly onto the ground.
32 18. The technical approach utilized by the project envisages the separate management of wastewater, on the one hand, to reduce investments and make maximum use of existing infrastructure, and on the other hand, to reduce the need for collective systems and treatment plants.
19. Taking into account the geology and type of housing in the project area, it is expected that for 80% ofthe population supplied by HCs, the appropriate technical solution for disposal of wastewater will be an on-site solution (soakaway pits). In the other 20% ofcases, where on-site solutions will not be possible, collective or semi-collective systems will be developed for the evacuation ofWastewater.
20. The appropriate solutions will be identified for each village as part of the studies undertaken by the TA. They then will be presented to users, and they will make a decision depending on what they are willing to pay.
21. The sanitation activities to be undertaken in the project include: (a) studies and the promotion of sanitation, managed by the TA. This promotion seeks to prevent any possible negative impacts from an inadequate disposal ofwastewater (adequate disposal is a condition for the granting of HCs) (b) an envelope of about DH 22 million (equivalent to US$2.44 million) from the IBFWAFD loans for the financing of pilot wastewater projects in areas where on-site solutions are not possible.
22. Construction costs for on-site wastewater solutions will be paid for by users. In cases where adequate wastewater management requires a collective system or a wastewater treatment facility, construction costs will be borne by ONEP and/or local authorities with the participation of users for connection costs. In all cases, technical, social and environmental studies of systems and supervision of works will be financed directly by ONEP and by the IBRD/AFD loans.
23. The project does not include promotion of latrines because this would exceed ONEP’s current mandate. The activities proposed here correspond to the urgent measures needed to mitigate the adverse health impact on users that could be caused by the increase in wastewater. The measures are not sufficient to significantly increase the health status ofthe rural population. For this, grants are being sought so that the Ministry of Health, through its health technicians, could take charge ofpromoting latrines in the project area. The coordination between the staff of the Ministry and the project’s hygiene specialists will be handled by the TA. The counterpart contribution of the Ministry of Health will include the salaries of the health technicians, including related personnel costs and office space.
33 Table 4 below shows the range ofworks included in the project: Table 4: Works included in the Project
Component 3. Institutional Strengthening and Project Implementation Support (total cost US$ 4.63 million)
24. TA would be provided in order to enable efficient project management, strengthen ONEP’s participatory approach to service provision, and facilitate effective integration of hygiene and wastewater management into the provision of improved water supply services. It would consist of a project coordinator, a social scientist, and a hygiene promotiodsanitation specialist based at ONEP headquarters. In addition, two social mobilization coordinators would supervise SMTs attached to ONEP provincial offices. The number of SMTs will range from 3 to 14, depending on the volume ofwork.
25. The approach is based on the following principles:
Demand-driven, participatory approach. The project will be implemented through a demand-driven, participatory approach adapted to the sector and the Moroccan context, meaning that it will seek to stimulate and organize active and responsible community participation in sub-proj ect design, construction, O&M, and M&E.
Inteaation. The project will integrate water supply and wastewater management measures to mitigate increases in wastewater flow, hygiene promotion, and the strengthening of local capacities to manage water distribution and wastewater management systems.
Gender and vulnerability. The approach will focus on the social relations and the status ofgender at the community level. All social groups will be included in the diagnostic studies and the social analysis of the projects (women, widows, wealthy, poor, men, youth and the aged). This will ensure that all voices are, heard in the technical and institutional choices.
Organization ofthe population. Organization ofthe population is a way to ensure long-term sustainability by facilitating community participation. Initially, the local associations may be informal but will evolve into more formal entities (WUA), especially in the case of community management of water distribution. The main role ofthe associations will be to ensure adherence ofthe community to the roles expected ofthem and to the good use ofthe water supply scheme.
34 (e) Partnerships and other contractual relations. Various forms of contractual arrangements will be made during the project cycle. Apart from the conventions passed between the ONEP and the CRs and ONEP and the users for their financial contributions, there will be other contractual arrangements involving the users and their local governments specifying the role and responsibilities ofeach party.
26. Hygiene education and promotion of wastewater management. The hygiene/sanitation specialists mentioned above will be responsible for appropriate water use and wastewater management promotion throughout the project area.
Public-privatePpartnership and OBA pilots
27. ONEP wishes to promote public-private partnership for the management of (multi) village water and sanitation systems to ensure adequate O&M arrangements and/or to leverage private sector investment, especially for the financing ofHCs and sanitation.
28. In this context, two to three pilot PPPs involving Output-Based Aid (OBA) schemes will be implemented in parallel to the proposed project. Feasibility studies have been completed for two of the pilots. Grant financing (DH 22 million) for the proposed OBA subsidy schemes will be sought with the GPOBA.
29. The objective ofthe first pilot is to encourage an existing local private operator managing a water distribution system supplying 14,000 customers in 17 villages to expand its services to rural sanitation. In these villages, customers are supplied through 1,700 HCs without the appropriate infrastructure to manage the resulting wastewater flows. The environmental health situation is critical and the demand for sanitation services is high. However, the operator and its customers do not have the financial means to invest in sanitation on their own. In order to cover the sanitation needs in 17 villages, it is estimated that the private operator would need a subsidy equivalent to 75% of the cost of sanitation investments (collective or individual) or DH 2,080,000.
Basic assumption Basis of calculation Result Population growth: low In 2005, 12,000 inhabitants of 11,400 inhabitants in year 10 the commune ofM’haya live in a village with access to piped water supply, of which 10,800 are served by ONEP; + 0.4% annually Taking into account To be realized: Needed investment: households who are 807 flush latrines with siphon; 807 x DH 2102 = DH 1.70 million already equipped, and 9 septic tanks, each collecting 81 x DH 3055 = DH 0.25 million willingness to invest of waste water from 9 households; other households 1072 x DH 533 = DH 0.57 million 1072 soakaway pits Households will be asked Household contribution: The private operator would need an to finance 25% ofworks 0.25 x 2.52 million = DH 0.63 OBA subsidy corresponding to the million difference, + lo%, = DH 2,080,000
35 30. The objective ofthe second pilot is to delegate to a local private operator under a 10-year contract the O&M of a water system supplying 142,000 inhabitants, of which 105,000 are rural inhabitants. In this case, the private operator will have to extend HC coverage from 40% to 80% over a five year period. It is estimated that the private operator would need a capital subsidy equivalent to DH 1500 per connection or DH 11,550,000 and a time-bound operational subsidy equivalent to DH 0.9/m3 over 5 years to cover the transitional deficit until revenues from water sales are large enough to cover costs.
Basic Assumption Basis of Calculation Result Simulation of operational BI coverage increasing from 40% Increasing operational deficit surplus with BI installation to 80% in 5 years until year 5, then gradually works not included Unit consumption increasing from decreasing 25 lpcd to 34 lpcd Positive operational surplus as Distribution network efficiency of year 8 (at current tariff equal to 75% in year 1, and levels) improving by 0.5% annually. Subsidy equivalent to cover Subsidy disbursed on the basis of DH 4,200,000 cumulative operational volume of water effectively put into or equivalent to DH 0.90 / m3 deficit ofyears 1 to 5 distribution (metered consumption): 4,700,000 m3 cumulative for years 1 to 5.
36 Appendix 4-A. GEP, Priority Program
CONSTRUCTION COSTS PROVINCE SUBPROJECTS KLUDING 10% CONTINGENCIES POPULATION 2004 ESSAOUIRA AEP du centre de TAFETACHTE et douars 4,386,000 4,900 ESSAOUIRA AEP de 22 douars de Talmest (2eme tranche) 7 544,000 5,900 ESSAOUIRA AEP de 17 douars de la CR dAguerd Alp de I'adduction Essaouira 8,772.000 7,900 AEP du centre d'Ounagha et douars 10,527,000 19.800 AEP de 8 douars dEssaouira 7 895,000 9,900 Ide Tamanar 25.920 000 29,106 Ghanem, Mouarid Bizdad Sidi Hmad ou Hamed et Sidi Kaouki Alp de I'adduction ONEP 57,017,544 64,350 AEP des douars des CR de Tahelouanete, Aglif et Bouzemour alp add Ait Daoud 15,790,000 17 400 AEP des douars de Zaouit Ben Hmida 2,632,000 3,700 AEP de 36 douars de Talmest (3eme tranche) 7,018,000 6,900 AEP des centres Lamkhalif, Tfenda et douars 4 386,000 10,400 AEP des douars des CR Akermoud et Sidi lshaq 26 316,000 26,200 AEP de 675 douars Alp de la station projetee sur le CPHS 715 790,000 214.300 I'ext du sys add youssoufia 30,702,000 23 300 I'extention du sys add Chemaia (SystBme RES CH) 135,393,690 55,285 AEP de 14 douars de Youssoufia-Chemaia 6,141,000 6,900 Alp du reservoirlemP shaim 13 422 000 7,300 IBeddouza-B1) 12,555 965 7,765 systBme adducteur Tnine Ghiate 13,?58000 9,700 AEP de 46 douars de Tnine Ghiate (28me tranche) 37 983 000 19,800 AEP des populations rurales de la province de safi A partir des installations de la ville de Safi 131,579,000 72 900 tranche) 258.772.000 84,100 AEP de 388 douars du cercle de Karia Ba Mohammed Alp du barrage AI Wahda 114,036,000 128,700 AEP de douars de Galaz. Sidi Mokhfi Mezraoua Alp du barrage Sahla (2Bme tranche) 52 632 000 17,100 AEP de 14 douars des CR Moulay Abdelkrim. Laghouazi et Moulay bouchta (2eme tranche) 5,264,000 7 200 AEP de 15 douars riverains A I'adduction de Bouhouda (lere tranche) 13,158,000 12 800 AEP de 122 douars de la province de Taounate Alp du barrage ldriss ler 170,176,000 56 900 AEP de 110 douars du cercle de Taounate Alp du barrage Asfalou 143 860,000 54,600 Ha) Mhemed, Sidi Mokhfi. Sidi Yahya Ben Zeroual Tamouda et Tafrante A/p du barrage AI 183,078,947 95.081 Sahla 44 737 000 21 200 AEP du centre de BOUHOUDA et douars 23,685,000 24 700 AEP de 16 douars des CR Moulay Abdelkrim. Laghouazi et Moulay bouchta (lere tranche) 6,141,000 5,100 AEP de 29 douars Sidi Abed et El Ouaka 21,053,000 10,000 de 14 douars de Bsabsa 12,281,000 2,900 des centres de Galaz. Sidi Mokhfi Mezraoua et douars (1Bre tranche) 26,316,000 19,800 AEP de 14 douars de Ain Mediouna 7,018,000 8,700 AEP du centre de Boured et douars (lere tranche) 4,123,000 3,300 barrage Asfalou (lot 6) 30,702,000 23,700 AEP de 5 douars de Bni Frasse 2 018.000 4,700 AEP de 21 douars de la CR de n 6,900 AEP de 17 douars de la CR de 2,300 IAsfalou (lot 5) 43,860,000 32 200 alp du barrage asfalou 52,632,000 41,200 AEP de 208 douars de la Province de Taza A/p de I'adduction Bab Louta (2eme tranche) 142,983,000 100 400 AEP de 165 douars de la province de Taza Aip adduction Bab Louta (18re tranche) 162,281,000 79 600 AEP de Taddarte et 12 douars (18re tranche) 13,334,000 16,800 AEP de 47 douars de TaddarteiZBme tranche) -- 11,200 AEP de Smiaa 3,500
AEP de 52 dou 1-EiJorf I 18,860,000 29,700 AEP de 564 douars par I'extension de la ST existante de Zemamra (Groupe ZEM+SB) 397,369,000 222,700
1,755,000 I AEP de 9 douars de la CR MyAbdellah-- I 3,900 AEP de 282 douars i/p de I'adduction Daourat ~orfschBma-(Groupe L&ouna"ieim 182,457,000 104,500 AEP de 19 douars par piquage sur I'adduction de Sidi Said Maachou (Groupe SSM) 12,018,000 16,300 AEP de 54 douars Alp de I' Daourat Jorf (Schema DJA+DJ) 21,786,000 17,_622 AEP de 98 douars Alp de I'a Daourat Jorf (SchBma DJB) 45,610,000 38.429 AEP de 83 douars Alp addu agan &age haut (schema MAZ-EH) 45,106,628 26,073 AEP de 40 douars Alp de I'adduction Mazagan Btage bas (schBma MAZ-EB) 15,463,407 23,026
AEPde 131 douars Alp de I'adduction Daourat Jorf (schernaDJH) 88,352,849 49,005 I AEP de 64 douars Alp de I'adduction Daourat Jorf (schema DJI EB) Etage bas 39,664,000 40,590 AEP de 69 douars Ahde I'adduction Daourat Jorf (schBma DJI EH) Etaoe haut 41.104.000 29,205 49,353,512 51,421 3,819,549,542 2,150,856 Note: AEP denotes rural water supply sub-project; douar denotes village.
