Documne The Worl

FOR OFFICIAL

A/ 3 S S cy Public Disclosure Authorized ReportNo. 9635-CY

STAFF APPRAISAL REPORT

REPUBLIC OF 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 - 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 - Conveyor LSD - Lands and Surveys Department LSDB - Sewerage and Drainage Board MANR - Ministry of Agriculture and Natural Resources MOI - Ministry of Interior MOF - Ministry of Finance PSB - Sewerage Board SBLA - Sewerage Board of -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 No.22890, 23037, and 22891. R£PUBLIC OF CYPRUS

SOUTHEASTCOAST SEWERAGEAND DRAINAGE PROJECT

I. INTRODUCTIN

1.01 Cyprus is a small country with a population of about 690,000 and an open economy: exports and imports avoraged about 552 of GDP in recent years. The economic structure is diversified:in 1990, industry contributed 26X of GDP and employed 382 of the labor force; the services sector contributed about 61X (includinggovernment) of GDP and employed 452 of the labor force. Cyprus has a long history of good economic performance,characterized by high growth, low unemployment,a manageable external debt burden, and reasonable price stability. Continued gains in output and incomes have been recorded over the last decade. In 1988, Cyprus entered into a Customs Union Agreement with the European Community (EC), and the phasing ut of restrictionson trade between Cyprus and the EC has begun to take effect. In July 1990, it formally applied to join the EC. Cyprus has recently embarked on An industrial restructuring program with the objective of moving towards a fully open regime consistent with EC requirements.

1.02 While rapid growth in exports of agriculturaland manufacturinghave played an important role in development,tourism remains the dominant foreign exchange earner in the economy, with value added in t'F hotel and restaurant subsector showing growth of over 16% per year. A concentrationon constructionof accommodationcapacity, together with weak zoning regulation and enforcementhas, however, resulted in some serious deficienciesin infrastructure,particularly sewerage.

1.03 The proposed project would benefit the towns of Larnaca, and Paralimni, the village of Ayia Napa and their environs (Maps IBRD 22890 and 22891). Larnaca, wittia population of about 55,000 is the country's third largest urban area; Ayia Napa and Paralimni are smaller coastal towns with populations of around 1,400 and 10,000, respectively,but with large inflows of tourists during the summer. Together, the project area accounts for about half of all tourist overnights in Cyprus. In all three areas, the present methods of sewage disposal are highly unsatisfactory,being increasingly responsible for both groundwaterand sea water pollution and presenting health risks and are highly unsatisfactory,being increasinglyresponsible for both groundwater and sea water pollution and presenting health risks and nuisance odors with a potentiallynegative effect on tourism. The project covers the constructionof sewage collection, treatment, and disposal systems; works to reduce flooding; and the training, equipment, and technical assistance needed to operate and maintain the system. The proposed project is estimated to cost about US$ 103 million, with a foreign exchange component of US$ 43 million, and is planned to be completed in the 1993-1999 period. Bank loans totalling US$ 32 million are proposed to cover a large proportion of the foreign exchange costs of the project.

1.04 The project is the second (a similar project for the Limassol- Amathus area was approved in June, 1990) in a recent Government initiative to provide sewerage and drainage schemes in high priority areas in Cyprus. -2

I1. SICTORAL CONTXTf

A. Water Resou a1s

2.01 Water resources available to Cyprus are scarce and their rational managemnt end developmentare critical to efficient economic development. Average annual rainfall in Cyprus varies from about 1,000 - in the mountains to about 400 - in the lower areas towards the east. About 85X of the total rainfall occurs between November and March, ar most of it runs off in flood flows. Shallow aquifers have variable yields which drop considarablyduring the dry season when water extraction is high and induced recharge from rivers ceases. The potential of the two major deep aquifers is limited as the water from both is frequentlyvery bard, with a high sulfate content.

2.02 Groundwater from shallow aqulfers and a few perennial springs has been the main source for irrigationand for water supply of urban and rural communities. As most groundwater resourceshave been developed and many aquifers overpumped, surface water is increasinglyimportant as the predominant source of water for development. There is some surplus of water in the western part of the island on the southern slopes of the Trodos Mountains. Development of this water supply resource is under way by the Governmentwith Bank assistance, principallyunder Phases I and II of the Southern Conveyor Project for Water Resources Development (SCPI Ln 2386-CY and SCPII Ln 2914-CY) -- the largest of the major water resources development projects for Cyprus. The SCP is a multi-purposeproject to alleviate water shortages in the main urban centers and tourist areas and provide vitally needed irrigationwater. The closing date for Phase I has been extended to December 31, 1991, and Phase II is scheduled for completion in 1994.

2.03 The scarcity of water and the high cost of developing the few remaining water resources have induced a general awareness in both Government and Water Boards, of the need for conservingwater resources in Cyprus. The Government is introducingbasic policy measures aimed at optimizing their utilization,and endeavoring to increase cost recovery, particularlyof irrigationwater, which is still priced substantiallybelow its economic coa t .V

B. Tourls

2.04 Over the last decade, real growth of almost 10 per annum in the sector led GDP growth averaglng 6.0% per annum. Gross foreign exchange receipts from tourism amounted to C£ 490 million (US$ 995m) in 1989 compared to CC 365 million (US$ 781m) in 1988, an increase of about 27X. Annex 1 shows trends in tourist arrivals and overnights,bed capacity and oc.U-pancyrates, v Under the Southern Conveyor Project, Phase II (Ln. 2914-CY), Goverrmenthas agreed to establish charges for irrigationwater sufficient to recover 381 of the weighted average unit cost, and to maintain tariffs on domestic water which will cover operating and maintenance costs, debt service or depreciation,and yearly revenue shortfalls. 3 and ln gross tourismreceipts. In the fi at ten monthsof 1990, tourist arrivalsregistered a 16X increaseover arrLvalsfor the same periodof 1989. Labor constraLnts,partlcularly in the unskilledand semi-skilledareas, are beginningto be felt. The availabilityof potablewater is also, potentially, a maJor constraintto tourismgrowth. The Governmentis aware of the need for an appropriatedevelopment strategy for tourism,and ln 1989 declareda ioratorLumon the isuance of constructLonpermits for new touriLs accoomodation.The moratorlumwas liftedfor most areas In December1990, at which time new condltlonsfor tourlsmdevelopment were enacted,including the limitationthat only 4- or 5- star hotelscould be constructedln large parts of the areas zoned for tourlsmdevelopment.

C. _e_r ServiceLevels 2.05 Only Nicosiahas a piped seweragesystem, constructed under a Bank assistedproject (Ln. 729-CY,signed in 1971). Constructionls expectedto begin ln 1991 on the Limassol-AmathusSewerage and DralnageProject (Ln. 3222- CY) and the systemshould be fullyoperational by 1997. The remainingurban populationis servedmainly by individualdisposal units consistingof septic tanks and percolatLonpits. Recentlyconstructed hotels and apartment buildingsare servedby small biologicalpackage treatment plants; although there are occasionaloperational problems, generally these functionwell and the effluentsare used to irrigatethe hotels'grounds. Problemsof sewage disposalare being experiencedin high densityareas, in coastalareas with high groundwaterlevels, and where soilshave poor permeability. 2.06 Virtuallythe entirepopulation of Cyprusis servedwith piped water of satisfactoryquality. However,since Cyprusis a water-scarcecountry, water rationingis requiredwhen rainfallhas been particularlylow.

D. SLctor Irgani ation 2.07 Water resourcedevelopment and the supplyof bulk water for agriculturaland urban use is the responsibilityof the Ministryof Agricultureand NaturalResources (MANR), and is carriedout throughits Water DevelopmentDepartment (WDD). Drinkingwater qualitystandards consistent with WHO guidelinesare establishedand monitoredby the Ministryof Health. Sewageeffluent quality standards that will protectthe publicand the environmenthave been set under the Sewerageand DrainageLaw of 1971 and its subsequentamendments, and the Ministryof Healthis responsiblefor monitorlng.Sewage effluent quality standards for sea disposalare administeredby the Departmentof Fisheriesof MANR, and are in compliance with the Conventionfor the Protectionof the MediterraneanSea, which Cyprus signedin 1976 and ratifiedin 1979.

2.08 Each municipalarea is responsiblefor the provisionof water supply, sewerageand drainagewithin its corporateboundaries, and in some cases,to contiguousareas when agreementis obtainedfrom the concernedautf)rities. Servicesare providedthrough separate Water Boards,and Sewerageand Drainage Boards,under the guidanceof the Ministryof Interior. Water supplyin rural areas is the responsibilityof localcommunities, administered through Village Counclls. -4

F. Sectc2 Oblectives

2.09 Provision of seweragein both urban and rural areas has been given high priority by the Government of Cyprus. Plans are uinderway to install piped sewerage sy3tems for the currently unserved larger towns and tourist centers (Limassol,Larnaca, Ayia Napa, Paralimni,and ). Earlier dol&ys in project implementation(paras. 4.01 - 4.03) have contributed to the current urgency of the situation. The sewerage system to be conastructedfor the Limassol-Amathusarea under Ln. 3222-CY, approved in June 1990, will be the first aajor urban area system to be constructed since the project was completed in 1980. The proposed project will address the needs of the next high priority areas, leaving only Paphos and the smaller r-.raltowns without piped sewerage systems. The Governmentalso wishes to define a strategy for rural sanitation in Cyprus that would be consistentwith its other objectives in the areas of natural resource conservationand the environment;to this end, a study of rural sanitation in Cyprus is being financed under SCPII.

F. Bank Involvement in the Water Supplv and Sewerage Sector

2.10 Bank involvement in the water supply and sewerage sector started in 1971 with the Nicosia Sewerage Project (Ln. 729-CY) and Famagusta Sewerage and Drainage Project (Ln. 730-CY). These projects provided for sewage collection and disposal facilities,and were well advanced until the events of July 1974, when the implementationof both projects was suspended. Subsequent arrangementswere made to complete the works in Nicosia; operationsbegan in 1980, and although the operation of the system is divided, the Project PerformanceAudit Report (PPAR No. 3694) concluded that the project's institutionaland investmentobjectives had been met. Similar arrangements for Famagustawere not possible, and the loan was closed in 1981.

2.11 The Bank became active in the sector again in 1983, when a sewerage and drainage project was appraised for the Limassol area. A loan of US$ 16.8 million for Limassol was made in FY84. A project for the Larnaca area was also under preparation,and this was appraised in July 1985. The Limassol project became effective in September 1985, about 15 months after Board approval. Problems were experienced in both projects, however. The Larnaca project was not processed further because of difficulties in the financing and cost recovery arrangements,and the Limassol loan was cancelled in April 1987 (without any disbursement),at the request of the Borrower, because of problems related to acquisition of the sewage treatment plant site and project financing.

2.12 Since that time, an increasingawareness of the waste water disposal problems has precipitatedrenewed efforts to overcome the obstacles. In early 1989, the Government requested that the Bank again consider financing sewerage and drainage schemes for coastal towns because of the acceleratingneed to

I/Construction, with Bank assistance, of a sewerage system for Famagustawas almost complete in July 1974 when political events caused implementationto be suspended (para 2.10). . 5 . rectify the unsatisfactorysituation before it affected the important tourism lndustry. i project to provide sewerage and drainage in the Limassol-Amathus area was appraLsed in February 1990, and became effective in December, 1990. The Southeast Coast Sewerage and Drainage Project would address the problems in the next largest town, Yarnaca, and in two smaller towns which are also ioportant tourist centers.

2.13 The Bank has also assisted in the implementationof two multi- purpose water resource developmentprojects --the Vasilikos-Pendaskinos(VPP) (Ln. 1658-CY, completed in 1987) and the ongoing SCPs (para. 2.02).

0. World Bank Lending Strateag for Cvnrus

2.14 The objective of the Bank's assistance strategy in Cyprus is to support the Government'sefforts aimed at diversifyingthe country's economic base, modernizing its industrial and financial sectors, further improving its transport and communicationsinfrastructure, and improving the quality of the environment. In providing assistance,the Bank focusses on those areas where its technical and internationalexperience are the most valued and have the most impact, particularlyin project design and sector work. The Bank's lending strategy in Cyprus is to provide assistance for a limited number of projects, in high priority sectors, in support of the Government'soverall development plan.

2.15 The Government has identified the sewerage sector as a high priority area, and is seeking solutions to its sewage disposal problems that are environmentallysound and make optimum use of scarce resources. The towns on the southeast coast of Cyprus have been identifiedas the next priority for sewerage schemes (after L'massol-Amathus)in a series of actions by the Government to provide sewerage facilities in unserviced urban areas (para. 2.12). The project would provide much needed infrastructureto protect the resident population and visitors to the area from potential health hazards, substantiallyeliminate the nuisance caused by unpleasant odor..;,and would reduce the risk of pollution of ground water aquifers.

III. THE PROJECT AREAS. SERVICES AJREDEMAND

A. Prolect Areas

3.01 Lanaca, situated on Larnaca Bay on the south coast of Cyprus, is the country's third largest urban agglomeration. The population has increased from 19,600 prior to the events of 1974 to around 55,300 in 1990. Larnaca is the site of Cyprus's primary intsrnationalairport, accounting for 90X of all air passenger and freight movements; while the port (the second most important in Cyprus) accounts for 35X to 40% of the country's imports and exports. Because of its sandy beaches and recreationalfacilities, it is also an important tourist center. The tourism sector in Larnaca employs approximately 3,500 people. In 1990 there were close to 10,000 tourist beds, representing some 16X of the island's capacity, and over 1 million tourist overnight stays. 3.02 The Larnaca project area extends over approximately7,000 hectares, encompassingpart of the Larnaca Municipality,the village of Livadhia, five refugee settlements (or "villages"),a coastal strip extending north of the town with most of the hotel development in the area, and south to include the Larnaca InternationalAirport and the Salt Lake. This area extends for about 2C kilometers along the bay, with a maximum width of about 10 kilometers (Map IERD 22890). The Municipal Corporation of Larnaca has jurisdictionwithin the town limits; the remainder of the project area, including the northern coastal strip and Livadhia, is administeredby the . High population densities have overloaded the existing wastewater disposal facilities; the lack of a sewage collection and treatment system has resulted in a deteriorationin sanitary conditions and could undermine the valuable tourist industry. Because of inadequate drainage, flooding occurs in several areas of the town during the rainy season.

3.03 yliaNMaa and Paralimni are small settlements (populationsabout 1400 and 10,000, respectively)in FamagustaDistrict, about 35 kilometers to the east of Larnaca, and some 10 kilometers south of the town of Fa-Agusta. Both have relatively large tourist developments,which have grown steadily since an initial influxof tourism diverted from Famagustaby the events of 1974. The two communitiestogether account for virtually all of the tourism in the , amounting to some 35X of all tourist overnight stays. Ayia Napa, with its sandy beaches, is the second largest tourist destination in Cyprus with 23X of the tourist beds (after the Limassol-Amathusarea which accounts for about 252 of the total). Of the 11,000 beds in Ayia Napa, about 8,000 are in hotels and hotel apartments. The hotels stretch out along the coast on both sides of Ayia Napa village. The area is administeredby the Ayia Napa ImprovementBoard. Paralimni, with an additional 4,300 tourist beds, accounts for another 9X of tourist capacity. The town is about 3 kilometers inland, and its hotel development in the Protaras area is relatively compact, although at some distance (about 6 kilometers) from the center of the town (Map IBRD 22891).

B. Existina and Planned Water SupplR

3.04 Larnaca is supplied with potable water from the Famagusta Conveyor, (FC) pipelineV, local Larnaca Water Board boreholes located in the Klaudhia area about 7 kilometers southwest of town, and from private boreholes. Non- potable supplies used for irrigationare brought to the Larnaca area by the Southern Conveyor pipeline (SCP). The supply of potable water is adequate at present, and provision for water demand of the Larnaca area up to the year 2010 has been made within the resource allocationsof the major surface water source of the Kouris reservoir, constructedunder SCP I (Ln. 2386-CY). The associatedwater treatmentplant, located at Tersephanou,is expected to be completedby 1993. The Larnaca Water Board is an efficient organization,and has recently succeeded in reducing its unaccounted for water to about 16X from previous levels in the range of 25-30Z.

a The FC carries water from the Yermasoyia dam near Limassol eastwards into Famagusta District. It precedes the Southern Conveyor pipeline (para. 2.02). . 7 -

3.05 In 1989, the totalwater consumptionin the LArnacaWater Board area of supply area reached3.3 millioncubic meters (mcm). Thl. is almost wholly domstic consumption,as industrialdemand is insignificant.Per capita consumptionis about 160 lcd. Touristconsumption varies seasonally, and is in the order of 200 lcd for apartmentsand 300 lcd in hotels. Disposalof sewagegenerated by the water supplyis describedin para. 3.11. 3.06 The Ayia Napa/Paralimniareas are suppliedwith potablewater from the FC. Responsibilityfor supplyin the two areas restswith the Paralimni Municipalityand the Ayia Napa ImprovementBoard. There is also a limited amountof groundwaterfrom boreholes,but theseare of diminishingvalue due to loweringof the water table and pumpingcannot be increasedwithout risking salineintrusion. Water consumptionfigures are estimatedto be of the order of 150 lcd. About 80X of water for irrigationpurposes comes from the SCP, the remaindercoming from boreholes.

C. EzistinaSolid Waste Disposal 3.07 Generally,solid waste collectionand disposalare satisfactory. However,in spite of municipalordinances some refuseis dumpedin natural drainageravines and vacantland. Controlmeasures are being taken by municipalofficials to reducesuch problemsby prosecutingviolation. 3.08 In the Larnacaarea, domesticand commercialrefuse collection and disposalfor Larnacaand nearbyvillages are carriedout by the municipal government.The landfillsite for solid waste containsabout 90 ha in the Tersaphanouarea, about 8 kilometerssouthwest of the town. The landfillis about 15 metersdeep, and is estimatedto have about a 20 year life. Refuse is spread,compacted and coveredwith soil, followinggenerally accepted landfillpractices. 3.09 Ayia Napa and Paralimnihave separatesanitary landfill sites. In Ayia Napa, a new sanitarylandfill site in a ravine,equipped with a compactor,has recentlybeen put into operation. Operationsare about to start in Paralimni,using an old quarrysite. In both cases,accepted sanitarylandfill practices are being observed.

D. ExistingLiguid Waste Disposal

3.10 The projectareas lack centralizedsewerage systems. In general, sewagedisposal consists of on-sitedisposal units such as septictanks with percolationpits, and holdingtanks. There are some exceptions,such as the small collectionand treatmentsystems in two housingestates and a beach area in Larnaca,and biologicalpackage treatment plants in the largerhotels and apartmentbuildings. There is no significantindustry in the projectareas. Most hotelshave packagesewage treatment plants which are costlyto construct,operate and maintain. Some of the hotelshave tertiarytreatment units (filtrationand disinfection)and the treatedeffluent is used for irrigationof hotel gardens. The unusedeffluent and the sludgefrom these small treatmentplants, the liquidwastes from the holdingtanks used by the rest of the hotels,and the contentsof the domesticseptic tanks and cesspools,are all taken to stabilizationponds by tankertrucks. - 8 -

3.11 For the Larnaca area, lagoons for disposal of liquid wastes are located about 10 kilometers north of the town center, beyond the village of Kellia. Theoe do not function as stabilizationponds, and are simply lagoons which would constitute a nuisance but for their remoteness from habitation. They stould begin to funttion as intended when the quantities of waste have been reduced as a result of the sewage treatment plant proposed under the project. The lagoons are run by the District of Larnaca, and costs are apportionedbetween the municipalityand villages according to use. The site has a clay subsoil, and so leachate is not a problem. Effluent from the small treatmnt plants serving the housing estate3 is used on land; in the case of the contact stabilizationtreatment plant in the Zeno Government housing estate,grass in a nearby stadium is being irrigated. In addition, the Mackenzie Restaurant area, a beach resort at the southern limits of Larnaca, has a centralized sewer system and a small treatment works, completed in 1988. The effluent is used to irrigate grass, trees and shrubs within the area. In the Ayia Napa/Paralimniareas, liquid waste is disposed of in lagoons in remote areas. Concern with the possibilityof overflow and subsequent seepage into the sea during heavy rains has led to the decision to establish a new disposal site near the proposed sewage treatment plant. This will be in use from early 1991 until the new treatment plant is operational.

3.12 The present situation is highly unsatisfactory. In Larnaca, due to the high ground water table in the low-lying areas of town, and increasing flows from new and larger buildings, septic tanks overflow as the ground cannot absorb the effluents from soakaways. The situation is particularly serious in the older parts of the town, due to the higher population densities and long period of usage. The septic tanks and absorption pits do not function properly because (i) volumes of wastewaters far exceed the soil absorption capacity; (ii) there is insufficientspace for constructionof disposal units of the proper size; and (iii) the groundwater table is high. Septic tanks are not emptied regularly (pumping out of the tanks is relatively expensive), exacerbatingthe situation. Wastewater volumes in the area are increasing, and the situation is rapidly deteriorating. Tourism is an important concern in all the project areas, and the tourism industry is very sensitive to the risk of groundwater or sea pollution. In addition, the continual presence of tanker trucks presents a visual and odor nuisance.

E. Existina Drainage Systems

3.13 Larnaca is surrounded by hills, and the town itself is divided into several small drainage zones running down to the sea. There are some low lying areas separated from the sea by the higher ground at the coast. Larnaca'sdrainage system consists of surface water flows along streets, and small-diameterroadside drains in some sections of the downtown center and coastal area, all of which discharge in Larnaca Bay. Flood waters reaching the Larnaca area originate from the following natural drainage basins: (i) the Kalokhorio River, which includes a diversion canal to bypass the Salt Lake; (ii) the town center basin, which is divided by three relatively low finger- like ridges; (iii) the Aradhippou River, which fans out forming a delta covering a large area within the northern end of the town and Livadhia village;and (iv) the north coastal plain, which is a coastal area 500 meters wide, north of Larnaca. Frequent flooding occurs in the low-lying coastal areas, particularly those below the 2.0 meter contour, because the natural drainage to the sea has been blocked by the embankment of the Famagusta road, as vell as by land reclamationnear the port area. Increased land developmont activities, together with poor permeabilityof soils and a high water table in low-lying areas, has not only aggravated the severity of flooding, but also cr-ated an unhealthy situation due to the formation of marshes which provide areas for mosquito breeding. Added to this, septic tanks tend to overflow particularly during floods.

3.14 In Ayia Napa and Paralimni, due to the relatively steep gradients of the streets, surface water finds its way along streets to natural ditches and ponds, and the problems associated with rainstorms have not been severe. The rapid growth of tourism in the area and consequent increase in population and now hotel areas will gradually alter the situation. As the natural surface drainage becomes more complicated,technical solutions may become necessary. The major stormwater collection systems have recently been constructed in Ayia Napa area, and no further work except for some repaving of streets and guttering is considered necessary in the near future. In Paralimni, the major stormwater collection systems have been designed and are under construction.

IV. THE PROJECT

A. Back mro4d

4.01 The Municipal Corporationof Larnaca, with the assistance of consultants,developed a master plan and carried out a feasibility study for storawater drainage and sanitary sewerage systems for Larnaca and the surrounding area in 1982. The terms of reference for the study were in accordance with the Government's 1978 policy decision to provide for the reuse of all treated sewage effluents, and considerationof a sea outfall was excluded from the study. A Bank oission reviewed the feasibilitystudy and master plan in June 1984, and agreed that a supplementarystudy, taking into account some of the options previously excluded, was needed to expand and update the original study. The findings of the supplementarystudy, and of a Government Committee review of the preliminary environmentaland agricultural studies, were that the least cost solution included a treatment plant on a oito south of Larnaca airport, with a sea outfall. This site was recommended because of (i) its distance from bathing beaches and inhabited areas, and (ii) its proximity to agriculturaland grazing lands that would allow a future pilot scheme for land disposal of the effluent. A Bank mission of February 1985 concurred with these findings, and a project for Larnaca was appraised in July 1985.

4.02 Approval of the sewer rates by the Sewerage Board was one of the conditions for negotiations, to be held in late 1985. Approval was not obtained, however, because the rates were perceived to be too high by Larnaca's Chamber of Commerce; the hoteliers were also not supportive,having already invested in individual treatment plants. The project remained inactive for several years. In early 1989, the Government requested that the Bank again consider financing sewerage and drainage schemes in high priority coastal towns. Progress in the preparation of a project for Larnaca and other - 10 - coastal towns was followed during the processing of the Limassol-Amathus project. By October, 1989, after efforts by the Larnaca authorities in explaining the environmentaland financial consequencesof further delay, it was felt that the residents of Larnaca were now fully aware of the need to finance the schemeas soon as possible, resolving the previous difficulties regarding the financing scheme. The Sewerage Board hired consultants in August 1990 to update the necessary studies. The updated studies outlined a feasible re-use schemefor the treated effluent, and concluded that a sea outfall would not be necessary.

4.03 The Feasibility Study and Master Plan for sewerage and drainage in Ayia Napa and Paralimni was finalized in January 1984. Supplementarystudies on effluent disposal (to the sea, and for irrigation)were completed in September, 1984. Little progress was made until recently,when the urgency of the situation prompted the two communities to update the studies. The Feasibility Study and Master Plan was completed in final form for Ayia Napa in December 1989, and in draft form for Paralimni in November, 1990. The same consultant carried out both studies, as well as an additional study requested by the Hinistry of the Interior, comparing separate treatment plant sites to the alternative of one common treatmentplant site. Environmentalassessments were carried out separately for the Larnaca and Ayia Napa/Paralimni components,and draft reports were completed in February 1991 (paras. 7.05 to 7.07, and Annex 2). Appraisal took place in March, 1991.

B. Proiect Oblectives

4.04 The project's main objectives are: (i) to provide safe, reliable systems for the disposal of human and commercialwaste water and thereby eliminate the nuisance and health risks, including the threat to the area's important tourist industry, that arise from the present unsatisfactory disposal arrangements;(ii) to provide key elements of stormwater drainage systems to reduce intermittentflooding; (iii) to improve environmental conditions and management of scarce water resources; and (iv) to strengthen the institutionalcapacity of the sewerage boards, which at present have only a nucleus of staff.

C. Rationale for World BAnk SuRRort for the Proiect

4.05 The Bank's country assistance strategy is in agreement with the Government'spriorities concerning environmentalissues, particularly those related to the protection of coastal waters and maximum utilization of scarce water resources. Support for the proposed project would foster the rational use of an additional water resource -- treated wastewater. In the absence of the project, wastewater can be utilized only in relatively small quantities, with the vast majority constitutinga potential pollutant that is both unpleasant and costly to dispose of. The Bank's strategy also seeks to support sustainableeconomic development,ensuring that the necessary infrastructureis in place to accommodate tourism growth, thus minimizing the adverse environmentalimpacts of the increasingnumber of visitors. In addition to supporting the Government in addressing its priority concerns, Bank assistance for the proposed project is indicatedbecause of limited v 11 - operationalexperience in the country with centralized sewagecollection and treatmnt systemsand reuse of treatedeffluent t'

D. lannedServies Lavels

4.06 11Mn AAIe : Since the eventsof 1974, Larnaca's population increasedfrom about 19,600 to an estimated55,346 inhabitants in 1990. Tourilehas greatlyexpanded, and in 1989 (themost recentyear for which completefigures are available),about 1.4 millionovernights were spentin LarnacaDistrict, most of them in the town of LarnacaLtself and the adjacent coastal strip containing most of the hotels. The area to be served includes the low lying area of the town close to the sea; this area is about 6 km long and varies ln width between 500 meters and 1.5 km. Several refugee settlements,or *villages', to the northwest of the town are also to be connected to the sewerage system. These are relatively dense low-rise apartment complexes, containing about 7,800 inhabitants in total, which depend primarily on septic tanks for disposal of wastewater. Sewerage will also be provided along the coastal strip containing mostly hotels and holiday apartments,with some areas of high density residential development,that extends some 7 km north beyond the edge of the town, as well as to the new tourist development that extends southward as far as the airport. The sewerage area contains about 60X of the town's population, and close to 100l of the tourist population. The remaining population living in the less densely developed areas, and at higher ground elevations, are not considered in the proposed sewerage scheme, and would continue to be serviced by individual disposal units.

4.07 The new planning proposals are to maintain the same mix of development,but at considerablylower plot development ratios. The sewers will be sized to take all the sewage that will be generated when the sewerage area is developed to its maximum capacity (about 77,000 population). If a decision is made to sewer additional areas of Larnaca, they could be accommodatedinto the proposed system if the sewerage areas have not been developed to 100 X capacity. If however, a decision is made to sewer the areas of town above the 5 m contour, a new trunk line will be needed. The second system would be independentof the proposed system, and constructionof the new trunk would not disrupt activities in the town center. The planned service levels, in terms of population equivalentswhich include tourists, are given in Table 4.1.

Table 4.1: PoRulation Proiections for the Larnaca Proje9t Area

Y£L Sewerage (Proiect)Area Total Larnaca Area

1990 41,301 55,346 2010 49,446 63,630

A The Jurisdiction of the only operational system in Cyprus (Nicosia)is divided. (para 2.11). - 12 -

4.08 AXia Na2a and Paralimni: Ayia Napa is a smallvillage, with a populationof about 1600 in 1990; Paralimniis largerwith a resident populationof about 10,000. Tourismis the main industryin both communities. Tourismis growingvery rapidly,and it is expectedthat the numberof beds in the two areas combinedwill increasefrom around26,500 in 1990 to around 80,000in the year 2005, as shown in Table 4.2.

Table 4.2: Ponulation Projections for the Avia Naga/ParalimniProject Area

A_ia Mam Prolset Area Paralimni Project Ar-a Xaa Residentand Residentand LdabLorforc Tourist Total Labor force Iourit Total 1990 4,600 16,500 21,100 10,000 10,000 20,000 2005 9,300 36,000 45,300 21,000 44,000 65,000 These figuresimply an averageannual increase of 7.4X in bed capacityover the next fifteenyears. Althoughthese figuresappear high, tourismdemand is very strongin the Famagustaarea. As can be seen from the tablesin Annex 1, the numberof touristovernights in 1-5 star hotels inithe Famagustaarea has grown at an averageannual rate of 19.5Xover the ten-yearperiod 1979-1989, higherthan the growthfor Cyprusas a whole (about131 p.a.)Y Capacityhas grown at a slightlylower pace (about191), and the occupancyrate has thereforeincreased slightly over the period.

E. ProlectComponents and Description 4.09 The projecthas two geographicallydistinct components: the Larnaca area component,and the Ayia Napa/Paralimniarea component. Their locations are shown on Nap No. IBRD 22891.

The lArnaca Comnegnt

4.10 The proposed Larnaca area sewerage and drainage scheme would provide seweragefor the coastalpart of the Larnacaarea and for the refugee settlementson the northernedge of the town, a sewagetreatment plant, and facilitiesfor treating,storing, and distributingthe effluentfor irrigation purposes. It would also upgradethe storm drainagesystem in parts of the area most susceptibleto flooding. The technicaland least-costaspects of the proposedsystem are describedin Annex 3; and the choiceof sewage treatmenttechnology and sewagetreatment plant site locationare outlinedin Table A2.1 in Annex 2. The proposedproject component constitutes a first

A/With tourismgrowth of these magnitudes,water and labor constraintswill be of increasingconcern. However,becauset of the importanceof the tourism industryto the economy,Government policy is to give the water needs of the sectorpriority over thoseof agriculture.This reallocationwill ease some of the labor constraintsas well. Ultimately,water desalinationin tourism areas may be necessary,but the indicationsare that this would be well justified. - 13 -

phase, iLe., the higherprlority works, to be constructeddurlng the 1992- 1993 period,and includesthe followingmajor components:

(a) a saworagesystem wlth 12 sub-system havingabout 60 km of lateralsand main sewers,includlng service connections within the publicright-of-way, and associatedappurtenances;

(b) an interceptorsewer with sewagelift stationsat intervals,long locatedin the north coastalarea and centralLarnaca, extending to about 16 km in length; (c) 17 pumpingstations and associatedpumping mains;

(d) a sewage treatment plant sized for an average sewage flow of 7000 m/day, with a peak flow of 17,500m'/day; (e) a storm drainagesystem consisting of: (i) about 4 km of flood controlcanal and secondarycollector drains at the northernend of Larnaca;(ii) about 1 km of interceptordrains to drain low- lyingareas at the southernend of Larnaca;and, (iii)about 2 km of drainsfor centralLarnaca flood control;and five pumping stations; (f) operationand maintenanceequipment for the sewerageand drainage systems; (g) consultantservices for projectimplementation, including institutionaldevelopment of LSDB; and (h) storagereservoir and distributionsystem for treatedeffluent. 4.11 Sewerage: The technicalaspects of the proposedsystem are outlined in Annex 3. The sewer systemwould compriselaterals, main sewersand collectorsized to meet sewageflows throughthe year 2010. The area's topography,i.e., a low-lyingcoastal strip, dictates that the laterals dischargeinto a seriesof main sewers,parallel to each other,running west to east towardsthe sea, with the collectortraversing the area from north to south close to the shoreline(Map IBRD 22890). Pumpingwill be requiredalong the whole length.

4.12 Savge Treatment: The proposedSTP design,based on 2010 water use projections,consists of two oxidationditches and two final sedimentation tanks. As the sewage Is expectedsometimes to be septic,no inljetworks or primarysedimentation tanks would be provided,and sewagewould be delivered directlyinto the highlyoxygenated liquor in the oxidationtanks in order to minimizeodor nuisance. Effluentwould be furthertreated by rapid gravity filtersbefore passing to a storagereservoir. From there,it would be chlorinatedand pumped into the distributionsystem. Operationalexperience may determinethat the filterswill be used after storage. Surplussludge would be thickened,digested aerobically, and dried on sludgedrying beds (10). 4.13 DistributionSystem for TreatedEffluent: From the pumpingstation at the STP, effluentwould be pumpedthrough a main along the publichighway 14 -

along the coast parallelto the trunk sewer. Branchlines would be laid to the publicparks and touristareas, where the treatedeffluent would be used for irrigationpurposes. PumpLngcapacity provided would be 280 1/s (the peak demandduring the month of July).

4.14 DfLzg: The drainageworks includedin the projectcover only those priorityareas recommended in the LarnacaDrainage Master Plan dated 1982. The proposed drainage systems have been based on an evaluation of alternatives,such as reducingthe systemsby reforestation,and flood control dams withinthe watersheds(which are long-termsolutions), and various channelroutings and sizes of structures,etc. Designis based on a storm returnperiod of 2 years. A major part of the improvementworks lies in increasingthe carryingcapacity of the Kalokhorioriver channel. The drainageinfrastructure to be constructedunder the projectwill be maintained by LSDB; the existingdrainage infrastructure will continueto be the responsibilityof the municipality.a The Ayia Napa/ParalimniComponent 4.15 This componentconsists of sewerage systemsfor the communitiesof Ayia Napa and Paralimniand theirassociated tourism areas; a sharedsewage treatmentplant in a centrallocation; and storageand distribution arrangementsfor the treatedwastes (as in the case of Larnaca,reuse potentialfor the treatedeffluent makes a sea outfallunnecessary). Sewage from Ayia Napa will be pumpeddirectly to the treatmentplant throughthe main pumpingstation; sewage from Paralimnitown will be conveyedalong a gravity sewer to the coast and connectedto the seweragesystem of Protaras(the coastaltourism area associatedwith Paralimni),from where it will be pumped to the treatmentplant (see Map IBRD 22891). The proposedsewage treatment plant site is to the east of Ayia Napa and southwestof the Paralimnitourism area. The landscapein the area is open, with sparseforest vegetation and some limitedcultivation of fruit trees. Treatedeffluent will be conveyed back to the hotel areas along irrigationpipelines. The storagearea for the treatedeffluent is locatedabout 1 km. from the treatmentplant. 4.16 The followingspecific components are includedin the proposed project:- (a) a seweragesystem for Ayia Napa and its tourismarea, including:-

- a sewagecollection network consisting of about 21 km of lateralsand main sewers; - a collectorsewer, i.e., main interceptor/forcemain about 10 km long; and - ten pumping stations.

(b) a seweragesystem for Paralimniand its tourismarea, including:-

- a sewagecollection network consisting of about 35 km of lateralsand main sewers;

1VThis arrangementis satisfactoryas the networksare separate. Any future changesin this arrangementwill be carriedout in consultationwith the Bank. * 15 -

a collectorsewer, i.e., main interceptor/forcemain about 10 km long; and - 24 pumpingstations.

(c) a sewagetreatment plant of about 26,000o/day capacity; (d) operationand maintenanceequipment for the sewagetreatment plant and sewerage systems; (e) rapid gravityfilters, storage reservoir, and distribution networksfor treatedeffluent (about 17 km in Ayia Napa and 26 km in Paralimni);and (f) consultantservices for projectimplementation, including institutionaldevelopment of the Ayia Napa and ParalimniSewerage Boards.

F. Statusof ProjectPreparation 4.17 For the Larnacacomponent, designs are completefor the sewerageand sewagetreatment plant, including the tertierytreatment facilities for the effluent. The designof the effluentdistribution system is expectedto be completeby November,1991. For the Ayia Napa/Paralimnicomponent, outline designshave been completedfor the sewerage,sewage treatment plant, and effluentre-use scheme. Tenderingprocedures should be startingby January, 1992 for the Larnacacomponent, and by end-February,1992 for the Ayia Napa/Paralimnicomponent; and the statusof projectpreparation is considered satisfactory.

G. Operationand Maintenance Equipment 4.18 Equipmentwill be providedto enablethe sewerageboards to efficientlyoperate and maintaintheir sewerage and drainagesystems. Items includetruck mountedcombined jetting/suction machines, trailer mounted jettingmachines, and trailermounted winding devices, vehicles and miscellaneoussewer cleaningtools.

H. ConstructionSuDervision 4.19 Experiencedengineering consultants will assistthe sewerageboards in constructionsupervision of the projectworks. (paras.4.25 and 4.26).

I. InstitutionalDeveloRment

4.20 Organizationand managementof the sewerageboards is discussedin para 5.02. The projectwill includetechnical assistance to strengthenthe sewerageboards. Similarorganizations in Cyprushave demonstratedtheir soundness,and arrangementsfor technicalassistance will allow flexibilityin the amountand type of assistanceto be provided. Duringnegotiations, it was agreedthat the Boardswould recruitstaff in a timelymanner in line with the - 16 -

organizationalchart in Annex 9 (para 8.03-b). Some specific training for the sewerageboards' staff will be obtained under the equipment supply and installationcontracts (para. 5.03).

J. Land Acaulaition

4.21 The land for tne treatment plant in Larnaca belongs to the LSDB. The additional land required for the reservoir to hold the treated effluent belongs to the Government. The land for the Ayia Napa/Paralimnitreatment plant and effluent reservoir site also belongs to the Government. The signing of leases between the Government and the Boards for the Government-ownedland is a condition of loan effectiveness(pAra. 8.03-c).

K. Cost Lstimates

4.22 The combined cost of the two sub-projects,including physical and price contingencies,is about US$ 103.3 million; US$ 54.6 million for the Larnaca component, and US$ 48.7 million for the Ayia Napa/Paralinni components.

4.23 Detailed project cost estimates are given in Annex 4, and are summarized in Tables 4.3 and 4.4. The cost estimates of the sewerage system for Larnaca, Ayia Napa and Paralimni are based on preliminary designs. Cost estimates for the sewage treatmentplant and pumping stations are based on preliminary designs. The costs of a large part of the drainage works are based on detailed designs, the remainder on preliminarydesigns. Costs of pipe materials and major electrical/mechanicalequipment are based on recent representativequotations furn'shedby establishedsuppliers. Civil works constructioncosts are on the basis of data furnished by major local constructioncompanies. Unit rates are based on price levels prevailing in the third quarter of 1990. Local inflation is projected at 4X per year, throughout the projection period; internationalinflation follows the projected index of unit value of manufacturedexports, and averages 3.41 for the 1990-2000 period. - 17 -

Table4.3: Swumrvof Prolect Cost Estimtes- Larnac Foreign Local Foreign toS Local Fo*1W T W al s X of ---- (Cl million)--- --(U.S. b111onii t l A. Sewrage 6.8 2.9 9.8 15.5 6.7 22.2 30 B. SewageTreatment Plant 0.7 1.5 2.2 1.7 3.4 S.1 67 C. Drainage 1.6 0.6 2.1 3.3 1.4 4.7 30 0. Irrigation 1.8 1.1 2.4 4.0 2.4 6.4 38 E. Vehicles andEquipmnt 0.0 0.2 0.2 0.1 0.3 0.4 75 F. Design.Supervision, TA.and Training 0.7 0.4 1.0 1.5 0.8 2.3 35 6 Land Li Li Q Q Q Li LI 2 Total BaseCost 12.1 6.6 18.7 27,4 15.0 42.4 35 (12/90 prices) Contingencies 3 4 9 _5_4 7 8 4 4 L2 Total Cost Larnaca 15.5 8.5 24.1 35.2 19.4 54.6 36

Table4.4: Sumnrv of Proiect Cost Estimates- Paralimni/AviaBaoa Foreign Local Fore an Totol LocaI Foreian 1 as X of (---(CCmillion)--- --(U.S.Smillion)-- totj

A. Sewerage 3.9 3.1 7.0 8.8 7.1 15.9 44 B. SewageTreatment Plant 1.6 2.5 4.2 3.7 5.8 9.5 61 C. Irrigation 2.1 1.8 3.8 4.7 4.0 8.7 46 D. Vehicles and Equipment 0.0 0.2 0.2 0.1 0.3 0.4 75 D. Design. Supervision. TA.and Training 0.6 0.6 1.2 1.4 1.3 2.7 48 E. Land 0 2 0.0 0 2 0.4 LQ 014 Q Total BaseCost 8.4 8.1 16.6 19.1 18.5 37.6 49 Contingencies 2.5 2.4 4.9 ...L55 DAL Total Cost, Paralimni and AyiaNapa 10.9 10.6 21.4 24.7 24.0 48.7 49

4.24 The proposedloans of US$ 32 millionequivalent would financean estimated31X of the cost of the Project:US$ 14.7 millionfor the Larnaca components(27X of their total cost);and US$ 11.3 millionand 6.0 million (36X and 34X of total costs),respectively, for Paralimniand Ayia Napa. The balanceof the Project'scost, estimatedat US$ 71.3 million($39.9m, $19.8m, and $11.6m,for the three sewerageboards, respectively), would be financedby loans from the Councilof EuropeResettlement Fund (CERF),funds from the Governmentfor costs of the tertiarytreatment and effluentdistribution, and 18 -

from charges to customers. The proposed project financing sources and amounts are summarized ln Table 4.5 below.

Table4.5: ProA Financin9Plan (USSmillions) Percent n Paralin Aia Ina gu f total INDloans 14.7 11.3 6.0 32.0 31.0 CERFfinancing 17.5 9.5 5.0 32.0 31.0 boenmmnt 9.3 7.3 5.0 21.6 20.9 Smrageboaras 13.3 0 -a Total 97 31.1 1 W.3 10.0

L. Project I aoleentation

4.25 The Larnaca comDonent: The Larnaca Sewerage and Drainage Board (LSDB) (para. 5.01) will be responsiblefor the construction,operation, and maintenance of the sewerage system (includingsewers and the sewage treatment plant), the effluent re-use system, and the drainage scheme. Project implementationwill be directly under the control of the Engineer of LSDB who will be an experienced engineer. However, revision and updating of the previous detailed design and day-to-day constructionsupervision of the project works will be the responsibilityof consultants. During implementation,the consultantswill carry out (i) tender evaluation; (ii) review of contractors'drawings, verificationof equipment and materials quality for approval by LSDB; and (iii) constructionsupervision of civil works, equipment and materials supply, installation,training, testing and commissioning.

4.26 The AyLa NAta/ParalimnicomRonents: The "joint venture" will be formed by the Ayia Napa Sewerage 3oard and the Paralimni Sewerage Board and will be a legal entity representedby a committee consisting of members of both ANSB and PSB, and chaired by the District Officer of Famagusta. The joint venture will have day-to-day responsibilityfor the construction, operation and maintenance of: (i) the sewerage networks in the Ayia Napa and Paralimni areas; (ii) the common sewage treatmentplant; and (iii) the effluent reservoir and distributionsystem. Detailed design and construction supervisionwill be the responsibilityof consultants.

4.27 Although LSDB, PSB, and ANSB have not yet implementedany major sewerage works, experience in Nicosia, Famagusta, and Limassol shows that the Sewerage Boards in Cyprus have no difficulty in recruiting qualified staff, and that they are quite capable of executing projects of this kind, with the assistance of experiencedconsultants. No major delays are expected, and the implementationperiod will be from 1992 to 1998, plus a one year guarantee period (Annex 5). Detailed Critical Path Method (CPM) networks will be prepared by respective contractors. A project monitoring and reporting system, including performance indicators (Annex 6) and progress on staffing, billing, etc. (paras. 4.20, 5.04, and 5.09), was agreed during negotiations (para. 8.01-d). I. -LQma~19-

4.28 Proposed contracts and their respective cost estimates are presented in Annex 7. All equipment and materials to be financed from the Bank loan proceeds would be procured in accordance with the Bank's Guidelines for Procurement of Equipment. Cypriot manufacturerscompeting under International CompetitiveBidding (ICB) would receive a preference in bid evaluation of 15X of the CIF price or the prevailing custom duty applicable to non-exempt importers,whichever is less, provided they can prove that the value added to the product in Cyprus exceeds 20X ef ex-factorybid price. Contracts for equipment and materials below US$ 200,000 will be procured through prudent shopping based on at least three price quotations. The aggregate value of these contracts will not exceed $ 2 million. 4.29 All bidding packages for equipment and materials estimated to cost $ 500,000 equivalent or more would be subject to the Bank's prior review of procurement documentation. Other contracts would be subject to ex-post review after contract award. These limits would result in prior review of contracts representingabout 94 X of the loan. Consulting services to be financed from the loan proceeds would be procured in accordance with the Bank's Guidelines for the Use of Consultants. Contracts not covered by prior review procedures will be subject to random post review by the Bank after contract award.

4.30 The Larnaca Component. It is anticipatedthat there will be four ICB contracts for works and equipment for the Larnaca Component. These contracts will include civil works and the supply of equipment and materials, including pipes. The sewage treatmentplant, storage reservoir, filters and effluent pumping station will constitute one supply and installationcontract; and there will be three contracts, each of which will include sewerage, drainage, and effluent distributionnetworks, in three areas of Larnaca. Contracts to be procured through other procedures relate to operation and maintenance equipment, engineering services, and technical assistance services.

4.31 The Ayia NaRa/ParalimniComponent. For the Ayia Napa/Paralimni component, it is anticipatedthat there will be six contracts for works and equipment and one contract for the provision of pipes, for which procurement will be according to ICB procedures. As in Larnaca, there will be one supply and installationcontract for the sewage treatment plant, storage reservoir and filters. There will be two contracts for pumping stations (one each for Paralimni and Ayia Napa stations); two contracts for sewer and irrigation works in the Paralimni areas; and one contract for the sewer and irrigation works in Ayia Napa. The remaining contracts are for operations and maintenance equipment, engineering services, and technical assistance. 20 -

Table 4.6: PrccurementArrangements (OUS millions)

ProcurementMethod ITal Sewerage and Drainage

Civil Works 94.1 -- 94.1 (26.9)a (26.9)

Goods 0.9 0.9 (0.5) (0.5)

Land Acauisition 2.0 2.0 Technical Services and Trainig -- b 0.9 (0.9) (0.9) ConsultingEngineering ama. iJ -- 5 . 4 b 5.4 (3.7) (3.7)

Ttal Project 94.1 9.2 103.3 (26.9) (5.1) (32.0)

'Amounts in parentheses are to be financed by the Bank bAccording to Bank Guidelines for the Usa of Consultants

4.32 It is anticipated that most of the ; pe materials and all of the electrical and mechanical equipment will be supplied by foreign manufacturers, and that contracts for the pumping stations an( associated pipelines, and sewage treatmentplant would be awarded either :o foreign contractors or to joint-venturesof foreign and local contractors. It is expected that the contracts for laterals and main sewers and drainage works would be awarded to local contractorswho are competent. Operationalequipment would be supplied by foreign manufacturers through local agents; local agents will not be mandatory,however. Some retroactive financing for engineering and technical assistance, in amounts up to US$ 0.6, 0.45, and 0.5 million (a total of US$1.5 million), may be required for LSDB, PSB, and ANSB, respectively. Assuranceswere obtained during negotiationsthat procurementwill be carried out according to Bank guidelines (para. 8.01-e).

f 21 -

M. Disbursesnts

4.33 The proposed Bank loans totallingUS$ 32.0 million equivalentwould be disbursed against normal documentationas follows:

(a) 24X of expendituresfor civil works for LSDB; 30X of expendituresfor civil works for PSB; and 311 of expendituresfor civil works for ANSB.

(b) 100 percent of foreign expendituresand 100 percent of local expenditures,ex-factory, and 80X of local expendituresfor other items procured locally, for goods; and

(c) 100 percent for consultantsand training.

4.34 Disbursementswould be against Statements of Expenditure (SOE) for eligible expendituresunder the contractsvalued at US$ 200,000 equivalent or less. Supporting documentationfor these would be retained by the Sewerage Boards for at least one year after receipt by the Bank of the audit reports for the year in which the last disbursementwas made. Documentationwould be made available to the auditors and Bank staff upon request. The annual audits of the project accounts would include a separate opinion on the disbursements made under the SOE procedure. All other disbursementswould be made against normal documentationsubmitted to the Bank.

4.35 In order to expedite project execution,Special Accounts for LSDB, ANSB, and PSB would be opened at the Central Bank of Cyprus (or any commercial bank acceptable to the Bank) with authorized allocations of US$ 1,000,000; $800,000; and $500,000 respectively,representing about four months of estimated expenditures. The documentationof replenishmentrequests would follow the same procedures as in para. 4.34.

4.36 Estimated schedules of disbursementsare given in Annex 8. The schedules are consistentwith the Bank's historical disbursementprofile for Cyprus. The closing date for all three loans would be June 30, 1999.

0. Prolect SuDervision

4.37 Progress toward meeting project objectiveswould be monitored through regular supervisionmissions that would be undertaken twice yearly. Supervisionwould be aided by the Sewerage Boards' documentationof progress in their reports to the Bank, which would be submitted twice yearly. The Boards would also submit an annual report which will contain full information on the monitoring indicatorsoutlined in Annex 6 (para. 4.27). - 22 -

V. THE BORRuWERS

A. Intrcti

5.01 The Larnaca Sewerage and Drainage Board (LSDB), whose members were appointed by the Council of Ministers Decision 25.795, dated May 16, 1985, would be the borrower for the Larnaca component. Project preparation in the Ayia Napa and Paralimni has been handled by the Ayia Napa Improvement Board and Paralimni Municipalityto date; however, sewerage boards have recently been created for both communities. The Ayia Napa Sewerage Board (ANSB) and the Paralimni Sewerage Board (PSB) will be borrowers for the Ayia Napa and Paralioni components, respectively. The Republic of Cyprus would be the guarantor for all three loans. The 1971 Law and subsequent legislation covering the creation of sewerage boards is broad and comprehensive,and provides the Council of Ministers with the authority to: (a) establish sewerage and drainage boards, define the area in which those boards are to operate, and nominate members of the board to represent the interests of non- municipal areas included in the board's operating area; and (b) approve the sewerage boards' annual budgets and investmentprograms, and their proposed schedule of rates, charges and fees. The Law also, among other things: (a) provides that boards are to be financiallyautonomous corporate entities; (b) gives boards rights-of-wayand power to compulsorilyacquire property; (c) establishes record keeping and auditing requirements;and (d) provides for the collection of unpaid rates or charges through the Comptroller of Inland Revenue. The sewerage boards are autonomous agencies, empowered to set their own financial objectives. On the basis of their legal, financial and operational environment,and previous Bank experiencewith similar boards (in Nicosia and Limassol), LSDB, PSB, and ANSB are consideredcompetent borrowers.

B. Organizationand Management

5.02 Project preparation work in Larnaca has been carried out under the control of LSDB's Chairman and Larnaca'smunicipal staff. LSDB has recently appointed an accountantand an engineer; and PSB and ANSB are expected to appoint an accountantand an engineer by mid October, 1991. An outline organizationalchart, along the lines indicated in Annex 9, was discussed with the Boards and a schedule for the appointment of critical staff was agreed during negotiations (para. 8.01-b). Agreement was also reached with the Government and with PSB and ANSB that they will enter into legal arrangements, satisfactoryto the Bank, for the construction,operation, and ownership of the project facilities. Advice on staffing and long-term developmentof the Sewerage Boards will be obtained through the technical assistance to be provided (para. 4.20), and will be discussedwith the Bank. While final authority for all decisions rests with the Boards, the engineers would be responsible for physical developmentof the sewerage and drainage systems (includingthe project works) and operation and maintenance,and the chief accountant/administratorswould be responsible for financial,accounting and administrativematters includingdevelopment of accounting procedures. 23 -

C. ffir and Trainins

5.03 The technicalstaff of the SewerageBoards would receivetraining by the oonsultantsduring projectimplementation. The treactmentplant superintendents and their assistants wouldbe hired in sufficienttime to provide 3-6 months practical training abroad in management and process operationof similartreatment plants, and these staff would also be given three monthstraining in Cyprusby the treatmentplant equipmentsuppliers. In addition,the chemistswould be providedwith threemonths training abroad in systemtechnology, sampling and laboratorytesting. Other technicalstaff, i.e., mechanies,electricians, and foremenfor the seweragesystems and pumpingstation operators, would be trainedlocally by suppliersof the equipmentand through arrangementswith local Sewerage Boards.

5.04 Administrativeand accounting staff would be added as required. Qualified staff are available in Cyprus, and would be under the direct supervision of the chief accountant/administrators,thus not requiring consultant services. Progress on staffing and training will be reported to the Bank as part of the project monitoring system (para. 4.27).

