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Projected Water Production, Consumption, and Losses, Koror/Airai

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Projected Water Production, Consumption, and Losses, Koror/Airai Final Report Republic of Palau Project Number: 40122 July 2009 Technical Assistance Republic of Palau: TA 4977-PAL Preparing the Babeldaob Water Supply Project CURRENCY EQUIVALENTS (as of 1 April 2009) Currency Unit – United States dollar ($) ABBREVIATIONS ADB – Asian Development Bank ADF – Asian Development Fund AIFC – Asian Incremental Financial Cost AS – Administration Support BWSP – Babeldaob Water Supply Project BPW – Bureau of Public Works CAP – Community Awareness Plan CAPP – Community Action and Participation Plan CAT – Community Action Team CC – Construction Contractor CIP – Capital Infrastructure Projects CIP – Capital Improvement Projects CPP – Community Participation Program DOE – Design Office Engineering DSC – Design and Supervision Consultant DSCR – Debt Service Coverage Ratio EA – Executing Agency ECC – Environmental Clearance Certificate EA – Environmental Assessment EIB – European Investment Bank EIA – Environmental Impact Assessment EIS – Environmental Impact Statement EMP – Environmental Monitoring Plan EQPB – Environmental Quality Protection Board ES/C – Environmental Specialist/Consultant ETP – Effluent Treatment Plan FIRR – Financial Internal Rate of Return GDP – Gross Domestic Product GOP – Government of Palau HAS – Health Awareness Support HH – Households IA – Implementation Agency ICB – International Competitive Bidding IEE – Initial Environmental Examination IS – International Shopping KPI – Key Performance Indicator LIG – Low Income Group LS – Local Shopping MASL – Meters above sea level MG – Million gallons MOF – Ministry of Finance MPIIC – Ministry of Public Infrastructure, Industries and Commerce MRD – Ministry of Resources and Development NCB – National Competitive Bidding NPV – Net Present Value i NGO – Non-Governmental Organization NRW – Non-Revenue Water OCR – Ordinary Capital Resources O & M – Operation and Maintenance p.a. – Per Annum PIA – Project Implementation Assistance PIU – Project Implementation Unit PMO – Project Management Office PMU – Project Management Unit PPME – Project Performance Monitoring and Evaluation PPTA – Project Preparatory Technical Assistance PSC – Project Steering Committee ROP – Republic of Palau RPPL – Republic of Palau Public Law SI – Sensitivity Indicator SV – Switching Value TA – Technical Assistance UFW – Unaccounted for water WACC – Weighted Average Cost of Capital WASA – Water and Sewerage Authority WHO – World Health Organization dia – diameter ft – feet gal – gallons gpm – gallons per minute gpcd – gallons per capita per day in – inch lpm – liters per minute m – meter m/sec – meters per second mg/L – milligram per liter NOTE (i) The fiscal year of the Government and its agencies ends on 31 December. (ii) In this report, "$" refers to US dollars. ii iii TABLE OF CONTENTS CURRENCY EQUIVALENTS……………………………………………………………………...…i ABBREVIATIONS………………………………………………………………………...………...…i MAP……………………………………………………………...…………...……………………...…ii Executive Summary………………………………………………………………………………....x 1 INTRODUCTION……………………………………………………………………..………1 1.1 Background to the Terms of Reference…………………………………………...1 1.2 PPTA Progress .............................................................…....................……….1 1.3 Project Rational……………………………………….….………………………….1 1.4 Analysis of Key Problems and Opportunities………………………………….....2 1.4.1 Inadequate Investment……………………………………...….…………..2 1.4.2 Unsatisfactory Water Source Reliability…………………………………..2 1.4.3 High Water Production per Capita………………………………...………3 1.4.4 Unsustainable Tariffs……………………………………...…….………….3 1.4.5 Lack of overall responsibility…………………………………….…………4 1.4.6 Unsustainable Water Supply Systems……………………………………4 1.4.7 Fragmented Water Supply Legislation….……………………..………….4 1.4.8 Weak Institutional Capacity………………………………………...……...5 1.4.9 Private Sector involvement......................................................……..….6 2 INTERIM REPORT INVESTIGATIONS & PROPOSALS & SUBSEQUENT STUDY.................………………………………………………………………….…………7 2.1 Interim Report Investigations.............................................……....…….……….7 2.1.1 New Sources........................……....................................…...………….7 2.1.2 Tariffs........................…..….........................…………..………………….7 2.1.3 Social Surveys.................…….....................………...........…...………..8 2.2 Subsequent Studies................................................................……... ………….8 3 INSTITUTIONAL…………………………………………………………………….……...10 3.1 Water and Sewerage Performance………………………………………..……..10 3.2 Institutional Recommendations………………………………..………………….11 4 GROUND WATER DEVELOPMENT……………………………………………………..13 4.1 Background………………………………………….………….