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aB,UI ~2 gYC- 27w Public Disclosure Authorized

ReportNo. 6722-IN

STAFF APPRAISAL REPORT Public Disclosure Authorized

INDIA

mADRASWATER SUPPLY AND SANITATION PROJECT

May 28, 1987 Public Disclosure Authorized Public Disclosure Authorized

Urban and Water Supply Division SouthAsia Projects Department

This docuent has a restriced disttibution and may be used by recipients only in the perfonnano of their official duties. Its conteots may nmotothenrwis be disclosed wPbout Wodd Balk authaioin CURRENCYEQUIVALENTS

CurrencyUnit= Rupee (Rs) US$1.00 = Rs 13.44 Rs 1.00 = US$ 0.074

MEASURESAND EQUIVALENTS mm mill',meter(1 millimeter - 0.039 inches) m meter (1 meter = 3.28 feet) km kilometer(1 kilometer= 0.62 miles) km2 = square kilometer(lkm2 = 0.368 squaremiles) ha hectlare(1 hectare= l0,000square meters = 2.47 acres) l = liter (0.22 Imperialgallons or 0.264 US gallons) lcd = litersper capitaper day m3 = cubicmeters (220 Imperialgallons or 264.2 US gallons) ml = million litersor 1,000cubic meters mld million litersper day (0.220million Imperial gallons per day or 0.264 million US gallonsper day) mgd = milliongallons per day (1 mgd = 4,545 m3/day)

ABBREVIATIONSAND ACRONYMS

AIC = Average IncrementalCost GOI = Governmentof India GTN = Governmentof Tamil Nadu GWD GroundwaterDirectorate of the Public Works Department IAS = IndianAdministrative Service LCS = Low Cost SanitationProgram MMA - Madras MetropolitanArea 14MC - Madras MunicipalCorporation MMDA = Madras MetropolitanDevelopment Authority MMWSSB MadrasMetropolitan Water Supplyand SewerageBoard MUDP I The First Madras Urban DevelopmentProject MUDP II = The SecondMadras Urban DevelopmentProject OAP OperationalAction Plan PS = PumpingStation TNHB = Tamil Nadu Housing Board TNPWD Tamil Nadu PublicWorks Department TNSCB = Tamil Nadu Slum ClearanceBoard TWAD = Tamil Nadu Water and DrainageBoard UNDP UnitedNations Development Programme WHO World HealthOrganization WPCB = Water PollutionControl Board

FISCALYEAR

April 1 - March 31 Ka OFFICIALUSE ONLY

INDIA

MADRASWATER SUPPLY AND S8NITATION PROJECT

STAFF APPRAISALREPORT Tableof Contents PageNo.

Loan, Creditand ProjectSummary ...... iv-v I. THE WATERSUPPLY AND SANITATIONSECTOR IN INDIA...... 1

Ao SectorContext...... 1 II. THE SECTOR1N MADRAS...... 2 A. The Stateof TamilNadu and the Madras MetropolitanArea (MNA) ...... ee*. e.g...... 2 B. The MadrasMetropolitan Water Supplyand Sewerage Board(MMWSSB) ...... *...... 3 C. The ExistingWater System and Levelof Serviceoo..... 3 D. The ExistingSewerage System and Levelof Service.. 5 Bo WaterDemando..oo... e..o...... o 5 F. The Bank'sSector Role and AssistanceStrategy in India.e...... 6

III. THE PROJECT...... 8 A. ProjectOrigin and Rationalefor BankSupport...... 8 B. ProjectScope9...... COOC...... 9 Co. Objectives*esso.*ee.o9ooso ..... ****... 9 D. Description...... e.g...... 0...... 9 E. The ProjectArea ...... e... 10 F. Cost2stimates .os*...... , ...... 11 G. Financing;.oo*o**.*.o... o ...q*.o*..oo.... 12 H. Statusof Preparation..... eoe...... eoo. 12 I. Land Acquisition...... o..o ...... 13 J. Procurementoo.*o.o*.#.*.o...... o...... 13 K. Disbursements...... e.e.*.*... 15 L. ImplementationSchedule & OperationalAction Plan.. 17 ProjectCoordination*..*..** ...... 17 M. Supervisionand Monitoringe.eee e ...... 17 N. Accountsand Audits*...... eg...e.eee.eeeee... 18

This reportis basedon the findingsof an appraisalmission which visited Madrasin December1986. The appraisalmission consisted of Messrs.N. Boyle (MissionLeader), C. Plantand B. Jensen(Sanitary Engineers), and D. Hamlin and J. Jordan(Consultants). Mmes. L. Salazarand F. Toppintyped the report. It was proofedby Mmes.M. Angus,J. Feldmannand M. Keane.