D. Accounting and Auditina

5.05 As provided for in the Sewerage and Drainage Act of 1971, the three Boards are required to adopt acceptable procedures for their annual budgets. They plan to follow procedures similar to those curiently applicable to the Sewerage Board of Limassol-Amathus(SBLA). The budgets, which include both recurrent and capital expenditurewill consist of a projected income statement, a statement of sources and applicationsof funds, and a statement of capital expenditures;they are subject to approval by the Council of Ministers (CM) (pars. 5.01). She budgeting cycle starts in September of each year and the CM approval is usually granted prior to the beginning of the fiscal year, which runs from January 1 to December 31.

5.06 The three boards will develop their own accounting systems, which will be tailored after systems that are currently used by the Nicosia and Limassol-AmathusSewerage Boards. The system will be based on accrual accounting principles and capable of generating the usual public utilities financial statements. Procedures would be computerizedas part of the effort to be undertaken for the billing (para. 5.09). The Boards' accounting staff will complete and implement the accounting systems; the systems will be ready for recording the sewerage boards' activities as from January l192.

5.07 Annual audits of the sewerage Boards' accounts are required by the Sewerage and Drainage Law of 1971, and are to be carried out by the Auditor General of the Republic, and this is acceptable to the Bank. Agreements were reached with the three Boards during negotiations,that, beginning with fiscal year 1992, their financial statements would be audited by an independent auditor satisfactoryto the Bank, and that such statements and the audit report, including the audits of the Statement of Expendituresand the Special Account, would be submitted to the Bank within six months of the close of each fiscal year (para 8.03-e). - 24 -

5. l Sllngand Collection

5.08 The sewerage Boards should start billing and collecting revenues from beneficiaries during the first year of construction, i.e., 1992 (para. 6.02). Collection of revenues from sewer rates to be levied on the assessed values of properties will be undertaken by the Boards, following procedures to be prepared along the lines of those currently applied by the Sewerage Board of Limsasol-Amathus. The list of properties and ownerships in the project and the general benefit areas are being prepared, and will be handed over by the Lands and Surveys Department (LSD) to the Boards in time for billing by early 1992. LSD is expected to make the complete data on the project areas and generalbenefit areas availableto the sewerage Boards by October 1991. LSDB, assisted by the municipality,will acquire its own computer facilities for billing and collection. PSB and ANSB will make the necessary arrangementsfor either acquiring computer facilities for billing and collection, or through contracting out these services.

5.09 Agreement was reached during negotiationsthat, as a condition of effectiveness,the sewerage boards will make satisfactoryarrangements and procedures for billing and collecting their revenues from sewer rates, i.e., (i) the Boards have obtained sufficient data on ownerships and value assessments to enable them to start billing their customers; (ii) the Boards have entered into arrangementswith LSD for the future updating of these data; and (iii) the Boards have completed arrangementsfor billing, including acquiring the services or facilities for issuing customer bills and collecting revenues (para. 8.03-a). Revenues from a water surcharge on water consumption will be billed and collected through the water authoritiesoperating in the projectareas (i.e. through the Water Board in Larnaca, the Municipalityof Paralimni and the ImprovementBoard of Ayia Napa), but this activity will not start before 1996, when the first groups of customers are connected to the sewerage system. Similar arrangementswill also be established for billing and collecting revenues for sale of irrigationwater. Agreement was also reached with the Sewerage Boards that the necessary arrangementsfor billing both the water surcharge and the water irrigationcharge will be completed as soon as feasible,but by not later than December 31, 1994 (paras. 6.05, and 8.03-g).

5.10 The Sewerage and Drainage Act of 1971, (as amended in 1972 and 1978) entitles the sewerage boards to request the authorizationof the Council of Ministers to collect bills overdue by more than six months through the Department of Inland Revenues. It also authorizes the sewerage boards to levy a 20X late payment penalty. 25 -

VI. FIANCE

A. at Perfomco and Present Position

6.01 Since its establishmentin 1985, LSDB has not undertaken any operational responsibilities,and has only been involved with project preparation,with the assistance of the municipal staff. Funds for project preparation have been provided by loans from the Government in anticipationof the boards' own revenues from operations. All these loans including funds for project expenditure in 1991 (land acquisition)are being consolidatedunder a single Government loan. The two other boards, PSB and ANSB, were established recently (April, 1991), and financingof the preparationof their projects was provided by the respective municipality and local community.

B. Rate Structure and Revenues

6.02 The Sewerage and Drainage Act of 1971 (para. 5.01) authorizes the sewerage boards to establish their rates in accordance with specified requirementsfor financial viability. According to the Act, the rates should be approved in time for billing the beneficiariesstarting in the first year of project construction. The rates should cover all costs of operations and maintenance, the higher amount of debt service or depreciation,and adequate working capital. In addition, they should provide for financing part of the investments. The Boards' rate structureswould consist of: (i) sewer rates levied as percentage of the property value assessments in the project and general benefit areas; (ii) sewerage surcharges on water consumption,levied per cubic meter of water consumed by customers connected to the sewerage system; and (iii) charge for irrigationwater resulting from the reuse of treated effluent. This rate structure is broadly similar to those applicable in Nicosia and Limassol. It is appropriate for this type of operation as provided for under the Sewerage and Drainage Act; it is simple and straightforwardin terms of public understandingand administration,and for the purposes of future adjustments.

6.03 The sewer rates will be composed of differentialrates for: (i) the properties located in the project area vis-&-vis those located in the general benefit area (in the case of Larnaca); and (ii) different types of property usage -- i.e. household and other types of properties, as disti9ct from hotels and hotel apartments used for tourism purposes, whereby those businesses will be charged a higher rate as is the case in the Limassol-Amathusarea. The rates, which will be applicable in 1992, were approved by the Boards in June, 1991: LSDB has approved a differentiatedrate structure; PSB and ANSB have approved average rates, while the levels of differentiationare being determined. The rates have to be ratified subsequentlyby the Council of Ministers and the House of Representativesbefore they can be applied by the Sewerage Boards. Agreement was reached during negotiationswith the Government and the Sewerage Boards that the rate approval by the Guarantor would be a condition of effectivenessof the respective loans (para. 8.03-b). - 26 -

6.04 The differentialrate structurewhich was approvedby LSDB for implementationin 1992 is composedof the followingrates: for progertes in the nrojectarea:

Hotelsand hotel apartmentsCC7.77 ($17.64) per CC 1,000 of property value All other propertiesCC 2.37 ($5.38)per CC 1,000 of propertyvalue

f2r oromrtias in the ganeral benefit area:

All proportiesCC 0.70 ($1.59)per CC 1,000 of propertyvalue. The averagesewer rates approvedby the other two Boardsare as follows:-

P-ralimni: CC 4.15 (US$ 9.42) per CC 1,000 of propertyvalue Ayia Una: CE 2.50 (US$ 5.68) per C£ 1,000 of propertyvalue

6.05 The value assessmentsof the propertieslocated in the projects' areas and in the generalbenefit area (in the case of Larnaca)were undertaken by the Land and SurveyDepartment (LSD) over a six year period (1980-86). They are given in the equivalentof 1980 marketvalue prices. However,these value assessments.which were used for calculatingthe rates applicablein 1992, do not adequatelyreflect the actualconditions and configurationsof the propertiesbecause of the high growthof tourismconstruction in the projectareas since 1986. A samplesurvey in the Paralimniand Ayia Napa areaswas undertakenin March 1991 by the LSD and the StatisticsDepartment of the HOF. The surveyindicated that, based on a revaluationof a representativesample of properties,whose constructionwas still not completedwhen the valuationtook place in 1986, the totalvaluation of properties(in 1980 prices)in Paralimniand Ayia Napa shouldhave risen by about 8 percentand 7 percentper annum,respectively. Since the sewer rates are calculatedas a percentageof this valuationassessment, it is important, primarilyfor reasonsof equity,to updatethe valuationas soon as possible. This exercisebecomes more imperativeas a differentialrate structure, implyinghigher rates for hotels,is to be applied. Duringnegotiations, agreementswere reachedwith the Governmentthat: (i) a full updateof the valuationof the propertios,taking into accountnew constructionin the projectareas in Larnaca,Paralimni and Ayia Napa and in the generalbenefit area in Larnaca,will be completedby not later than June 30, 1993,which would be in time for the next projectedadjustments of the sewer rates (expectodin 1994) (par&.8.02-a); and (ii) thesevaluations will be updated continuouslyas requiredfor the purposesof adjustingthe sewer rates.

6.06 Seweragesurcharge and irrigationcharges. The seweragesurcharge on water consumption,will be applicablein 1995/1996,when customersare first projectedto be connectedto the new system. The rate is currentlyestimated at about CC 0.17 (US$ 0.38) per cubic meter of consumedwater. In addition, the treatedeffluent, which will be availableat aroundthe same time,will be 27

sold for irrigationof parks and hotel groundsat a fee to be determinedon the basi of marketconditions and pricesof alternativesources. Rate. are projectedat about ER 0.20 (US$ 0.45) per cubic moter (in 1996) on the basis of currentof water tariffs. Detailedmethods for chargingfor the irrigation water, as well an for the seweragesurcharge, will be developedduring project execution. The effluentrouse schoemwhich La entLrelyfinanced by the overrnentwill remin the propertyof the Government,but will be operated and maintainedas an integralpart of the assetsoperated by the respective boards. Accordingly,matters relating to the operationand maintenanceof these schemes,to the uses of the water, and to the establishmentof rates for sale of the Irrigationwater withinthe Boards'areas will be agreedupon by the Governret and the respectiveBoards In consultationwith the Bank. Agreementswere reachedduring negotiations that the Governmentwill enter Into agroemnt with the Borrowersfor operationand maintenanceof the effluentreuse schemes,for the eatablishmentof rates,and for arrangingfor the chargesto be borne by each party in connectionwLth this operation(para. 8.02-c). 6.07 Agreementwas reachedduring negotiations that: (i) the rate structuresof the respectiveBoards will be amended,as appropriatefor meetingthe SewerageBoards' financial objectives (para.6.14), by not later than one year beforecustomers are connectedto the system,to include(in additionto the sewer rates):(a) a seweragesurcharge on water consumptionof those customers,and (b) a fee for sale of irrigationwater, as to be agreedunder the arrangementsdescribed in para. 6.06 above; (ii) the SewerageBoards will submittheir new rate structureas per (i) above to the Bank by June 30, 1994 for review;and (iii) the SewerageBoards will adopt thesenew structuresby December 31, 1994, or not later than six monthsbefore starting to bill the surchargeand irrigationcharges to customers(para. 8.01-h).

C. FinancinePlan 6.08 Dotailedforecasts of the sourcesand applicationof funds for the period 1991 - 2000 for LSDB, and for 1992.2000for PSB and ANSB, are given in Annex 10 (TablesA10.2, A10.5 and A10.8). A summaryof the financingplans for each of the Boards in additionto a consolidatedfinancing plan for the project(1991-1998) in presentedin Table 6.1. A summaryfinancing plan for the three Boardsduring the projectionperiod (1991-2000)is given in Table 6.2. 28 -

Table .1: Pinmiina Fl _s_arfao fteJect -Period (1991-1995)

GaMLL .1 gL..LL .1 GLalJL .1 CZmlul,L Lml~l,

T~~~~~LD S otal

lkwerage md DrainageSystems 20.0 761 10.5 661 5.5 631 36.0 61.7 712 Irrleat.ic5ysat .eimf m - =A a toa l 926 13.0 1 2.7 3i 14. 13

rF loan C v 7.7 2l _. 27n 2. 251 1*.1 32. 261

l.tCshGurtio 7.3_ 281 3.6 221 1. 221 12.7 21. 251

Surce ota FurLs: Csh Oeoratiof fundsi by the Boardsg51v 7r2 3 8 43n mt24c3 54g7 47X Loss:TotaeFundst Debt Sorvice 6.0 V23 3.6 2u Li Au A1.62E1 ot CtheeGenlration TotalRairements 14.87t3 28a561 3.692 22S5101 Li4.51.8 ..22w55121 ..26.912.7L§ ..65.32a.6L au571021X

Boarrowing

pIer Lo ofs 6.5 25t 5.0 31r 2.7 30b 14.2 32.0 2lX CMR Loma 7.7 29X 4.2 271 2.2 25X 14.1 32.0 28X 3ov*rnmrnt 0S.6 __L 0.0 0XU Q _S O.8 1.3 -a Total 14.8 56S 9.2 58x 4.5 55X 28.9 65.3 57X

favrromtnt ntEu )ant-The 161opeConvi of mn _et Fun ) inE21 i otal moureseabou 2pre 16o0rqie e.9 The Bord ntra115i5

c.09 The pronect financing plan consists of about 25 percent (after debt service) of funds internally generated by the Boards; the goverment financing of the effluent treatment works and irrigation systems will represent about 19 percent of total funds requirements. The remainder will be financed by loans from the Bank (28 percent), and the Council of Europe Resettlement Fund (CERF) which also meet about 28 percent of total requirements. The Boards' internal cash generation is expected to grow to about 29 percent during the pro,jection period (Table 6.2). During negotiations, agreement was reached with the Governsent that it would provide the necessary funds for the construction of the effluent re-use schemes (tertiary treatment works, and effluent storage and distribution systems) to be constructedunder the project (para. 8.02-b). Agreements were also reached with the respective Boards, that completion of satisfactoryarrangements for the CERF financingwill be a condition of effectiveness (paras. 8.03-d).

V For both project and non-project related expenditures.

Al Project preparation advance already received from Government and now part of Sewerage boards' contributionto Project financing. - 29 -

?&VW 6.a2: &i6z Rona _. the

(1991-2000)

|_ _:~~~~~~~~__V GLgIL .._PSL cLLmil.1 GLMLLLn J1 GLmLL MAULL J1 hrejeetlnveOetmt. sworoe *od Drainage systm 20.0 71x 10.5 612 5.5 562 36.0 61.7 66 Xriatiamon Syt.w 4.1 152 3.2 10t 2.2 22X 9.5 21.6 162

OCKer IuIVetnnts _.0 .X _37 Li 11i J4 JJ _5 Total 25.1 901 15.0 871 6.6 892 46.9 110.6 902

Jesro Jo in workin Capital -Li 1Q -Z_Z 131 Li a1 -Li 1LL3 1i

Total Vnds lequlrammnts 1OOX 17. 1O2S LI l2OX AILAS5. MLd lOOS Soref PI%ds.

Cashbmofraticn by the Doards 19.4 692 11.4 66s 6.3 631 37.1 83.2 67X Less: Debt Service AI 3M j 1X Li 3ex 3l. J 227. 290 not Cash Generatioo 8.3 302 4.3 281 2.8 311 15.9 35.7

Borrowing

1U- Louse 6.5 231 5.0 292 2.7 251 14.2 32.0 262 CURP Loans 7.7 281 4.2 251 2.2 222 14.1 32.0 261 Other 1-4 .J 0.O -a O. _S -.L -.L 3S

Total 15.6 561 3.2 542 4.9 471 29.7 67.1 55X

Goevrnmnt Long-Ten Investmnt 4.2 14S 32 121 Li 3 ...9. ALAI in1

Total Source s IL 1221 I1. lOO12 L lO22 S12 13*. 1221

D. U tr e Performance

6.10 Annex 10 presents the details of the financial analysis of the three Boards. Projected financial statements for the LSDB (1991 - 2000) and for the PSB and ANSB (1992-2000)are given in tables A10.1 through A10.9 of the Annex; the main assumptionsunderlying the projections are given in the same Annex 10. The financial performance of the Boards during the period 1992 and 2000 and beyond will be geared toward achieving self-financingratio, after debt service and increase in working capital (other than cash), of at least 20 percent of average annual investments (other than investmentsrelated to irrigation) over three year intervals. During the project implementation period (1992-98),LSDB would be able achieve an average self-financingratio of about 31 percent; PSB and ANSB will achieve averages of 27 and 25 percent, respectively. However, in 1999 and 2000, these ratios are expected to be higher (about 36 percent for LSDB and about 42 and 40 percent for PSB and ANSB, respectively),enabling them to finance their future investmentsfrom their own resources without incurringany new debt. * 30 -

6.11 In order for the Boards to achieve the above mentioned targets of inoresaed self-financing,the Boards would require periodic adjustments in the revenues from sewer rates (and subsequentlythe sewerage surcharge and charges for Irrigationwater), over the projectionperiod. L9DB would have an average inoreae of about 12 percent between 1992 and 2000. A first increase of about 80 peront should be introducedby 1994 (from CC 2.50 to 4.50 per one thousand pounds of property valu), assufiig, meanwhile that the property assessmnts would grow by about 2 percent per annum to reflect the changes in their physioal conditions aine 1986 (pars. 6.04). Average Increases for PIS and AXIS would be about 7 and 8 percent per annum between 1992 and 2000, with the first increases to be introducedIn 1994 for PSB and ANSI, amounting to about 42 and 40 percent, respectively. Both Increases assume that the valuation assessmnts are fully updated to reflect the changes in the conditions of the properties as indicatedby the revaluation of the sample survey undertaken in 1991 (para. 6.05),

6.12 Despite the fact that the projected increases in the rates represent significant jumps, they are not expected to affect affordability,(para 7.12). The introduction,and the subsequentadjustments, of a differentiatedrate structure (para. 6.03) would facilitate their implementation,and would further improve their responsivenessto equity and economic objectives. Future increases of total revenues over the projectionperiod would range between 21 and 31 percent per annum for the three Boards. By the end of the projection period (the year 2000), revenues from sewer rates would constitute i between 46 to 73 percent of total revenues of the respectiveBoards. The operating ratios of the three Boards are expected to be at about 42 percent on average in the year 2000. The unusually high margins of net income before interest is justified by the high debt service, in addition to projected surplus for financing investments. With time, it would allow the respective Boards to build additional cash reserves for self-financingsubsequent investments.

6.13 The proposed financing plan for each of the three Boards, wherein about 55 percent of the full constructioncost consists of borrowed funds, means a heavy debt load for the Boards. However, their debt equity ratio would reach a level of about 35 percent on average in the year 2000, as the Boards build up their equity. The Boards' funds would provide debt service coverage averaging about 1.4 beyond 1996. Agreement was reached during negotiationsthat the Boards would not, during the project implementation period, contract any medium or long-term debt (other than for financing obligationsunder this project), unless their net revenuesV for the fiscal year immediatelypreceding the date of such incurrenceor for a later twelve- month period ended prior to such incurrence,whichever is the greater amount, shall not be less than 1.2 times the maximum debt service requirementsfor any succeeding fiscal year (para. 8.01-i). The preceding assurances,together with the financial covenant proposed below in para. 6.14, should ensure that the Boardswould have sufficient funds to meet their annual investment requirements.

U the differencebetween (i) the sum of revenues from all sources related to operations and net non-operating income and (ii) the sum of all expenses relatedto operations, excluding provision for depreciation,other non-cash operating charges and interest and other charges on debt. * 31 -

6.14 Duringnegotiations, agreements were reachedthat, beginning in FY 1992, LSDB, PSB, and ANSB, would implementrates and other chargesto provids adequatefunds to cover: (a) all expensesof operations,maintenance, administrationand other taxes and contributionsrequired by law, and depreciation;(b) all interestand other chargeson debt as well as principal repaymentsin excessof depreciation;(c) increasesrequired to maintain adequatelevels of workingcapital (other than cash);and (d) at least 20X of each year'sannual investment (excluding investments for effluentreuse scheoes)determined as the averageof investmentover the subjectyear and two subsequentyears (para.8.01-J). This financialdiscipline would be monitored throughannual reviews. Agreementswere also reachedthat LSDB, PSB and ANSB, will, six monthsbefore the beginningof each fiscalyear, providethe Bank with a copy of theirproposed budget for such fiscalyear and financial projectionsfor the followingtwo years,as well as its plans for proposed rates and chargesfor the Bank'sreview and comments(para. 8.01-k).

VII. PROJECTJUSTIFICATION AND RISKS

A. ProjectBenefits 7.01 The Larnacaand Ayia Napa/Paralimniareas are estimatedto generate about CC 250 million(over US$ 550 million)per year in tourismrevenues, i.e. more than 5 times the total cost of the project. A largeproportion of employmentin the areas is in activitiesdirectly related to tourism;i.e., in hotels,rental apartments, restaurants, etc., and in tourism-related activitiessuch as taxi services,gift shops,and beverageproduction, etc. This is particularlytrue in Paralimniand Ayia Napa, where tourismis the main economicactivity. Hence the proposedproject, that will protectthe tourismindustry in the two areas,is of criticalimportance to their economies,as well as to the economyof Cyprus.

7.02 The presentsystem of sewagedisposal using privateseptic tanks and absorptionpits for domesticsewage, and some biologicaltreatment for tourist hotelsand industry,is inadequate.In denselydeveloped areas, the problem is particularlyacute. Also, the presentmethods and processesfor treatment and disposalof human and commercialliquid wastes are costly,in terms of both the frequentemptyings required and the limitingeffect on futuregrowth. Even now, the presentarrangements produce nuisance odors and constitutea healthhazard. An outbreakof diseasefrom sewagecontaminated bathing waters would have a disastrouseffect on the touristindustry. The only permanent solutionto this problemis to installcentral collection and sewagetreatment systems. 7.03 Benefitsattributable to the proposedsewerage and effluentre-use systemsare in six principalareas: (i) savingsin operationalcost of the existingsewage disposal arrangements, and in the cost of constructingand operatingadditional individual waste disposalunits in the future;(ii) benefitsattributable to the availabilityof less costlywater for irrigation in the projectarea (para7.04 below);(iii) increasesin propertyvalues due to the improvedsewerage and drainagesystems; (iv) reduced risks to human * 32 - health due to waste-water related diseases; (v) an improvement in air quality from the eliminationof odors from overflowing septic tanks and the regular emptying process; and (vi) protection of the tourist industry in the two project areas,a major source of foreign exchange earnings and employment. Benefitsfrom the drainage works include reductions in productivity losses and damage to property, including roads, due to flooding.

7.04 The treated effluent from the sewage treatment plants in both project areas will be produced at a lower average incrementalcost than water from the Southern Conveyor system.W Water from the SCP was estimated to cost C£O.31 per cubic moeterin 1987; in 1990 prices this would be about C£0.35; whereas the comparable cost for treated effluent from the Larnaca scheme is estimated at C£0.26, about 741 of the SCP cost (Table A11.4 in Annex 11). A discount rate of 9X was used in both cases.

B. EnvironmentalImpact

7.05 The proposed project was placed in environmentalscreening category A/D. Rating A reflects the project's significant environmentalimpact, thereby requiring an EnvironmentalAssessment (EA), and D denotes that environmentalobjectives were a major focus of project preparation. In this case, the fragility of Cyprus' environment,given the country's small size and geographicalconstraints, and the importanceof the tourism industry to the economy of the island makes the protection of the environment particularly critical. Moreover, the sensitive nature of environmentalissues relating to the location of the sewage treatment plant in the first Limassol project had caused public opposition which was largely responsible for serious implementationproblems (para. 2.11). It was, therefore, felt to be necessary to encourage public participation in this project, particularlyin decisions on method of treatment, re-use and disposal, and the siting of treatment plants, especially in view of the importance attached by the Government and the Bank to such a process. Accordingly,detailed environmentalassessments were carried out by internationalconsultants, on behalf of the Borrowers, for the Larnaca and the Ayia Napa/Paralimnicomponents, respectively,in accordance with Operation Directive 4.00, Annex A.

7.06 The assessmentswere carried out in accordance with the terms of reference, process and schedule agreed by the Bank. As part of the EA process, public meetings/hearingswith envircnmentalnon-governmental organizations (NG0), intergovernmentalagencies, and local community representativeswere held during EA preparation,and their outcome has been incorporatedin the EA reports. The environmentalassessments analyzed the various alternativesof the different project components (includingthe "no project" alternative), identified the most desirable environmentaloptions and examined a wide range of possible environmentalimpacts, and recommended certain measures for their elimination or mitigation. They generally conclude that the proposed project will have positive environmentalimpacts in that it

IW Water from the SCP will not be sufficient,however, to support the projected increases in tourism in the area; and investment in desalination facilities will eventually be necessary. Water produced in this manner is likely to have an average cost of at least C£0.50. - 33

will prevent groundwaterand coastal pollution and will promote water conservationand developmentof green space throughwastewater rouse.

7.07 The most important impact identifiedby the environmentalassessments was the threat to an ecologicallyimportant halophytic (salt-loving)community by the proposed site of the effluent storage reservoir for the Larnaca scheme. As a result, it was agreed during appraisal and confirmed during negotiations that the reservoir would be relocated south east of the treatment plant to a site which poses no threat to the halophytic community. The new site lo under Government control and will be at the disposal of LSDB under a long-term lease. Other possible detrimental impacts are largely related to risk and safety considerationsin connection with system breakdown. These aspects will be incorporatedin the project's final design and constructioncontracts. During negotiations,an environmentalmitigation and monitoring plan was finalized and agreed with the Borrowers (para. 8.01-1). The main elements of the plan will include (i) measures to reduce disturbance to wildlife and natural habitats, and to prevent damage to antiquities,during construction; (li) procedures to reduce nuisances and avoid accidents during operation; and (iii) monitoring of effluent quality, both at the STP and at distribution points. The findings, recommendations,and mitigation and monitoring plan of the EA are smmarized in more detail in Annex 2.

C. Economic Rate of Return

7.08 Economic rates of return (ERR) are calculated only for the sewerage and effluent re-use systems to be implementedunder the project. It is not feasible to obtain the data needed for an economic analysis of the proposed drainage works for Larnaca (representingabout 6X of total project costs); i.e. on the value of lost production caused by the intermittentflooding which impedes road transport for varying lengths of time over the winter season, and on property and road damage. Although the proposed project is essential to the continuationand expansion of tourism in the area, it is not possible to attribute the tourism benefits directly to the project, since there are additional constraints to tourism development (para. 2.04). The health and air quality benefits of the project, and the visual and other benefits attributable to the expansion of "green areas", although important, are also non-quantifiable. Calculationsfor the ERRs for both the Larnaca and Ayia Napa/Paralimnischemes are given in Annex 11.

7.09 For the Larnaca sewerage and effluent re-use scheme, revenues attributableto the project are used as a proxy for consumers' willingness to pay in quantifying the benefits for the estimated rates of return. The revenue streams are based on projected sewer rates and sewerage surcharge on water consumption1I. Revenues from the sale of treated effluent are also estimated fairly conservatively,and included as a benefit stream. Cost streams include the costs (includingphysical contingencies)of land, civil works and equipment, design and supervision,and operation and maintenance,as well as the connection costs to be incurredby private property owners. Details of the assumptionsare given in Annex 11. Because of the exclusion of ilUThe use of rates and charges as a proxy for willingness-to-payis iliscussed in Annex 11. - 34

the substantialunquantified benefits of property value increases and additionaltourist revenues, the resulting economic rate of return, 13.62 is considered to be a very conservativeestimate. The rate of return decreases to about 102 with either a 10 increase in costs or a one-year delay ln revenues.

7.10 The economic rate of return for the Paralimni and Ayia Napa sewerage and effluent re-use schem is based on a comparisonof the "with* and "without project* situations. This comparisonis discussed further in Annex 3. In the absence of the centralized sewerage system to be provided under the project, the two communitieswould continue to depend on individualsewage treatment plants, to accomodate the rapid tourism growth, and residents and temporary workers would continue to have to depend on septic tanks. The benefit streams are the cost savings, i.e., the stream of costs attributableto continuing the wwithout project" arrangements. These are based on the number of new package treatment plants and septic tanks needed, the operation and maintenance costs, the rehabilitationcosts for the package plants, and the costs of expanding the ponds to receive the sewage and septage. Again, revenues from the sale of treated effluent are conservativelyestimated, and added as a benefit stream. The costs of the sewerage and effluent re-use scheme are calculated in the saoe manner as for Larnaca. The estimated ERR for the scheme is 17.72. Since the ERR for this component is particularlysensitive to the speed of tourism growth, it was also estimated using for a scenario of lower growth in the number of tourism beds (4.52 p.a. instead of 82 used in the base case scenario). This reduced the ERR to 8.7%.

C. Affordgbillvz

7.11 The projected sewer rates and sewerage surcharge on water consumption are not expected to impose an unreasonableburden on households in the three project areas. Sewer rates are to be based on property values as assessed in 1980 prices. The average household income for 1990 in the Larnaca urban area is estimated to be CE 7,625. Based on an average assessed value for a house of C£ 15,000, and assuming average water consumptionof 150 liters per head per day (3.4 persons per household), the total bill for water, sewerage, and drainage would amount to 1.92 of average household income in 1994 (the first year of operation), increasingto about 22 in 1998. For low-income households, with lower property values and lower water consumption,the proportion of income would also be 1.92 in 1994, increasingto 2.12 in 1998. These proportions are well below 42, and thereforewithin the generally accepted 'affordable"levels.

7.12 In Paralimni, the projected sewer rate is somewhat higher than in Larnaca; however, incomes are also estimated to be higher due to the very rapid tourism growth in the Ayia Napa/Paralimniarea. The Department of Statistics estimates that incomes in the area are in the order of CC 9,000 for 1990. Using conservativeestimates (i.e., relativelyhigh property values of C£ 25,000 for the average house, and average incomes at CC 8,000), the combined outlay for water and sewerage would constituteabout 32 of income in 1994, and about 3.42 in 1998. Again, these are within affordable limits. The sewei rates for Ayia Napa are projected to be lower than in Paralimni,and with similar property values, water consumptionand water tariffs, ability to pay for water and sewerage is not expected to be a problem in Ayia Napa. - 35

K. Riksan Sfeuad

7.13 The main risk relates to the willingnessof the beneficiaries to pay for the project costs. This risk will be minimized through the use of a rate structurothat is affordable to the lowest income groups, possibly incorporatingsom differentials,and through approval of adequate tariffs before project effectiveness. The risk of inadequate institutional developmentof the project implementingagencies will be minimized through agre esnts on staffing levels, and by the provision of tochnical assistance and training under the project.

VIII. AGREEMENTS TO BE REACHED AND UCOENDATIONS

8.01 The following agreementswere reached with the Borrowers during negotiations:-

(a) The project objectives,description, cost estimates, and financing plan will be as agreed with the Bank (paras. 4.04, 4.09-4.19, 4.22-4.24).

(b) The Borrowers will recruit staff in a timely manner in line with an agreed organizationchart (paras. 4.20 and 5.02).

(c) PSB and ANSB will enter into a joint venture agreement satisfactoryto the Bank (para. 4.26).

(d) The Borrowers will adopt project monitoring and reporting systems satisfactoryto the Bank, including performance indicators and progress on staffing,billing, etc. (para. 4.27).

(a) Procurementwill be in accordancewith the Guidelines for Procurementunder World Bank Loans (para. 4.32).

(f) The Borrowers' financial statementswill be audited by an independentauditor satisfactoryto the Bank, oeginning with fiscal year 1992, and such statements and the audit report, including the audits of the Statements of Expendituresand the Special Accounts, will be submitted to the Bank within six months of the close of each fiscal year (para. 5.07).

(g) The Borrowers will complete the necessary arrangementsfor billing and collecting the water surcharge and the irrigation charges as soon as feasible,but by not later than December 31, 1994. (para. 5.09).

(h) The Boards' rate structureswill be amended as appropriatefor meeting the Borrowers' financial objec:ives,and this structure will include (in addition to the sewer rates) (i) a surcharge to be applied against water consumptionby those customers, and (ii) 36 -

a fee for sale of irrigationwater. The Borrowerswill submit these now rate structures for Bank review by June 30, 1994, and will a&.pt this structure by December 31, 1994. (para.6.07). (i) The Borrowerswill not, duringthe projectimplementation period, contract any medium or long-term debt (other than for carrying out the project), unless its net revenues for the fiscal year immediat;ely preceding the date of such incurrence or for a later twelve-monthperiod ended prior to such incurrence,whichever Is the greater, shall not be less than 1.2 times the maximum debt servicorequirements for any succeeding fiscal year (para. 6.13).

(j) Beginningin FY 1992, the Boards will implement rates and other chargesto provide adequate funds to cover: (i) all expenses of operations,maintenance, administration and taxes and other contributionœ required by law, and depreciation; (ii) all interest and other charges on debt as well as principal repaymentsin excess of depreciation; (iii) all increases required to maintain adequate levels of working capital; ard (iv) at least 20X of each year's annual investment (excluding investmentsfor the effluent re-use scheme) determined as the average of investment over the subject year and two subsequentyears (para 6.14).

(Ik) The Borrowers will, six months before the beginning of each fiscal year, provide the Bank with a copy of their proposed budgets for such fiscal year and financialprojections for the following two years, as well as their plans for proposed rates and charges for the Bank's review and comments (para. 6.14).

(1) The Borrowers will implement environmentalmitigation and monitoring plans agreed with the Bank (para. 7.07)

8.02 The following agreementswere reached with the Government during negotiations:

(a) A full update of the valuation of the properties located in the project (and general benefit) areas in Larnaca, Paralimni and Ayia Napa will be completed in time for the next adjustment of sewer rates, but not later than June 30, 1993 (para. 6.05).

(b) The Government will provide the necessary funds for the constructionof the effluent re-use systems to the respective Boards (para. 6.09).

(c) The Government will enter in agreement with the Borrowers, satisfactoryto the Bank, for the operation and maintenance by the Borrower of the re-use facilities,and for the establishmentand collection of charges for the effluent (para. 6.06)

8.03 Conditions for Effectiveness: The followinghave been set as conditions for effectivenessof the oan documents for the proposed loans:- - 37 -

(a) The sewerage boards will have made satisfactoryarrangemnts and procedures for billing and collecting their revenues from sever rates (para. 5.08).

(b) The Guarantor will have approved the sewerage boards' sever rates (para. 6.03).

(c) The Guarantor and the Borrowers will have entered into lease agreements for the land required for the constructionand operation of the treatment plants and storage reservoirs.

(d) The Borrowers will have made arrangementswith the CERF, or other arrangementssatisfactory to the Bank, for project financing.

(e) The effectivenessof the loan agreement for the loan to PSB is contingent on the effectivenessof the loan agreement for the loan to ANSB, and yice versa

8.04 Some retroactivefinancing (up to US$ 1.5 million) for engineering and technical assistance would be provided (para. 4.32).

8.05 With the agreements reached as outlined above, the proposed project would be suitable for Bank loans totallingUS$ 32 million equivalent (US$ 14.7 million to LSDB; US$ 11.3 million to PSB, and US$ 6.0 million to ANSB). Each loan would be guaranteed by the Republic of Cyprus, with final maturity of 15 years, including a 5-year grace period, at the standard variable interest rate. Annx 1 -38 - Page 1 of 2

REPUBLIC OF CYPRUS

SOUTHAST OAST SEERGEAND DRAINAGE PROJECT

TouariturTrends in QUMru

TableAl.l: TiUrist Arr1val.*nd Ov rn10hts1n Cyprus.

TouristArrivals Overniahts1n 1-S StarHotals

-Hmu-r I rowtha.&. Nu bw I *Eead oa.. 1974 150,47S 740,143 1975 47.064 247,739 1976 180,206 78,867 1977 178,185 98.79 1978 216,679 1,047,070 1979 297,013 31.5 1,504,101 36.2 1980 353,375 17.4 1.723,222 13.6 1981 429,313 19.5 1,937,432 11.7 1982 548,180 24.4 2,001.259 3.2 1983 620,726 12.4 2,249,620 11.7 1984 736,972 17.2 2.631,800 15.7 1985 769.727 4.3 3.209,761 19.9 1986 827,937 7.3 3.319,254 3.4 1987 948.551 13.6 3,783.158 13.1 1988 1,111,818 15.9 4.894,342 25.8 1989 1,377,636 21.4 5,514.302 11.9 1990' 1,598,058 14.8

Estimate based on figures for Jan-Oot, 1990

TableA1.2: TouristOverniahts in 1-5Star Hotels. by District

Larnaca Famausta 2 AalCrus3 1979 194,848 210.788 1,504,101 1980 233.961 18.2 263.019 22.0 1,732,222 14.1 1981 314,211 29.5 279,875 6.2 1,937,432 11.7 1982 310,387 -1.2 356,175 24.1 2,001,259 3.2 1983 380.536 20.4 482,815 30.4 2,249,620 11.7 1984 461,142 19.2 631,891 26.9 2,631,800 15.7 1985 553,370 18.2 936,212 39.3 3,209.761 19.9 1986 601,370 8.3 971.617 3.7 3,319,254 3.4 1987 598,688 -0.4 1,171,306 18.7 3.783.158 13.1 1988 763,987 24.4 1,415.038 18.9 4,894,342 25.8 1989 820,155 7.1 1,474,921 4.1 5,514.302 11.9

Includel most hotels in Paraliumi and Ayia Nspa lIneludoa Papbo. and LLusaol Districts. -39 muexLI Pap 2 of 2

TableA1.3: *el Deaunev lt.. ln 1- 3*.,HtolNatal. snd Dflz^xSJsL u r t d lifLMgg All cvDr-us m u 151 6.0 6.1 55.6 1,66 1,541 10.654 Il1 416 U.0 47.7 1,6U 1,648 11t.66 18 47.1 We.6 476 1.s0ot 1,735 14,543 1664 46.1 6IC0 50.4 3,066 3,5U? 1S,144 18 46.8 67.6 U5 1 3,651 4.561 1.ll7 1666 46.0 65.1 5O7 3566 4,741 16,5 1367 4.7 67.3 5.1 3.13 5.576 21, f557 1666 66.5 74.4 63.3 3,636 l,l10 18,305 1666 U.7 U 5 64.1 4,016 7.06 1l,110

TableA1A4 : ronsR eojot fr Tourip, Immart. O Aar1 t ManufacturedGooob and TotalExports of RMtigo Excortn(Cc 11ll1ola

Exportsof Exportsof TotalExports Agricultural Manufactured of Domestic Iouris Goods Goods Goods 1973 23.8 28.6 12.6 51.3 1977 23.8 38.2 62.2 109.5 1979 50.1 36.6 82.3 127.6 1980 71.7 36.3 109.8 148.5 1981 102.4 43.3 139.5 193.3 1982 138.7 54.4 134.4 196.0 1983 174.8 43.8 129.7 179.9 1984 212.0 65.4 163.4 235.0 1985 232.0 49.3 142.9 199.3 1986 256.6 51.9 119.4 177.1 1987 320.7 57.6 158.1 222.3 1988 365.0 46.4 181.0 232.0 1989 490.0 55.3 183.7 241.4

AveraaeAnnual Growth Rates

Touristarrivals in Cyprus (1979-1989): 15.3% Touristovernights in 1-5star hotels, allCyprus (1979-89): 13.0% Touristovernights in 1-5star hotels, Larnaca (1979-89): 14.3% Touristovernights in 1-5star hotels,Famgusta District (1979-89): 19.5% Nimberof bedsin 1-5star hotels,all Cyprus: 9.8% Numberof bedsin 1-5 star hotels, Larnac (1981-89): 15.2% Numberof bedsin 1-5 starhotels, Faugusta District (1981-89): 16.9% Grossreceipts frou tourin (1979-89): 22.8% Grossroeipto from exportsof agricultural goods(1979-89 4.1% Grossreceipts fromoexports of manufacturedgoods (1979-89): 8.0% - 40 - AinLXI Page 1 of 22

REPUBLIC OF CYPRUS

SOUTHEASTCOAST SEWERAGE AND DRAINAGEPROJECT

sumaryof Enviromntal Assessment Re2orts

1. Larnaca relies mainly on septic tanks which are emptiedperiodically by tankerswhich dischargethe raw sewageto ponds near Kellia. Becauseof high water tables,septic tanks mut be emptiedfrequently (often weekly, sometimes daily),with associatedtraffic disruption and odors. It is probable that the groundwateris contaminatedwith septate. The ponds near Kelliaera overloadedand the treatmentis inadequate.The firstpond is full of sludge and a sludgedelta is formingin the secondpond. The outletflow from the fifthpond containsa high level of dissolvedand suspendedsolids. Villagers livingdownstream complain of odors and insects. The ponds will probablyhave to be replacedin the near future;the site would be more distant,increasing the costs of disposaland increasingthe risk of illegaldumping.

2. Implementationof the proposedsewerage and drainagescheme for Larnaca would have numerousbenefits for the town of Larnacaand its surroundingarea; and the productionof treatedwastewater, providing it meets acceptable standards,will be very beneficialin a countryfacing water shortages. 3. The sewagetreatment plant site, consistingof 11 ha is locatedabout 2.5 km. south of town near the internationalairport and 1 km from the Larnaca Salt Lake. It is surroundedby agriculturalland and undevelopedscrubland, which is a halophytic(salt-loving) plant communitywith three ephemeralsalt lakes. The site coversapproximately 8 ha of halophyticcommunity and 3 ha of agriculturalland. The effluentstorage reservoir, an importantcomponent of the seweragescheme, will cover an area of 21 ha. 4. The halophyticcommunity covers between 31 and 48 ha, dependingon the water level of an ephemerallake locatedwithin the area. There is also an isolatedarea of about 10 ha which supportstransitional scrubland/halophytic communityto the south of the proposedsewage treatment plant and effluent reservoirsite. The scrublandand salt lakes are locatedwithin a temporary game reservewhich forms part of the LarnacaSalt Lake Game Reserve. The Game Reservehas been identifiedby the internationalcommunity as a site of biologicaland ecologicalvalue in the Directoryof Marineand Coastal ProtectedAreas in the MediterraneanAreas and as an importantbird area in Europeby the InternationalCouncil for Bird Preservation,the International Waterfowland WetlandsResearch Bureau and the Royal Societyfor the Protectionof Birds. About 165 bird specieshave been noted to inhabitand migratethrough the area, and five speciesnest in the scrubland. The area is not consideredto be importantfor amphibians,reptiles or mammals. 5. The alternativesfor variousaspects of sewerageand drainage(e.g. site location,treatment technology, disposal, etc.) that have been considered, eitherduring project preparation or duringthe environmentalassessment, are sumarized in Table A2.1, and are not discussedfurther in this annex. - 41 - Annex 2 Pag 2 of 22

Imacts and MitiaatLon

6. The numrous short and long term benefits for the area include:

An end to the use of ponds for the disposal of most of the liquid wastes, with their associated probl ems.

- Prevention of leakage of septate into the groundwatet, or into stormvater which drains over recreational beaches.

- Reduced risk of disease.

- Reduction in illegal and uncontrolled dumping of raw sewage.

- Production of treated wastewater available for reuse.

- Reduction in noise, odor, and traffic disruption to locals and tourists from sewage tankers emptying septic tanks.

- Production of sludge for use as a soil conditioner.

= An end to the reliance by new developmentson septic tanks or small self-containedand unregulated sewage treatment plants.

7. The sewage treatment plant and effluent storage reservoir site south of the airport has the advantages of bel , undeveloped and remote, being separated from the town by the airport, and thus providing a barrier to possible pest movements. It will cause little disturbance to the local and migrating wildlife, and there is little, if any, opposition to the proposed land use.

8. Implementationof the storm drainage project will reduce standing water in the current channels, and diminish the breeding grounds for pests. Property values in the areas previously subject to flooding should appreciate as a result.

9. The potential cumulative impacts of all developmentsplanned for the project area need to be addressed when assessing the signifieanceof the environmental impacts of the proposed project. Other possible developments include:-

A redevelopment of the sea front, including a pedestrian plaza of about 1 ki, is being planned. If this development coincides with sewage pip installation,disruptions to traffic may be exacerbated.

An extension to the Larnaca airport is planned. The proposed sewage plant and effluent reservoir should not limit this development.

In addition, a development of the agriculturalland and halophytic scrubland surrounding the sewage treatment works site for recreational purposes (including a golf course) is being discussed, but would need to re-assessed in light of the proposed project. -42- pge 3 of 22

10. The most importantnepgtive impacts of undertaking the proposed projoct, and tehir associated sitigpting asureso,are ummarisodin Table A2.2. Of most concern are the impact on the halophytic comunity in the construction ad opration. phasesof the sewae treatentplant. Care should be taken to ininilue disturbance at all phases. The effluent reservoir should be relocated to provent the loss of the halophytic counity.

11. The siLgnifLant potential risks and their mltipgting masures are:*s

Iffluent in the oxidation ditches of the $TI and in the collection pLpes Ic likely to turn septic in a few hours if the electrLoity supplyfails and the aeratorsstop functioning.Standby goneratorswill be fittedat the treatmnt plant and the pumping stations. * Failure of the chlorinatorwould lead to dischargeof non- chlorinatedfinal effluentinto the storagereservoir prior to re- use. This shouldhave littleenvironmental or publichealth impact,as the retentiontime of water in the reservoiris estimatedat two months.

- Ruptureof on-sitestructures such as the oxidationditch could lead to rapid dispersionof the contentsgiven the surrounding flat terrain. However,the site topographywill affordnatural containmentin the event of rupture,and littleoff-site environmentalimpact is expected. It shouldbe ensuredthat futuredevelopment does not impairthis oemrgencycontainment capacity.

- Chlorineis the only hazardouschemical to be used in the STP; appropriatetraining will be given,and the chlorinatorwill have an automaticshut-off. Plans for the controland clean-upof hazardoussubstance spills that can occur duringSTP operation (e.g.,Chlorine and raw sewage)will be in place and containment berms will be providedwhor3 necessary.

onitoringand Servisior'

12. The controlof dust, noise, and odors will be tho responsibilityof the site engineer,with expertise providedby the publichealth officers. Mechanismsshould be in place to recordand act upon any complaintsfrom the public. The LarnacaPolice Department will be notifiedabout planned excavationsin advanceso that alternativeroutes can be ldentifiedto minimizedisruptions to trafficflow. Othor utilitieswill also be notified in advanceto minLmizedamage to other undergroundservices due to trenching. Groundwaterexposed during trenching and pipelayingwill be toeted,and no contaminatedgroundwater will be sent to stormdrains dischargingto beaches; it will be eitherbe chemicallytreated before discharge, or tankeredoff- site for appropriatedisposal. - 43- L2xD Page 4 of 22

13. Provisions for the protection of archaeologicalfeatures will be included in works contracts or sub-contracts:within specified areas, clearance of planned excavationswill be required by the Department of Antiquities, and an archaeologistwill be present during the work; outside these areas, any finds will be reported to the Departmontof Antiquities, and work will cease during site inspectionby an archeologist.

14. Long-term monitoring is required for the operation of the STP, the irrigationwater and application sites, sludge quality and application sites, and the screenings disposal site.

- Monitoring and safe operation of the STP will be developed in conjunctionwith the design and site engineers. Sewage will be predominantly domestic, and is not expected to contain significant quantitiesof toxic materials or heavy metals. This will be confirmed by initial and periodic monitoring. Pest populations at the site will also be monitored.

- Irrigationwater (treated effluent) will be analyzed to ensure adequate quality. Monthly analyses are appropriate,given the two-month retention time in the reservoir. Soil quality in irrigated areas should be monitored quarterly for sodificationand salinization,as well as for the effects of permeability and drainage and the occurrence of perched water tables.

= Sludge used as a soil amendment should be sampled at least every six months for the constituentsrelevant to its fertilizer value (dry matter, organic matter, pH, nitrogen, phosphorous, and those elements concerned with toxicity). Soils to which the sludges are applied need to be monitored for quality and accumulation of metals, controlled public access, odor control, storage, surface run-off, and groundwater pollution.

- The landfill/tipwill need to be monitored to ensure that appropriatepractices are adopted for the disposal of screenings and grit from the STP.

Recommendations

15. The proposed Larnaca Sewerage and Drainage Scheme is considered desirable, with the following recommendations:-

- The sewage treatment plant works should be planned and designed to minimize loss of the halophytic community.

- The reservoir for treated effluent should be built on nearby agricultural land to the southwest of the STP site, where there would be no encroachmenton the halophytic community1W.

1U During appraisal, the decision was made to locate the reservoir in this site to the southwest of the STP, on the basis of this recommendationof the EIA. The decision was cxonfirmed at negotiations. The land for the new site - 44 - MAiLN2 Pag 5 of 22

An accuratevegetation map is developedfor the area.

The roeminingscrubland should be maintainedin an undeveloped state because the vegetation type is an importantand diminishing community within the Mediterranean Basin, and the area is an important resting place for migratory birds.

The sludg from the plant should be used as a soil conditioner provided it is properlytested, application rates and sites are monitored, and the public is educated about its meritsand hazards. The monitoring and supervisionshould be carried out as outlined in the Enviromwental Assessmnt Reports.

is owned by the Government,and will be at the disposalof LSDB under a long- torn lease. - 45- Pga 6 of 22

Table 2.s1: E

- -

ear Aipowt 3ll peUtAeal aseeptme dIsm delomt pottial et with Low rih k l iph eeulsgal Value m fleatim Lu. purchae smot Lu eleatio earth C..t.l Lm ee.la.ieal val. Law political a.eeavmce Rjeet ACea Lu. eleatin 31gbU risk 31gb urchase oawt Nudium operatimns scat 3pGb devel_nt potntial Nea VeAle Low ecological value Ls political acceptance Reject U1gb hum risk Nih purcseh cost Nigh operations cost Mediae dewelopmnt potential Nedium elevation

Near Kiti DM_ Low ecological value Loewpolitical acceptance Reject LoW developmeot potential MNdium huben risk NObJiu purchase coat High operations cost Sigh elevation

West of Salt Low ecologeal value Low polUtical acceptance Reject Lke, Loew levation MNdim hum risk NAdism purchase coat Nudium operations cost Medium developmnt potential

Oxidation9ltchi Low huMan health risk Nudsum cost Accept Zztmnded Aeration Nigh political aceoptance Nudism land requirment Nigh effluent reuse Audium sludge production Chlorination needed High maintenance

go Action; Loe cost HNig humn health risk Reject Wate Stabilisation Low land requireent Low political acceptance Ponds at Kelila Low sludge production Low effluent reuse edisum maintenance Risk of iflegally discharged raw sewage

Stabilsation ponds Low cost Loewpolitical acceptance Reject Low humun health risk Nigh lend requirement low sludge4 production Low effluent reue Loewmaintenance

Aerated Lagoons Low humen health risk Nudium cost Reject Loe sludge production Loewpolitical acceptance Medium maintenance Nigh lend requirement Nudium effluent reuse

Activated Sludge Lowebumn health risk High cost Reject Medium political acceptance Medium effluent reuse

Low lend requirement High maintenance Low sludge production

Drying Be" Los development cost NOdium Land reqirement Accept Lowemintmenace cost Nlgh drying potential Loe odor

Belt Press High developmnt cost Reject Medium mintenanee cost Low drying potential Nish odor Medium land requirement -46 - Annx Page7 of 22

Table A2 1 leeo t.): __ o _ a

Sail Coeitiaew Uigh trt.iUstiao vaue for NORMmanitesing requibemnst Aesept rop prodwatiao Low peuetisem soot 1Taseetal aeeeptahlity Low devlo_pat seat Lad Reclamation sUi t i sa"tiem value fat Nedi smiton seirement "ajet tow greasi Nalm eoeatimes east Low derelep_t oost Law sial assoeptability Land-fill Nighp oial aeeptablity Law fertilisatism value Bask-up Biah momitoring requiraemet Nigh operations eost Medium development cost

South of STP Site Low ecological value Medium enineering Accept Low land price constraints North of STP Site Low ecological value Nigh land price Roject Medium ensineering constraints East of STP Site Low engineering constraints High ecological value Reject Low land price TRgITD UFLUUI DISAL_ Irrigation High water reuse High developent cost Accept High political acceptablUty N diAu operations cost Medium land area Evaporation Pons Low operation cost LoWwater reuse Reject 'ediue deelopment cost High lnd area Low political acceptability Salt Lake Low developa nt cost Low water reuse Reject Low operations cost Low political acceptability Low land area High risk to Salt Lake Underground Recharge Righ water ruse Mediumpolitical Reject Low developmnt cost acceptability Low operations cost Risk of Salt Lake Low land area contmination Sea Low operations cost LOwwater rouse Reject Low land area High developent cost Low political acceptability

Greaning Town and High value to tourist trade Mediumdevelopment cost Accept Hotels High political acceptance Hedium operations cost Unknownsocial acceptability Groening Airport Low development cost Loss of halophytic community Reccet Medium value to tourist trade Low operations cost Agriculture S all increase in arable land Mediu development cost Reject acreage Medium operations cost LLmited renge of crops can be grown 47 - AnnIxZ Page 8 of 22

DOUTNWASTCOAST MEW22A ANDDAKA ~E

Table A2. 1 (ceot.):

Combined Low inintenanee cost medium cnstrwUtion coat Aeopt MSdiUV hbbitat diversity Nedlim potential to collect rubbish Fleuible with respect to other lend surtaeo developemnt proj ecte

Open Low cenatructicn coat igh potential to eollect rubbish Reject Low *sintenmaie cost Inflexible with reepect to other sigh babitt aiivaresity lend surface developuont projecte Clocad Low maintenaneo cost sigh enstruction coste Reject Low potential to collect Low habitat diversity rubbish Flexible with respect to other land surface development projects iZiuc OF CPlaus

Enviromenel litisation and Nonitorina PIn

Table £2 .2: Larnaca S rane and Dra_inage Qo et

MITIGATION

* Sist.uaea to wrl_ md * Cmatructim sebedle * hioU * C_t _ mm 1*6. people (lexavation, detour ut.es pla ad omtrater. ol _otrUotimthi tati .i noise) coordi.etio as part of eomtrzat (Construction In Wdter) * etzetim of mtiitie * Clear_c. pervit irn * L_ d t _lobe. * u i&Ieat Dpt. of mtiquities of hstiqAties et eetor 9

* obaltori by arceologist rt_t oetul""eea a 1h ut during camstruotle. period cotervtism pwried o onoerd_me with the Depetmt ofemt.iqitiee Regulations

* Imoie p1ov isims In O * C0maet agreemnt CMatrwctiom eomtrect

* Disruptieo et ietis * Cordnatiom with responsible Cmtrctor/LS * Centrotor blUstiOt services (pipe. cebi.) authorities tbe one.t_tiou * Itposed g iroudewtorcmtemnrated with * Test for contaminatioa L=SC.tCr&ot4r contruction septet. go sea diechar&e It c.mtlated

* PIetubmce to esting buildiug * Approprlate project design * LS/Costretr * Solewo olIm of faomatioms 1 19. deal. * Constratlon previenm to outraot * LDS/Ctreter * C et eet =5Mz im Table A.2 (catinoed): L

Shart-tem

• Dituwb ce to wildlife dring construction * so wVrk at da awenddusk * tS/ tConLctr a*Duing construction * teap machinery And traffic to site and agricultural lend

* a soVal of vegetation a leveetation, plEating of aw trees & LDS mad eootzecter * Se ae plant operation

* Lose of section of halophytic comunity tre- * Design4 it, tLo*miniis loss * LID/cOmaule n * Dseesc apl tiem of *It site finaL desin * Trattieto the site daring construction * tLming of traffic routes, timing * Contractor, US, pollee * Before start of works

* Disturbance of balophytLic c nity beyod * FeCinD of STP Site and reservoir * LS,'ceotrtactr * AL coietieo of 3TI ST? *Isite c_rrwoir

* aencing of halophytic commity site * LS/contractor * Sfefoe stnrt of contructioen Loag-term a Odors nd aeroels (Treatment plent will be looated far enog ftrm the tourist end residential area)

* Additional mitigation: plenting of trwes * LFDSor contraetwr Seftree opleatio of eemsretl_cio

* DwsDn for covered creening end * LSS/coneutnt _* S ore oeepletean sludge treatment (thickening ad of flnal design dewetering) processes * Noise * Additional mitigation: plantin of trees * LSDSor contractor a Setae _ 4etien Of esestamctiem

* Tisoul Imacts * Additional mitigation: plnting of troes * LSO or eontractor a Safe" eoea0ete ef oestrauctie

* Sealth hazard to workers * Trsining of workers, provisions * LIDS, contractot, * CeLtret agreement in contract, good pI mIg, workers thr e construction precautions IL Table £2.2 (continued): Larnaoa and Draiaag Cmm

~g-tez

* Leos of bolopbytic ommuity frm offluent * Relocate reservoir * LSD/comnaulteoL * Sed re peeleo ot Storage reservoir site finl de 4 * 2bmvol of vegetotie * Roeetatiou. planting of mm tres * L=S or cotraeter * seems att tf reoggeig egerties Urn-toe

• Insects * Insectiides. b erial mosquito * Los a Ses,t tact otf centrol producets. osqutoflsh or *epsMS_ .huezal oillgoaolLne film a Alg gro-Lb * MNitor F level in rersrvoir * ID" * O riaepretim * Iclude F re ovol usnit press * LSDb * befere eoletm alternative ln UIP delign SC tAl l deetw

Lang-torn o PbeIt hazards * COlorinotios, effluent reuse re,trict.in * Inlieiality (bolib Berries) * beto, e*ttlue

* Manitoring of *fflu

Acumulation of chlorine ompounds In nature * Adjusten t of chlorination l1vel Las * note" offlet - a Monitoring of chlorine compounds in irrigatlon water a Durli Operatioen distrib.t.ca IL 0 Table A2.2 (continued): Larncad

* rine utropbication trom fttluent * Huitor N level * LIs ^ luriag oparatlen intausiln lEto semoter. * Include N removal nit proccss * LS R tm or_lItiom alternativ, in STP design of fl-al damig lnde. Trea b eL _ imas Long-term

* Sludge disposl nulsence * Ccmposting nd controlled reuse tor soil * L5DS * oaring peratiem improvement * Groundwater pollution ^ Control *nd collection of leakage waters * LSDb * Afte start of *peratie * Lining of disposl area it required * LSD ^ Deterioration of soil quality * Nonitering of sludge mad receivi.g soil * LhSh/ Hinistry of * lur&ng opeation *nd health hazards contnt Agriculture * Naintoainnce ot application records - ^ Restriction ot access durin lend aplicatlaon Rinkr i * Deterioration ot weLor quality In harboutr * Sedinst traps Imnlad In flas dei4n andJor marina * OlL and Sr""s trap * LSDS/com_ltent/contr eter .tl1l before * Garbage removal screens start et oepration * Place outlets outside nelosed spaces * Proper drainage diteh wmdntenmneo * aurin opealto

^ Pipe rupture Preventive mainnance, stock of spare parts a LDS * Durin operation

* Pum failure * Stand-by pu_ good usintensnce * LSOS * Refs start of opeation

* Aeeidental odor at pumping stations * Cbomicals (hydrogen peroxide, oxygen * LIDS * Detl"aoperation or chlorine) IIW FN Table A2.2 (coatiad): a .l ..

* he.. distazhince at treatimmat pIlt * Sra lima In treatment proes. LsSomtraetr * madeg_ eperie training ot workers to hudls ecapLtinl situatiim * V.11. of equignmst (e.g. aratoer) * Seral li1. In treamt process. L*I.W mtrestor _u * epat stock of spare par"

* Availability et minLamce persmel * sees"* peat *'allre ot elactricity suppy * St-by amerators at trat_mt plnt * LES * a_ MI p L stetiona

* Fillss * Oerf lo tntdvania syt_ * LES * l_bu apraie I * Cro ater - Seterioration et qUality a ltoetp o trg etAin ter a LE * _U _i e Debmee Operation * tIner accideet durin mstctin * Includ safety proemees in ommmtrocticn * LUS/cmtroteor * Ci_t _premt contract * Aroeiate amieerin de"ig * sot" tfil desig Reay access to sedcal belp * eematre_in nLlom

'40 tabl A2.2 (omtinued)): Med

* Leakage of freeheat from reseroi * Teat sonl przmeability * LUE eelI"l e w, Sept. * 3etw fias doew or _ 1mtag om*Uo * Lin reerevoir if soil is permeable

• 'ffluet 1Uty eostrel (ICAjD .d f e.l ^ e oeeklyISua sysmles lmiciplt.y * (Usalth esv le) * mJ t_renmt eolifoie)/precm oautrl ef treatment pl_t Md diitmtim

* Operatiomal entrel of tratamt pIest * Daily testin * LM * L.A. * cmdsmtez Iwel med 9,ality * mthly atlote * Mnitery of AeriouLtae * Ku--a irrigation

* Ueeth hasards in of*ffet reuse ares * QaotIrly s*les * aidcai ty (Noltble )slee * _j si.stim

a Cbl. e c_pomed La Sirr atUie ae * SWrS study * Muicipality (3.1lt Usseam) * L tf

* Soil salinity n Irrigated aceas a lUmiR/qmaartozly numpe Mlst.yf A1riaultw * Arirt iuisaem

Imet ppulatime * Continuou L0 film - r_srei

* miteriu of P_d 1 In *fflu * Wekly t re ervoe r outlt * LU * *ijeat et tbuy tar "eeka at rese ir It. trriesim gteeteoa

* AmpU _OLOAMef IP _d a r_L m_it pesm at U as n"d * Mtoring of 1 meal omtamt is * Htbly for alud* * RM 5l dispo*al aLt slde med reeciviss soil * Semianully ftor rece ivi SoIl * Iis t *fsf ilere site. -i 0 -54- Annex 2 Page 15 of 22

1. The traditionalsewage dlsposal method used ln the projectarea is septictanks and absorptionpits or holdingtanks. Hotels and hotel apartmnts with a populationequlvalent of more than 25 peopleusually have packJe sewagetreatment plants, and use the treated effluentfor irrigating their hotel gardens.

2. The proposed system would includea commontreatmnt plant for both Paralimi and Ayia Napa near Ayios loannis forest. The treatment process would lnclude biological treatment (extended aeration) and tertiary treatmnt (sandfilters). The treated effluentwould be disinfected and conveyed to the hotel irrigationareas for irrigation.During the vinter time, the treated effluentwhich is not neededin the hotel areas would be used for irrigation of areas designatedas forestryareas near the treatmentplant. ProjectAlternatives

3. The alternativeof 'no action'was rejectedfor severalreasons, the most importantones being environmentalconcerns and costs. There are at presentover 70 small treatmentplants in operationin Paralimniand Ayia Napa, and applicationshave been made for about 100 new treatmentplants. Many of the existingplants are approachingthe end of their life span, and will need major rehabilitationin the near future. The total numberof new plantsneeded by the year 2005 would be in the order of 350-400. Additional septictanks would also be neededto accomodate populationgrowth, and the laborersneeded to supportthe tourismindustry. The costs of continuingthe presentarrangement are higher,under the assumedgrowth projections, than the cost of the proposedcentralized system (Annex 14). The proliferationof individualplants would also createsludge disposal problems, and a treatment plant for sludgewould be needed. 4. The alternativelocations and treatmentconsidered are summarizedin TablesA2.3 and A2.4. 5. STP Loc-tin The alternativesconsidered included separate treatment plantsfor Ayia Napa and Paralimni,and severalsites for a commontreatment plant. The preferredalternative is near Ayios Ioannisforest (siteno. 1 in the table). Its main advantageis that its distancefrom both the communities and tourismareas is not excessivefrom the cost point of view, but is great enoughto minimizenuisance.

6. TreatmentProcess. Of the seven alternativesconsidered, extended aerationis the preferredoption. Becauseof the water scarcityin the area, reuse of the treatedeffluent is the preferreddisposal option. Sand filtrationand chlorinationafter the biologicalprocess are therefore indicated. PotentialEnvironmental Impacts and RecommendedMitigating Measures

7. The impactsof the proposedsewerage project and mitigatingmeasures are summarized in Table A2.5. The project'simpacts would be mainlypositive; a centralizedsystem can be bettercontrolled, and better effluentquality is expected. The possibleshort term effectsare those that would occur during - 55 -

Ane 2 Page 16 of 22 construction,such as disturbanceand disruptionof existingservices caused by excavationworks, accidental destruction of antiquities,effects on groundwater,and constructionnuisance such as noise,dirt and odor. Short- term programsshould be set up to monitorthese effects. The construction stage impacts can be mitigatedwith carefulplanning and stagingof constructionworks; and damage to antiquities can be avoidedthrough coordinationwith the Departmentof Antiquities,and the presenceof an archeologiston-site, when necessary.

8. The long term effectsof systemoperation would includeodor, noise, insect or visual impacts, and possible health risks. Under the proposed project, the long-term impacts are expected to be minimal; the remote location providesadditional assurance. The risk of odor from pumping stations will be addressed by the odor control equipment. The possible health risks to sewerage workers, and from sludge treatment, would be better controlled with a centralized system than under the existing situation, and can be minimized through planning and proper training of personnel. It is recommended that training of operational staff for the treatment works be started during the constructionstage. The potentialimpacts related to effluentre-use can be minimizedby the appropriatemonitoring and control. 9. Long-termmonitoring should includethe followingitems:- Effluentquality Wastewatertreatment process Groundwaterlevels and quality Soil salinityin irrigationareas insectpopulations Sludgeapplication Monitoringof sea water

10. The environmentalassessment also notes that more controlover tourism constructionis needed,and that attentionbe paid to other infrastructure needs,such as road connections,and recommendedsome specificstudies, such as the conditionof the coastalzone. Table £2.3 Alt_rati a for rean

ageme 33*is hians Lft bil - to b O.S.1 w _I hSIMON

Spies lewwe forest UP, am-us5 i.e 3.50.4 beud Uamt.e tat £uiM bodheUst.e Cocast £4? bard lintemeAseta sit. a

*llest tLoert A+t 40 1.0 4.03.5 bud Umaste eee=tism Bit. 3 30 0.7 3.2+4.4 bed litmes V*s a" J 1_wsyJ.o'emesers * 10 0.2 2.2 best Liestone gwlwste se1 Aako.is foret t. =eVst * . emOst *?I. teem 400.6 0.5 best lunset. agse"estzata VMUe P. e"st/ P. eset+ t: tasm 15 0.3 - bad Liunt. pivse a" P. taw t. taw + P. coet 75 3.5 3.5 baes itet wiye" LedkSue t . t.,_ 75 3.0 - miteme sa. Iuiaoe,. lathS Leaie, SSt 9 A A 40 1.3 3.5 bes Uaestme stat Szg4sth VTha L^e, Sit. 9 A +. tt.w 65 1.7 4.0 bed linstee tzuSoetSm Vetbi Lodie, SiteS9 C A 70 1.6 4.4 best lSamwt.me stat. igei&t.S. Ajia layers A 25 1.0 4.7 best limeteme etsm Ares imAs"e foret A 25 1.2 5.5 best limest.oe at. iastm

The varlie loetims ae _hin figreU 2 Sn thb s_iney of the iuxvimstal Asseasmmt Repoet fm ParaLimi _ AwSl NW.

0p.t oi IZPULICOF CYPILUS

SOUTHEASTCOAST SE= A MXE DOjEcT

aralini *nd Avia on C _mnt

Table A2 4 Corison of a ste ter Tretmnt Process"

sAlM silmi -""KAI . .mAAL

-cawmtUmal 10 9 S 6 6

- emt.t *tabi izatic 10 6 6 * a - .. ti"l mcin 16 9 5 9 41 (miaetlar) ta o

-tricums ait ge 9 9 5 * 9

* - grzcoatinl biel4gcal - w.t.trusbiaiaa~11 1@ 5S

* l

-e.zt.l emm 7 5 I S S 61 -mre tuL t*lUsa tms -_ 7 * 1, 10 S67

0 RUtULIC OF CYPRUS

SOUTHEASTCOAST SIVRAgK AND DIAXE&OKPRO2C

Parali and A*ia aCOMmnt

Table A 2.5 Nit eto iayTable

* Disturbance to tanIle au * Cotmatruion schdufle cd deour nturner.veJo a CANtret sateen" bask people (excaratlem. route" pmlagnu a coodnuatiom hoteliem. eamress. goUge twon cometruetien traffic and aosk") as pert of contract (Coustruction la winter) * Destruction of anthqfitiee * Clearene pe it aon * Joit ventu De * Deg.C st Dept. of Antiquitios of istiqauiiso of aeLtreeto * locria by aeologist Dt of jii 1 Ee u o" c_tructi_ dnring constructiom period peried In soordene with the Departmentc of Antiqities Rsegulations * Inlde provisns in * J Veture * frct cl_ cotruction contract * Disreption of eistin * Coordinatin with responsible Comtractee/jelm vurw * COrecter malUstien services (pipes, a lbu) authoritie teh _etruetie

hort-t.r

• Dmval of vegetatin Iveetation. * pletia of rew Joient _vW&u m_ eeto * as"t gln perat.

* Traffic tL tie site dtrin comtrtin * Pleming of traUc routes, tin * cotracto. joi_ Vore. * *eete start of wedet police Long-term * Wors end aerosols (Treatent plt will b located far onough from the tourist and residential areas ) 1.5 hk)

^ Additional mitigation: plentins of tr ee * Joint venture or eeter efeo,. cobetin of

Design for coverod screeing ed * Joint v e _t * _e C letem *ltude treatent (thickening ad ot fna_l desmnp dewateting) processes

* fNise - Additional mitigation: planting of tros * Joint venture or e_retor * Defere ccoplatl_ of ° ' Visual impct ^LAdditional nitigation: plenting of trees * Joint ventureor *orseLtr Delete cOepletion of Tee2tmcotied Table A2.5 (continued) * EUith baad to gker a raining of - Orer provisions * Joint ve_tmr. eentrmtor, * MrSt agree_mo*g in m=tract. good PJLi. workers U emtausties preceti

10ot-tam

* Removal of vegettiem * Ussgtatios. planting of ae tre * Joint venter oc emat.r * Debo start _o e,ssntm Lon-tm SCrseet

* Inmscts * seticide., bacterial nsuite * Join venre * etrtrt conrol pcoducts. imoitofis or _Perto minral oil/gasoline fils * Alae or-t IbitorM I level In reservoir * JOint v_mIeIe * in epeu_

* Inlude U real ovast press * Joint vaetre * De_rw c6ieM alternative in STP dsaign ef fcina d@se

Long-term

* llcItb berara a Cmlotriation. efflut guise retricted * lmicipality too"k * Dete oftl_e. S.rvice)/DstrieL nkA et diatribtiem linistry o* Ps_lb

a torin of effluent quality. * It_icip.LUty (3.t5b a rigs operatio servite)/Distret Sa of Mnistry ot Boom a Iacreose in soil salinity a Keepin the solinity of drinking ester a Mater Db lqpc tepw t Dring operation. UNe by milmising _mut ot water fran trom local borebolb a Accumlatie of cDlerino cO O_M in nature a Adjustment of chlorination leel *ambicipality (§sLtb a Od r ttlf t Servic)'Distriet Demb of * i¢tJrihLi Ministry of 5s0LAh a Monitoring of chlorine camp_ in irigation woter S wring _rtiem

* Marine eutrophication frau efflunt * Monitor a level * Joint venture a bring operti_a intrusion into acw ater. * Include I rueoval unit procwes * Joint vacturo a O tor cocpletiem alternative in Sm? design at tinal design SlUnise Trret t *d Diseose'

L-g-tenO

• Sludge disposal nuisance * C4oeting nd controlled reuse for soil * Joint venture a rnlg oFpert ta imprvevuct o

* Groud"er pollution a Control and collcticon of lOak&&*WaterS * Joint vectare a Aft" Start of * Lining of disposal &res it requird Table A2;5 (continud)

* Dcterioratin of soil qulity * Honitoring of *lud0ge ed receiving solL Joint Venture/ 'DSiW *waUe and helth baer contet Depart"et of *guiuLtu * kintnance ot sIlicOtion recorb e 1e5.iCetion of access durin led awlication

'Fipe ruptunr 'Ievetive maintenance, stocw of spare parts * Joint ve*ue t' _in eeem

* po tfaiure *S d p good maintmnw ' Joint ve_tue Det st ot

4 Accidntal odo St p 1i11sttis a C cal (hydr p d oxy ^ Joint w*ter a _ n Operation or chlorine)

a Process disturbance at treatment plant * Several lines in treatment process a Joint ventur./cet.ruet.e * *eter eperetlo training of workers to bmadle exceptional situatiens ^ Failures ot equlpment (e.g. aerators) * Several line In treatment process, Joint ventur e/aetracer * Defr *retiom stock of spacr parts * Availabilit: of mainte_ance parenmel a Joint ventwr * Deler*eration

* Failure of el*etricity SupplY * Stand-by Senerators at treatment plant a Joint venture a SDter. epertime and ppping Stations a spillage e Overtlw tank/warning systm a Joint venture a Saftr e" ratin g a Groocdvtor - Detedioration ot quality * Waterpreof structures/innitoring * Joint venture Ce etrvutionce tzaet/ beet. eperatien

a Worker accidents during construction a Inclusion of sfetty provisions * Joint vnturce/otraStr a CotraCt agreemet in Construction contract * Appropriate engineering design * Joint ve.ture/eemLreetar saft" flnal *eAl,

a Ready access to medical belp * Joint vectore/eentreater a wrig construction

wStil1 oaive smcts _ii Ss ibiLit

^ Effluent quality controeL(DOI/CGO end * Weekly/mntbly sa_ples tuaicipality (ealth A14m)t trtetamn fecal coLiforn) of treatment Service /District Drench _ disimectieme of Hinistry of ealtb pCeoea

a operational control of treatment plant * Daily tsting * Joint venture N.A.

a Groundwater level end quality * Monthly sepls * Ministry ot Ag4rieltwre Mceaty rrigati

* Helt hazard in effluent rCuse areas * Honthly s*pls * Muenicipality ( Ie Modify irrigatiom Servic)/District branch 0 of Ministr * f eeItb * Chlorln compounds in irrigation vater a Separate study * Ibmicipelity (al"th Adijustment of F Service)Vistrict Sr_ch C eia nimtevel ot Ministry of Helth Ii'' ~~~~~~~~~~~Page22 of 22

* ~** *

I 44 i i X ~S , s Ii i

1 .1

* * 1lff - 62 - Page 1 of 7

REPUBLIC OF CYPRUS

SOUTHEASTCOAST SEWERAGEAND DRAINAGEPROJECT

Teehnical Alternatives a sdLatCost Solution I. Ina 1. The KasterPlan Study and FeasibilityReport on StoruwaterDrainage and Sanitary SeverageSystems for Larnacawas preparedin 1982. Accordingto the KasterPlan, the area to be providedwith a severagesystem was the low-lying coastal strip running from the boundary of the UK Sovereign Base Area in the north, to Larnaca Airport in the south. The strip varies in width between300 and 1500 meters,and is about 13 km long. Stormwater drainage to four low- lying areas of town was also needed. Several options were consideredfor treatmentmethods and plant sites; these are sumsarizedin Annex 2, and will not be expanded upon further here. Paras. 2-8 below describe the proposed sewerageand drainage systems and the treatment technology. Because of the scarcityof water resourcesin Cyprusand the reluctanceto dischargesewage effluentinto the sea, the recentfeasibility study, completed in January, 1991, investigatedthe potentialfor effluentre-use. Its conclusionis that the use of treatedeffluent for irrigationof parks and hotel gardensis feasible,desirable, and cost-effective(paras. 9-12). The drainagesystem is describedin para. 13. SwawraneSystem 2. The seweragesystem, as envisagedat the time of the Feasibility Study,would servicethe main hotel and touristareas along the coastnorth of the town, the low-lyingresidential area on each side of TimayiaAvenue, the port and marina,the main shoppingand businesscenter, the centralwaterfront and hotel area, the old Turkisharea of the town, and the new tourist developmentextending southwa.zd as far as the airport. Since the Feasibility Studywas completed,the decisionhas been made to includesome refugee housing*states to the north of the town in the seweragearea. No allowance has been made to accommodateany other zones into the seweragearea as describedabove. If it is decidedin futureto providesewerage in the areas of town above the 5.0 meter contour,a new trunk sewer will be required. This secondsystem would be quite independentof the proposedsystem, would have sts own final pumpingstation, and would deliverto an extensionto the proposedSTP. 3. Under the project,sewers would be providedin the highestdensity area of Larnacaand th^ adjacentcoastal strip. About 375 ha. of centralLarnaca would be sewered. The sewer systemwill compriselaterals, main sewersand collector,sized to meet sewageflows thatwill be generatedwhen the areas are fullydeveloped. Thn will form an integratedsystem passing through and collectingfrom the ti , center;the main line of sewers/forcemains will stretch16 km from the hotel area in the north to the sewage treatmentplant near the airport. -63 - Anuex 3 Page 2 of 7

4. The topagraphy of the area, i.e., a low-lying coastal strip, dictates that the laterals discharge into a series of main sewers, parallel to each other. The only practical location for the main collector sewer is adjacent to the sea shore. The lateral sewers would be laid in each street in the area to be sewered running west to east towards the sea, with the collector traversing the area from north to south close to the shoreline (Nap IBRD 22890).

5. Pipe diameters would be as follows:-

dia. up to l50 . 80 km dia. over 150 -, up to 700m. IQ-km Total 100 km Manholes would be provided for cleaning and access. Flow in the lateral and main sewers would be by gravity.

6. Pumping Stations: Pumping will be required in stages along the length of the sea frontage. Based on an analysis of variables such as energy, number and location of pumping stations, and depth and diameter of sewers, there will be 9 pumping stations along this length, and 3 pumping stations off the main line, but delivering into it. There will also be 9 small pumping stations serving small low-lying areas delivering into branch sewers leading to the main line. All 21 pumping stations will be constructed of a size to accommodatesewage flows to the year 2010. Capacities would be:

Pump arrangement (No. numps) Pumping Station No. Working Standbk lotal 1 3 1 4 2 2 1 3 3 2 1 3 4 2 1 3 5 2 1 3 6 2 1 3 7 2 1 3 8 1 1 2 9 1 1 2 10 1 1 2 11 1 1 2 12 1 1 2

Nos. 13-21 1 1 2

Capacity would range from 22 to 300 l/s.

7. Sewage Treatment: The STP design is based on water use projections for the year 2010. It is proposed to construct two oxidation ditches and two final sedimentationtanks. As the sewage is expected sometimes to be septic, no inlcZ works or primary sedimentationtanks would be provided, and sewage would be delivered directly into the highly oxygenated liquor in the oxidation tanks in order to minimize odor nuisance. There would be two extended aeration tanks, ana two sedimentationtanks, with capacities of 24 hrs, and 3.3 hrs, dry wqkatherflow (DWF), respectively. Effluent would be further -64 - Pag. 3 of 7

treatedthrough two rapidgravity filters (loading at 250 mo'/m/day)before passingto a storagereservoir. From the reservoir,water would be chlorinatedand pumpedinto the distributionsystem. Operationalexperience may determinethat the filterswill be used afterstorage. Surplussludge would be thickened,digested aerobically, and driedon sludgedrying beds (10). WastewaterRe-use

8. Water is regardedas a very valuableresource in Cyprus. The demandfor water in all sectorsis increasing,and the availableresources cannot always meet the demand. The recentdrought has emphasizedthe gravityof the situation. The AgriculturalResearch Institute (ARI) has been carrying studyingthe effectsof the use of sewageeffluent for agriculturaland horticulturalirrigation. In the Larnacaarea, average annual rainfall is only 350 m, and annualevaporation is in excessof 2000 -. The need for water for domesticpurposes, as well as for landscapingto providean attractiveenvironment for tourism,is acute.

9. Studieshave been carriedout on the use of treatedeffluent for agriculturalirrigation near Dhromolaxia,a villageto the southwestof Larnaca. Aquiferrecharge has also been considered.Hotels are alreadyusing tertiarytreated effluent for the irrigationof lawns,trees, and shrubs. Duringthe studyof effluentre-use in the Larnacaarea, LSDB's consultant investigatedpotential irrigation areas for agricultureand landscapingat Dhromolaxia,south of the treatmentworks site, the airport,parklands, the coastalareas, etc. The conclusionwas that the use of treatedeffluent for landscapingpresented the most feasibleand cost-effectivealternative, and at least 190 hectaresin the Larnacaarea were identifiedas being suitablefor this purpose,provided that a suitablequality of effluentcould be guaranteed.

10. The primaryconsideration in maintaininga suitableeffluent quality is the efficacyof pathogenremoval; in this, the reliabilityof the treatment processand suitableoperation of the plantare the main factors. The key designparameters considered for effluentreuse included: primary landscape greeningareas and secondaryareas as overflow;storage areas for treated effluentensuring sufficient detention time; annual water balance between sewageproduction and effluentreuse; 12-hour daytime demand and nigh-time storageneeds; sizing of pipelinediameters according to maximumflows; terminalpressures adequate for operatingsprinklers and drip systems;pipe frictionlosses; hydraulic head abovesea level;pipeline location along existingroads in trenchesparallel to sewer lines;and chlorination facilitiesat the pumpingstation at the storagereservoir.

11. DistributionSXstem for TreatedEffluent: From the pumpingstation at the STP, effluentwould be pumpedthrough a uPVC pipe main laid in the public highwayalong the coastparallel to the trunksewer, but in a separatetrench with lm - 1.5m of cover. From the main,branch lines (alsouPVC) would be laid to the publicparks and touristareas, where the treatedeffluent would be used for irrigationpurposes. Pumpingcapacity provided would be 280 1/s (the peak demandduring the monthof July). Designof the distributionsystem has been based on a 12 hour daytimedemand at 2.2 litersper secondper - 65 - AmLx 3 Page 4 of 7 hectare (I/s/ha);velocity of flow in the pipes would be 1.0 to 1.5 moetersper second, and terminal head would be 20 m, sufficient to operate sprinklers and drip systems.