37 Appendix 4-B : 13 Sub-projects on which the Appraisal is Based
AEP de 54 douan hip de i adduaion Daourat Jorf
El Jadida 2
4EP de 83 douars Up adduction Mazagan &age haul El Jadida 4
El Jadida 5
AEP de 131 douan hip de I'adduction Daourat Jolf El Jadida 7 (sch6maDJH)
AEP de 64 douan hip de I'adduction Daourat Jori El Jadida 8 (schema DJI EB) Etage bas
IEl Jadida 9 (schbma DJI EH) Etage haul
IAEP de 72 douan aip de i'adductwn Sidi Daw El Jadida 10 (schema SD) cSafi 2 cSafi 3 cEssaouira 1
Essaouira 2
Taounate 1
Note: APS = Feasibility Studies APD = Detailed Design
38 Appendix 4 - C Methodology for the Participatory Approach
Phase 1. Information and Commitment of Local Authorities
During this phase, ONEP works along two parallel fronts: the first being information and commitment oflocal authorities (provinces and CRs), and the second technical studies.
Step 1. Consultation with Local Authorities and Elected Representatives. ONEP informs provincial authorities and CRs of the priority program. More specifically, the following points are explained: (a) the proposed selection ofthe sub-projects; (b) the methodology for community participation; (c) the financial and management implications of the choice of delivery system (SPs or HCs); and (d) the financial contribution from each party to construction costs.
Step 2. Information and Commitment of the CRs. The CR through conventions and agreements passed with ONEP commits itself to the mobilization offunds. Ideally, the CR will designate a technician to support the SMT in the initial contacts and mobilization of the population. At this stage the project can also begin to explain to the rural commune representatives the overall characteristics ofthe participatory approach.
The detailed studies presented to the CRs and local authorities should also indicate whether there will be any environmental impacts, temporary occupation of lands, or land acquisition and if so, the mitigation measures to be taken.
Phase 2. Social Mobilization and Community Participation
During this phase, the SMTs fully launch their work in the villages. This is a critical phase to gain the trust and cooperation of the communities. Before beginning their work, the SMTs must have the information necessary to understand the technical aspects of the proposed sub-projects. This will also help them teams in focusing the participatory diagnostic. During this phase SMTs carry out three critical steps: informing and consulting with the community and verifying their demand; conducting the participatory social community diagnostic, and organizing the community management structures for water distribution.
Step 1: Community Information. The SMTs begin the process of education and mobilization with the communities. This work will require one or several visits to the communities, depending on their degree of prior information and other factors. During this phase the SMTs inform the population about the requirements for accessing the project; technical options, including choice of SPs or HCs; the rationale behind community participation and the necessary contributions required to bring water to the douar; and the financial contributions required by the users if HCs are chosen.
Step 2. Community Participatory Diagnostic and Choice of Service Level
The objective of the diagnostic is to establish an accurate socio-economic baseline for the implementation of the project and to begin to explore the best methods for the management of the water systems. The participatory diagnostic will include:
39 (a) a socio-economic baseline study, which will be used for project M&E. Datdinformation collected could include: (i)the number of households with and without access to water and sanitation; (ii) an inventory of households and household characteristics (led by men, by women, widows); (iii)the type of house: permanent construction, earth, other; (iv) a typology of the village settlement pattern: concentrated, dispersed; (v) alternative water sources, mapping of existing water sources; (vi) existing roles within the household, work distribution, time spent collecting water; (vii) cost of water provisioning; (viii) hygiene and sanitation practices and infrastructure; and (ix) statistics on water-related diseases;
(b) a diagnostic of existing forms of community organization and of the existence and types of social cohesion. This will permit the SMT to explore the potential for different models of organization and management of the water distribution system as well as wastewater management. This also helps to identify existing organizations and the role they could play in the social mobilization and management ofwater distribution systems;
(c) an assessment ofthe community’s level ofrelative wealth and poverty and capacity to pay for the different technical choices offered to them.
The outcome ofthe diagnostic permits the SMT to:
(a) know local capacities (both men and women, youth and aged) that can be used for the implementation ofthe project;
(b) evaluate potential capacity for different management models;
(c) recommend possibilities for different types of distribution (SPs or HCs) depending on local conditions as well as technical considerations;
(d) assist the community in decision-making concerning the choice ofservice level (water management and wastewater management).
After the community has made the choice of water distribution systems (SPs or HCs) the SMT must inform the CRs ofthe results of the diagnostic as well as the community’s choice. At this time, ONEP signs an agreement with the CR concerning the CR’s 15% financial contribution. In addition, the communities start collecting their capital cost contribution.
Step 3: Choice and formation of community management structures. The project cycle follows two different paths, depending on the choice ofthe community for either SPs or HC. However, they both have the following steps in common:
(a) community decision on the management model to be chosen; (b) creation ofthe management unit at the community level; and (c) consolidation and evaluation ofimpacts, and M&E.
40 The steps in this phase of community organization can be summarized as follows. Standpipes HCs4 1. Selection of location for placement of 1. Discussion with the community on the standpipes according to set rite ria.^ conditions of access to HCS.~ 2. Community agreement and technical feasibility 2. Technical studies and choice of option for ofthe placement ofstandpipes. the treatment of waste water, jointly with the study ofthe distribution network.
3. Identification of possible models for 3. Identification and decision on the management ofthe water system and provision of management model, with the SMT explaining management training. Completion of collection of the different alternatives, requirements and first tranche of community contribution to capital responsibilities. The SMT subsequently costs. provides the necessary management training. 4. Signing of the contracts with the managers in 4. Financing period launched by the association the community and the ONEP. and, if necessary, measures to acquire land required for any works. 5. Hygiene education related to water supply and 5. Signing of any pre-financing contracts wastewater management. between ONEP and the association, and signing of the management contracts with the associations. 6. Turning over the standpipes to the managers 6. TA for the creation of the waste-water and the Community, after final contributions to treatment and sanitation systednetwork. capital costs have been received by the project. 7. Regular monitoring of the management system 7. Follow up on the management association and consolidation of the management structures; and assist in their functions, consolidation of monitoring of health and hygiene and sanitation. the associations, M&E ofthe management, and environmental and social impacts.
The role of the SMT is ofparticular importance in the assistance to the community, guiding them to decide on the appropriate management structure. This is relatively straightforward in the case of the SPs, but requires more assistance as well as community consensus in the case of HCs. Among their functions, the SMTs will:
(a) explain to the community the legal aspects of each management model (standpipe operator, water users association, cooperatives, private contractors, etc.); (b) explain the role ofthe other partners: CRs and ONEP; (c) demonstrate the role and advantages of each management model depending on the community’s characteristics and needs; (d) explain the roles and duties ofthe members of a management model; (e) help communities form management associations and provide them with training;
The project will offer a prefinancing mechanism to assist some communities with financing ofHCs. The SMT work with communities will be more intense in this case. Criteria for the location of SPs: one SP for an area covering 500 meters in a grouped population; one SP per 300 inhabitants average; one SP for 100 to 150 inhabitants minimum in an area of 1 km in a dispersed settlement; placement has to be accessible to all the users. Criteria for HCs: community consensus for HCs (at least 70% ofhouseholds demand this level ofservice); 100% financing by the users; need to have created an association or other management structure to manage and deal with ONEP; adequate measures for wastewater management or commitment to have one in place during the project; create the distribution system for the connections according to the technical plan proposed by ONEP.
41 (f) assist the communities in integrating women in the processes of preparation and creation of the management association; and (g) make available to the members of a management association the documents required to formalize the organization: statutes, models of assemblies, legal texts governing micro- enterprises, rights and duties of associations, copies of the conventions drawn between the community, the CRs and ONEP, etc.
The role of the SMTs will be to continue to work within the communities until the chosen management model is operating, and then to provide follow-up support over the next two years through occasional visits. These management structures can encompass more than a single douar; however, all the households must be in agreement with the model that is chosen so as to avoid conflict. The modalities of the management model chosen should include measures to ensure that the women’s interests are well represented.
The SMT will keep a dossier with the relevant information to inform ONEP and subsequently sign the contracts.
