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World Bank Document Document of The World Bank For Official Use Only Public Disclosure Authorized Report No: 58809-AL INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN Public Disclosure Authorized IN THE AMOUNT OF EURO 62.5 MILLION (US$85.3 MILLION EQUIVALENT) TO THE REPUBLIC OF ALBANIA FOR A Public Disclosure Authorized WATER SECTOR INVESTMENT PROJECT November 25, 2013 Sustainable Development Department Central Europe and the Baltics Country Unit Europe and Central Asia Region Public Disclosure Authorized This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank’s policy on Access to Information. CURRENCY EQUIVALENTS (Exchange Rate Effective October 31, 2013) Currency Unit = Albanian Lek (ALL) 100 ALL = 0.71 EUR or 0.97 US$ 1 EURO = 140.1 ALL or 1.37 US$ 1 US$ = 102.6 ALL or 0.73 EUR FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS DWU Durres Water Utility EIA/EMP Environmental Impact Assessment / Environmental Management Plan EIB European Investment Bank EU European Union FM Financial Management GDP Gross Domestic Product GDWSS General Directorate for Water Supply and Sanitation GFIS Government Financial Information System GIZ Gesellschaft für Internationale Zusammenarbeit GoA Government of Albania IBRD International Bank for Reconstruction and Development IDA International Development Association (of World Bank) IFR Interim Financial Reports IPA Instrument for Pre-Accession Assistance (from the EU) KfW Kreditanstalt für Wiederaufbau LGU Local Government Unit M&E Monitoring and Evaluation MoF Ministry of Finance MTI Ministry of Transport and Infrastructure NRW Non Revenue Water O&M Operation and Maintenance OP/BP Operational Policy / Bank Procedure PEFA Public Expenditure and Financial Accountability PIU Project Implementation Unit PMBU Performance Monitoring and Benchmarking Unit PMT Project Management Team RAP Resettlement Action Plan SAI Supreme Audit Institution WRA Water Regulatory Authority (of the WSS sector) WSS Water Supply and Sanitation WWTP Wastewater Treatment Plant Regional Vice President: Laura Tuck, ECAVP Country Director: Ellen A. Goldstein, ECCU4 Sector Director: Laszlo Lovei, ECSSD Sector Manager: Sumila Gulyani, ECSUW Task Team Leaders: Stephen Karam, ECSSD & David Michaud / ECSUW ALBANIA WATER SECTOR INVESTMENT 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 .............................................. 4 II. Project Development Objectives ........................................................................................... 5 III. Project Description ................................................................................................................ 6 A. Project Components ...................................................................................................... 6 B. Project Financing .......................................................................................................... 7 C. Lessons Learned and Reflected in the Project Design ................................................. 7 IV. Implementation ...................................................................................................................... 9 A. Institutional and Implementation Arrangements .......................................................... 9 B. Results Monitoring and Evaluation ............................................................................ 10 C. Sustainability .............................................................................................................. 11 V. Key Risks and Mitigation Measures .................................................................................. 11 VI. Appraisal Summary ............................................................................................................. 12 A. Economic and Financial Analysis .............................................................................. 12 B. Technical .................................................................................................................... 13 C. Financial Management ............................................................................................... 15 D. Procurement ................................................................................................................ 16 E. Social (including safeguards) ..................................................................................... 16 F. Environment ............................................................................................................... 17 Annex 1: Results Framework and Monitoring ........................................................................ 19 Annex 2: Detailed Project Description ..................................................................................... 21 Annex 3: Implementation Arrangements ................................................................................ 26 Annex 4. Operational Risk Assessment Framework (ORAF) ............................................... 40 Annex 5: Implementation Support Plan ................................................................................... 45 Annex 6: Team Composition ..................................................................................................... 49 Annex 7: Economic and Financial Analysis ............................................................................ 50 Map ALBANIA WATER SECTOR INVESTMENT PROJECT PROJECT APPRAISAL DOCUMENT EUROPE AND CENTRAL ASIA Datasheet Date: November 25, 2013 Team Leaders: Stephen George Karam / David Michaud Country Director: Ellen A. Goldstein Sectors: Water supply (60%); Sewerage 35%; Sector Manager: Sumila Gulyani Sub-national government administration (5%) Themes: Other public sector governance (15%); Water resource management (27%); Pollution Management and Environmental Health (20%); Infrastructure services for private sector development (10%); Access to urban services and housing (15%); Decentralization (13%) Project ID: P102733 Environmental Category B: Partial Assessment Lending Instrument: Investment Project Joint IFC: N/A Financing Joint Level: N/A Project Financing Data [X] Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (EURO): 62.50 million (US$85.3 million equivalent) Proposed terms: Fixed Spread Financing Plan (EURO) Source Local Foreign Total Borrower 0.34 0.00 0.34 International Bank for Reconstruction and 23.15 39.35 62.50 Development Total: 23.49 39.35 62.84 Borrower: Republic of Albania Ministry of Finance Blvd Deshmoret e Kombit, Tirana Albania Tirana, Albania Tel: (355-4) 228-8373 Responsible Agency: Ministry of Transport and Infrastructure (Ministria e Transportit dhe Infrastrukturës) Tirana, Albania Tel: (355-4) 223-0336 Estimated disbursements (Bank FY/EUROm) FY 13 14 15 16 17 18 19 Annual 0.00 1.00 9.00 19.00 18.00 11.00 4.5 Cumulative 0.00 1.00 10.00 29.00 47.00 58.00 62.5 Project implementation period: Start: December 20, 2013 End: June 30, 2019 Expected effectiveness date: April 1, 2014 Expected closing date: June 30, 2019 Does the project depart from the CAS in content or other significant respects? [ ]Yes [X] No Ref. PAD I.C. Does the project require any exceptions from Bank policies? Ref. PAD IV.G. [ ]Yes [X] No Have these been approved by Bank management? [ ]Yes [ ] No Is approval for any policy exception sought from the Board [ ]Yes [X] No Does the project include any critical risks rated “substantial” or “high”? [X]Yes [ ] No Ref. PAD III.E. Does the project meet the Regional criteria for readiness for implementation? [X]Yes [ ] No Ref. PAD IV.G. Project development objective Ref. PAD II., Annex 2 The Project Development Objectives (PDO) are to: (i) improve the quality of water and wastewater services in the Durres Water Utility Service Area; and (ii) improve the financial performance of Durres Water Utility. Project description Ref. PAD III.A., Annex 2 Component 1: Priority Water Supply Investments. This component will finance: (i) six water supply production wells and a bulk water supply transmission pipeline that will provide up to 630l/s additional supply capacity to address the acute water shortages in the Durres Utility Service Area; (ii) ancillary investments, including elevated reservoirs, linking municipalities/communes within the Durres area and along the transmission pipeline route to the water supply system in a sustainable manner; and (iii) priority investments in the water distribution network in Durres, as well as provision of leak detection equipment and pressure reducing valves to reduce losses. Component 2: Wastewater Network Investments. This component will finance priority wastewater investments aimed at enhancing the existing sewerage network’s capacity to handle the increased water supply in an environmentally and socially sustainable manner, including: (i) rehabilitation of critical parts of the existing
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