…………………..13 4.2 Stage 1 Groundwater Investigation……………………………………..………..14 4.3 Stage 2 Groundwater Investigation…………………………………………..…..14 4.4 Preliminary Design of a Wellfield…………………………………………………15 4.5 Water Quality Analysis…………………………………………………………….16 iv 5 THE PROPOSED PROJECT……………………………………………………………...18 5.1 Project Impact and Outcome…………………………………………..………….18 5.2 Components………………………………………...………………….……..……18 5.3 Component 1: Strengthen Sector Planning, Management, and Regulation….……………………………………………………………………….18 5.3.1 Institutional Strengthening and the creation of a corporatized National Water and Sewerage Authority………………………………..19 5.3.2 Preparing of a Draft Water Supply Law for Palau…….………………..21 5.4 Component 2—Development of Water Supply Wells and Associated Water Source Works………………………………………………………… .…….…....22 5.5 Component 3: Community Action and Participation Program…………….…..23 5.5.1 Community Participation Plan………………………………………...….24 5.5.2 The Community Awareness Plan………………………………….…….24 5.5.3 Health Awareness Support………………………………………….……24 5.6 Component 4: Rehabilitation and Expansion of the Koror-Airai Water Supply Network……………………………………………………………………………...25 5.6.1 Water Supply Rehabilitation……………………..………….. ……....….25 5.6.2 System Expansion……………………………...…………………….…...25 5.7 Component 5: Project Implementation Assistance and Administrative Support.......................................................…………..........……………………26 5.7.1 Project Implementation Assistance……………………………………...26 5.7.2 Administrative Support……………………………………….…………...27 6 COST ESTIMATES AND FINANCING PLAN……………………………………………….28 6.1 Cost Estimates…………………………………………….………..………………28 6.2 Financing Plan…………………………………………………………..………….29 7 SUMMARY ENVIRONMENTAL EXAMINATION……………………………………………30 7.1 Introduction……………………………………………………………………..…..30 7.2 Description of the Project………………………...………………………………..30 7.3 Description of the Environment…………………….………………………..……31 7.3.1 Physical Resources……………………….……………………..………..31 7.3.2 Biological Resources……………………………...…………………..…..32 7.3.3 Human and Economic Development……………………………….……32 7.4 Screening Environmental Impacts & Mitigation Measures…………...………..33 7.4.1 Potential Impacts and Mitigation measures………………………….....33 7.4.2 Climate Change and Adaption Measures………………………..……..35 7.4.3 Poverty and Social Assessment……………...……………………..…...35 7.4.4 Mitigation Costs…………………...……………………………………….36 v 7.4.5 Technical Assistance……………………..…….…………………………36 7.5 Environmental Management Plan and Institutional Requirements……..…….36 7.5.1 Environmental Management Plan……………………….…..…………..36 7.5.2 Institutional Arrangements…………...…………………………………...38 7.6 Public Consultation and Information Disclosure…………………………...……38 7.7 Conclusions…………………….……………………..…………………………….38 8 FINANCIAL ANALYSIS……………………………………………………….……………….40 8.1 Past Financial Performance……………………….…….………………………..40 8.2 Projected Financial Performance………………………….………………….….41 8.2.1 Financial Objectives……………………………………………………….41 8.2.2 Proposed Water Tariff…………………………………………………….41 8.2.3 Affordability and Willingness to Pay……………………………………..42 8.2.4 FIRR and Sensitivity Analysis……………………………………………42 8.3 Projected Financial Results…………………………….……..…………………..43 8.4 Project Financial Sustainability & Implementation Risks…………………...….43 9 ECONOMIC ANALYSIS……………………………………………………………..………...45 9.1 Background to the Analysis………………………………...……………………..45 9.2 Economic Benefits of the Project…………………………………...…………….48 9.2.1 Reduction in economic costs of supply……………………………….…48 9.2.2 Elimination of potential unserved demand……………………………...49 9.2.3 Protection against droughts………………………………………………50 9.2.4 Potential health benefits……………………...…………………………..51 9.3 Least Cost Analysis………………………………..………………………………52 9.4 Valuation of Economic Costs……………………………..………………………52 9.5 Results of the Economic Analysis…………………………..……………………53 9.6 Sensitivity Analysis…………………………………………………..…………….54 10 IMPLEMENTATION ARRANGEMENTS…………………………………………………55 10.1 Project Management………………………………………….……………………55 10.1.1 General Approach………………….……………………………………...55 10.1.2 Executing Agency………………………………….……………………...55 10.1.3 Project Management Unit……………………………….………………..55 10.2 Equipment for Project Implementation………………….………………………..56 10.3 Implementation Period……………………….…………………………………….57 10.4 Procurement……………….…………………………….………………………….57 10.5 Consulting Services……………….…………...…………………………… …….59 vi 10.6 Disbursements Arrangements………………….…………………………………59 10.7 Accounting, Auditing, and Reporting…………………………….……………….60 10.8 Project Performance Monitoring and Evaluation………………………….…….61 10.9 Project Review…………………………………….……………………… ……….61 11 PROJECT BENEFITS, IMPACTS, ASSUMPTIONS AND RISKS…………………....62 11.1 Expected Benefits and Beneficiaries…………………………………………….62 11.2 Poverty Reduction……………………………………….…………………………62 11.3 Gender Impact………………….…………………………………………………..63 11.4 Environmental Impacts………………………….…………………………………63
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