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Document of The World Bank FOR OFFICIALUSE ONLY Public Disclosure Authorized ReportNo. 6582a-AL Public Disclosure Authorized STAFF APPRAISAL REPORT ALGERIA SECOND NATIONAL WATER SUPPLY & SEWERAGE PROJECT April 23, 1987 Public Disclosure Authorized Public Disclosure Authorized Water Supply and Sewerage Division Europs, Middle East and North Africa Regional Office This documenthas a restricteddistribution and may be usedby recipientsonly in the performanceof tb,ir officialduties. Its contentsmay not otherwisebe disclosedwithout World Bank authorization. CURRENCY EQUIVALENTS (As of September 30, 1986) Curre.icyUnit = Algerian Dinar (DA) * 100 centimes DA 1 US$0.213 US$1 DA 4.70 DA 1,000,000= US$212,766. ABBREVIATIONS ft foot m = meter ha hectare mm = millimeter 3 Km - kilometer Mm = iillion of cubic meter inh inhabitant m3 /sec= cubic meters per second Lcd liters per capita per day min = minute MEASURES AND E!UIVALENTS Metric System U.S. System Kilometer (km) = 0.62 mile (mi) Hectare (ha) = 2.47 acres (a) Meter (m) = 3.28 feet (ft) Cubic meter (i 3 ) = 220 gallons (g) Million cubic meters/year (M3 /year)= 0.603 million gallons/day (mgd) Liter (l) = 0.220 gallon (g) Liter per second (1/sec) = 19,000 gallons per day (gd) 2 Kilogram/cm = 0.981 Bar Milligram/liter (mg/l) = 0.0703 (gr/g) GLOSSARY OF ACRONYMS AGEP = Agence Nationale de l'Eau Potable et Industrielle et de l'Assainissement EPEA = Entreprise de Production, de Gestion et de Distribution d'Eau d'Annaba EPEAI= Entreprise de Production, de Gestion et de Distribution d'Eau d'Alger EPEBA = Entreprise de Production, de Gestion et de Distribution d'Eau de Batna EPECO = Entreprise de Production, de Gestion et de Distribution d'Eau de Constantine L.PEOR = Entreprise de Production, de Gestion et de Distribution d'Eau d'Oran EPEOU = Entreprise de Production, de Gestion et de Distribution d'Eau d'Ouargla EPES = Entreprise de Production, de Gestion et de Distribution d'Eau de Setif EPET = Entreprise de Production,de Gestion et de Distributiond'Eau de Tiaret ILO = International Labour Organization MHEF = Ministere de l'Hydraulique,de 1'Environnement et des Forkts SEDAL = Societe des Eaux de l'Agglomerationd'Alger SONADE = Societ6 Nationale de Distribution d'Eau Potable et Industrielle SNC = Societe Nationale de Comptabilite WHO = World Health Organization WATER COMPANIES' FISCAL YEAR January 1 - December 31 FOR OFFICIALUSE ONLY ALGERIA SECOND NArIONAL WATERSUPPLY & SEWERACEPROJECT STAFF APPRAISAL REPORT Table of Coniei ts Page No. LOAN AND PROJECT SUMMARY ................... 1. INTRODUCTION .......................... II. THE WATER SUPPLY AND SEWERAGE SECTOR ...... 2 Background .0 0 ..... 2 Recent SectorDevelopment and SectorOrganization 3 Water Resources ............ *..*****............. 4 GovernmentSector Strategyand Sector Investments 5 Service Levels . ....................... ...... 7 PreviousBank Loans in the Sector .............. 7 Constraintsto SectorDevelopment ................ 8 Rationalefor Bank Involvement................ o.. 9 D]. THE PROJECT ..... ........... 9 Sector Investment Program ..................... 9 Project Objectives ................................. 10 Project Description . .................... 11 Cost Estimates ............,, .. 15 Status of Preparation ............ , . .17 Implementation ........... .,. ........ 17 Financing Plan ........ ... ... 4 . .......... 19 Reimbursementand Other Agreements . 19 Procurement . .... .... , . ............ 20 Dis')ursement ............... , ............ l1. Reporting . ... .......................... 23 Project Accounts and Audit ................ 23 Thisreport was preparedand writtenby Messrs.Fritz Rodriguez, Geoffrey Matthews and SergioContreras Thisdocument has a restricteddistribution and may be usedby recipientsonly in the performance of their officialduties. Its contents may not otherwisebe disclosedwithout World Bank authorization. Table of Contents (Cont.) Page No. Wv. THE BENlEFICIARIES .......... .. .... *....... .. ...... 23 Background ................................ ... 23 Organization and Management ...................... 24 Staffing * ** *......................................... 24 Training............................................. 25 Billingand Collection........................... 25 Accounting Systems ..........*.. .................. 26 Audit .....................................*.... 26 Insurance ........................................ 26 V. FINANCIAL ANALYSIS .. ... ............ .......... .. 27 Past and Present Financial Performance ........... 27 Revenues ..................... *.... *.............. 27 Future Financial Performance ..................... 29 Monitoring System ............................ 30 VI. PROJECT JUSTIFICATION .......................... 31 Objectivesof the Proposed Investments ........... 31 Technological Aspects ............................ 31 Economic Acceptability ........................... 32 Affu.>dability........................................... 33 Environmental Impact of the Project .............. 33 Risks .......................................... 33 VI. AGREEMENTS REACHED AND RECOMMENDATIONS 33 LISTOF ANNEXES AnnexNo. 1 Volume& Structureof Sales Estimatedfor 1987 for Eight Companies 2 DetailedDescription of Subprojects 3 Terms of Reference for a Review of the Hydraulic Construction Industryin Algeria 4 EstimatedSchedule of Disbursements 5 ImplementationSchedule 6 TypicalOrganization Chart of SectorCompanies 7 Eight Companies- IncomeStatements 1984-1991 8 Eight Companies- BalanceSheets, 1984-1991 9 Eight Companies- Sourceand Applicationof Funds Statement,1986-1991 10 Eight Companies- MonitoringIndicators 11 Graphs - Sector Investment and Financing Program, and Sector Auiofinancing 12 Eight Companies- Assumptionsfor FinancialProjections Tableof Contewtts(Cot.) 13 Distributionof Annual Per CapitaHousehold Expenses in Algeria in 1980. 14 Cash Flow for Calculationof Rate of ?eturn 15 TariffSchedule 16 Sele, ed Documentsand Data Availablew'th ProjectFile M9h No. 19898R The SecondNational Water Supply& SewerageProject DEMOCRATICAND POPULAR REPUBLIC OF ALGERIA SECOND NATIONALWATER SUPPLY & SEWERAGEPROJECT LOAN AND PROJECT SUMMARY Borrower: Democratic and Popular Republic of Algeria Beneficiares: Lntreprise de Production, de Gestion et de Distribution d'Eau: d'Annaba - EPEA d'Alger - EPEAL de Bechar - EPEB de Batna - EPEBA de Constantine - EPECO de Laghouat - EPEL de Medea - EPEM de Mastaganem - EPEMO d'Oran- EPEOR d'Ouargla- EPEOU de Setif - EPES de Tiaret - EPET and de Tizi Ouzou - EPETI Amount: US$250 million Terms: Fifteen years including three years of grace, at the standard variable interest rate. RelendingTerms: The Beneficiaries will reimburse the Government the equivalent of the Bank loan, over a period of 25 years including five years of grace, at an interest rate of 10 percent. Project Description: The project is part of the national water supply and sewerage sector investment program included in the Second Five-Year Development Plan. The project provides for the development of four water supply and three sewerage subprojecis to be completed by 1989. The project would help expand > ter production, treatment and transmission to meet the unsatisfied and future water demands of areas served by five regional water supply companies and to help expand the distribution systems of areas served by all thirteen regional water supply companies. Technical assistance will be provided to water sector entities and to the sector's portion of the local construction - ii - industry. The project wili benefit 2.2 million people and assist the industrialdevelopment in seven provinces. The project faces no technicalrisks. The degree of success of the Government'scost recovery policy will depend upon timely implementationof sector financial policies. ThiR risk, however, is minimized in view of the strong Government commitment to this sector'sdvelopment. Estimated Cost: Local ForeiRn Total Item ----- US$ Million----- Water Supply: Ain Dalia - Souk Ahras 54.1 58.3 112.4 In Anguel - Tamanrasset 9.5 28.0 37.5 Ain Skhouna- Saida 22.9 73.6 96.5 Mexenna- Annaba 21.9 45.4 67.3 Subtotal: 108.4 205.3 313.7 Seweraae: TlemcemSewage Treatment Plant 5.7 8.2 13.9 MaghniaSewage Treatment Plant 4.5 6.1 10.6 Setif SewageTreatment Plant 10.6 12.8 23.4 Subtotal: 20.8 27.1 47.9 DistributionPipes 86.5 51.1 137.6 TechnicalAssistance, Studies 0.6 0.7 1.3 Inter=basinTransfer Studies 4.9 5.3 10.2 ManagementTraining 0.1 0.1 0.2 ConstructionSupervision 14.0 3.3 17.3 BASE COST 235.3 292.9 528.2 PhysicalContingencies 32.3 24.5 56.8 TOTAL COST (Dec.1986Prices) 267.6 317.4 585.0 Price Contingencies 32.3 13.2 45.5 PRO'JSEDPROJECT TOTAL COST'- 1 L2 IQ3 6 6305 1/ IncludesUS$37.3 million equivalent of taxes and duties. - {ii - Local Foreign Total Item ...... US$ Million Regional Companies' Cash Generation 94.6 - 94.6 Syndicated Loan 119.4 80.6 200.0 Proposed Bank Loan - 250.0 250.0 Government Equity Contributions 85.9 - 85.9 Estimated Disbursements: ........ US$ Million ......... Bank FY 1988 1989 1990 1991 1992 1993 Annual 40.3 50.0 59.4 52.3 33.0 15.0 Cumulative 40.3 90.3 149.7 202.0 235.0 250.0 Staff Awria Ptepwt: NN 6582a-AL of April 23, 1987 Map 0: JBRD 19898R ALGERIA SECOND NATIONALWATER SUPPLY & SEWERAGEPROJECT STAFF APPRAISAJ,REPORT 1. INTRODUCTION 1.01 This report appraisesa number of regionalwater supply and sewerage works to be executed in Algeria during the Second Five-YearDevelopment Plan (1985-89). These works, together wi:h ongoing projects in the cities of Alg -rs, Oran and Constantine,constitute the