Monitoring will be participatory as much as possible, with the assistance of the SMTs. This will consist, in addition to the result indicators, of indicators of social impact produced by the community. It is suggested that from the beginning of the social diagnostic, a small sample group be chosen by the SMT for the measurement of impacts. This group would be heterogeneous reflecting the wider community in order to follow through the changes in well being and quality of life of the communities (schooling rates, women’s literacy, rising levels of income, new economic activities, reduction in water borne diseases and infant mortality, etc.).
.
42 Annex 5: Project Costs MOROCCO: Rural Water Supply and Sanitation Project
Base cost + Project Cost By Component and/or Activity Base cost Physical Total costs (US$ million) cont.
Water production and conveyance 80.46 88.51 94.35 Works 76.63 84.29 89.86 Studies and supervision 3.83 4.21 4.49
Water distribution and wastewater management 11.41 12.56 13.49 Water distribution 7.68 8.44 9.07 Works 7.31 8.04 8.64 Studies and supervision 0.37 0.40 0.43 Wastewater management 3.74 4.1 1 4.42 Works 3.56 3.92 4.21 Studies and supervision 0.18 0.20 0.21
Institutional Strengthening / Project 4.08 4.49 4.63 Implementation Support
Total Project Costs 95.95 105.55 112.47
Project Financing By Component World Rural CommunesiWater and/or Activity (US$ million) Bank AFD ONEP Users
Water production and conveyance 51.35 20.54 4.49 17.97 Works 51.35 20.54 0.00 17.97 Studies and supervision 0.00 0.00 4.49 0.00
Water distribution and wastewater management 5.35 2.14 1.25 4.75 Water distribution 3.60 1.44 0.43 3.60 Works 3.60 1.44 0.00 3.60 Studies and supervision 0.00 0.00 0.43 0.00 Wastewater management 1.75 0.7 0.82 1.15 Works 1.75 0.7 0.61 1.15 Studies and supervision 0.00 0.00 0.21 0.00
Institutional Strengthening 3.32 1.32 0.00 0.00
Total Project Costs 60.00 24.00 5.75 22.72
43 Annex 6: Implementation Arrangements MOROCCO: Rural Water Supply and Sanitation Project
1. The Borrower will be the OfJice National de I’Eau Potable (ONEP), which will implement the project with the support ofits regional and provincial Departments. The Treasury Department ofthe Ministry ofFinance would guarantee repayment ofthe IBRD/AFD loans.
2. ONEP already has experience with Bank-financed projects. Implementation would leverage existing ONEP structures and available staff, to be strengthened by the TA component. The establishment of a special implementation unit is therefore not planned, and the project would support ONEP’s ongoing decentralization and outsourcing ofits services.
3. Specifically, the Division Suivi, Etudes et Re‘alisations (DEP/S) of the DEP will be responsible for overall project implementatiod and coordination, including selection of sub- projects and technical standards. All sub-projects to be financed by the Bank will be subject to Bank prior review and need to meet the economic, environmental and social requirements (see annex 4). The Direction Environnement et Assainissement (DEA) will be responsible for the implementation of the wastewater component, environmental screening, environmental assessment and environmental monitoring. Its sewices juridiques will be responsible for procedures related to temporary and permanent land acquisition.
4. ONEP’s provincial and regional offices, with the support ofthe central departments, will oversee the technical, social and environmental studies, community mobilization, and the construction and supervision of works outsourced to consulting firms and other private sector companies. This will include the activities described under Component 3: TA for community mobilization, hygiene promotion, and support for project coordination. The regional and provincial offices will also be responsible for issuing the call for bids and issuing contracts, with the support of the central departments. This arrangement is appropriate due to: (i)the geographically dispersed nature of the works in rural areas and the local availability of qualified contractors; (ii)the small value of contracts; and (iii)the nature of labor intensive works. It is expected that most contracts will not attract foreign competition and will be processed under NCB procedures. Most of the tasks overseen by the provincial and regional offices would be out-sourced to the greatest extent possible to consulting firms. This would include the TA activities described under component 3 “Institutional Strengthening and Project Implementation Support”.
5. In particular, TA will include a project coordinator, social scientist, and a hygiene promotiodsanitation specialist located within the DEP/S in Rabat and social mobilization teams (SMTs) located in ONEP provincial offices. Two social mobilization coordinators will supervise the SMTs. The TA specialists will conduct the demand-driven and participatory approach to service provision, and monitor the design and implementation of the environment and social action plans, including those related to land acquisition issues. The social scientist and the hygienekanitation specialist will work during the first years ofthe project, to hlly elaborate their sub-components, and to provide training and initial supervision. Later on in the project, their supervision roles will be taken over by the social mobilization coordinators. The SMTs will be responsible for village-level implementation of the strengthened demand-driven, participatory approach to service provision introduced by the project. They are expected to spend most of their time in the field with rural communities. Each SMT will comprise a social scientist and a hygiene specialist (one male, one female).
44 6. ONEP will be responsible for collecting data on outcomes and progress. It will submit to the Bank semi-annual reports indicating the status ofproj ect implementation, outputs, outcomes, financial statements, updated procurement plan, environmental and social issues, and actions taken to ensure satisfactory project implementation. A mid-term review and final evaluation will be conducted to assess progress and impacts.
7. Financial management of the Project will be the responsibility of ONEP's Financial Department.
8. The Communes Rurales (CR) under the Ministry of Interior are responsible for water supply and sanitation in villages under their jurisdiction. They will participate along with water users in financing approximately 20% of water production and conveyance construction costs and, in some cases, in financing water distribution and collective wastewater management infi-astructure. They will approve the selection by the community of the local operators (i.e. Gardien ge'rant, WUA) responsible for operating the distribution and collective wastewater management systems, as well as the tariff charged to water users. Contractual agreements will be signed between ONEP, the local operator and the CR, specifying the role and responsibilities of each party.
9. Village committees, representatives of users at the village level, will: (a) participate in project design (Le., choice between HC or SP, location and type ofHC and SP); (b) collect user contributions to construction costs of water production, conveyance and distribution infrastructure, and to construction costs of collective wastewater management systems; and (c) participate in the selection of the type of local management organization (Le., WUA, small private operator, or cooperative) in charge of O&M of water distribution and collective wastewater management systems.
45 Annex 7: Financial Management and Disbursement Arrangements MOROCCO: Rural Water Supply and Sanitation Project
Summary of the Financial Management Assessment
1. Major Findings and Conclusion. ONEP will be responsible for managing the project funds and all related financial transactions. ONEP is a state-owned commercial and industrial enterprise with financial and administrative autonomy (Etablissement public ri caract2re industriel et commercial) under the tutelage of MATEE. Accordingly, it operates as a private sector entity and the systems in place are based on the principles and procedures of the commercial law of the Kingdom of Morocco. ONEP has a Managing Director, a Permanent Technical Committee, and a Board composed of various ministries and a Representative of the Prime Minister.
2. ONEP issues year-end financial statements that are audited by external independent auditors with the required qualifications and experience. ONEP’s Financial Department is well structured, and it has an adequate staff complement with proven experience in donor-financed projects. ONEP has already had experience managing several Bank-financed projects. Furthermore, the financial management capacity assessment conducted between project pre- appraisal and appraisal confirmed the robustness of the entity’s financial management system and that the financial risk is low for this Bank-financed project to be implemented by ONEP. The accounting is centralized at Headquarters. The only relevant activity required is for ONEP to speed up the consolidation and updating of their Manual of Procedures, encompassing disbursements and financial management procedures. As of today, the existing written procedures are in the form ofcirculars and directives issued by the concerned departments.
Audit Arrangements
3. Internal Audit. There is a fdl-fledged Department of Audit and Organization at ONEP, headed by a senior staff reporting directly to the Managing Director. The Audit Department is composed of four (4) divisions, namely, Organization, Audit, Total Quality, and Post-evaluation. The Department has a well established statement ofmission objectives which includes, inter-alia, assurance that procedures set forth in the Financial Management Manual of Procedures are enforced, conducting internal audit missions, and reinforcement of coordination among the various operating aspects ofONEP.
4. External Audit. The records and accounts of the project would be audited annually, in accordance with international audit standards, by IGF. The audit would include a comprehensive review of all statements of expenses (SOE). The auditor would be expected to issue a consolidated management report covering all project accounts with practical recommendations for improving the project’s internal control system, if weaknesses are noted. The audit report would be submitted to the Bank no later than 6 months after the closing of each fiscal year. Furthermore, ONEP will submit its annual audit, conducted by an external independent auditor, to the Bank after its approval by ONEP’s Conseil d ’Administration. The auditor issued qualified opinions concerning ONEP in 2002, 2003 and 2004. Qualifications earlier than 2004 were corrected in the 2004 report and those ofthat year were not ofa nature to affect ONEP as a going concern.
46 Supervision
5. Financial supervision activities will include, inter-alia, review of semi-annual FMRs, review of annual audited financial statements and management letters as well as timely follow up on issues which have arisen, and participation in Bank project supervision missions, as appropriate. There will be about two financial management supervision missions during the first year, and thereafter, one a year. Bank supervision missions will consist ofvisits to ONEP and its decentralized offices to review financial management practices, procurement methods, payment procedures, and documentation.
Accounting System, Accounting Policy and Procedures
6. ONEP already has a comprehensive accounting system with an adequate chart of accounts which is in compliance with the existing laws and regulations of Morocco. Donor- financed projects are fully integrated into ONEP systems. In addition, and to take into consideration the financial requirements ofthe various donors, parallel accounting is maintained just for projects. It is fed from the main system and configured to comply with donors’ financial reporting requirements, such the Bank Financial Monitoring Reports (FMRs). The current accounting system is being upgraded, and the parallel system for project accounting will be phased out gradually. The new system will be comprehensive and consolidated with the necessary features to sort out all necessary information as required by donors. A cursory review of ONEP’s internal control system indicated satisfactory levels of segregation of duties. Reporting is adequate and timely.
Books of Registry
7. In addition to any information system installed, and the books needed to maintain an accurate and complete record of transactions, ONEP will maintain a set of additional books of registry, either within their systems or outside them, for control purposes. These books will include and not be limited to:
0 Fixed assets register at Headquarters and in the Regions
0 Contracts register 0 Register for the prefinancing mechanism, with all relevant data per beneficiary
Budgeting
8. The project annual budget process will follow the ONEP budget cycle which is as follows:
May-June: Letter or Orientation issued by the Finance Director to all Departments September: Budget and Controller consolidate data and prepare financing plan September - December: Internal negotiations and validation December : After Board approval, budget sent to Minister ofFinance January: Minister ofFinance approves and budget is implemented.
47 Reporting (Financial Monitoring Report)
9. ONEP will produce semi-annual Financial Monitoring Reports (FMRs) for the project and submit them to the Bank as part of the project progress report, or separately. These reports will consist of:
0 Financial Reports: to include a cash flow statement, beginning and ending project cash balances, and an expenditure report comparing actual and planned expenditures (Cash forecast). Also, a narrative report explaining all variances and the proposed corrective actions should be included as an annex to the financial reports.
0 Physical Progress Reports: to include narrative information and output indicators linking financial information with physical progress.
0 Procurement Reports: providing information on the procurement ofgoods, works, services, training and selection ofconsultants, showing procurement performance against plan, including information on all authorized contract variations.
These reports should be remitted to the Bank within 45 days from the end ofthe period. The format and content ofthe FMRs were discussed and agreed upon during the appraisal mission.
Project Financial Statements
10. In addition to the semi-annual financial reports related to project activities, ONEP will produce its customary annual financial statements and consolidated FMRs. These project annual financial statements will be composed of:
0 A consolidated Statement ofSources and Applications ofFunds; 0 A consolidated use offunds by project categories/activities; 0 An SOE withdrawal schedule, listing individual withdrawal applications relating to disbursement through the SOE, by reference number, date and amount; 0 Notes on significant accounting policies and accounting standards adopted for the preparation ofthe accounts; and any supplementary information or explanation that may be deemed appropriate by Management to enhance understanding ofthe financial situation ofthe project.
48 Staffing
11. The existing human resource capacity is adequate to carry out the financial management tasks ofthe project. At this stage therefore, there is no need for change in quantity and quality of the existing staff to meet Bank and ONEP financial reporting requirements. It is however expected that this aspect will be monitored closely so as to anticipate any capacity gap which could occur and agree with ONEP on a capacity-building program in a timely manner. For this project, ONEP will select a dedicated accountant from within to take charge of the project financial management aspects for all the donors.
Risk Assessment
12. Country Risks. The Country Financial Accountability Assessment (CFAA) dated June, 2003 concludes that the overall Public Finance Management (PFM) risk in Morocco is low. However, there are areas ofhigher risk, such as excessively long payment delays; and in the area oftransfers to local GOM, which are inadequately deconcentrated, making it difficult to see how these funds are allocated and used. These particular PFM risks do not affect the project since ONEP operates as an autonomous entity from GOM public finance system.
13. Project Risks. The project risk from a financial management perspective is considered low as ONEP is a very experienced entity which has in place procedures and systems to prevent financial irregularities. The audit reports of 2002, 2003 and 2004 did not bring out any serious issues which could jeopardize the operations of ONEP. In fact, the qualifications were tied to provisions made (salary payable) while negotiations were under way or the absence ofprovision on receivables. On the latter case, an agent from a state-owned collection agency working for ONEP is being sued for embezzlement. Furthermore, ONEP has developed over time various mitigating measures to address potential risks (the State-owned collection agency embezzlement was uncovered by ONEP’s own internal inspection). Although the 2002, 2003 and 2004 reports were qualified, the financial statements did not present any material departure from accounting principles. In conclusion, the systems seem quite sound, and ONEP does not appear to face issues which could affect it as a going concern.
Prefinancing Mechanism for HCs
14. Users opting for HCs will be responsible for the construction costs of the distributiodhouse connection system. To facilitate the financing of these investments, ONEP will provide users with a prefinancing mechanism of not more than 2,500 DH per connection. The remaining cost of construction will be financed by the users and paid to ONEP before the commencement ofworks. The credits would be disbursed from the “prefinancing mechanism’’ category ofthe loan on the basis of SOEs, which would list each beneficiary, the amount of the credit made available, the amount of the annuity and payment dates. ONEP will be reimbursed by users for these amounts through the users’ water bills, with terms of 7 years at a 5% interest rate.
15. This prefinancing of HCs is not new for ONEP, as ONEP has been engaged in the practice since 1982 in urban areas, with great success in terms of recovery and timeliness. Furthermore, appropriate measures have been designed to limit the risks, which include, inter- alia, an initial payment by users of 20% before works commence to cover their upfront contribution, the guarantee of the village association for repayment, the recovery of the loan 49 through the monthly billing statements, and the possibility to suspend service. The repayment or amortization will be monitored through the accounting system of ONEP, where individual sub- ledgers will be maintained toward that end.
Conclusion
16. The overall conclusion ofthe financial management assessment is that the Bank financial management and reporting requirements will be met. Close supervision in the first year of implementation will be necessary, nonetheless.
Disbursement Arrangements
17. Allocation of Loan Proceeds. The allocation ofloan proceeds by disbursement category and the percentages financed by the loan are presented in the table below.
Category of expenditures Amount of the Loan Percentage of expenditure to Allocated (US$) be financed Works 44.130.000 8 0% 1 Goods I 1.200.000 I 100% I Services and Training 3,630,000 100% Prefinancing mechanism 6,040,000 100% Unallocated 4,850,000 Front-end Fee 150.000 Total 60,000,000
18. Withdrawals from proceeds of the Loan to finance project activities will be based on the traditional disbursement methods of the Bank, using direct payments, requests for special commitments and reimbursement applications, either fully documented or using Statements of Expenditures (SOEs) according to the procedures outlined in the Disbursement Letter and the Bank’s Disbursement Manual. On the basis of the Bank’s standard disbursement profiles, disbursements would be completed four months after project closure.
19. Prefinancing Mechanism. The prefinancing mechanism for HCs will be used to disburse funds under a separate disbursement category labeled “prefinancing mechanism’’ based on SOEs which will indicate the beneficiaries, the funds allocated to them, the amount of annuities granted and repayment dates.
20. Use of Statements of Expenditures (SOEs). All applications to withdraw proceeds from the Loan will be fill documented, except for: (a) expenditures of contracts with an estimated value of US$5,000,000 or less for works; (b) US$2,500,000 or less for goods; (c) US$lOO,OOO or less for consulting firms; and (d) US$50,000 or less for individual consultants which may be claimed on the basis of SOEs and which will also be required under the prefinancing mechanism for individual HCs. Documentation supporting expenditures will be available for review by Bank supervision missions and project auditors. All disbursements will be subject to the conditions of the Loan Agreement and the procedures defined in the Disbursement Letter.
50 21. Retroactive Financing. To facilitate project start-up, ONEP intends to make first payments for eligible civil works and consultant contracts before the planned effectiveness date of March 20, 2006. Accordingly, retroactive financing will be available for an amount not to exceed US$ 2.43 million (equivalent to Euro 2 million).
51 Annex 8: Procurement MOROCCO: Rural Water Supply and Sanitation Project
Procurement Guidelines
1. Procurement for the proposed project will be carried out in accordance with the World Bank "Guidelines: Procurement under IBRD Loans and IDA Credits", May 2004, and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers", May 2004, and the provisions stipulated in the loan Agreement.
2. Overall, the Moroccan procurement legislation for goods and works is in line with the Bank's guidelines with some exceptions for national competitive bidding (NCB) provisions as stated in paragraph 5 below, and reflects adequate capacity of implementing agencies to handle procurement, and adequate control organizations in the country.
3. For consultants, substantial divergences exist in the procedures for the selection and employment of consultants which, following local legislation, are based on open competitive bidding. Under the project, ONEP will apply the Bank's procedures.
4. The methods to be used for the procurement under this project, and the estimated amounts for each method, are summarized in Table A. The threshold contract values for the use of each method are fixed in Table B.
NCB Provisions
5. Except in the cases provided for below, goods and works shall be procured under contracts awarded on the basis ofparagraphs 3.3 and 3.4 ofthe guidelines and paragraphs below.
(a) all envelopes constituting a bid should be opened simultaneously in one public session, with the price read aloud and recorded in minutes;
(b) quantifiable evaluation criteria should be included in the bidding documents and, in the case ofgoods, a point system should not be used;
(c) the contract is awarded to the bidder who meets the qualifications required and whose bid has been determined to be substantially responsive to the bidding documents and offers the lowest evaluated bid;
(d) the requirement for bidders to have a local representative, established in Morocco, should not be a condition for submission;
(e) the evaluation for procurement ofgoods should be by lot (instead ofby article); and
the bid document should clearly explain the criteria for bid evaluation, award and bidder qualification.
52 Project Management
6. DEP/S will be in charge of the general coordination of the project assisted by a consultant. In terms of procurement, ONEP has good experience in implementing Bank- financed projects, and a good number of staff will be involved in different steps ofprocurement. Procurement is managed and executed by the regional offices under the general supervision of DEP/S. Nevertheless, for all contracts above DH8 million, for all contracts not awarded to the lowest bid price, and for all contracts undertaken through direct contracting, the no-objection of the Central Department ofSupply and Contracts (DAM) is required.
Assessment of ONEP’s Capacity to Implement Procurement Activities.
7. An assessment of the procurement capacity of ONEP was conducted during pre-appraisal and is filed in the Project File. The assessment concluded that the public procurement system is solid and operates in a structured and reliable control environment and does not present major fiduciary risk. ONEP follows the national legislation on procurement, which is generally in line with the Bank’s guidelines, with some exceptions as outlined in paragraph 5 above.
8. At the central level of DAM, procurement capacity was found to be satisfactory. At the decentralized level, Regional Departments (DR), capacity was found to be fair. Considering that procurement will be mainly handled at decentralized level by DRs within the project, the overall risk is assessed to be average. This risk could lead to some non-compliance and delays during the project implementation and will be mitigated by the following set ofactions:
(a) Agreed standard bidding documents for works under NCB will be prepared. (b) A detailed procurement plan will be established and used during project implementation. (c) Training in Bank procurement procedures will be provided after the negotiations to DR procurement staff. (d) Finally, the implementation design includes regular ex-post reviews.
Civil Works
10. Civil works to be financed under the project will cover mainly the construction and installation ofRWS infrastructure facilities, as well as wastewater management facilities in rural areas. These contracts are expected to add up to an aggregate of about US$102.71 million equivalent. Civil works contracts above US$5 million will be awarded on the basis of International Competitive Bidding (ICB), contracts equal to or below US$5 million will be awarded on the basis ofNCB procedures, subject to the provisions listed in para. 5 above and the use of sample bidding documents acceptable to the Bank. Civil works contracts equal or below US$30,000 will be awarded on the basis ofshopping procedures or NCB.
11. Direct Contracting. Works for railway crossings and the connection of newly installed electrical lines to water production and conveyance facilities under Component 1 of the Project, which are specialized or of a proprietary nature, may be procured in accordance with the provisions of paragraph 3.6 of the Guidelines. All other works may, with the Bank’s prior agreement, be procured in accordance with the provisions ofparagraph 3.6 ofthe Guidelines.
53 Goods
10. NCB may be used for contracts estimated to cost less than US$2.5 million, while shopping based on price quotations obtained from a minimum of three suppliers can be used for small quantities ofgoods, provided that the value ofthe goods does not exceed US$30,000.
Consulting Services
11. Consulting services will total approximately US$4.63 million equivalent and will consist of national and international consultants. Consultants' Services with an estimated contract amount exceeding US$200,000 will be advertised in the United Nations Development Business and in at least one national paper, seeking expressions of interest. For such contracts, the Bank's Standard Request for Proposals (SRP) will be used, and the selection of consultants will be addressed through competition among qualified short-listed firms in which the selection will be based on Quality and Cost Based Selection (QCBS) or Quality Based Selection (QBS). In the case of assignments to cost less than US$200,000 equivalent, the short list of consultants may comprise entirely national consultants if a sufficient number of qualified firms are available at competitive costs. However, if foreign firms express interest, they will not be excluded.
12. The selection methods for contracts estimated to cost less than US$lOO,OOO, equivalent, will be either QCBS, QBS, or based on Consultants' Qualifications.
13. The need for Sole Source contracts is not anticipated but, if justified, they will be awarded in accordance with the provisions of paragraphs 3.9, 3.10, 3.11, 3.12 and 3.13 of the Guidelines.
14. Individual consultants will be selected and employed in accordance with paragraphs 5.1 to 5.4 ofthe Guidelines.
15. A detailed procurement plan for the first twelve months' activities was agreed upon during appraisal.
54 Procurement methods (Table A) Table A1 : Project Costs by Procurement Arrangements (US$ million equivalent)
Expenditure Category Procurement Method'
ICB~ NCB9 Other" N.B.F." Total Cost
Goods NA NA NA NA NA
Works (including Turnkey Design and 3 96.55 0.4 2.75 102.71 Installation) (1.7) (54.78) (0.21) 0 (56.7) Total 3.00 96.55 0.4 2.75 102.71 (1.7) (54.7 8) (.21 (56.7)
Table A2: Consultant Selection Arrangements (optional) (US$ million equivalent)
Consultant services Selection Method
Expenditure QCBS QBS SBF LCS CQ Other N.B.F. Total Cost1 Category 1/ A. Firms 4.63 NA NA NA NA NA 5.13 9.76 (3.32) (0.00) (3.32) B Individuals NA NA NA NA NA NA NA Total 4.63 5.13 9.76 (3.32) (0.00) (3.32)
Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines), Commercial Practices, etc.
' Figures in parentheses are the amounts to be financed by the Bank Grant. All costs include contingencies. ICB International Competitive Bidding NCB National Competitive Bidding loIncludes works and Goods to be procured through National shopping 11 N.B.F. Not Bank Financed 55 Prior review thresholds (Table B)
Table B: Thresholds for Procurement Methods and Prior Review1
Contract Value Procurement Contracts Subject to Threshold Method Prior Review (US$) (US$)
Expenditure Category
1. Works and Turnkey > 5,000,000 ICB Prior review installations < 5,000,000 NCB > 5,000,000 < 30,000 Shopping
> 2,500,000 ICB Prior review < 2,500,000 NCB > 2,500,000 2. Goods < 30,000 Shopping
3. Consulting Services a. Firms > 200,000 QCBSQBS Prior review < 100,000 QCBS/QBS/CQ Post-review c. Individuals > 50,000 Individuals Prior review Consultants < 50,000 Post Review
Total value of contracts subject to prior review (PrR): 7.03 US$ million Overall Procurement Risk Assessment: Average Frequency of procurement supervision missions proposed: One every 6 months (includes special procurement supervision for post-review/audits)
56 Annex 9: Economic and Financial Analysis MOROCCO: Rural Water Supply and Sanitation Project
A. Economic Analysis
Summary of Bene$ts and Costs
1. The project is expected to increase sustainable access to potable water supply in rural areas, while promoting improved hygiene practices including safe sanitation, for a total of about 465,000 rural inhabitants in some 1,000 villages.
2. The primary benefits ofthe project include:
(a) Time savings arising from reduced time spent collecting water, especially among women and girls. They are likely to translate into increased time allocation to productive activities and hence increased household incomes. For children, especially girls, this will enable an increase in time spent attending school. (b) Increased household water consumption, together with improved drinking water quality and improved hygiene practices, resulting in decreased morbidity and mortality rates, especially among children under 5. This is expected to result in reduced medical expenditures and improved labor productivity.
(c) Increased sustainability of RWS services through the adoption of a participatory approach, focusing on what people want and are willing to pay and prolonged support to WUA or local operators.
3. The main costs related to increasing access to potable water supply in rural areas are:
(a) Costs of feasibility studies, works, and supervision of works linked to the construction of water production, conveyance and distribution infrastructure and wastewater management measures for villages served by HCs.
(b) Costs ofO&M and replacement ofthe infrastructure mentioned above.
(c) Costs of project management including social mobilization, hygiene education, formation and training of management structures for village water distribution systems and wastewater management systems.
Methodology and main assumptions
4. An economic analysis was carried out for a sample of 13 pre-selected water supply schemes or sub-projects, and for the project as a whole.
57 5. Main assumptions are described below:
Benefits and costs have been projected over a 30-year horizon, corresponding to the expected life ofmain water supply installations.
The opportunity cost ofcapital is assumed to be 10%.
All transfers including taxes and subsidies are excluded from the analysis.
Conservative assumptions have been made on future water consumption. In particular, no population growth has been taken into account and average consumption is estimated conservatively at 10 litedcapitdday (lcd) for SPs (SP) and 30 lcd for HCs (HC).
Time savings. Two types of information were used to determine the situation before project: the average distance between household and the water source and the average time spent fetching water every day. These data were derived from household surveys conducted during project preparation. In the “with project” scenario, it is considered that in the case of HCs, the time spent fetching water is zero, in the case of SPs, the distance would be reduced to 500 meters. The time spent fetching water was valued at 80% ofthe minimum wage for farm workers to take into account the unemployment in rural areas.
The approach used to value health benefits uses a variant of the cost of illness approach and values current health expenditures on waterborne diseases as well as the loss of output due to related morbidity and premature death among the population. Morbidity and mortality rates as well as direct health expenditures of households on waterborne diseases have been estimated on the basis ofprovincial statistics assembled by the Ministry of Health and estimates from WHO. Output lost as a result of morbidity is calculated on the basis of the number of days lost valued at the minimum agricultural wage. The value of statistical life (VSL) approach has been used for the valuation of mortality risks. Due to lack of specific studies in Morocco, the economic value of one year of life lost has been estimated on the basis of studies conducted in the European Union, corrected by the ratio of GDP (purchasing power parity) between Morocco and the EU. One case of mortality has been considered as equivalent to 10 years of life (and corresponding value-added) lost.
Summary of results (economic rates of return)
6. The main results of the economic analysis of the sample of sub-projects and the whole project are presented in Table 1. Economic internal rates of return (ERR) range from 6% to 34%, with an average return for the whole project (considered as aggregate of the 13 sub- projects) estimated at 13% and a NPV ofDH 229 million (equivalent to about US$25 million).
7. Detailed calculations indicate that ERR of individual schemes are closely correlated with the average investment cost (DH/habitant) with a similar, though less significant, correlation with average O&M cost (DH/m3). 58 Table 1: Results of the Economic Cost-Benefit Analysis of the Sample of Sub-projects
El Jadida 1 (DJA) - incl. El Jadida 6 (DJ: -0.56 10% 17,758 El Jadida 2 (DJB) 37.63 20% 38,817 El Jadida 4 (Maz Eh) 10.47 13% 26,336 El Jadida 5 (Maz EB) 34.61 34% 24,000 El Jadida 6 (DJ) - p.m. (included with El Jadida 1) El Jadida 7 (DJH) 11.60 12% 50,260 El Jadida 8 (DJI EB) 43.38 24% 41,012 El Jadida 9 (DJI EH) 17.40 15% 29,515 El Jadida 10 (SD) 55.38 21% 52,370 Total El Jadida 209.90 17% 280,068
Safi 2 (Chemaia) 65.98 17% 56,513 Safi 3 (Beddouza) 16.50 26% 7,843 Total Safi 82.48 18% 64,356
Essaouira 1 (Meskala) 20.68 15% 56,513 Essaouira 2 (Tamanar) -14.32 6% 29,694 Total Essaouira 6.36 11% 86,207
Taounate 1 -20.84 8% 96,041 Total Taza-Taounate -20.84 8% 96,041
TOTAL PROJET 229.24 13% 526.672
Sensitivity An a Zys is
8. A sensitivity analysis for all major assumptions was conducted. The implications of these various risk scenarios on the project economic viability are summarized in Table 2. The sensitivity analysis indicates that ERR are fairly robust to deviations from the base case assumptions. Under an assumption of a 20% increase in total costs, the ERR would be reduced to 11%. A 20% decrease in benefits would reduce the ERR to 10%. A one-year delay in project benefits (e.g., due to delays in construction costs) would reduce the ERR to 12% and a two-year delay to 10%.
Table 2: Sensitivity Analysis
Whole project NPV@lO% ERR(%) (DH million) Base case 229 13% Investment costs + 10% 148 12% Investment costs + 20% 66 12% Benefits - 10% 115 11%
Benefits delayed 1 year 117 12% Benefits delayed 2 years 14 10%
59 B. Financial Analysis ONEP
Background
9. ONEP’s service responsibilities have grown substantially since its creation in 1972, when it took over the management of water supply systems in 61 secondary towns from its predecessor. Since then ONEP has become the primary potable water “producer” in Morocco, selling bulk water to large urban centers, and has taken over water distribution of 301 urban and rural centers. To meet growing demand for drinking water supply and to take over the management of an increasing number of town water distribution systems, ONEP created an extensive infrastructure of water treatment plants and transmission pipelines nationwide, which now also serves as the initial backbone for increasing access to potable water by the rural population through feeder lines from this system.
Past Performance
10. ONEP’s overall performance was acceptable from 2001 to 2004. Water sales and revenues from related activities rose from DH 2.53 billion in 2001 to DH 2.72 billion in 2003, after they had fallen to DH 2.47 billion in 2002 because of lower sales to the water distributing company of Casablanca due to the latter’s efficiency improvements. The 2003 revenue increase was the result oflarger volumes ofwater sold and the April 2003 tariff increase of4.5%. Cost of operations showed a similar evolution with a decrease in 2002 to DH 1.71 billion from DH 1.92 billion in 2001, due to lower costs and voluntary resignations. The 2003 increase was due to higher volumes ofwater sales and the associated increases in costs as well as higher maintenance expenses and payroll costs.
11. In 2001 ONEP’s net income amounted to DH 1.116 billion including extraordinary income of DH 1,110 billion that regularized the treatment of subsidies, grants, and customer contributions. The net income then reached DH 65 million in 2002 and DH 127 million in 2003.
12. ONEP’s liquidity was positive and adequate from 2001 to 2003. Changes in the timing of the payment of the guarantee fee (3% loan amount) to the Treasury of the Kingdom of Morocco were enacted in 2002. The payment is effectuated now at time of signing of the loan and not during the period of project implementation. This change, together with a foreign currency loan repayment ofDH 0.5 billion pending refinancing by a local loan, reduced ONEP’s overall cash reserves from DH 1.26 billion at end 2001 to DH 1.07 billion by end 2003.
The Contrat Programme
13. The contract programme defines respective obligations and commitments between GOM and ONEP for a period of four years. The contrat programme sets annual financial and operational performance targets and ONEP’s financing and investment plan relate to these targets. ONEP’s last contrat programme ended in 2004, and a new one is presently being negotiated. The last programme foresaw annual tariff increases of 8%. Actual tariff increases took place in November 2000 (6.75%) and in April 2003 (4.5%). Any tariff increase requires the approval of a special tariff commission presided over by the Ministry of General Affairs and consisting of representatives of the Ministry of Interior, the Ministry of Finance, and the
60 Secretariat of Water Resources within MATEE. Because of lower than anticipated tariff revenues, ONEP delayed the execution of a portion ofits investment program.
Accounts Receivable
14. The amount of accounts receivable has diminished considerably in recent years, especially for public agencies. This result is due to the Treasury’s establishment of a special account in which is placed, at the beginning of each year, an advance for the estimated payment ofbills for this group of customers. The agencies use vignettes taken from the special account to pay their water bills. In early 2005, accounts receivable for this group of customers represented about 87 days of related water sales and services. Overall accounts receivable represented 177 days ofsale in 2001,174 in 2002,119 in 2003 and 116 in 2004.
The Proposed Project
Financing plan
US$ Million 2006 2007 2008 2009 2010 2011 Total % Water production and conveyance 8.62 34.55 39.14 12.04 0.00 0.00 94.35 84% Water distribution and wastewater 0.00 0.00 1.13 5.26 3.55 3.55 13.49 12% Institutional support 0.80 0.98 1.18 0.81 0.46 0.41 4.63 4% Total 9.42 35.53 41.45 18.10 4.01 3.96 112.47 World Bank 5.39 20.03 23.13 8.78 1.35 1.32 60.00 53% AFD 2.03 7.51 8.80 3.87 0.90 0.88 24.00 21% ONEP 0.44 1.78 2.10 0.97 0.23 0.23 5.75 5% Beneficiaries/ local GOM 1.55 6.20 7.42 4.48 1.54 1.54 23.19 20% Total 9.42 35.53 41.45 18.10 4.01 3.96 112.47 100%
16. Loans from IBRD and AFD would contribute 53% and 21% respectively to the project cost. Beneficiaries and CRs would provide approximately 20% financing share ofthe production and conveyance system with a payment ofDH 500 per household and the remainder by the CRs. In addition, the beneficiaries ofHCs would support ofthe cost ofthe distribution system as well as the HCs. A prefinancing mechanism (maturity 7 years, interest rate of 5%) of up to DH 2,5001* per connection would be provided by ONEP to facilitate the adoption of HCs. The balance, an average of DH 1,500, will be paid for directly by users. The prefinancing mechanism will be financed firom IBRD and AFD loan proceeds. The related sub-loans will be reimbursed by users through their water bills. ONEP will finance the design studies and supervision ofthe works estimated at US$5.75 million.
Prefinancinn Mechanism
17. Funding ofthe sub-loans granted to the beneficiaries ofthe distributiodhouse connection program will come from the IBRD and AFD loans. A separate disbursement category labeled “prefinancng mechanism” will disburse at 100% the sub-loans accorded. Given a maturity of 7 years and an underlying IBRD loan maturity of 22 years including 6 years of grace, the
l2Equivalent to about 63% of the average construction cost of water distribution systems in rural areas estimated at DH 4,000 per connection. 61 repayment by beneficiaries that would not be used for meeting repayment obligations of the IBRD loan would be used for funding new sub-loans.
18. The table below indicates the amounts that would be generated annually through the revolving operation and which would be used first in financing additional credits.
Financial Projections and Cost Recoverv
19. Cost recovery would differ for the productiodconveyance and the distributiodhouse connection systems. ONEP would operate the production /conveyance systems and deliver and sell water to standpipe operators and to the operators of water distribution systems with HCs. The tariffs are insufficient to cover the costs of O&M for the water production and conveyance systems. Tariffs for these two groups are low (standpipe DH2.35/m3, delivery to the distribution system DH3.5/m3) and leave with the supply tariff charged at the take-off point from the trunk mains ofDH2.50/m3 only a very small margin for the water sold to the distribution system and a deficit for the water supplied to SPs. This deficit increases if distribution losses are taken into account. Adding to these amounts the debt service for the loans contracted raises the deficits from DH15.87 million in 2007 to DH110.9 million by 2014.
2006 2007 2008 2009 2010 2011 2012 Operating Deficit -1.89 -5.44 -9.61 -10.52 -10.93 -10.91 Debt (AFD+IBm) 30.36 13.98 29.51 43.81 49.63 70.31 89.05 + charges ondebt Debt Service (AFD+IBRD) 30.36 15.87 34.95 53.42 60.16 81.24 99.96 + charges ondebt+ Operating Deficit
Until a clear financing policy for the rural water sector is established, these deficits will be covered by ONEP’s other operations, that is, bulk water sales to municipalities and private concessions. This, however, is not sustainable in the long term. Therefore, one of the loan’s financial covenants foresees that from 2006 onwards, ONEP will, by the end of September in each year, determine whether it will meet a 15% self-financing ratio and in the event of non- compliance ONEP will, in consultation with BRD, implement measures agreed upon with GOM for meeting said ratio.
62 Operation ofthe Distribution Systems
20. The operation of the distribution system would be outside ONEP’s obligations. Projections for the 13 sub-systems show that in general operating, maintenance, and replacement costs would be covered with a retail tariff of DH 9/m3, which is in line with tariffs charged elsewhere by WUAs providing the same type of service. This coverage could not be achieved in earlier years of some systems where larger tariffs would be required as indicated in the attached table.
Net Income per m3after Depreciation at Retail Tariff of DH 9/m3
2009 2010 2011 2012 DJA -0.10 0.42 0.51 0.60 DJB 0.3 1 0.41 0.57 0.63
Assumptions used in Assessing Financial Viability
The following assumptions were used in preparing the projections:
Energy According to consumption and applicable tariffs Maintenance 0.7% ofasset value Personnel According to staffing levels Chemicals DH 0.2/m3 Miscellaneous Expenses 20% payroll + personnel expenditures I General & Administrative Expenses 10% ofcash charges excluding personnel I I I exDenditures I Losses at Production 5% ofwater distributed Losses at Distribution 20% ofwater sold Accounts Receivable 90 days ofsales Inflation rate 2.5 % per annum
63 I 2007 I 2008 I 2009 I 2010 I 2011 Target rate % of population with access to potable water 30% 48% 96% 100% 100% - with HCs 10% 20% 25% - with access to SPs 48% 86% 80% 75% Annual construction program of HCs 2.896 9.095 5,244 6,374 Population served by SPs - percentage 87% 80% Population served by HCs - percentage 13% 20% Volume ofwater (m3> - sold through HCs 175,742 686,756 1,201,159 - sold by ONEP to SPS 314,554 910,053 1,828,441 1,817,080 1,747,273
64 Annex 10: Safeguard Policy Issues MOROCCO: Rural Water Supply and Sanitation Project
1. Project Environmental Category. The project would support environmental and social improvements by increasing sustainable access to potable water supply, while promoting improved wastewater management and hygiene practices. Positive social and environmental impacts are significant. They include decreased child mortality and morbidity caused by water- related diseases; reduced time allocated to fetching water by women and children; improved school attendance especially among girls; decreased household spending in health care; job creation during construction and operation of water and wastewater infrastructure; strengthened social cohesion through community participation in RWSS scheme design, financing and operation. All these positive impacts should contribute to slowing down rural-urban migration.
2. Potential adverse environmental and social impacts during both construction and operation are restricted in magnitude and severity. Negative impacts will be mainly related to construction activities at the civil work sites and to increased wastewater flows where HCs are provided. The project will not entail resettlement of population; however expropriations and temporary use of land during construction will be required. Furthermore, the project will not fund any sub-proj ect that would require resettlement, deforestation, or could adversely affect natural habitats, biodiversity, and cultural heritage sites. Accordingly, the proposed project has been placed in “Category B” in accordance with World Bank Operational Policy (OP 4.01) on Environmental Assessment (January 1999). The safeguard policies on Environmental Assessment and Involuntary resettlement would apply to the first and second components of the project. No other safeguard policies will be triggered.
3. Environmental and Social Safeguards Review Process. Evaluation of issues concerning environment, social, involuntary resettlement, and land acquisition has been an integral part of project preparation. As all sub-projects to be hnded by the project were not identified prior to appraisal, a framework approach was adopted for managing environmental and social impacts. ONEP’s Sanitation and Environment Department developed an operational manual on environmental assessment with the help of consultants. An Environmental Management Framework (EMF) and a Resettlement Policy Framework (RPF) were prepared during project preparation.
4. During project preparation, several meetings were held to discuss the environmental and social process and requirements. An evaluation of environmental regulations and procedures in Morocco and their conformity with World Bank requirements was also undertaken. In addition, capacities ofthe various institutions to undertake environmental assessment and monitoring were evaluated. Moreover, field visits and interviews were undertaken to several potential sub- projects sites in the five provinces.
5. Preparation ofthe environmental screening and scoping as well as the EMP of each sub- project will include public consultation.
65 Annex 10 - Appendix 1: Safeguards Policy Issues - Environmental Aspects
1. Institutional and Legal Framework. The Ministry of Water and Environment (MATEE) is GOM institution responsible for the development of a national policy on environmental management. The national committee for environmental assessment’s mandate is to assess the impact studies and to determine the acceptability ofenvironmental aspects ofprojects.
2. Law no. 11-03 on the protection and the development ofthe environment has strict basic requirements for environmental impact studies. This law states in Articles 80 and 83 that environmental impact studies (EIAs) are mandatory in the case of private or public sector projects which could have a negative impact on the environment. Law No. 12-03 on environmental impact studies defines the content of the EIA, describes the creation of a national EIA committee, gives a list of projects for which an EIA is required, and has launched compulsory public enquiries. The draft decree which specifies the implementation requirements for this consultation and the Moroccan EIA procedures has not been approved.
Environmental Assessment
3. Environmental issues which need to be properly addressed during the implementation of the proposed Project include: (a) construction-related impacts limited to construction sites under Component 1 (water production and conveyance) and Component 2 (water distribution and wastewater management); and (b) impacts related to increased wastewater flows under Component 2.
4. As sub-projects to be funded by the proposed project were not all identified prior to appraisal, the following eligibility criteria and environmental requirements will be observed during the implementation ofthe project:
(a) Each sub-project under Component 1 (water production and conveyance) will be subject to an environmental screening process undertaken by ONEP’s Environment Division which states:
(i)sub-proj ects possibly having considerable irreversible negative impacts, such as those requiring extensive deforestation as well as sub-projects affecting natural habitats, biodiversity and cultural heritage sites, will not be approved for funding;
(ii)sub-projects identified as having moderate or short-term impacts on the environment, with no significant adverse impact on communities or important resources, would be addressed through the implementation of an environmental assessment including the preparation of a specific Environmental Management Plan (EMP) and the incorporation of mitigation measures in the contract documents; and
(iii)sub-projects, identified as having only minimal environmental impacts limited to the sites and with no adverse impact on communities and resources, will not be subject to an environmental assessment.
66 (b) Each sub-project under Component 2 (water distribution and wastewater management) will be subject to an environmental assessment including the preparation of a specific EMP as part of the “village sanitation and environmental management plan.” The plans will be developed by the SMTs as part of project TA and will be validated by ONEP’s sanitation division. Implementation of the mitigation measures specified in the plans for wastewater management will be a condition for water delivery to households.
5. Assessment of Environmental Capacities. There is a sound environmental capacity within the staff of ONEP’s Environment Department with respect to environmental requirements such as environmental assessment, mitigation measures, and monitoring. The project will nevertheless provide TA for the formulation of the “village sanitation and environmental management plans”. This TA will include the development ofguidelines for the development of these plans, the formulation ofthe plans, and monitoring oftheir implementation.
Environmental Management Framework
6. The Environmental Management Framework (EMF) establishes the process and the institutional criteria for environmental management, notably the screening process and the environmental monitoring process. The EMF conforms to existing Bank procedures and Moroccan political and institutional guidelines (ONEP and MATEE). ONEP, in particular its Environmental and Sanitation Departments, will be responsible for implementing the EMF.
Mitigation Measures
7. The environmental assessment of selected sub-projects will identify the appropriate mitigation measures based on ONEP’s EA manual, which includes a general description of mitigation measures as well as samples of typical mitigation measures. These sample measures are presented as follows:
(a) environmental components (surface water and groundwater: quality, drainage and drainage conditions; land: erosion and destabilization; air and noise; vegetation; fauna and habitats); and
(b) social components (population, quality of life; construction works; roads and traffic; public safety; recognized or possible historical and archeological sites; agricultural activities and water resource development).
8. This manual also describes the methodology to be used to develop EAs during project preparation, studies, construction and development ofsub-projects.
(a) Planning PhaseISub-Project Studies - Environmental Assessment Implementation Stage. This stage includes: (a) masterplan studies; (b) feasibility study (APS); and (c) detailed design (APD). At this stage, a sub-project goes through the screening process and the EA is conducted if required. This screening process takes place prior to ASP launch and is
67 carried out by the Environment Division ofONEP. The EA is an integral part ofthe ASP study and is prepared by a consulting firm. (b) Construction Phase - Environmental Monitoring Phase. During this phase, sub-project works are being constructed. The specific mitigation measures described in the EA are taken into consideration at this stage as well as the environmental monitoring, The measures proposed in the EA are integrated into the civil works contract. The consulting firm responsible for supervision of works is also responsible for environmental monitoring. Moreover, an environmental monitoring report should be prepared by the Environmental Division or a delegated authority.
9. The EA process managed by the Environment Division and following the methodology described in ONEP’s EA manual, fulfills project requirements in accordance with World Bank, ONEP, and MATEE policies.
10. In the case of Component 2 (water distribution and wastewater management), appropriate mitigation measures will be identified and prepared by Project TA specialists.
11. MATEE Assessment. MATEE is the main entity responsible for the coordination, oversight and control of environmental protection. The National EL4 Committee is part of the MATEE and is responsible for enforcing Law No. 12-03 on EIAs. This Committee is also responsible for analyzing EAs and for assessing the environmental quality of projects. For ONEP projects, MATEE requires EAs only for sanitation projects, not for water supply projects. However, ONEP does inform MATEE ofEAs carried out within the scope ofthis project.
EMF activities
EMF Activities
ofWSS sub-projects. screening process by ONEP’s ASP study budget. Environmental Department. (b) Implementation ofimpact These measures will be integrated Costs included in mitigation measures. into contracts for works awarded works budget. under the Project. (c) Implementation of The supervision ofworks will oversee Costs included in oversight programs. these measures through consulting works supervision services or through ONEP staff. costs. (d) Implementation of ONEP and water user associations Costs included in environmental monitoring. will carry out these measures. ONEP ’s operating budget.
68 Annex 10 - Appendix 2: Draft Policy Framework for Land Acquisition
Morocco: Rural Water Supply and Sanitation Project
There will not be physical involuntary resettlement but there is likely to be land acquisition through the following two main situations: (i)temporary occupation during the digging of the trenches for water adduction, and (ii)land expropriation where permanent structures will be built. However, wherever possible, the project will try to minimize the social as well as environmental impacts by the study of alternative sites for the placement ofphysical structures.
ONEP already has clearly established procedures for acquisition or temporary occupation of land, and these are in accordance with Moroccan law and acceptable to IBRD. Therefore, a formal resettlement policy framework document was not prepared. Instead, a summary framework for land acquisition has been prepared and disclosed, with the relevant Moroccan legal codes and related ONEP procedures attached.
Any requirements for land acquisition will be established for each sub-project as part of preliminary engineering studies. In cases where land acquisition will be required, an impact study will take place along with consultations with the project-affected people (PAP).
In the case of temporary occupation of land, the PAP will be informed by the president of the communal council. When land is being permanently acquired, the PAP will be informed through a public posting, noting the land to be acquired and providing the PAP 60 days to lodge any complaints they may have.
In both types of acquisition (temporary and land expropriation), the affected people will be compensated as established by Moroccan law, i.e. at market value determined by the responsible Provincial Commission. In the case of expropriation, a process for the permanent acquisition of lands will be undertaken, by inventorying the people and areas oflands affected and initiating the legal procedures for the transfer oftitles. In cases where the entire community decides to donate lands for the placement of water structures, the process will be documented. The report will include a description ofthe land and its size, value, and the number ofpeople affected.
The Moroccan law and ONEP’s established procedures include procedures in case ofgrievances. Ifdisagreements have not been resolved, they can be submitted to the Provincial Development Council, or, if needed, to the Regional Development Council. In addition, if the PAP does not agree with the amount of compensation offered by the Commission Administrative d ’Expertise (C.A.E.), Moroccan law provides for the assignment of an expert by the Tribunal. The expert will then determine the compensation amount.
Monitoring and evaluation of the implementation of land acquisition procedures is the responsibility of ONEP. Indicators related to land acquisition activities will be included in the semi-annual reports submitted to the Bank by ONEP, and the Bank supervision missions will monitor the implementation of the framework. This issue will also be examined during the project’s mid term review. The budget for the execution of these procedures will be covered by ONEP.
69 Annex 11 : Project Preparation and Supervision MOROCCO: Rural Water Supply and Sanitation Project
Planned Actual PCN review 02/06/2004 02/06/2004 Initial PID to PIC 02/24/2004 02/24/2004 Initial ISDS to PIC 03/02/2004 03/02/2004 Appraisal 09119//2005 09/19/2005 Negotiations 11/07/2005 11/07/05 BoardRVP approval 12/15/2005 Planned date of effectiveness 03/20/2006 Planned date ofmid-tern review 06/3 0/2009 Planned closing date 12/31/2012
Key institutions responsible for preparation ofthe project: ONEP.
Bank staff and consultants who worked on the project included:
Name Title Unit Marie-Laure Lajaunie TTL MNSRE Wendy Wakeman Sr. Social Scientist MNSRE Concepcion Del Castillo Sr. Social Scientist MNSRE Hocine Chalal Sr. Environmental Specialist MNSRE Sylvie Tillier Economist FAO/CP Johann Renkewitz Financial Analyst Consultant Khadija Bourarach Social Scientist Consultant Hassan Lamrani Sr. Irrigation Specialist MNSRE Antonio Cittati, Georges Procurement Specialists MNSRE Khoury-Haddad, Nadia Gouhier, Alaleh Motamedi Siaka Bakayoko Sr. Financial Management MNACS Specialist Pier Mantovani Sr. Water & Sanitation Specialist MNSIF Derko Kopitopoulos Hygiene/Sanitation Specialist Consultant Jan Janssens Program Manager EWDWS Dominique Bichara Sr. Counsel LEGMS Marie Khoury, Hovsep Sr. Disbursement Officer LOAGl Melkonian Sylvie Pittman Language Program Assistant MNSRE
Bank funds expended to date on project preparation: 1. Bank resources: US$428,287.98 2. Trust funds: (PHRD Grant, TF053332, Recipient Executed) - US$323,000 3. Total: US$75 1,288
70 Annex 12: Documents in the Project File MOROCCO: Rural Water Supply and Sanitation Project
A. Bank Staff Assessments
- Project Aide-memoires and Back-to-Office Reports 2003-2005. - Financial Management Assessment. - Procurement Capacity Assessment.
B. Other
- Etude de diagnostique de 1’AEP dans le monde rural (ONEP, septembre 2005). - Guide technologique pour l’assainissement dans les douars marocains (D. Kopitopoulos, octobre 2005). - Guide institutionnel pour l’assainissement dans les douars marocains (D. Kopitopoulos, octobre 2005). - Guide pratique de l’assainissement rural (DGH, 1999). - Etude diagnostique de l’eau potable en milieu rural (ONEP, 2005).
71 Annex 13: Statement of Loans and Credits MOROCCO: Rural Water Supply and Sanitation Project
Difference between expected and actual Original Amount in US$ Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev’d PO69124 2003 MA-Rainfed Agriculture Development 26.80 0.00 0.00 0.00 0.00 28.55 0.40 0.00 PO055 16 2003 MA-ASSET MANAGEMENT REFORM 45.00 0.00 0.00 0.00 0.00 26.58 -1.32 0.00 PO75808 2003 MA-Adult Literacy (Alpha Maroc) 4.10 0.00 0.00 0.00 0.00 4.75 0.75 0.00 PO7353 1 2002 MA-Social Development Agency 5.00 0.00 0.00 0.00 0.00 6.56 1.10 0.35 PO56978 2001 MA-IRRIGATION BASED 32.57 0.00 0.00 0.00 0.00 32.53 8.35 0.00 COMMUNITY DEV. PO483 14 2000 MA-PROTECTED AREAS 0.00 0.00 0.00 9.80 0.00 9.95 9.69 0.00 MANAGEMENT PO63918 2000 MA-LEGAL AND JUDICIAL 5.30 0.00 0.00 0.00 0.00 2.97 1.90 0.00 DEVELOPMENT P0 6 5 7 5 7 2000 MA-SUSTANABLE COASTAL 2.20 0.00 0.00 0.00 0.00 0.81 0.37 0.00 TOURISM DEV. PO05525 1999 MA-HEALTH MANAGEMENT 66.00 0.00 0.00 0.00 2KQ 46.88 60.53 0.05 PO05524 1999 MA FES/MEDINA REHAB. 14.00 0.00 0.00 0.00 4.40 7.85 11.18 0.75 PO055 19 1999 LAKHDAR WATERSHED MG 4.00 0.00 0.00 0.00 1.00 1.78 2.78 0.00 PO05521 1998 MA-WATER RESOURCE MGMT 20.00 0.00 0.00 0.00 3.28 8.53 11.57 0.00 PO43725 1997 MA-RAILWAY RESTR & PRIV 85.00 0.00 0.00 0.00 0.00 44.68 49.24 26.67 PO05503 1996 SEW.& WATER REUSE I1 40.00 0.00 0.00 0.00 12.00 11.96 23.96 0.17 Total: 349.97 0.00 0.00 9.80 41.01 234.38 180.50 27.99
MOROCCO STATEMENT OF FC’s Held and Disbursed Portfolio In Millions of US Dollars
Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 2000 Maghreb Inv. Mgt 0.00 0.02 0.00 0.00 0.00 0.02 0.00 0.00 2000 Maghreb Invest P 0.00 5.00 0.00 0.00 0.00 4.25 0.00 0.00 2001 Medi Telecom 56.42 0.00 22.13 319.05 56.42 0.00 22.13 319.05 0187 SETAFIL 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total portfolio: 56.42 5.02 22.13 319.05 56.42 4.27 22.13 319.05
Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic. 2003 AI Amana Micro 0.00 0.00 0.00 0.00 2002 SGRI 0.00 0.00 0.00 0.00 Total pending commitment: 0.00 0.00 0.00 0.00
72 Annex 14: Country at a Glance MOROCCO: Rural Water Supply and Sanitation Project M. East Lower- POVERTY and SOCIAL &North middle- Morocco Africa income 1 Development diamond' 2002 Population, mid-year (miiiions) 29.6 306 2,411 1 Life expectancy GNI per capita (Atiasmethod, US$) 180 2,070 1,390 GNI (Atlas method, US$ billions) 35.3 670 3,352 Average annual growth, 1996-02 Population (99) 16 19 1.0 Laborforce (%) 2.5 2.9 1.2 GN I Gross per +- primary Most recent estimate (latest year available, 1996-02) capita enrollment Poverty (%of population belo wnationalpo vertyiine) 8 Urban population (%of totalpopulafion) 57 58 49 Life expectancyat birth (years) 68 69 69 infant mortaiity(per 1,OOOlive births) 39 37 30 Child malnutrition (%of chiidrenunder5) 11 Access to improved water source Access to an improvedwatersource (%ofpopuiation) 80 88 81 Illiteracy (%ofpopulation age 59 49 35 13 Gross primaryenrollment (%of school-age population) 94 95 111 -...--Morocco Male 131 98 in Lo wr-middle-inco me group Female 88 90 1D
KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1982 1992 2001 2002 Economic ratios' GDP (US$ biilions) 15.4 28.5 33.9 37.3 Gross domestic investment/GDP 28.2 23.2 24.8 25.2 Trade Exports of goods and servicesiGDP 8.2 25.1 30.7 29.9 Gross domestic savingslGDP 13.8 13.5 8.5 8 .3 Gross national savingslGDP 8.2 217 25.0 24.0 T Current account balance/GDP -Q.l -15 4.8 Interest paymentsiGDP 4.3 8.1 2.7 2.9 Total debt/GDP 80.4 79.7 58.9 49.9 Total debt service/exports 44.8 40.6 8.2 32.9 1 Present value of debt/GDP 43.4 Present value of debt/exports a4.6 Indebtedness 1982-92 1992-02 2001 2002 2002-06 (average annual growth) .-=Morocco GDP 4.2 3.0 6.5 4.5 3.4 GDP ..DercaDita 2.0 13 4.8 2.9 17 Lo wer-middie-income group
STRUCTURE of the ECONOMY lge2Igg2 2o01 2o02 Growth of investment and GDP (%) (%of GDP) Agriculture 153 254 58 B 1 40 Industry 319 323 314 311 30 Manufacturing I73 181 73 ff3 2o Services 528 523 528 528 lo 0 Private consumption 679 667 624 648 General government consumption 83 Be. 181 130 imports of goods and services 337 318 361 359 ----GDI -GDP
1982-92 1992-02 2001 2002 Growth of exports and imports (%) (average annual growth) Agriculture 5.3 17 23.0 7.0 30 T Industry 3.2 3.5 3.0 3.5 20 Manufacturing 4.2 3.0 4.0 4.5 Services 4.3 3.2 5.1 4.5 10 Private consumption 4.3 3.4 3.9 13 .O 0 General government consumption 3.8 3.9 14.5 -6.0 Gross domestic investment 2.9 5.1 8.1 5.6 Imports of goods and services 5.9 6.5 2.3 6.7
73 Morocco
PRICES and GOVERNMENT FINANCE 1982 1992 2001 2002 Inflation (%) Domestic prices (%change) 4T Consumer prices 13.5 5.7 2.0 0.6 I Implicit GDP deflator 7.2 4.4 16 2.6 Government finance (%of GDP, includes current grants) Current revenue 22.0 26.2 24.5 24.0 97 98 99 00 01 02
Current budget balance ~ 14 0.2 ~I-GDPdeflator -CPI Overall surplus/deficit -12.1 -2.3 -0.8 -3.4
TRADE 1982 1992 2001 2002 Export and import levels (US$ mill.) (US$ millions) Total exports (fob) 2,065 5,045 7256 7,663 Agriculture 546 1,745 1,958 r-1 Phosphorus rock 572 307 445 439 Manufactures 407 2,6Q 3,822 3,966 4,36 8.113 11,394 12,083 . Total imports (cif) Food 580 a95 1,370 1,459 Fuel and energy Iff3 164 2,026 2,086 Capital goods 953 2,019 2,237 2,393 96 97 98 99 00 01 02 Export price index (S95=00) 70 a7 a2 85 Import price index(S95=0O) 78 91 a9 88 mExports mlnports Terms of trade (S95=00) a9 95 91 96 I
BALANCE of PAYMENTS 1982 1992 2001 2002 Current account balance to GDP (Oh) (US$ millions) Exports of goods and services 2,969 7,u4 13,541 13,941 I imports of goods and services 5,199 9,043 ~,3ao 13.139 Resource balance -2,230 -1,909 -1,839 -2,$68 Net income -650 -1.057 -944 -1,066 Net current transfers sa1 2,533 2,520 2,567 Current account balance -1,867 -433 1611
Financing items (net) 2,061 $16 374 Changes in net reserves -194 -683 -1,985 223 Memo: ReSeNeS including gold (US$ millions) Conversion rate (DEC, local/US$) 6.0 8.5 113 11.0
EXTERNAL DEBT and RESOURCE FLOWS 1982 1992 2001 2002 (US$ millions) Composition of 2002 debt (US$ mill.) Total debt outstanding and disbursed 6,401 22,674 19,944 18.601 IBRD 698 3,408 2,500 2,549 IDA 41 37 25 24 I Total debt service 1721 3,894 2,556 3,691 IBRD 89 518 452 4P IDA 1 1 2 2 Composition of net resource flows Official grants $63 182 I72 Official creditors 726 471 -432 -727 Private creditors a04 49 62 -399 Foreign direct investment ao 503 2,658 Portfolio equity 0 0 -8 E: 6,209 World Bank program Commitments 136 275 8 33 A-IBRD E-Bilat~al Disbursements ?35 477 61 45 B-IDA D-Gtkrmltilateral F-Private Principal repayments 38 270 280 269 C-IMF G- Short-ter
74 MAP SECTION
10°W 5°W 0° SPAIN Mediterranean Sea
Tangier
Tétouan To Al Hoceima Algiers 35°N MOROCCO Nador Larache Chechaouene
a y 35°N u lo Oujda u Ouezzane o M d Taounate e u Taourirt Taza O Oued Taounate Sebour Kenitra Taza Sidi Fès Sale Kacem Ain Bini RABAT Mathar Meknès Khemisset Casablanca Ifrane Azrou Ben Slimane Boulemane ALGERIA El Jadida Berrechid To Settat El Bayadh Oued Zem Khenifra El Jadida Khouribga Bouârfa
O ue d Er Figuig ATLANTIC Rb ia Beni Mellal Safi El Kelaa des Srarhna OCEAN Safi To Tindouf 0° Azilal Errachidia Oued Tennsift Demnate Marrakech MOROCCO Essaouira Chichaoua Tahannaout Essaouira RURAL WATER SUPPLY
AND SANITATION PROJECT Ouarzazate Y O R u A e D PROJECT PROVINCES d N s U us D o ra O d S a SELECTED CITIES AND TOWNS Oue Zagora B Agadir Taroudannt PROVINCE OR PREFECTURE CAPITALS* E T 30°N 30°N A NATIONAL CAPITAL M P P R O X I Tata A RIVERS Tiznit MAIN ROADS
This map was produced by Ifni ALGERIA RAILROADS the Map Design Unit of The World Bank. The boundaries, PROVINCE OR PREFECTURE BOUNDARIES colors, denominations and NOVEMBER 2005 any other information shown 0 50 100 150 200 Kilometers INTERNATIONAL BOUNDARIES on this map do not imply, on Goulimine IBRD 34331 the part of The World Bank Group, any judgment on the INTERNATIONAL BOUNDARIES legal status of any territory, 0 50 100 150 Miles (Approximate) Draa o r a n y e n d o r s e m e n t o r Tan-Tan Oued a c c e p t a n c e o f s u c h To 5°W *Province or Prefecture names are the same their capitals. boundaries. Tindouf