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World Bank Document Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 15778 IMPLEMENTATION COMPLETION REPORT MALAYSIA Public Disclosure Authorized JOHOR WATER SUPPLY PROJECT (LOAN 2654-MA) Public Disclosure Authorized JUNE 24, 1996 Infrastructure Operations Division Public Disclosure Authorized Country Department I East Asia and Pacific 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. CURRENCY AND EQUIVALENTS Currency Unit = Malaysian Ringgit (M$) 1984 US$1.00 = M$ 2.34 1996 US$1.00 = M$ 2.50 &NITS OF MEASUREMENTS Metric System lcd liters per capita per day MI Megaliter (1000 M) Mid Megaliters per day FISCAL YEAR January 1 to December 31 ABBREVIATIONS AND ACRONYMS F-JKR - Federal Department of Public Works GOM - Federal Government of Malaysia JBA - Johor Water Department JS-JKR - Johor State Department of Public Works M&E - mechanical and electrical PUB - Public Utilities Board of Singapore SAJ - Syarikat Air Johor Sdn. Bhd. (Johor Water Company, Inc.) WD - Water Department FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT MALAYSIA JOHOR WATER SUPPLY PROJECT (LOAN 2654-MA) Table of Contents Page No. P re fa c e .......................................................................................................................... i E v a lu atio n S u m may ..................................................................................................... ii Implementation Assessment A. Statement/Evaluation of Objectives ............................................................. 1 B . A chievem ent of O bjectives.......................................................................... C. Major Factors Affecting the Project............................................................. 8 D . P roject S u stain ab ility ................................................................................... 9 E . B an k P erfo rm an ce ....................................................................................... 9 F . B orrow er P erform ance .............................................................................. 10 G. Assessment of Overall Outcome................................................................ 10 H . F u tu re O p eratio n s ..................................................................................... 10 I. K ey L esso n s L earn ed ................................................................................ 1 1 Tables Table 1: Summary of Assessments................................................................... 12 T able 2 : R elated B ank L oans........................................................................... 13 T able 3 : P roject T im etable ............................................................................... 13 Table 4: Cumulative Disbursements: Planned v. Actual.................................... 14 Table 5: Key Indicators for Project Implementation ......................................... 15 Table 6: Studies Included in the Project ........................................................... 16 Table 7: Project Costs and Financing ............................................................... 17 Table 8: Economic Costs and Benefits............................................................ 18 Table 9: Status of Legal Covenants.................................................................. 19 Table 10: Bank Resources: Staff Inputs............................................................. 20 Table 11: Bank Resources: Missions.................................................................. 21 Appendixes: A . M ission's A ide M em oire ............................................................................. 22 B. Maps (IBRD 18823 and 18824) 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 wiLout World Bank authorization. IMPLEMENTATION COMPLETION REPORT MALAYSIA JOHOR WATER SUPPLY PROJECT (LOAN 2654-MA) Preface This is the Implementation Completion Report (ICR) for the Johor Water Supply Project in Malaysia, for which Loan 2654-MA in the amount of US$ 62.0 million equivalent was approved on February 25, 1986 and made effective on August 7, 1986. The loan was closed on March 31, 1995, compared with the original closing date of March 31, 1992. US$ 15.0 million was canceled on April 23, 1990. The final transaction took place on August 2, 1995, at which time the balance of US$ 2.75 million equivalent was canceled. The ICR was prepared by Mr. Kevin Page, Operations Analyst, Infrastructure Operations Division, Country Department I of the East Asia and Pacific Region and was reviewed by Mr. J. Shivakumar, Chief, EAlIN; Mr. Mohammad Farhandi, Portfolio Manager, EAIIN; and Mr. Walter Schwermer, Projects Advisor, EAIDR. Preparation of this ICR was begun during the Bank's final supervision mission. It is based on material in the project file and the information provided by the implementing agency, Syarikat Air Johor Sdn. Bhd., during the ICR mission which took place between March 11 - 16, 1996. A final draft of the ICR was provided to the Borrower for comment, and no comments were received. IMPLEMENTATION COMPLETION REPORT MALAYSIA JOHOR WATER SUPPLY PROJECT (LOAN 2654-MA) Evaluation Summary Background i. The State of Johor is situated at the southern tip of the Malay Peninsula and, with a land area of 18,985 sq. km, ranks ffth in size among the 13 states of Malaysia. It is divided into eight administrative districts, namely: Batu Pahat; Johor Bahru; Kluang; Kota Tinggi; Mersing; Muar; Pontian; and Segmat. These range in size from 3,483 sq. km (Kota Tinggi) to 919 sq. km (Pontian). The Johor Water Supply Project (Ln. 3654-MA) covered three of these administrative areas, Johor Bahru, Batu Pahat, and Kluang. The population of Johor State at appraisal was 1.7 million compared to a population of 2.3 million in 1994. The population in the project area increased from 937,000 at appraisal to 1.3 million in 1994. ii. Water supply in Malaysia is a state-level responsibility, historically under State Public Works Departments called Jabatan Kerja Raya (JKR), with federal government providing budgetary allocations, policy and strategic guidance and technical assistance when required. During the implementation of the Johor Water Supply Project, water supply institutions in Johor State evolved. The water supply function moved from a division of the Johor State JKR to an independent Johor State Water Department (JBA). Toward the end of project implementation, JBA was corporatized, becoming a fully-state-owned company called Syarikat Air Johor Sdn. Bhd. (SAJ). Project Objectives iii. The project objectives were to: (a) improve piped water supply service to existing consumers and extend service to new customers in the Johor Bahru metropolitan area and in the urban and rural areas of the Batu Pahat and Kluang districts; (b) reduce the dependence of Johor State on Singapore's water abstractions; (c) strengthen water supply activities in the State through the creation of a separate Water Department and the development of adequate institutional measures (manpower, training, a commercial accounting system and improved financial management); and (d) ensure the financial viability of the Water Department. Specifically, as regards the physical improvements, the objective was to raise the percentage of population served between 1983 and 1995 from 75% to 92% in Johor Bahru, 52% to 85% in Batu Pahat, and 68% to 86% in Kluang, respectively. iv. The physical objectives were timely and consistent with the development needs of the rapidly growing Johor State. The institutional objective of creating a separate water department was a necessary condition for the creation of an accountable, efficient water supply institution. The institutional measures required to build a strong and viable institution were also clearly defined in the project objectives, although the timeframe for their implementation may have been too optimistic. Implementation Experience and Results v. The physical and institutional objectives were achieved, and in some respects surpassed. The physical works were completed to a satisfactory level of quality, under the original cost estimates, albeit with some delays. The recalculated internal rate of return was 9.3 percent compared to the appraisal estimate of 7.7 percent. The percentage of population served in 1995 increased to 96 percent, also exceeding the project's objectives. While SAJ continues to purchase water from Singapore's Public iii Utilities Board (PUB), the development of water treatment capacity under the project has reduced Johor State's reliance on PUB water in keeping with the project development objectives. vi. The institutional objectives were to (i) create an independent, viable water department and (ii) strengthen aspects of its operation, such as accounting, training and manpower. The former objective was met late, but ultimately surpassed, while in the latter areas, results were delayed and only marginally satisfactory. The responsibility for water supply was removed from the Johor State Public Works Department (JS-JKR) and established under a new Water Department (JBA). This did not occur, however, without problems and delays. The loan agreement called for the separation to take place by January 1, 1987, but the legal separation did not
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