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Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: PAD822 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN IN THE AMOUNT OF Public Disclosure Authorized US$474 MILLION TO THE LEBANESE REPUBLIC FOR A WATER SUPPLY AUGMENTATION PROJECT SEPTEMBER 4, 2014 Public Disclosure Authorized Water Global Practice Middle East and North Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective July 31, 2014) 1507.5 LBP = US$1 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AA Alternatives Analysis BdL Banque du Liban (Central Bank of Lebanon) BML Beirut Mount Lebanon BMLWE Beirut Mount Lebanon Water Establishment CBA Cost Benefit Analysis CBO Community Based Organization CDR Council for Development and Reconstruction CE Citizen Engagement CNRS Centre National de la Recherche Scientifique COM Council of Ministers CPS Country Partnership Strategy CWRSAS Country Water Resources Sector Assistance Strategy DA Designated Account DSPE Dam Safety Panel of Experts DGA Directorate General of Antiquities EIRR Economic internal rate of return ED Executive Director EC Expropriation Committee EPP Emergency Preparedness Plan ERP Emergency Response Procedures ESIA Environment and Social Impact Assessment ESMP Environmental Social Management Plan ESPE Environment and Social Panel of Experts FM Financial management GBML Greater Beirut Mount Lebanon GCM Global Circulation Model GDP Gross Domestic Product GoL Government of Lebanon GBWSP Greater Beirut Water Supply Project GRM Grievance Redress Mechanism GWTF Task Force of Gender and Water HA Hectare IANWGE Interagency Network on Women and Gender Equality IFR Interim Un-audited Financial Report IsDB Islamic Development Bank IPCC Inter-governmental Panel on Climate Change IPSAS International Public Sector Accounting Standards IWA International Water Association IWRD Integrated Water Resource Development KM Kilometer KM2 Square Kilometer LBP Lebanese Pound LCWMC Lebanon Center for Water Management and Conservation LRA Litani River Authority M Meter M3 Cubic Meter MASL Meter Above Sea Level MCE Maximum Credible Earthquake MCM Million Cubic Meter MENA Middle East and North Africa MOEW Ministry of Energy and Water MOF Ministry of Finance MOSA Ministry of Social Affairs MW Megawatts NCLW National Commission for Lebanese Women NGO Non Governmental Organization NPV Net Present Value NRW Non Revenue Water NWSS National Water Sector Strategy O&M Operation and Maintenance ORAF Operational Risk Assessment Framework PAPs Project Affected Peoples PDO Project Development Objective PIC Project Information Center PFS Project Financial Statements PIM Project Implementation Manual PMU Project Management Unit POE Panel of Experts RAP Resettlement Action Plan RWE Regional Water Establishment SW Staff Weeks TOR Terms of Reference UNHCR United Nations High Commission on Refugees US$ United States Dollar USAID US Agency for International Development VEC Valued Environmental and Social Components WA Withdrawal Application WSAP Water Supply Augmentation Project WTP Water Treatment Plant WWTP Wastewater Treatment Plant Regional Vice President: Inger Andersen Country Director: Ferid Belhaj Senior Practice Director: Junaid Kamal Ahmad Practice Director: Jennifer Sara Practice Manager: Steven N. Schonberger Task Team Leader: Claire A. Kfouri LEBANON WATER SUPPLY AUGMENTATION PROJECT TABLE OF CONTENTS Page I. STRATEGIC CONTEXT .................................................................................................................... 1 A. COUNTRY CONTEXT ................................................................................................................................ 1 B. SECTORAL AND INSTITUTIONAL CONTEXT .............................................................................................. 2 C. HIGHER LEVEL OBJECTIVES TO WHICH THE PROJECT CONTRIBUTES ...................................................... 7 II. PROJECT DEVELOPMENT OBJECTIVE ...................................................................................... 8 A. PDO ........................................................................................................................................................ 8 B. PROJECT BENEFICIARIES ........................................................................................................................ 8 C. PDO LEVEL RESULTS INDICATORS ......................................................................................................... 9 III. PROJECT DESCRIPTION .............................................................................................................. 10 A. PROJECT COMPONENTS ......................................................................................................................... 10 B. PROJECT FINANCING ............................................................................................................................... 11 C. LESSONS LEARNED AND REFLECTED IN THE PROJECT DESIGN............................................................ 11 IV. IMPLEMENTATION ........................................................................................................................ 14 A. INSTITUTIONAL AND IMPLEMENTATION ARRANGEMENTS .................................................................... 14 B. RESULTS MONITORING AND EVALUATION .......................................................................................... 15 C. SUSTAINABILITY ................................................................................................................................... 15 V. KEY RISKS AND MITIGATION MEASURES............................................................................... 16 A. RISK RATINGS SUMMARY TABLE .......................................................................................................... 17 B. OVERALL RISK RATING EXPLANATION ................................................................................................ 18 VI. APPRAISAL SUMMARY ................................................................................................................. 18 A. ECONOMIC AND FINANCIAL ANALYSIS .................................................................................................. 18 B. TECHNICAL ............................................................................................................................................. 19 C. FINANCIAL MANAGEMENT ................................................................................................................... 20 D. PROCUREMENT ...................................................................................................................................... 21 E. SOCIAL .................................................................................................................................................. 22 F. ENVIRONMENT ...................................................................................................................................... 27 G. OTHER SAFEGUARDS POLICIES TRIGGERED ......................................................................................... 29 ANNEX 1: RESULTS FRAMEWORK AND MONITORING ................................................................ 31 ANNEX 2 : DETAILED PROJECT DESCRIPTION ................................................................................ 35 ANNEX 3 : IMPLEMENTATION ARRANGEMENTS ........................................................................... 47 ANNEX 4: OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) ........................................ 59 ANNEX 5: IMPLEMENTATION SUPPORT PLAN ................................................................................ 64 ANNEX 6: ECONOMIC ANALYSIS ....................................................................................................... 67 ANNEX 7: FINANCIAL ANALYSIS ....................................................................................................... 71 ANNEX 8: ENVIRONMENT SAFEGUARDS ......................................................................................... 75 ANNEX 9: SOCIAL SAFEGUARDS ........................................................................................................ 93 ANNEX 10: GENDER ANALYSIS......................................................................................................... 106 ANNEX 11: COMMUNICATIONS STRATEGY ................................................................................... 111 PAD DATA SHEET Lebanese Republic Lebanon-Water Supply Augmentation Project (P125184) PROJECT APPRAISAL DOCUMENT . MIDDLE EAST AND NORTH AFRICA Water Global Practice Report No.: PAD822 . Basic Information Project ID EA Category Team Leader P125184 A - Full Assessment Claire Kfouri Lending Instrument Fragile and/or Capacity Constraints [ ] Investment Project Financing Financial Intermediaries [ ] Series of Projects [ ] Project Implementation Start Date Project Implementation End Date 30-Sep-2014 31-Dec-2023 Expected Effectiveness Date Expected Closing Date 30-Sep-2015 30-Jun-2024 Joint IFC No Practice Senior Global Practice Country Director Regional Vice President Manager/Manager Director Steven N. Schonberger Junaid Kamal Ahmad Ferid Belhaj Inger Andersen . Borrower: