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CYPRUS Public Disclosure Authorized Documne The Worl FOR OFFICIAL A/ 3 S S cy Public Disclosure Authorized ReportNo. 9635-CY STAFF APPRAISAL REPORT REPUBLIC OF CYPRUS Public Disclosure Authorized SOUTHEAST COAST SEWERAGE AND DRAINAGE PROJECT AUGUST 1. 1991 Public Disclosure Authorized Infrastructure Division Public Disclosure Authorized Country Department IV Europe, Middle East and North Africa Regional Office This document has a restricteddistribution and may be used by recipients on!y in the perfonnanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EOUIVALENTS Cyprus Pound (CC) - 100 cents Cc 1.00 = US$ 2.27 (av. for March, 1991) Cc 1.00 US$ 2.03, 2.18 (av. for 1989, 1990) US$ 1.00 - C£ 0.46 (av. for 1990) MEASURES AND ABBREVIATIONS Kilometer (km) - 0.62 miles Square kilometer (kn2) - 0.39 square miles Hectare (ha) - 2.47 acres Cubic meter (m 3 ) - 220 imperial gallons Million cubic meters (mcm) - 220,000,000imperial gallons Liter (1) - 0.220 imperial gallons Meter (m) - 3.28 feet (ft) Millimeter (mm) - 0.04 inches lcd - liters per capita per day. ACRONYMS ANSB - Ayia Napa Sewerage Board ARI - Agricultural Research Institute CERF - Council of Europe Resettlement (Social) Fund CM - Council of Ministers CPM - Critical Path Method EA(EIA) - Environmental(Impact) Assessment EC - European Community FC - Famagusta Conveyor LSD - Lands and Surveys Department LSDB - Larnaca Sewerage and Drainage Board MANR - Ministry of Agriculture and Natural Resources MOI - Ministry of Interior MOF - Ministry of Finance PSB - Paralimni Sewerage Board SBLA - Sewerage Board of Limassol-Amathus SCP - Southern Conveyor Project for Water Resources Development STP - Sewage Treatment Plart UNDP - United Nations Development Programme WDD - Water Development Department (in MANR) FISCAL YEAR January 1 - December 31 FOROMCIL USEONLY REPULIC OF CYPRus SOUTHEASTCOAST BEVERAGE AMD DAINAGR PROJET STAl APPRAISAL UrQvRT Table of Contenta LOAN AND PROJECTSUH U M MA.................... £ I. 1INTRD.UCTIIN....................... 1 II. SETRLCNE .................... 2 A. Water Resources.................... 2 B. Tourism........................ 2 C. Sector Service Levels ................. 3 D. Sector Organization .................. 3 E. SectorObjectives ................... 4 F. Bank Involvementin the Water and SewerageSectors.. 4 G. World Bank Lending Strategy for Cyprus........ 5 III. PROJECTAREA. SERICES. AND DEKMND............5 A. Project Areas..................... 5 B. Existingand PlannedWater Supply........... 6 C. ExistingSolid Waste Disposal............. 7 D. ExistingLiquid Waste Disposal............. 7 E. ExistingDrainage Systems............... 8 This reportis based on an Appraisalmission which visitedCyprus in March- April, 1991,consisting of A. Elwan (TaskManager and SeniorEconomist), N. Shehadeh(Principal Financial Analyst), S. Margetis(Senior Environmental Specialist),N. Khouri (UNDPWorld Bank Water and SanitationProgram Officer), and J. Pettigrew(Consultant - SanitaryEngineer). The peer reviewerwas M. Dickerson,Principal Engineer, EM5IV. EM5 Infrastructure,Energy and Environmentis the responsibledivision (Jonathan C. Brown,Division Chief), CountryDepartment. V, (RussellJ. Cheetham,Director), Europe, Middle East and NorthAfrica. Thisdocument has a restricteddistribution and may be used by recipients only in the perfoirmance oftheir official duties. Itscontents maY not otherwise bedisclosed without World Bank authorization. lTblaof Contents(cont.) .tesg No. IV. EL1RIJJW=................ ,. 9 A. B o ... ... 9 B. Pr oje ctObjctivs................................... 10 C. Rationale for World Bank Support for the Project..... 10 D. Planned Service Levels............................... 11 S. Project Components and Desriptionc ................... 12 The LarnacaComponent.... 12 The Ayia Napa/ParalioniCompon nt..14 F. Status of Project Preparation . .5............i iG.Operation and MaintenanceEquipment . 15 H. ConstructionSupervision . 15 I. InstitutionalDevelopment .. 15 J. Land Acquisition ..................... 16 K. Cost Estimates ............... .... 16 L. Project Implementation........................ 18.. M. Procurement ....................... 19 N. Disbursements ...................... 21 0. Project Supervision ................... 21 V. THE BORROUERS............................. 22 A. Introduction............................. 22 B. Organizationand Management.......................... 22 C. Staffing and Training............................. 23 D. Accounting and Auditing............................. 23 E. Billing and Collection............................. 24 VI. FINANCE.25 A. Past Performanceand Present Position.25 B. Rate Structure and Revenues.25 C. Financing Plan.27 D. Future Performance.29 VII. PROJECT JUSTIFICATIONAND RISKS......................... 31 A. Project Benefits.31 B. EnvironmentalImpact .32 C. Economic Rato of Return.33 D. Affordability.34 E. Risks and Safeguards.35 VIII. C2REEMENTSREACHE.D AND RECOMMENDATIONS.35 Table of Contents (cont.) tags No. 1: Tourism Trends in C y............................ p r u s 38 2: Sumary of EnvironmentalAssessment Reports......... 40 3: Technieal Alternatives and Least Cost Solution...... 62 4: Project Cost Estimates.............................. 70 5: ImplementationSchedule ............................. 73 6: Monitoring Indicators............................... 75 7: Procurement Schedule................................ 76 8: DisbursementSchedule ............................... 78 9: Outline OrganizationalStructure .................... 79 10: Details of Financial Analysis ...... ................80 11: Economic Analysis................................... 92 12: Documents in Project File........................... 100 NM IBRD Nos. 22890R, 23037R1, and 22891R REPUBLICOF CYPRUS SOUTHEASTCOAST SKV ItOAND DRA!NAOKPROJECT LOANAND PROJRCTSUIKARAY u9nuan: Larnaca Sewerage and Drainage Board (LSDB) Ayia Napa Sewerage Board (QSB) Paralimni Sewerage Board (PSB) bgauMnz: Republic of Cyprus ImL.a=: US$ 14.7 million to LSDB; US$ 11.3 million to PSB; and US $6.0 million to ANSb, for a total of US$ 32 million. mini: Fifteen years, including five years grace, at the standard variable interest rate. Obiecilves: The main objectives are: (i) to provide safe, reliable, and urgently needed systems for the disposal of domestic and comercial waste water and thereby eliminate the nuisance and health risks, including the threat to the important tourist industry, that arise from the present unsatisfactorydisposal arrangements; (ii) to provide key elements of stormwater drainage systems to reduce intermittentflooding; (iii) to improve environmentalconditions and management of scarce water resources; and (iv) to strengthen the institutionalcapacity of the sewerage boards of the project towns, which at present have only a nucleus of staff. Project DesclRtIQn: The project would provide sewerage and drainage systems for Larnaca, and sewerage systems for the communitiesof Ayia Napa and Paralimni. Only the first phase (coastal areas) of a sewerage system for Larnaca would be included. The project would consist of: (i) central sewage collection,treatment, and disposal systems; (ii) the distributionof treated effluent for re-use; (iii) upgrading the existing stormwater drainage system in Larnaca; and (iv) technical assistance and training and provision of related equipment to the sewerage boards. Benefits ndlRiLsks: The project will replace the inadequatemethods of liquid waste disposal with environmentallysound sewerage systems and treatmentand disposal processes. This will prevent ground water and marine pollution and will protect the tourism industry in the project areas, which is of critical importance to the economy. Benefits from the drainage works include reductions in productivity losses and damage to property due to flooding, and improvementsin sanitary conditions due to reductions in standing water. The design, location, and planned operation of the proposed networks and related facilities have been determined in accordance with the findings and recommendationsof the environmentalassessment carried out. The risks relate mainly to delays in development of adequate institutionalcapacity, which will be addressed through the provision of technical assistance and training, and agreements to be reached on the organizational structures and schedule of staffing. LL DntimatedProleet Cost:' Local Foreign Total *US$ Millions----- Sewerage 15.5 6.7 22.2 Sewage Treatment Plant 1.7 3.4 5.1 Drainage 3.3 1.4 4.7 Irrigation 4.0 2.4 6.4 Vehicles and Equipment 0.1 0.3 0.4 Engineering, TA, and TraLning 1.5 0.8 2.3 Land 1.3 - 1.3 Total Base Cost 27.4 15.0 42.4 Contingencies 7..A8 -4A4 1 Total Cost, Larnaca .IL. 19LA4 4 A A4i& NagA/ParaliMn Sewerage 8.8 7.1 15.9 Sewage Treatment Plant 3.7 5.8 9.5 Irrigation 4.7 4.0 8.7 Vehicles and Equipment 0.1 0.3 0.4 Engineerlng,TA, and Training 1.4 1.3 2.7 Land 0A I --- Q4 Total Base Cost 19.1 18.5 37.6 Contingencies 5.6 5.5 11.1 Total Cost, Ayia Napa/Paralimni 24 Z 24LIQ0 AL7 TOTAL PROJECT COST 59.9 43.4 103.3 at 1990 prices Financinu Plan: IBRD Loans -- 32.0 32.0 Council of Europe ResettlementFund 29.1 2.9 32.0 Sewerage boards 17.7 -- 17.7 Government 1311 8..5 21LA Total financing 59 OA4 103.3 Estimated Bank Disbursements: IBRD Fiscal Year 129 12941295 199i 1227 1228 1222 .--.-.----.--USS millions ------------- Annual 3.4 6.0 6.6 8.0 5.3 2.2 0.5 Cumulative 3.4 9.4 16.0 24.0 29.3 31.5 32.0 Economic Rates of Return: Larnaca Component: 13.6X Paralimni and Ayia Napa Component: 17.7X MM: IBRD
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