12. Dxanag: The drainage works included in the project cover only those priorityareas recomeended in the LarnacaDrainage Master Plan dated 1982. The proposeddrainage systems have been based on an evaluationof alternatives,such as reducingthe systess by reforestation,and flood control dams withinthe watersheds(which are long-termsolutions), and various channelroutings and sizes of structures,etc. The proposeddrainage system is the least cost solutionto the drainageproblem of Larnaca. Design is based on a storm returnperiod of 2 years. Drainsprovided under the project would range in size up to 160 me dia. A major part of the improvementworks likes in increasingthe carryingcapacity of the Kalokhorioriver channel.

II. The A&ia Napa/ParaliuniArea Sub-Project 13. In Paralimniand Ayia Napa, the presentpractice is for hotels and apartmentbuildings to have their own packagesewage treatment plants. Privatehouses, shops, and restaurants,etc., have septictanks and holding tanks or absorptionpits. Absorptionpits are functioningfairly well in Paralimnitown area,but this is not the case in Ayia Napa villagebecause of the slopingground and dense construction.Along the beach areas, septic tanks and holdingtanks are used for housesand shops,etc. In these areas, the growthof hotels,apartment buildings, and privatehomes is rapid. In the absenceof a centralsewerage system, each new constructioncarries with it the obligationto constructeither a packagetreatment plant or a septictank and holdingtank or absorptionpit. In Ayia Napa, particularly,because of the topographyand densityof the buildingsin the village,this is no longer possible. New residentialareas have been plannedfor the villageof Ayia Napa, as the existingbuildings in the villageare rapidlybeing convertedto tourismuses; in these plannedexpansion areas, it would not be cost effective to constructseptic tanks. 14. The costs of a centralizedsewerage system have been comparedto those of a continuationof the presentsystem; i.e., septictanks and holdingtanks or absorptionpits for houses,restaurants, etc., and packageplants for hotels and apartmentbuildings. The resultsof the comparisonare given in Annex 11, Table All.l,and show that the cost of the centralizedsystem is lower than continuingwith individualpackage plants and septictanks. These findingsform the basis of the economicanalysis for this component. 15. AssumDtionsUnderlying the Comparison: In order to estimatethe costs of continuation,it is assumedthat every new hotel in the Paralimnicoastal area would have a treatmentplant of its own, and in the Ayia Napa coastal area, two hotelswould share a treatmentplant. It is assumedthat in Paralimni,only the new establishmentswould make additionalinvestments for sewagedisposal; whereas in Ayia Napa, residentswill move to new areas outsidethe villageceixter, and new investmentswill be needed. The growthin tourists,population, and labor force are the same as thoseused for the project'splanning horizon. By the year 2005, 165 new packagetreatment plantswould be neededfor Paralimni,and 120 for Ayia Napa (assumes200 and - 66 - Pago 5 of 7

250 beds per treatmentplant, respectively). Construction costs for these plantsare estimatedat CE62,00and C£64,000respectively, and operationand maintenancecosts at 16.5 cents (CC 0.165)per cubic metor (in). These 0&K costs includethe costs of secondarytreatment (11.5 cents/20)including electricity,excess sludge removal, maintenance, labor expensesand chlorination,and of tertiarytreatment (5 cents/rn)including chemical products,power consumption,one oporator2 hrs/day,maintenance, and amortizationover 20 years.

16. For houses,shops and restaurants,it is assumedthat the systemto be used would be septictanks plus holdingtanks (CC 1,300),and that by the year 2005, the number of such units neededwould be 800 and 600 for Paralimniand Ayia Napa, respectively.Each now septictank and holdingtank would serve a populationequivalent of 10 persons. The operationcosts of the septicand holdingtanks consist of the emptyingof the tanks and transportingof the contentsto the stabilizationponds. These costs are estimatedat about CE 1/e. The existingstabilization ponds are alreadyconsidered inadequate, and new ones wouldhave to be constructed.These would cost about C£1.8million, with the firststage costing about C£1 millionto be constructedimediately, and the secondstage to be added in about 5 years. 17. The costs of the proposedcentralized sewerage system and treatment plant,used here for comparison,are the same as thoseused in the economic analysis. These costs includephysical contingencies. Land costs are not includedin eitheranalysis; one reasonis that the site would be approximatelyin the same place for both the proposednew plant and the stabilizationponds, and althoughstabilization ponds would requirea larger area, the land at presentis largelygovernment owned, and has littleeconomic value (the site is not withinan area zoned for futuredevelopment, and the scope for development in other areas is very large). 18. The net presentvalues (NPV)of the two systemsare givenbelow in tabularform. Under the assumptionsgiven above,the NPV of the proposed centralizedsystem is about 231 less than that of a continuationof the presentarrangements. The NPVs for the lower tourismgrowth assumptions are about the same.

Base Case ScenarioLower TourismGrowth Scenario PresentArrangements 25,927 17,506 CentralizedSystem 19,811 17,675

It shouldbe noted that the NPV compar!sonsdo not take into accountthe substantialenvironmental benefits of the proposedproject. 19. Other Aspectsof the ComRaXison Other factorswhich shouldbe taken into accountwhen comparinga centralizedvs. decentralizedsewage disposal systeminclude:-

- Smallpackage treatment plants are locatednear hotels,and odor may be a nuisanceto tourists; - 67 - Page 6 of 7

- Hotels and apartmont buildings must either have adequate garden area to accomodate the treatedwater, or the excess has to be carriedaway by tankertrucks;

- Sludgemust be pumpedand transportedaway. During this operation,odor may be a nuisance;

- In smallplants, chlorination breakdown may cause healthrisks; the breakdownof air blowersmay lead to odor problemsand deterioratethe qualltyof the effluent;

- Skilledlabor is neededfor the appropriat,operation of the system. Operatorsoften do not have the necessary knowledgeand skill;and

- Qualitycontrol of the effluentis difficultand costly,and resultsare often less satisfactorythan in a largerplant operatedby skilledpersonnel.

20. The leastcost systemfor Paralimniand Ayia Napa consistsof sewerage systemsfor the communitiesof Ayia Napa and Paralimniand their associated tourismareas; a sharedsewage treatment plant in a centrailocation; and storageand distributionarrangements for the treatedwastes. Sewagefrom Ayia Napa will be pumped to the treatmentplant throughthe main pumping station. Sewagefrom Paralimnitown will be conveyedalong a gravitysewer to the coast and connectedto the seweragesystem of the Protarascoastal area (thehotel area associatedwith Paralimni);from where it will be pumpedto the treatmentplant throughPS 8 (seeMap IBRD 22891). The proposedsewage treatmentplant site is to the east of Ayia Napa and southwestof the Paralimni tourism area. The landscape in the area is open, with sparseforest vegetationand some cultivatedfields. Treatedeffluent will be conveyedback to the hotel areas along irrigationpipelines. The ctoragearea for the treatedeffluent is locatedabout 1 km. from the treatmentplant.

21. The followingspecific components are includedin the proposedproject:-

(a) a seweragesystem for Ayia Napa and its tourismarea, including:-

- a sewagecollection network consisting of about 21 km of lateralsand main sewers,and serviceconnections;

- a collectorsewer, i.e., main interceptor/forcemain about 10 km long; and

- ten pumping stations. (b) a seweragesystem for Paralimniand its tourismarea, including:-

- * sewagecollection network consisting of about 35 km of lateralsand main sewers,and serviceconnections; -68 -AMU- Pago 7 of 7

- a collector sewer, i.e , main interceptor/forcemain about 10 km long; and

- 24 pumping stations.

(c) a sewage treatmnt plant of about 26,000 iO/day capacity;

(d) operation and maintenance equipment for the sewage treatmnt plant and sewerage syst ems; and

(e) rapid gravity filters and storage reservoir, and distribution networks for treated effluent (about 17 km in Ayla Napa and 26 km in Paralimni). - 69 - Pag 1 of 4

REPUBLIC OF CYPRUS

SOUTHEAST COAST SEVRAEAND DRAINAGE PROJECT

ProisetCost EtIMAte

1. Su ary cost estimatesby expenditurecategory, year, and financing sourceare in TablesA4.1 throughA4.3. Detailedestimates are Includedin the ProjectFile. All of the estimateswere preparedusing 1990 prices,and the base estimatesare presentedin these prices.

2. Cost estimatesfor the sewerageand drainagecivil works are based on recentcivil works, includingsewerage works, contracts in the Nicosiaand Limassolareas. For the equipmentand materials,costs are based on recent budgetquotations obtained from suppliersin Europe. 3. The cost of consultantsfor constructionsupervision, technical assistance,and studiesare based on personmonths estimates and on rates chargedby foreignand localconsultants in Cyprus.

4. Physicalcontingencies are 10, exceptfor land acquisition,where a OX contingencyhas been used. Importduties are not included,since the sewerage boardsare exempt. REPBLIC OFCYPX OIEAST COASTSEWACE ANDDRAINACE MJECT Tabtl MA: Larncea Component: Project Costs Including C tinguFcls (Cyr Pcund, '000)

1991 1992 1993 1994 1995 1996 1997 19" S-Total Teedt e Sewrae d Rus9 Scheme

for S_ara 520 Sao for Effluent Reuse 162 162 st-total laE 682 682 Seer mid force Hine Naterials rnd Equipant 53 202 405 799 1340 907 152 35 2619 Civil Works 107 410 823 1620 2721 1813 306 M2 ash-totat sewers 160 612 1228 2419 4061 2750 4Ul 1169 PIlng Statlae aterials and Eqapint 17 67 105 122 383 694 694 Civil works 12 61 70 70 150 42 405 sht-totat pi ing station 29 128 175 192 533 42 1low Sewae Treatment Plant (STP) Moteriats aid Equl nt 88 391 1000 360 t 153 Civit Marks 116 274 400 110 006 sht-totat SmP 204 665 1400 470 2739 Effluent Tr"ete nt n d Distribution Materials rndEqupi[nt 76 237 30 101 303 4 793 Civit Works 76 342 208 533 850 502 393 2156 ° asu-total effluent 152 579 238 634 1153 548 393 36W 1 Engineeing for Sewrag 36 56 68 8S 270 127 132 774 46S for Effltunt 10 28 24 26 42 39 25 196 ash-total gineering 84 92 111 312 166 1S? 960 Vehictes and Eqaip mnt for Serwerae 13 25 21 27 40 5 131 131 for Effluent 4 11 9 17 10 5 56 sht-total vehicie 17 36 30 44 S0 10 1J7 ...... _ Total Swrae and Reus Scemea 682 606 2104 3163 3870 6109 3S16 "101 2U662 21662 5745 Drainge Schee Surfae Mater Drainag Materials wd Equipmnt 36 100 160 259 266 106 135 nu Civil Works 54 157 241 388 399 160 203 142 sub-totel draInag 90 257 401 647 665 266 338 2664 2664 Engineering (for drainag) 14 22 25 32 43 32 s 173 173 104 Total for Drainw Schms 104 279 426 679 706 298 343 2M 2w3 1w. Technical Assistane 10 24 21 24 35 32 23 6 160 169,

TOTALLARLVA 682 722 21.07 3610 4573 652 386U 1376 24636 24A66 6021 3333 3333 3.33 3333 333 Sa33 Bass mm Sass mlt.C Of Cti WU AT COT El MD OSAIU EPUOECT Tabe A4.2: Pwralani Ca*onantt Project CostslmIludin CmtilScIM (Cypn Pmm,. '000)

1991 1992 199 1994 1995 1994 1997 1"994 10-Tta tad Samrag aid Raie Scheme Low for Sewra 60 d for Efflunrtum 60 6 sh-totat land 120 12i Sugrs nd ForcaNins Nhterlials ad Eqoip.mt 57 100 200 200 260 156 we 37 S36 Civii larks 23 97 155 525 104S 1020 430 3S sub-tot sewers a0 197 355 72 1305 1176 S30 431 ftqpin' Statios naterials *d EEquiupsnt 41 329 167 488 492 a 1529 f525 Civil Works 15 1S0 151 100 86 Su sub-total puqpingstation 56 479 315 SOB S78 a 2827 Sewa TreatmmntPlant (SIP) Natwrslls and Equlginst 318 300 5OO 700 U101 IOU Civil works 25 369 176 250 450 70 1is" sub-totat SIP 25 707 476 75I0 150 70 3175 Iff tuant Tr t_mat Notarials *d Equii m_t a 124 130 200 220 110 90 002 Civil wrks 13 72 100 160 160 60 10 57S - sub-total offlumnt 21 196 230 360 300 170 100 ' 145s EffHuwntSistributlon Network NetrictsOrd Eqisn_t 45 33 10 100 SO 47 315 Civlt Works 20 66 169 175 282 243 143 on sub-total efflsunt distribution 65 99 269 275 332 290 143 1473 Enqinasrins for Sowara" 67 67 96 106 128 112 5S64 564 for Effluent 22 27 36 35 33 25 2 10 sue-total nulnoenr Sp9 94 132 141 161 137 10 764 Vhiletes ad Eqpipat far Saar so be so far 1ff luwat 2 ash-total ivahlles 0 0 105 _ tot l t WIstes O O , ~...... us5 ... Total Swra andRom Scheme 0 400 1349 2046 2569 3916 2421 791 13492 13492 4543 ,. ,,,.,. ,...... _. . .. __......

Technical Assistace 10 20 30 30 SO 40 30 a10 216 210 TOTALPMAINNI 0 410 1369 2076 2599 3966 2461 821 17s2 137r 4753 333 8338 3333 383 # 33 333 8383 3833 3- 3_ 888_

0 O' mmic w e_wu IMMOMTCOWT 110S 3M mAaWWCI T1M A4.3: Ayla Up _ ti Pwt csts 1ui,dq GM" n (Cons ftmd, 'OM)

1991 1992 193 19 199 199I 19o7 Sb-l la"t1

twe fa S_mra 45 for IffR* Mu" 45 45 mb-total lw 90S 4S Notarials, I Elpmuat 40 4S S0 90 120 112 40 Clvil VIrb 40 497 2 mb-total 60 100 170 412 400 174 135 s_n$ 86 105 150 Pauig Statism 260 532 512 214 Fltariabl* dE Wl_nt 135 130 140 126 60 SO clvil vets 20 U 6- _b-total 89 60 60 40 20 - pwiang statiol 20 224 190 200 lineag Tretsat Plaint (SIP) 16" 0 Sf ht l aicd Wpoalint 200 300 civil Verb 297 300 100 119 1197 10 25 90 119 340 335 44 sb-total Sr to 225 l_ Efflust Tretaset 390 416 640 485 40 229 Nateralas aid 1upip t as 140 220 clvil Ves 46 9 5 _ mb-total Offlu"t 20 71 120 250 32 20 513 tretsat 0 20 159 260 470 a Efflawn Sistributlia Ibtsrk so ye 1N Naterlsudl WlPMt 10 Clvil Ves 20 40 so or 30 37 10 40 60 160 250 140 sbtotal efflest trestant 20 60 7 Eailnmrfeg 100 240 337 170 5 for _ -ag_- 10 112 110 for Effttet S1 62 30 6 33 2n 3 20 20 20 20 10 2 Sb-total. efnewring 13 132 130 IS Vabiclos wad SqJipw 71 62 40 U 45 for Ssiort 41 f1r Eff ist 41 41 aab-tot1 sr 17 V ci.s 0 0 58 0 .... 0 0 0 Total S rawpwd a mcO ...... 0 3 7 11 2229 136 ...... 4S0 6 235 ...... Tnetbcs Assutser 3 5 20 20 ) 16 1 a5 as a TOTALATIA hM 0 236 m ig1 1467 2249 uw- *-a ama 1363 451 T72 _m ma_ m_s mm _m _ _ ft mCs a go a $Ie soof Is 9 8 ItK St t et Le cc g QC OC9Z CZ ZZ ST COt C 00"vo 1"e0

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r am~~a _r amr am am AVerag BMWt Rats (Per CZ 166 et proquty Areseamt) 2.56 2.50 4.50 4.50 5.75 3.75 0.25 .2S 6.25 Iter kobuoe (CSU 0 0 0 0.17 0.17 6.22 6.22 6.26 6.26 Cbarge tr Iuig4et4eme Watr(CMl) 0 0 0 0.2" 0.20 0.25 6.25 0.35 6.26 Opecaijwa Ratio (2) 13 17 2 21 20 *0 42 44 45 Selt-timmci. Rlati (t) 33 o1 31 21 34 56 43 all a Debt Service Coverage (Uteg) 7.7 4.6 6.0 2.3 2.2 1.7 1.6 1.4 1.2 Receivables (Potbs Rwevams) 3 3 3 3 2.2 2.2 1.0 1.6 1.$ nim Aerase Swer Retes (ter Cl 1006 at fCperty hAseseaot) 3.75 3.75 5.50 5.50 6.50 6.5s 6.50 6.54 6. so@ Hater Szchrg* (Ca/O 0 0 6 6 0.17 6.22 6.22 6.2a.26 Cmlo ter IrriBatieon Uet*r(CL/) 0 a 0 a 0.20 0.25 6.25 6.2 6.326 Oper tias Ratio (I) 15 16 11 13 33 43 4 43 43 Slf-Fana,ci Ratio (x) 27 15 30 17 19 25 46 as as Debt Service Coverage (time) 6.9 4.6 6.2 2.0 1.7 1.4 1.3 1.5 1.4 Reeivabls ("nth* Revummes) 3 3 3 3 2.2 2.2 1.6 1.6 1.6

A"re Sewer Rates (ter Ct 1000 of ?icerty Asscsmmt) 3.00 3.00 3.00 4.25 4.25 4.56 4.56 4.50 4.56 Water Surcberge (CL/O 0 0 0 0 0.17 0.22 6.22 *.26 6.26 Cmrge for Irrigatioe Ibter(CL/u0) 0 0 0 0 0.20 0.25 0.25 6.32 6.26 Opeetia Ratio () 20 23 19 16 40 45 46 43 42 SeLE-F-umcins Ratio (1) 29 16 16 17 19 40 71 112 105 Debt Servieo Coverage (tims) 10.2 4.7 3.9 2.0 1.7 1.7 1.6 2.06.0 Receivables (Nostl Revenues) 3 3 3 3 2.2 2.2 1.6 1.6 1.6 rCUK OF CP

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3. Purluimi - Srnut m*d Innigatim Works reot Ban& at mid atrelimi Tomu 6.2 0.6 Warks/Pipes ICa 1 4/04 7/J4 /US 12/U

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Septz 30.1990 0.9 5.0 0.6 3. 0.3 2.4 11.2 35.0 kein_m 31. 194 1.4 6.4 0.2 4.0 0.4 2.5 1.2 41.2 Nmrsk31, 95 0.3 6.? O.S 4.CS .3 3.1 14.3 44.7 c ainm30. W95 0.9 7.6 0.5 S.0 0.3 3.4 16. 50.6.

Snptbr 36. 19OS 0.9 $.S 0.5 S.S 0.3 3.7 17.7 55.3 Igeuabr 31. 199S O.S 9.0 0.5 6.0 0.3 4.6 t. 59.4 Nmrch31. 1996 1.9 10.9 0.5 6.5 0.3 4.3 22.0 60.7 am 3S, 196 0.6 11.5 1.0 7.5 0.4 4.7 23.6 5.6

Snpte_ 36, 1996 0.6 12.1 0.5 5.6 0.2 4.9 25.6 U. Semeger31, 9416 0. 12.6 0.9 9.S 0.4 5.3 27.4 5.6 Nwreb31, "199 0.4 13.0 0.4 9.9 0.1 5.4A.3 0.4 Jam 36, 199T 0.4 13.4 0.4 10.3 0.2 S 29.3 91.S f M Inpensher 30, "97 0.5 13.9 0.4 10.7 0.1 5.7 36.3 94.7 ims; 31. 1997 0.4 14.3 0.4 11.1 0.1 5.5 31.2 9T.5 bsnd 31. 193 0.1 14.4 0.0 11.1 0.0 5.0 31.3 9A. JAm 30. 1"9 0.0 14.4 0.1 11.2 0.1 S.9 31.S 95.4

_ptpi 30, 194M 0.1 14.5 0.0 11.2 0.0 S.9 31.6 Is.7 "|Z"brek31, 1999 0.1 14.6 0.1 11.3 0.0 6.6 3 .9 6.6Y kfm 31. 193l 0.1 14.6 0.0 11.2 0.0 6.6 312.9 .07 - 79 - Annex 9

REPUBLIC OF CYPRUS

SOUTHEASTCOAST SEWERAGEAND DRAINAGEPROJECT

Outline OrganizationalStructure for Sewerage Boards

BOtodof Directors "Ixv

9~0" ~~~~~~~~~~~Acco'.ntwntl Engineer c?amftt Administrationl

Seuefa0& ~~~~~Treatetsln DroinWe Superintenen Superintnd lt Accoutfrg Off icer AdInistrctivc

NaIntewonco Tretmnt Plant PFwam Foreminn

pointor TI PLantI staf It lSttaff S - 80 -

Amx 10 Page 1 of12

REPUBLICOF CNYPRUS

SOUTHEASTCOAST SEVERACRAND DRAINACGPROJECT

Detailsof FinancialAnalXsis

I. Introduction

1. The projectedfinancial statements (income statement, statement of sourcesand applicationsof funds and balancesheets) for each of the three severageBoards are given in the attachedtables: Tables A10.1 throughA10.3 containprojections for LSDB (1991-2000);Tables A10.4 throughA10.6 give the projectionsfor PSB (1992-2000);and TablesA10.7 throughA10.9 contain projectionsfor ANSB. The assumptionsused in the projectionsare given in the followingparagraphs. The financialprojections are in currentCypriot pounds. The same ratesof localinflation, as used for capitalinvestment costs (SAR,para. 4.23), have also been used in estimatingoperating expenses over the projectionperiod.

II. Incomestatements

2. The sewerrates, water surchargesand chargesfor irrigationwater are based on revenuerequirements as per the Boards'financial objectives (SAR, para. 6.12). Sewerrates for the period1992-2000, together with the water surchargeand chargesfor irrigationwater (startingin 1995 for Larnaca,and 1996 for Paralimniand Ayia Napa)were devisedto cover operatingcosts, excludingdepreciation, debt service,and appropriateincreases in working capital(other than cash),and to yield at least20X of the cost of investment (otherthan investmentsfor effluentreuse) during the projectionperiod (calculatedfor each year as the annualaverage of that year and the two subsequentyears). The rates used for 1992 are thoseapproved by the three Boards for applicationin January1992. Subsequentrate adjustmentswere made to meet the Boards'requirements of financialobjective..

3. The properties'assessed values for the projectand generalbenefit area (in the case of LSDB)used for the firstyear of projections(1992) were developedby the Land and SurveyDepartment of LimassolDistrict. They reflectthe conditionsof the propertiesprevalent in 1986 expressedin 1980 prices. The totalproperty values for the subsequentyears are projectedon the basis of theirexpected update according to changesin properties conditionand new constructionssince 1986. This includesa first increaseof 2 percentper annum to be introducedin Larnacain 1994 (to cover increases since 1986)and subsequentannual increasesat the rate of 2 percentper annu. Totalproperty values in Paralimniand Ayia Napa are projectedto be adjustedin 1994 in accordancewith the ratesestablished by the samplesurvey and revaluation(SAR, para. 6.04). Subsequentupdate due to new construction is estimatedto grow by 2 percentper annum. The volume of water consumedby - 81 -

Armex 10 Page 2 of 12 the population connectedto the seweragesystems in the three Boards in 1995/1996and beyond was estimatedon the basis of plannedsewerage connectionsto the syste. Sales of irrigationwater are estimatedon the basis of effluentavailable for reuse.

4. Operating expenses of the three Boards were projected as described below. The incomestatements of PSB and ANSB reflecttheir respective shares of operating the comon project facilities. (i) Salaries and wages are based on the number of staff needed for the projectimple-mntation, administrative functions and operation of the three respectiveBoards. The numberof staff was developed from similartypes of operationssuch as the Nicosiasewerage system;salaries were based on currentlevels, including allowances,as adjustedfor statutorygrade progressplus increase for cost of livingadjustment; (ii) Energycosts consistsof electricpower and fuel consumptionat the projectfacilities at currentenergy prices; (iii)Chemical and maintenancecosts were developedfrom engineering experienceon similartypes of projectsat currentprices; (iv) Administrativeand other expensesinclude normal office expenses, miscellaneousand cost of billingand collectionof the Boards' revenues,including collection fee for servicesby the respective water boardsstarting in 1995/1996;

(v) Depreciationexpenses were calculatedon a straightline basis, and accordingto the followingrates; they includethe depreciationprovision related to the effluentre-use scheme (para.6 below): Civil works and pipes 2.5X

Mechanicaland electricalequipment 5.0X The averageannual depreciation rate is 3.25X

III. BalanceSheet and Sourcesand ARnlicationof Funds 5. LSDB balancesheet for 1991 in'ludesthe estimatedcost of deferred expenseswhich were incurredfor projectpreparation, and outstandingadvance loans from the Government(para. 11 below). 6. Investmentsinclude the projectcosts (1991-1998for Larnaca:1992- 1998 for Paraliani and Ayia Napa) which were then incorporatedin fixed assets In the year in which they were commissioned.These includethe assets representedby the cost of effluentre-use schemes which will be owned by the Govrnment but will be operatedand maintainedby the Borrowers,under - 82 -

Page 3 of 12 arrangements similar to a lease of these schemesto the Boards. Government ownership Ls reflected in the balance sheets of the Boards as 'Governnnt Long Term Investment. Investments in 1999 and 2000 comprLse expected constructlonswhich are estimated to be at 1998 levels. Interest payments duringconstruction were capitalize5 in accordancewlth localpractice; thereafterthey were chargedto operatingresults.

7. Accountsreceivable consLst of an estimated25Z of revenuesfor the first four years of projection(through 1994). Duringthls period the Boards are expectedto experiencesome difficulties in the billingand collectlonof their revenues. The receivablebalances should improve gradually thereafter to be at a level of about17X of revenuesthrough the year 2000.

8. Inventoriesrepresent an estimatedtwo monthsof maintenancecosts. 9. Accountspayable were assumedto be equivalentto one month of investmentcosts plus two monthsof cash operatingcost.

10. Long term loans include,in additionto the Bank loan,a corresponding loan for each of the Boardsfrom the Councilof EuropeResettlement Fund (10 years finalmaturlty including 5 yearsof grace,at an interestrate of 7.5Z per annum). Debt serviceon the Bank loans is calculatedon annuitybasis for 15 years financlalmaturity including three yearsof grace.

11. Governmentadvances to LSDB for projectpreparation since its inceptionin 1985 are consolidated,including advances for project expenditures(land acquisition)in 1991. Debt Serviceon this loan includes repaymentwith 20 years finalmaturLty including 5 yearsof grace beginningin 1992, at interestof 61 per annum. REPUBLICOF CYPRUS Southeast Coast Swrage nd Drairng Project

Lernace Swra and Drainrae Doa (LSDS)

Inrom statemnts, 1991 (estimted) wd 1992-2000 (projected) 1996 199 19Me 1a9 2000 Year Ending Dwcb_ r 31, 1991 1992 1993 1994 1995

4T7.6 467.1 496.9 50.6 516.9 AIsee_ Prprty Value (CL mitlion): 364.1 364.1 459.0 466.2 lWaterCowuption bv Comwrcted 1.650 1,600 1,9 2,136 2,250 PopAation (N3 thousand) 180 1,350 1,500 1.673 1.," 1,950 Irrigation Mater 3 Thousand) 50

Average Swer Rates 5.75 6.25 6.25 6.5S Per Thousd of Proprty Value (CL) 2.50 2.50 4.50 4.50 5.75 0.22 0.22 0.20 0.26 Water Surchrge (CL per N3) 0.17 0.17

Charge for Irrigation 0.25 0.25 0.30 0.30 Water (CL per H3) 0.20 0.20 ------Amouts in CL Thousand ------Revenues

2.001 3,1f6 3.16 3.36 on from Sewr Rates 0 960 960 2,066 2,107 2.746 396 43 So9 630 L From Water Surcharge 0 0 0 0 31 281 375 416 552 SO5 From Irrigation water 0 0 0 0 10 270 3.766 4,016 Total 0 960 960 2,066 2.138 3,027 3,197 3.,5 E x p e n s es 319 332 345 wAnlge 12 60 64 105 161 201 2C6 Salaries U 112 117 Energy 0 0 0 0 3 30 56 25 29 33 36 Chl icals 0 0 0 0 2 21 149 155 161 167 Iaintenance 0 0 0 0 14 143 125 140 1S0 1t7 190 Acinistrative & other 10 48 50 75 6s 655 Total 22 108 134 180 265 S20 658 741 m 2,539 2, 2.95 3.161 0 b Net Werating Incom (22) 852 826 1,8U6 1.873 2,507 342 ss5 6 J74 901"I Deqrecistion 0 19 30 77 190 1.982 2.031 2.0i4 2.260 Net Income Refore Interest (22) 833 796 1.809 1;662 2,164 0 0 993 95 839 Interest 0 0 0 0 0 2,164 1,962 ;00 ;1t161 1.421 Net Income (22) 833 796 1,809 1,682

38X 43X 45X 44X Operating Ratio X 133 17X 12X 21X 28X

14-Jul-91 REPUBLICOF CYPRUS Southeat CoastSeerag and Drainag Project LarnacaSewera and Drainae Board MLDSN) Statementof Sourees nd Applications of Funds,1991 (estited), 1992- 2000(projected) (meounst in CL '000) Year endingDcbr 31. 1991 1992 1993 1994 1995 ...... 1996 1997 19M 1999 am S o u r ce s of F u n d s groae In.ernal Fund (22) 852 826 1,U65 1,J63 2,507 2,539 2,796 2,9S Low: Debt Service 3,161 Principal Repayments tlu 0 0 0 0 0 650 650 650 650 Other 0 0 0 0 0 98 223 437 752 1,220

Total 0 0 0 0 0 Interest 96 673 1.017 1,402 1.170 1365 0 62 107 193 288 382 438 421 376 Other 327 25 58 90 153 252 396 526 sn S4 512 Total 25 121 196 346 540 776 964 993 923 839 TotalDebt Service 25 121 196 346 540 876 1636 2.000 2,326 2,710 Net InternalCenerated Fuxds (47) 732 630 1,540 1,333 1,631 701 718 633 452 GovernimntLong Ter Investent 162 166 618 271 677 1205 592 416 0 0 LongTerm Borrowing I IBRD 0 385 882 1,575 1,145 1,556 749 208 Coumcilof Europe 0 0 0o 0 207 629 1,066 1,576 2,343 1,43S 429 0 0 &- other 567 0 0 0 0 0 0 0 0 800 Total 567 592 1,511 2,641 2,721 3,899 2,184 637 0 0 Total Sources 682 1,490 2,759 4,452 4,731 6,735 3,477 .7M 633 1,252 A p p l i c a t i o n of F u n d s Investments Project 682 722 2,407 3,610 4,573 6,852 Other 3,W86 1,376 0 0 Investm.nts 0 0 0 0 0 0 0 0 450 SSO total 682 722 2,407 3.610 4,573 6.852 3,U46 1,376 450 SSO Increase(Decrease) in Non-Csh Capital Working 0 162 (173) 94 (42) (131) 267 259 14 38 ° ;;i....@ ...... * ...... Total ...... --.....-.-- --- Applications 682 884 2.234 3,704 4,531 6,721 4,113 1,635 S9S Su6 Ineremse(Decreas) in Cash (0) 606 525 748 199 14 (636) 136 39 663 CashBalance at Boiming of Year 0 (0) 605 1,130 1,878 2,077 2,091 1.45S 1,594 1.632 CashBalance at End of Year (0) 605 1,130 1,8 2,077 2,091 1,455 1,594 1,632 2,296 333a333 33z=3X 3333333 3=3333*#_ 3Mass*------3x3f3= m#m Debt Service Coverag 7.1 4.2 5.5 3.5 2.9 1.4 1.3 1.3 1.2 Self-Financing Ratio (3 yr. Aver.) 33X 162 312 26X 41X 372 302 1902 * 752 t(excl. Irrisation) 392 212 362 31X 502 50 752 NA NA 14-Jul-91 REPUBLIC0F CYeI nd Obrenoa Project Southest Coat Sewerage an trainro Bord (M.) larn Sewrag (_ut* In CL '00 and 1992-2001 (projoeted) Balance,sbnts, 1991 etimted) 19" 1999 00 ...... 1996 1997 1993 1994 1995 .*...... 1991 1992 As of Decbe 31, 2,713 21,116 2,04" 2,713 A s* * t s 7,922 13,145 2,86 3,757 932 3,76 1,ff2 ...... AsseAsstsAets 932 659 1,215 ...... F11* 225 126 316 ...... tt 19 49 ...... Gran f xed Ase 0 ...... 24,57 23,f95 ...... 19,911 24,02 Los: Depreciation ...... 3,673 7,605 12.46 1,199 () sso 225 913 88 7,933 4,M 3,446 4,535 S.525 Nt Fixed Assts 707 843 24.S0? 24,62 25.,81 24,057 itW k In Progres 6,206 13.130 20,418 932 1,756 4,329 G8 S43 G0o 40 Total 413 428 S15 76 79 240 211 52 43 n Current Asets 0 0 38 i.54 1,632 2.296 0 0 0 2,01 1.455 *ectivabl 1,130 1.87 2,077 Inventories 0 605 2,34 3057 2,657 2,062 2,266 cash 1,32 2,2" 2.5S43 0 5 27,205 27.564 Assts 26,34 27V,S Total Current 10.499 15,6n 23,076 932 2,601 S,671 Totat Assets 12,81S t I t I * s 10,Z3 11,394 I t y & L I a b I 7,213 9,195 E qu 1,557 3,366 5,048 Ecaity (72) 761 4.109 3.691 4,109 4.109 tetained Eernti 1,217 1,894 3.099 Lore Teom 328 96 C_nwiwmnt 162 14.342 1S.503 16.924 Invetment 6,942 10,312 12.S66 1.69 2,50 4,S8 90 5.56 4,SS0 3,900 Total 3.967 SS43 S,642 5,236 1.267 2,42 7,047 7,096 6,400 Long Tem Borrowi.e 0 335 3,478 5780 617 1,361 207 86 1.902 730 674 ISM 0 82 842 7 Europ 842 842 Council of 842 12,978 11,56 10,496 8,307 12,106 13,419 (2.51) Othr 2,945 5,586 (1.?) (1,40) (1.670) 842 1,434 0 (96) (8n) Totat 0 0 0 ,446 12,333 11,568 9,66 Les Current Naturities 5,58 8,209 11,25 842 1,434 2,945 Totat LT Borowing 143 429 2 135 42 656 1,80 2,051 222 330 1,W2 .. ,r LlebtiztIs 0 78 67 1,OU7 ...... Current 0 96 ...... 0 0 ...... o payale 0 ...... 2.005 2.19 of LT ebt ...... 1,515 1.46 Current Naturities ...... 330 521 1,S29 0 i8 222 V7.5" 26,734 2V.54 27,V0S total 10,49 15,673 23,076 932 2,681 5,671 1.4 1.4 1.4 1.2 Total Eqpity and Liabiitles 4.9 1.7 38 333 10.8 6.0 7.0 49X 451 55X 543 52X *atIo 57X 543 Current & LT Dbt LT d.bt/Totat Equty 14-Jut-91 REPUBLICOF CYPRS SouthestCoat Sewrg ar Drainew Project

Paratlmnf Sewrag Board (PU)

Incom statements, 1992-2000(proJected) ...... Te_ eno Deor 31, 1992 1993 1994 1995 1996 199? 1996 19 20a ...... Asessed Prorty Value In the ProJect Arm (CL million) 111.6 111.6 199.7 203.7 207.8 211.9 216.2 220.5 224.9 Witer Conesptian by Comwcted Population (N3lhouaad) 0 0 0 0 379 624 901 1,570 2,121

Irrigation Mater (N3 Th _swad) 0 0 0 0 179 424 701 1,370 1.121 Averag Seer Rates per Tood of Property value (CL) 4.15 4.15 5.90 5.90 7.00 7.50 7.50 7.50 T.50 Weter Surcharge (CL per 33) Chag for Irrigation 0.00 0.00 0.00 0.00 0.17 0.22 0.22 0.28 0.28 Water (CL per M3) 0.00 0.00 0.00 0.00 0.20 0.25 0.25 0.30 0.3 ------A ounts in CL thousnd ------R e v e n u es ......

From Seo Rates 463 463 1,178 1,202 1,04 11,.d9 1.41 1.6,4 1.6 From Water Surcharge 0 0 0 0 64 137 196 40 S"6 Frm Irrigation water 0 0 0 0 36 106 175 411 S 0 Total 463 463 1,1782 1,SS 1,63 1,995 2,50 2.7W E x p a n s * a

Salries wid Wes 35 36 42 124 143 16 197 229 Enry 0 0 0 0 23 43 57 e1 90 Chemieals 0 0 0 0 3 7 12 24 34 Ibint w 0 0 0 0 86 90 93 97 161 Adinistrative& other 33 3S 50 60 75 100 110 120 135 Total 68 71 92 104 311 3 436 519 S5

Net Operating Incom 395 392 1,066 1,098 1,24 1,450 1.559 1905 2,23 Depreciation 0 9 25 39 167 323 395 473 SI7 ...... --.. P.. Net IncomeBefore Interest 395 383 1,062 1,059 1,076 1,126 1,164 1,512 1.6m2 . c

Interest 0 6 0 0 0 0 612 570 49i ...... oP Net Income 395 383 1,062 1,059 1.076 1,126 552 942 1.195 C'o

Operating Ratio X 15X 173 103 12X 313 39S 42S 40X 4 14-Jul-91 IWLIC OF CYIMS ai Drainag Project Southeast Coat Seweage ui Ssw4en Sowrd(PU) Pwerot 1992-200 (Projected) of FtM, ..... Sources nd Applications ...... Stat_nt of ...... me ...... "9s 19 ...... 1996 1997 _ _ _ .. ^...... 1994 199 ...... 1992 l ____._.._.__ _...... _._.,...... __... Year .mdU Decedw 31, ...... _...... _.__...... 1,90 2,20 .. _.. __.... ___.... 1,450 1,599 1,006 1,096 1,244 Sour c es of F unds 395 392 &tew Int lia Uwws so0 S SW Lees: Debt Sevice 0 0 see Repavsnts 0a O0 0 15 55 591 Principal 20 Ise ...... 0 0 ...... Od 0 0 ...... 1,' ...... 45 .#5 Other 0 20 6Q0 0 0 0 21 22 Total 278 336 326 73 126 194 36 2 26S intest 45 96 172 249 I1IM 4. 23 54 612 570 497 Other 291 450 55 48 95 161 1.9 1,405 1,514 Total 291 470 1,186 48 95 18a 261 SlO 623 Total Debt Service 806 774 264 347 m 905 Func 24S 0 0 Net Intwtl Cenated 670 745 46 168 322 560 0 toverrowntLon Tem Investment 0 0 1.496 722 96 596 962 903 151 0 0 Log Term oroing 205 749 1.260 916 0 100 402 424 0 0 0 Em 0 0 0 Cosictl of Europe 0 0 44 0 0 Othr 1.652 2.756 1,638 305 996 1,406 5s 425 Total 4,275 2,3 953 820 1,61? 2,871 3.128 Total Sources 0 a t i o n of F u n d s 621 0 A p p I i c 2,599 3,966 2,461 460 410 1,369 2,076 0 0 400 investments 0 0 0 ProJect 0 0 61RI0 600 Other Isnest_mns 2,599 3,966 2,461 410 1,369 2,076 6 141 38 ---- '''' Total 160 15S - w*-ODl 0 (41) (124) ...... *--* ...... In (90) 72 ...... (Dareae) 70 ...... Incras ...... _ ...... 741 468 Iln-Cash Working Capital ...... 3.82 2,621 976 1% :. M 1,275 2.148 2,558 480 (64) O Appicatiom (22) (161) S Total 570 433 (234) 1,969 J 339 342 m 2,406 2,172 2,150 681 1,404 1,974 Increae (Decreae) in Cash 0 339 at Seiming of Year 2,150 19m9 1,9I' Cah Balnce ,974 2,406 2,12 339 641 1,404 End of Yew 1.2 1.4 1.4 Coah Balance at 3.8 2.6 1.2 96 8.2 4.1 6.0 20X 3K 952 312 272 32X a Service Coverae 27% 1SX 21X 45S NA Debt yr. Aver.) 41% 34X 402 Self-Fiancing Ratio (3 37% 20% U t(escl. Irrioation)

14-Jul-91 ItEPUBLICOF CYPtUS SoutheastCot Sewe ad Drainag Project

Primi Sewle Board (PC )

Blance Shets, 19P2-2000(proJected) Cmu_t In CLa ) As of De ber 31, 1992 1993 1994 1995 1996 1997 1"9 1 Assets

1ros Fixed As0ets 0 951 1,442 8.859 11,043 13,1 "53 15,19A Less: Ibpreciatln 0 9 34 73 240 5s "9 1,431 1,99 ...... let Fixed Asnts 0 551 917 1,370 8,619 10,40 12,2M5 14,41 14, work in Proge 4S 1,363 3,229 5,628 2,627 3,490 2,111 81 6 ...... Total 456 1,914 4.17 6. 11,247 13.970 14,3 14.5 1,05 Current Asts Receivable 116 102 236 240 264 312 339 426 476 Irwentoris 0 0 0 0 0 0 0 0 6 cash 339 681 1,404 1,974 2,406 2,172 2,150 1.969 1.915 ...... Total Current Assets 455 783 1,640 2.214 2,671 2.4S4 2,489 2.414 2.401 ...... __ Total Assets 913 2,696 5.786 9,212 13,917 16.453 16,85 16.957 17,86 E q u I t y & L I a ab I I t I e s (0) Equity Retained Earnngs 395 77S 1,839 2.96 3,974 5,101 5,652 6,594 7,7 noverrmntLouu Tem Iwstmmnt 168 490 1,050 1.720 2,46S 2.950 3,19M 3.195 3.15 CD ...... __ Total 563 1.268 2,689 4.618 6,439 6.051 8,847 9,7M9 10.984 Lang Tm orrowing I"D 205 801 1,783 2,686 4,182 4,404 4,000 3,50 3,000 Cmmcil of Europe 100 502 926 1.675 2,915 3,731 3,86 3,561 2,971 Othsr (ownmit Advenes) 0 0 0 0 0 0 0 0 0 ...... _ Total 305 1,303 2,709 4,361 7,097 8,135 7,86 7,061 5,971 Les: Current bMturities 0 0 0 (20) (600) (65) (5) (1,067) (1,2YO) ...... ;;...... Total LT worrowing 305 1,303 2,709 4,341 6,497 7,U9 7,061 5.97?4 4." Current Liabilities Payalme 45 125 18 233 361 28 141 67 96 Current Maturitie of LT Debt 0 0 0 20 600 6S5 55 1,067 12137 ...... Total ~~~~~~125 ~~~45l1" 253 901 153 9i ,1i , t X ...... __ Total Equity and Liabiltitis 913 2,696 S,786 9,212 13,917 16,453 16,85 16,957 1T, IoO 3333 333 33 _3 3 3 _ _ _ _ _ Current Ratio 10.0 6.2 8.7 8.8 2.7 2.6 2.6 2.1 1.8 LT dsbt/Tot*l EequltyS LT Debt 44 633 60X 60o 623 59 so An4S 14-JuL-91 REPUBLICOF CYPRUS Southeast Coast Sewerag and Draieng Project Ay Uape Sewerapgeoa" (AMS)

InComestate_ent,s 1 M-2000 (projected) ...... Year mndiq Deerbw 31, 199 1 1994 1995 1996 1997 19Y99 2 _ ......

Assessed Prorty Value in the Project Aroo (CL mtllion) 117.4 117.4 153.0 156.1 159.2 162.4 165.6 *16.9 172.3 Vbto Conemption by Conancted Population (NS Thousand) 0 0 0 0 612 84? I115 1tSOO 1.61S Irrigation hater (03 Thousand) 0 0 0 0 512 747 1,005 1*,40 1.675 Average Swr Rates Per Thoutsnd of Property Value (CL) 2.50 2.50 3.SO 3.SO 4.50 4.50 4.50 4.50 4.56

Water Surcharge (CL per N3) 0.17 0.22 0,22 0.26 0.23 Charg for Irrigation Water (CL per M3) 0.20 0.25 0.25 0.30 0.30 ------Am ounts in CL thouand ------Revenues ...... Frm ewr Rates 294 294 S3 546 716 731 745 760 77m FromVter Surcharge 0 0 0 0 104 166 261 420 469 From Irrigation wter 0 0 0 0 102 17 271 420 631

Total 294 294 536 546 923 1,104 1,27 1.600 1,W4.TD E x p a n * a a ...... Slaries and Ucgs 35 36 42 44 132 151 172 183 or Energy 0 0 0 0 22 38 SO sT A9 Ch demis 0 0 0 0 a 12 19 25 31 NeintenAnce 0 0 0 0 49 51 53 55 5T Adenistrative & other 25 26 30 40 45 60 65 75 SO

Total 60 64 72 84 256 312 3S9 355 444

Net Operating Incom 234 230 463 462 667 792 "1A 1205 1.=6 Depreciation 0 S 14 22 96 186 227 272 zo6

Net Incoem Before Interest 234 224 449 440 570 606 691 933 1,005

Interest 0 0 0 0 0 0 323 301 264

Net Incom 234 224 449 440 570 606 346 631 761 *---uuu #z=UM *azu wa _ _

operating Ratio X 20X 241 16X 19X 38 451 46X 43 421 14-Jul-91 REPUBLICOF CYPRUS Southtet Coat Sewerage and Drainoge Project

Aye Nap Sewra Boerd (ANSS) Statem_nt of Sources wnd Applications of Funds, 1992-2000 (ProJectod) (mamutS in CL 'S) _...... __...... Tee ending Deceoer 31, 1992 199 1994 13 1996 1991 19ff 19 m

S o u r c * s of F u n d s Ors Intenl Fu 234 230 463 42 66 792 918 1,2I' 1,33 Le: Debt Service PrincipalRepsymnts I1D 0 0 0 0 0 26 265 26S 265 Other 0 0 0 0 20 54 99 ISO m ...... _..... ------...... ~.. ___...... ___ Total 0 0 0 0 20 319 36 424 549 Interest IURD 24 46 86 126 164 181 172 154 133 Other 4 14 29 48 82 127 151 147 131 ...... ------Total 27 60 114 175 246 306 323 301 2 ...... ------...... ------.... ------.... ------...... Total Debt Service 27 60 114 175 266 626 667 72S 614

Net Internl Generated Fuads 206 170 349 288 401 165 232 480 48

Bovewrnt Long Ter lInvestunt 68 100 296 520 827 260 140 0 0

Long Term Borrowing 16RD 110 520 625 530 543 247 75 0 0 Coumcil of Europe 100 168 227 298 629 626 169 0 0 Other 0 0 0 0 0 0 0 0 0 0 ...... ------...... I Total 210 68 852 828 1,172 8 24 0 0

Total Sources 484 95 1,497 1,636 2,400 1,29S 616 480 49

A p p l i c a t i o n of F u n d s Isw twnts Project 236 m 1,197 1,47 2,249 1,383 451 0 0 Other Iwestents 0 0 0 0 0 a 0 S00 550 ...... ------...... total 236 m 1,197 1,47 2,249 1,363 451 5s1 S50 Increae (Decrees) in Non-CashWorking Capital 44 (54) 33 (9) (34) 99 111 91 22 ,,.,, , , ...... ----...... --.---__P Total Application 280 M7 1,230 1,458 2,215 1,482 562 591 s72 '*

Increae (Decreae) in Cash 204 241 267 178 1S5 (1U) 53 (111) (a3) Cash Salance at Begiing of Year 0 204 445 712 890 1,075 89 944 as .

CashlIlance at End of Year 204 445 712 890 1,075 691 944 750 s333333 32=3 3=33a3 3333333 3 3 3 3 Debt Service Coverage 8.5 3.9 4.0 2.6 2.5 1.3 1.3 1.7 1.6 Self-Finncing Ratio (3 yr. Aver.) 28X 15 211 17X 294 21X 46X 91X OX9 * (CExcl. Irrigation) 361 20X 32X 251 42X 351 223m NA OR 14-Jul-91 REPULIC Of CYPRUS Southeast Coast Sewr ge nd Drairna Project

Aya Napa Sewerage Board (ANSB)

Balance Sheets. 1992-2000 (projected) (o uts In CL '040)

As of Deceaber31, 1992 1993 1994 1995 1996 1997 1998 ...... 1999 20G4 ...... A sa e t s Fixed Assets Gross Fixed Assets 0 322 547 830 5,100 6,357 7.629 9.137 9,184 Less: Depreciation 0 5 19 42 138 324 552 824 1,122 Net Fixed Assets 0 317 528 788 4.962 6,033 7,078 8.313 6,062 Work in Progress 263 772 1,5 3,217 1.442 1,876 1,055 47 S50 Totat 263 1,089 2,386 4,005 6,404 7,909 8,132 8,360 8,612 Current Assets Receivable 73 65 107 109 157 188 217 272 297 Inventories 0 0 27 40 52 58 70 cash 75 s0 204 445 712 890 1,075 891 944 833 750 Total CurrentAssets 278 510 846 1,039 1,284 1,136 1,231 1.180 1.127 Total Assets 541 1,598 3,232 5,045 7,688 9,045 9,364 9,540 9,740 ======SX ======_ = z =azz a======SUZ3iz aSzz E q u i t y & L i a b i t i t i e s Equity RetainedEarnings 234 458 907 1,347 1,917 2,523 2,891 3,522 4,263 GoverfuentLong Term Investment % 68 168 464 984 1,611 2.071 2,211 2.211 2,211 Total 302 626 1,371 2,331 3,728 4,594 5,102 5,733 6,474 Long Term Borrowing IBRD 110 630 1,255 1,785 2,328 2,310 2,120 1,S55 1.590 Covmcit of Europe 100 268 495 793 1,402 1,974 2,044 1.886 1.601 Other (GoverruentAdvances) 0 0 0 0 0 0 0 0 0 Total 210 898 1,750 2,578 3,730 4,284 4,164 3,741 3,191 Less: Current Naturities 0 0 0 (20) (319) (364) (424) (549) (410) ...... ------~~~~,...... ------....------Total LT Borrowing 210 898 1,750 2,558 3,411 3,920 3,741 3,191 2,782 00 "i Current Liabilities Payable 30 75 111 136 230 167 97 66 74 Current Maturities of LT Debt 0 0 0 20 319 364 424 S49 410 ------....-...... ------> Total 30 75 111 156 548 S31 521 615 484 Total Equity and Liabilities 541 1,598 3,232 5,045 7,688 9,04S 9,364 9,540 9.740 ==..zUz uu.z...a ~gzuz ssuzagX= uz zansu3u asumn.luu ina80 Current Ratio 9.4 6.8 7.6 6.7 2.3 2.1 2.4 1.9 2.3 LT debt/Total Equity & LT Debt 41X 59X 56X 52X 48X2 46 42X 36Z 30 14-Jul-91 - 92 -

Annex 11 Page 1 of 8

REPUBLIC OF CYPR'JS

SOUTHEASTCOAST SEWERAGEAND DRAINAGEPROJECT EconomicAnalysis

Economic Rate of Return

1. In the calculationsof the economic rate of returr (ERR) for both the Larnaca and the Paralioni/AyiaNapa componentsof the project, the substantial benefits of property value increases and additional tourist revenues are excluded; the resulting ERRs are therefore considered to be conservative estimates.

Paralimni and Ayia NaMa

2. The economic rate of return for the Paralimni and Ayia Napa sewerage and effluent re-use scheme is based on a comparison of the 'with" and "without project' situations,as described in Annex 3. In the absence of the centralizedsewerage system to be provided under the project, the two communitieswould continue to depend on individualsewage treatment plants, to accommodate the rapid tourism growth, and residents and temporary workers would continue to have to depend on septic tanks. The benefit streams are the cost savings, i.e., the stream of costs attributable to continuing the "withoutproject" arrangements. These are based on the number of new package treatmentplants and septic tanks needed, their operation and maintenance costs, the rehabilitationcosts for the package plants, and the costs of expanding the ponds to receive the sewage and septage. Revenues from the sale of treated effluent are conservativelyestimated, and added as a benefit stream.

3. Cost streams for this component include the same elements as in the Larnaca scheme, with the addition of some interim measures (such as expansion of the inadequateponds for sewage disposal) which will be needed before the centralized system is in operation.

4. The population and tourism projections (baseline scenario) underlying the calculationsare given in Table All.l; which also shows the estimated costs for the "without project" situation,and the costs of the proposed project, along with the estimated economic rate of return (ERR) for the scheme--18.4X. Since the ERR for this component is particularly sensitive to the speed of tourism growth, it was also estimated using for a scenario of lower growth in the number of tourism beds (4.5% p.a. instead of 8X used in the base case scenario). The correspondingtourism projections and ERR calculationsfor the lower growth scenario are given in Table A11.2. This lower growth assumption reduces the ERR to 8.7X. - 93 -

Annex 1 1 Page 2 of 8

5. The costs and benefitstreams are shown in Table All.3 of this annex, togetherwith the estimatedeconomic rate of return. Cost streamsinclude the costs (includingphysical contingencies) of land, civilworks and equipment, designand supervision,operation and maintenance,rehabilitation of treatment plant equipment,and connectioncosts to be incurredby privateproperty owners. Also shown on the table are the resultsof tests of sensitivityof the ERR to a 1-yeardelay in benefits(e.g. delays in completingthe house connections),and to a 0l increasein costs.

2. Revenuesattributable to the projectare used as a proxy for consumers' willingnessto pay in quantifyingthe benefitsfor the estimatedrates of return. The revenuestreams are based on projectedsewer ratesand sewerage surchargeon water consumption.There are no quantitativedata on the demand for sewerageservices in the area. Althoughthe suitabilityof the use of rates and chargesas a proxy measureof willingness-to-payis diminishedby the fact that consumersof sewerageservices will not be offereda choiceof whetherto connector not, the indicationsare that potentialbeneficiaries are willingto pay the projectedcharges. Revenuesfrom the sale of treated effluentare also estimatedfairly conservatively, and includedas a benefit stream. This rate of returndecreases to about 10 with eithera 10 increase in costs or a one-year'sdelay in revenues. With both cost increasesand delayedrevenues, the rate of returnfalls to about 7.3X. 6. Calculationsfor the averageincremental cost of the treatedeffluent for use as irrigationwater are shown in Table A11.4. Capitalcosts of the tertiarytreatment, storage reservoir, and distributionsystem are included, togetherwith rehabilitationcosts for pumps,etc., and operationand maintenancecosts. A discountrate of 9X is used as an estimatefor the opportunitycost of capital,and rates of 6X and 12X are also used for purposesof comparison. REPIJIC OF CTrMS SOTHASTOST SVERMI AM 3IAE~ PUOJECT PsAtiani anW Ayia Nap0 CQ1qWMs Table 11.1: ECOUNICAIWYSIS -- _aseCase Scenario Poplation and Towno Projectln ('000) (19W) 1991 1992 1993 A,#1 1994 1995 1996 1997 1996 1999 21 am a" ----...... - 32am ...... Resid nts 1.4 1.4S 1.50 1.5S 1.60 1.65 1.71 1.76 1.82 ToLuristbaik 1.19 1.95 2.0 2.00 2.M5 2.23 14 14.91 1a.1s 16.91 18.01 19.18 20.43 21.75 23.17 24.67 26.23 27.S 29_3 Labor force 3.1 31.74 33.0 3.27 3.46 3.65 3.85 4.07 4.29 4.53 4.79 S.05 S.34 SAS S.f 6.32 6.43 Ocldents 6 8.17 3.35 6.53 6.71 6.90 9.09 9.26 9.48 9.66 9.0 Tourist beds 10.0 10.32 16.54 *6.7 10 11.04 12.16 13.45 14.65 16.39 18.09 19.97 22.04 24.33 25.45 29." 32.72 56.11 Labor forec 2 2.23 39.36 2.48 2.76 3.07 3.42 3.61 4.24 4.72 S.2S S.6 6.51 7.25 6.67 6.96 Total Pop. Eqv. 38.S0 41.07 43.84 46.84 50.09 53.60 57.41 61.54 66.02 70.13 76.15 W1. n.12 91.9 62.27 brnml increment in Pop. (units) Ayia Maps Residents 47 49 S0 52 54 56 57 59 61 63 Tourist bed 910 60 76 72 969 1032 1099 1170 1246 1326 1414 1S06 16 17 19 1937 2063 Lbor force 173 183 193 204 215 227 240 2S3 267 232 Pratrieni 20 314 332 356 Residents 172 175 179 183 167 191 195 199 203 205 212 Tourist beds 1036 217 221 226 1146 126S 1396 1541 1701 1878 2073 221 2S2S 276 3 336 3749 Lawr force 227 252 281 313 346 367 431 480 S34 595 Total Incremntal 612 nr 21 914 Resident.laor force 618 659 703 751 804 861 923 992 1066 1146 1236 Tourists 1948 211S 16 1444 15 2297 2495 2712 29" 3205 3467 3794 4129 44U 4U 533 5812 CALOJATIONiF IIITNOiTPOECT COSTS(Contimation of Prsnt Arrannnts) go. nowunits needed Septic tas. etc. 62 66 70 75 0o 86 92 91 107 Pwca plants 11S 12 134 144 1S6 10 11 11 12 14 15 16 1? 19 21 22 Total B pkc. plants 24 27 29 (incl.85 in 1990) 95 105 117 129 143 158 174 191 210 231 2SS 23 3 333 COSTS(CP CO0O) mI plants conetr.+ reabb eAmb. ech. works 230.71 230.71 230.71 230.71 230.71 230.71 230.71 230.71 225.01 250.12 277.46 W.5 3W.23 374.23 NW septic tar" 80.38 85.65 91.39 97.64 104.46 111.90 120.03 12J.91 136.63 149.27 Hm packe pints 1". 13.73 6.77 203.1 613.62 666.20 723.51 786.00 854.16 928.52 1009.67 1096.25 1194.96 1300.62 1416.63 IS42.15 11.01 0 AN s"etic tanks 13.73 Reidentsz Lyla Up 110.92 114.65 118.51 122.50 126.62 130.68 135.29 139.64 144.S4 149.41 1S4.44 1593A WA.S 176.56 Laborers, - r A*1 W.37 93.30 96.51 104.01 109.81 115.94 122.41 129.24 Residents, 136.4S 144.06 1S2. 1U6.59 W.AS 179.81 erarlieni 2.72 2.76 2.64 2.90 2.97 3.03 3.09 3.16 3.23 3.30 Laborern, sutr, 3.37 3.44 3.S1 3.59 Pa. 0.37 0.41 0.46 0.51 0.57 0.63 0.71 0.79 0.13 0.97 1.6 1.21 1.34 0 1N pkg. plants I.S6 8 Towints. A. Np 234.36 249.59 265.62 283.09 301.49 321.06 341.95 364.17 367.4 413.01 439.3 Tourists Paraiuni 4.4T 496.2 531.34 173.51 191.52 211.40 233.35 257.57 284.31 313.83 346.41 382.37 422.07 41.6 514.5 W."4 65.S6 Wastestabilization ponds 1000 300 TOTALCOSTS, '000 1S34.97 2634.83 1743.1S 1860.7? 1966.36 2127.01 3077.66 2M1.4 2613.92 2M32.67 371. 33.51 NPV 25927.74 3612.96 36.72 c REPUSL'COf CYntUS SOUTUEASTCOAST SESRME AMD DRAINAGE PROJECT Paralioni *nd Ayf U p Cconmnts Tsal £11.1 (cent.): ECONOMICALYSIS -- Be" CaseScenario C CALOSLATIN FORPROJECT (Centralized Sewerge Systmemid STP) 1992 1993 1994 1995 1996 1997 1996 1999 200 2001m 2aa0m 2f .,,...... 4 ...... _... _... .. I. PALIMI SeAwalirris. met/equip. 92 121 266 259 258 161 77 tivitworks 39 18 287 604 1103 1002 440 P"Iang stations, equip 37 291 14 406 390 6 civilworks 14 133 130 83 68 Treatmnt plant, quip 290 266 432 582 civiiworks 23 354 156 216 374 56 Terttiry tr.4resv, quip 7 113 115 172 182 6? civil works 12 66 as 138 134 4 Vehicles and Equipment 93 Enbineering 81 86 117 122 134 109 8 Plot comectins 2.52 4.32 63.34 64.77 66.01 67.23 70.24 13.8 15.18 16.26 u.37 20.20 Equip. rehab. 22.23 Total Paralimi 256.52 1233.32 1875.34 2281.77 3322.01 1968.23 601.24 13.80 1S.18 16.20 18.37 2I.20 22.23 11. IlA NWPA Sewers/irrig.metiaquip. 43 S8 76 143 167 110 31 civil works 43 89 135 277 533 419 186 a Puapingstatiea , wqUip 120 110 118 103 47 38 civilworks 17 79 51 SO 32 16 ' Treatmentplant, eqWip 177 253 250 242 78 civiltorks 9 22 76 100 274 299 31 Tertiaytr.4 rev, equIp 74 118 177 37 38 civltworks 18 60 101 201 25 15 Vehicleswid Equilpent 49 EngIeering 11 117 110 60 66 31 6 Plet camncties 1 25.38 38.99 27.51 28.49 15.19 15.61 J.58 9.01 9.46 9.93 Equip. rehab. 1U.43 10.95 TotalAya N"p 124 705.38 1032.99 1244.51 1823.49 1077.19 360.61 8.58 9.01 9.4 9.93 IS." Wt.%5 fi1. OTERCOSTS 1w3d 120 Interimemaswes 2635 872 46S ON Costs: AyiaMpe 55.5 56.9 61.5 69 203.1 237.1 261.6 277.5 300 360 3 ONl In 300 Costs:Pwratleni 62.9 63.1 78.64 8S.48 245.8 291.1 318.6 364.6 396 390 390 39N 3K9 Total NeWProject Cots 3253.75 2930.28 3513.65 3680.76 5594.403593.62 1542.05 664.48 722.19 726.16 75.30 75.63 731.Ut WV ('0O0) 21102.26 E0OKIC tATEOF RETUENCALWOLATIOU Total costs, witheut project so (can. preseunt rr.) aB 2634.83 1743.15 1860.72 1968.36 2127.01 3077.68 2441.4 2613.92 232.87 3871.13 30.51 3612.96 39207 x Totalcets, proposedproject 3253.752930.28 3513.65 3680.165594.40 3593.62 1S42.05 664.48 75.16 CostSavirs 722.19 1.39 75.13 731.1 o -618.92 -1187.12-1652.93 -1692.40 -3467.39 -515.94 899.43 1949.4 2110.6 234.97 N 9 264.31 328.S4 Effiuwnt raveien,Ayle Np 70.66 87.SJ 112.96 120.0 127.2 13S.3 143.97 IlL.* 162.S7 Effluentreveuwes, Pwrallani 87.7 110.29 135.93 146.78 158.26 171.79 15.17 Totalnot M1.0 219.3 ewf its, with project -618.92 -1187.12 -16S2.93 -1692.40 -3306.9f -318.0e 1148.33 2216.2S 2196.90 .2 5 205.35 323.3 3S71.51 ECNOMIICRATE OF K111IM 0.176764 ERELIC Of ChUS SOUTHEASTCOW SEYE ANDI OAIIW PJECT Pwetrmlli amd Lya MP Ceqment Tel. £11.2: ECODMICA"IS -- Lower lowim growth Scerio Ppaltls d TuTra rojctioen (O1M) (1990) 19"1 1992 13 1994 1995 1996 197 199 1999 21J AT' _up-----9--- ... . -.... am1 ;m a m ...... _eldEs 1.4 1.45 1.56 I.SS ...... _ 1.60 1.65 1.71 1.76 1.62 1.6 1.95 2.11 Turist b1d 14 1a 14.96 15.49 16.02 16.57 2.4 2.1f 2.23 Labw 17.13 17.72 16.33 16.96 19.6 69.26 20.9 2149 fac 3.11 3.22 3.33 3.44 3.56 3.68 3.81 3.43 PW1 iXn 3.94 4.07 4.21 4.36 4.51 4.6 4* 4.96 bmiduts a 6.17 8.35 8.53 8.71 .90 9.09 Jurist beds 9.26 9.48 9.66 9. IO." 16.32 164 10 10.61 11.26 11.94 12.67 13.4 14.26 15.13 16.7 La force 16.06 17.04 14.67 19.C 2.5 2Z.3 22.9 2 2.36 2.50 2.65 2.82 2.99 3.17 3.36 3.57 3.79 4.12 4.26 4.S2 4*_ 5.3 Total Pop. EWi 36.51 40.26 41.90 43.60 45.37 47.23 49.17 51.20 53.33 55.56 57.3 0.34 42.96 45.3 6.4 mih Ineremnt In Pop. (units) Lyla EqW Residms 47 49 s0 S2 54 56 Towrist beds S? 59 61 63 6 lo 12 479 496 513 530 549 567 567 Labor force 607 626 69 611 64 7 743 108 110 114 118 122 126 130 135 139 144 149 154 1 165 Residents 172 175 179 183 167 191 195 199 T'iuist bea. 610 203 26 212 217 31 226 647 66 726 m a20 570 923 sbor force 356 979 l69 1162 lug M11 1316 144 153 162 172 162 193 205 216 Total incrimntal 231 245 2n 26 29 a eidmnts#labor force 64 478 496 515 534 555 S76 596 622 646 2 09 m77 ourists 10Q9 1143 1199 1259 1321 1367 56 1457 1530 107 166 1774 164 1MP 259 CALaIlAUGNOf WITOT PJECT' COSTS(ContfmitIon of Proent Arriwmmnts) lo. no unfts needed Septi ta*s,etc. 66 48 5s 51 53 55 Pwace ptants S5 60 62 65 67 is is 11 5 6 6 6 7 7 I Total * pFl. plants a S 8 9 9 1 is (Incl.85 in 1990) 9D 96 102 106 115 122 129 137 145 153 12 172 31 192 COTS(CP 1000) Omvplwnts censtr.* rdaeb ebab.meth. umks 230.71 230.71 230.71 230.71 230.11 230.71 230.71 230.71 214.61 226.38 242.42 257.57 273.n21.73 a sptic tank 16.94 62.14 64.47 66.91 69.45 72.12 mm pecka plants 74.90 77.60 60.85 84.6 1.36 ".8 94.49 9631 343.11 360.00 377.77 396.49 416.20 436.96 45a.83 481.67 0 &1 sptic tanks 506.14 531.12 55.1 5W 617.0 646.63 esidKnts, Ayil NW 110.92 114.65 11l.51 122.50 126.62 130.86 135.29 139.64 144.54 149.41 154.44 Labor rsee _ M 86.16 89.65 92.93 96.11 59.6 165.6N 1.S6 99.40 102.81 106.33 109.97 113.74 117.43 121.46 125. esnidwts, Pwralleni 27.24 27.62 20.42 29.03 29.65 30.29 13.1 134.59 ebores, srer, 30.94 31.60 32.20 32.97 33.1 34.40 35.1 5S." Pa. 3.93 4.17 4.42 4.69 4.96 S.28 5.61 0 & N Pk. ptants 5.95 6.31 6.69 7.16 7.54 LO G." Twourists,A. NW 227.60 235.39 243.45 251.79 260.41 269.33 278.56 2U8.10 297.96 366.17 316.72 329. " Tlwists, erwlJionl 16.77 176.94 167.73 199.16 211.33 224.21 34.91 352.6 ut* stabilization 237.66 252.39 267.7W 2M.11 Mt.44 319* 339. 310.31 ponk 1006 6 TOTALCOSTS m00 126.16 2301.69 1348.43 1397.42 144.77 1502.60 2359.04 1616.23 WV 11505.95 164.41 1743.12 iii.n 1912.36 j6 . mA1n REPIDICOF CIPSI STINEAST MAST SELEMU ASD DAINME POECT Table All.2: ECONIC NALYSIS -- Lowr Tourism growth Scenrio Paalimnl an AyIa Map Coqponmnts Cost Calculetlon for Proposed Contralized SewerageSystem. STP, and Effluent Distribution Scheme

1992193 1994 995 199619971996 1999 1. t*IMI ------.... 200 a2m 2812 23 am ...... SeroWirrig. mt/eqpulp...... 92 121 266 259 258 161 77 civil orks 39 146 28? 604 1103 1002 440 Puplng statloe, eaipp 37 291 14 406 390 6 civi works 14 133 130 83 68 Tretmnt plant, equlp 290 266 432 S62 civilworks 23 354 156 216 374 56 Tertiary tr.& resv, eqip 7 113 11S 172 182 87 civil wrks 12 66 as 138 134 48 Vehicles an Equipent 93 Engineering 81 86 117 122 134 109 8 Plot comections 2.25 3.90 55.78 55.31 54.33 53.18 Equip. rehab. 53.22 45.09 10.66 11.34 11.04 12.37 12.92 Total Paratimi 256.25 1232.96 1867.78 2272.31 3310.33 1974.18 584.22 45.09 10.66 11.34 11.4 1M.3T 12.92 11.AYIA AP SSewarsllrrlg.mt/equip. 43 58 76 143 167 110 31 civil works 43 89 135 277 Pwpting 533 419 186 stations, equip 120 110 118 103 1 civllt 47 38 wrks 17 79 51 50 32 16 Treat_mnt plant, equIp 177 253 250 242 78, civil works 9 22 76 100 274 299 Tertiarytr.9 rev. equip 31 74 118 177 37 38 civit works 18 60 101 201 25 15 Vehicles andEquipuut 49 Engineering 11 117 110 60 66 31 Plot 6 comections 0.68 1.37 24.85 25.32 25.82 26.35 Equip.rdeab. 27.25 28.17 29.13 30.1 31.15 32.21 33.31 Total Ayja Nape 123.68 681.37 1018.85 1242.32 120.82 106.35 372.25 28.1? 29.13 30.13 3.S 32.21 33.31 111. OTIER COSTS _ Luod 120 Interimmeasures 1302 674 349 016 Costs: Ayfla ap 53.1 SS3 S5.3 60.8 173.9 197.3 211.4 217.6 228 226 2B 2 226 OINCosts: Paraimln 60.2 58.8 70.8 75.3 210.4 242.2 257.4 285.8 302.5 302.5 3S2.5 .5 3.2.5 Total Ne Project Coats 1915 3200 3362 3651 SS1S 3502 1425 577 576 Nw. Newproject costs: 19062.04 572 s73 5s sn? Rewei,o effluent sales 0.00 0.00 0.00 0.00 139.16 165.01 196.28 204.34 Net Project Costs 212.76 221.61 226.W 2.56 250.72 1914.91 3200.37 3362.08 3650.73 5376.29 3337.02 1228.99 372.32 35.72 WV net project costs: 17526.27 35.35 32.42 334.S2 35.61

ECONNIC RATEOF kEN* Cost Sawings Attributable to Proposed Project 306.7728-1851.93 -1964.65 -2201.96 -4012.84 -1142.96 Effluentrevwomjs; 192.97 1087.76 1172.62 125173 13.2 14.24 1S22.0* Ayia N" 60.26 72.70 LS.93 U6.87 Efftuent revmuis: Paratieni 91.9 n.65 66.31 01AT 1"5S.1 78.90 92.30 110.35 11S.47 Total Net Project _e tits 120.87 126.56 132.56 1SJ0 145.S 316.772 -1851.93 -1964.6S -2201.95 -3873.68 -977.977 389.2439 129M.093 ECr"W-ICRATE OF METM: 0.067r 1315.396 141S.344 UW.7 1U.M I2m.M REPIIC OFCIPUSS SOUThEASTCOAST SEUESMEA5D OSAINASEPPCJECT tooe,a Component Table A11.3: ECnSr IC ANAlYSIS -- 0gmeCase Scenario,tarnaca

1991 1992 1993 1994 1995 1996 97 9 1999 2ma1 20 am ,.- ...... --- ...... Sewrs I m_ins, m_t/equip. 48 184 363 690 1114 civil 720 117 works 97 374 738 1399 2262 Pspino 1463 237 station, eqaip 15 61 94 105 318 civitworks 11 56 63 60 125 33 Treatmnt plant,equip 80 356 897 311 civil works 105 250 359 95 Tertiary tr.& dist.,eq. 69 216 27 87 252 37 civilworks 69 312 187 460 767 396 302 Vehiclesand Equipnnt 15 33 27 38 42 a Ensinmerine 42 77 83 96 259 132 121 Land 100 Plot ct mections 1159 614 371 322 30 1o Equip. rehab. 10 10 is 10 oIN Costs 120.1 176.9 304.3 421.6 478.9 503.8 502.7 505.9 566.1 .... ----...... S-6.6 S6.a 50S.6 ...... ----...... ----...... ----. .... ----. .... TOTAtCOSTS 100 671.1 209s.9 4301.3 4376.6 5968t.9 3616.8 1309.7 515.9 516.8 516.8 516.8 516.1

ECONONICRATE OF RETUR CALCUOULATI Totalproject costs " 100.0 671.1 2095.9 4301.3 4376.6 5908.9 3616.8 1309.7 515.9 Benefits, sewer rates 516.6 S16.8 S16.6 516.8 Go U87.2 853.3 1765.8 1731.3 2170.8 2126.4 2268.1 2226.3 2183.1 surchrge 218M.I 216113.1 2163.1 21.1 25.5 222.1 300.9 316.3 420.2 425.7 effiuent sales 425.7 425.7 425.7 425.7 6.0 162.0 250.0 331.2 351.0 351.6 Total benefits XI. 351.0 351.0 351.0 a87.2 653.3 1765.8 1762.8 2554.9 2679.3 2915.6 2997.5 2959.8 ...... 2989.8 2f99.8 29f.s 2959.8 ...... ----...... Net benefits 787.2 182.2 -330.1 -2570.0 -2205.6 -3860.5 -1348.7 916.6 1667.2 166.3 16.3 46.3 166.3 ECOW IC RATEOF ETRM 0.136393

SENSITIVITY ANLYSIS

A. Cost overrun, lOX 110 73.21 2305.49 4731.43 4814.26 6587.79 3978.48 1440.6? 567.49 5".46 s56.46 Benf Its 867.2 653.3 176s.8 S6.48 568.48 1731.3 2170.6 2128.4 2268.1 2226.3 2183.1 213.1 216.1 216.1 2103.1 get ben fits M.2 115.09 -539.69 -3000.13 -2643.46 -4459.39 -1710.38 785.63 1615.61 1614.62 1614.62 14.2 1614.42 EIC 0.104125

S. Deltay in benfits 853.3 1765.6 1731.3- 2170.8 2128.4 2268.1 2226.3 2183.1 23 2113.1 Costs 100 671.1 21.1 2095.9 4301.3 4376.6 5968.9 3616.8 1309.7 SIS.9 516.6 516.8 5164. met bew fits -100 -671.1 -1242.6 516.6 -2535.5 -2645.3 -3818.1 -1486.4 958.4 1710.4 U4.3 6.3 16.3 ERR 0.091654 1466.3 C. Cost wvernm S delay Costs, 110 738.21 2305.49 4731.43 4814.26 6587.79 3978.48 1440.67 SDnefits S67.49 546.4 S485. 56.AU 568.46 853.3 1765.8 1731.3 2170.8 2128.4 2266.1 2226.3 2163.1 Net benefits 110 218U1 2113.1 2t13 . -73.21 -1452.19 -2965.63-302.96 -416.99 -150.06 827.43 1658.61 1614.62 1614.42 EUR 0.0730650 U114.6U 1614.62 q REPULLICOF CYPRUS SOUTHEASTCOAST SEUERAGE AND DRAINAGEPROJECT Larnaca Com;onent

Table A11.4: ECONOMICANALYSIS -- AIC Calculationfor IrrigationWater, Larnaca

Costs of Irrigation Water 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 ...... ---- . .... ------. .... ----. ... . ------...... -.---.. Tertiary tr.& dist., eq. 69 216 27 87 252 37 civil works 69 312 187 460 767 398 302 Engineering 9.2 21.3 18 19.7 27.7 24.3 16.8 Equip. rehab. OZM Costs 31 24 35 55 93 110 116 116 118 120 121 122 Total Costs 0 178.2 573.3 267 621.7 1139.7 569.3 434.8 116 118 164 121 122 NPV of Costs, a 9s 3028.633 NPV of Costs, a 6X 3787.482 NPV of Costs, a 12X 2493.196

IrrigationWater Production

Cubic Meters ('000) 50 1350 1500 1670 1840 1950 1950 1950 1950 NPV of Water, 2 91 11686.20 NPV of Water, a 6X 17701.63 NPV of Water, a 12X 8046.376

AIC of Water (C. pounds/cubicmeter) ...... a 91 0.259163 a 6X 0.213962 a 12X 0.309853

OD - 100 -

Annex 12

REPUBLIC OF CYPRUS

SOUTHEAST COAST SEWERAGE AND DRATIAGE PROJECT

Documents in Proiect File

1. Annual Reports, 1988, 1989, Cyprus Tourism Organization.

2. Gooarison of the Sewage Treatment Plant Sites and Separate vs. Common treatment Plant for Avia NaRa and Paralimni, Final Report by Soil and Water, Ltd., November, 1990.

3. Feasibility Study and Master Plan for Ayia Napa Sewerage and Drainage, Final Report. Soil and Water, Ltd., Helsinki, Finland, in association with EleftheriosGavrielides, and the ImprovementBoard of Ayia Napa. December 1989.

4. FeasibilityStudy and Master Plan for Paralimni Sewerage and Drainage, Final Report. Soil and Water, Ltd., Helsinki, Finland, in association with EleftheriosGavrielides, and the Municipalityof Paralimni. November, 1990.

5. Larnaca Sewerage and Drainage Scheme: Re-AppraisalReport. Howard Humphreys and Partners, Ltd., Leatherhead,U.K., and J. A. Theophilou, Nicosia, Cyprus.

6. Larnaca Sewage Scheme: Use of Treated Effluent for Dhromolaxia Proposed Irrigation Scheme, PreliminaryReport. Republic of Cyprus, Ministry of Agriculture and Natural Resources, Department of Water Development. October 1985.

7. EnvironmentalAssessment for the Southeast Coast Sewerage and Drainage Project: Larnaca. CyRrus. Barnus Ltd., EnvironmentalConsultants, July 1991.

8. EnvironmentalAssessment for Paralimni and Ayia Napa Sewerage Pro4ect, Soil and Water, Ltd., May, 1991.

Documents Filed with Previous Larnaca Sewerage and DraiaaageLoan

Master Plan and FeasibilityReport for Stormwater Drainage and Sanitary Sewerage of Larnaca: SupplementaryReport, by Reid Crowther InternationalLimited, Canada in associationwith Solon Hadjiminas and associates,Cyprus, February, 1985. IBRD22890R VOROKLINI KelliaS.woge TreromentWorks

KELUA

IF

* lAADIPPOU s0 t / ~~~~~~~~~~~LEIVADIA afi ff4 Larnioco Bay

SOUTHEASTCOAST SEWERAGEAND DRAINAGEPROJECT PROPOSEDSEWERAGE AND EFFLUENTDISTRIBUTION SYSTEM FORLARNACA AREA

- SEWERAEAREA BOUNDARY' \~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~h. PROJECTCOMPONENTS: C.9 Fi Lin \~~~~~~~~~~~~~~~~~~~~~JL - SEWAGETREATMENT WORKS Halci Sultan kW~~~~~~~~~~~~~MANSEWERAND FORCEMAIN 1991j Tekke~ Mosque~ ~ ~ ~ ~ ~~~~~* SEWAGEPUMPING STATIONS o EFFLUENTRESERVOIR

-!- EFFLUENTDISTRIBUTION LINES ac: ~~~~~~~NN, ~~ EFFLUENTIRRIGATED AREAS REFUGEEHOUSING ESTATES TO BE SEWEREDUNDER THE PROJECT

3- JULY~.~3~ 1991 MMD23037R1

// 3S~~ ~ App~~3mi3

b cau FW L. -~~ Jl

SOUTHEASTCOAST SEWERAGE AND DRAINAGEPROJECT (MI PROPOSEDDRAINAGE SYSTEM FOR LARNACAAREA

DRMNAGEAREA BOUNDARES SEWERAGEAREA BOUNDARY

t ~~~~~~~~DRAJNAGECHANNELS

- -- DRAJNAGEPIPES * * ~~~SURFACEWATERPUMPING STATIONS

BUILT-UPAREA ROADS q-. SALTLAKE

L K 0~~~~~~~~~~~~~~~~~~~,I20 0 S00 FC000 . TOIODV,V0 ldi

AUGUS1991 I - - a

A , _ t 47:

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