Thisdocument has auticed butionand wrbe used by recipients onyin thewonnsnc. ofthi offca dutes& Itsconnts may not otherwie bediscsed without Wodd Bankauthizaton. Page No.

IV. '3GANIZATIOMAND MAJAGEMENT...... 18 A. PastPerformance and PresentSituation...... I8 Organization...... cc.... ce0e~O... 18 8taffing...... 19 Operationsand Maint.nance...... 19 materialsManagement eceecec ...... eec...... cc.... 20 Nateting...... §21 Mater .ead i n ...... c 21 PublicStandpipes ...... e 21 Low-costSanitation*...... *...... 22 IndustrialWaste c...... c...e. 23 Pilot Privatisation.e c .e...ce.eeee.cee..e....cc 23 ManagerialAccounting ...... 23 Training.cc.e...cceecccece.eee.ce.cec...cee.ec. . 24 B. FutureOrganizational Performance...... ,.. 24 Roleof Boardof Directorsin PolicyAnalysis..... 24

V. FINANCIALASPECTS8. c.c....eeeeeceec 25

A. NMWSSBFinancial Position and Performance..... 25 Introduction..ceccccoeceee.c..ece.eceeccecc..ec 25 Tariff Level and Structure... e.e.ce ...... 25 New TariffLevel and Structure...... 27 Profitability...... 27 Billingand Collection...... 28 CustomerReceivables...... 28 FreeAllovances. 0...... , 28 WorkingCapital...... c .. c..e.e.c...... cc...... 29 B. FutureFiLincial Performanceec.cc....ec...c.ccc.. ..29 Profitability ...... 29 Managementof WorkingCapital...... 30

VI. ECONOMICAND SOCIAL B3NEFITS...... ee 30

A. Background...... e.e.e.. 30 B. Environmentaland HealthImpact*.ee.e..ec.c.ccc.c.* 31 C. PopulationServed ...... cce e 31 D. Povertylpact...... eeecce 31 t. EconomicB4nefits...... 32 F. Affordabilitye...... ec...... c 32 DomesticConsumers eeeecec..ee ec.e...... 32 Industrialand CommercialConsumers.e.eec.eceeeeeso 33 -ill-

Page No.

VI. RUSACHEDAND RCO0SKENDATIONS...... 33 A. AgreeentsReached with bGTT... 33 B. AgreementsReached with MNWSSB,*...... 34 C. AssurancesReached on DatedActions for OAP Pe...... 34 D. Recorendatione...... 35 LISTOF ANNEXS ANNEXES 1. PopulationForecasts and Ded. . . 36 2. Unaccountedfor Water,and.... nd...... 39 SewageTreatment/Collection Zon e s 39 3. PlannedImprovements to WaterSupply System and ProjectCoMPonents...... 40 4. Scheduleof ProjectComponents...... e... 46 5. DetailedSummaries of ProjectCosts...... 55 6. Procurementby Component.....on.e...... 57 7. LocalProcurement Procedures..s...... 59 8. Scheduleof ICB/LCBContracts...... 64 9. ImplementationScu . ... . 64 10. FinancialPr os eetions 68 -V WSSBHistorical Financial Performance...... o. 83 -NewWater Supply Charges and Tariff iffs...... , 84 11. VaterSupply Poii t i o n 86 12. OperationalAction Plan...... 87 13. EconomicAnalysis...... 97 14. AffordabilityIndices - Industry/CoCmerce..0...... 98 15. Land Acquisition...... e...... 100 16. OrganizationChart 1...... 101 17. Listof SelectedDocuments in ProjectFiles******* 102

MAPS Naps IBIDNos. 19905,19906, 19907 -iv- INDIA

MADRAS WATER SUPPLYAND SANITATIONPMOJECT

WANg, CREDITAMD PROJECTSUMMARY

Borrowers India, actingby its President,Government of India (GOI).

Beneficiaries:Government of Tamil Nadu (GTN) and Madras Metropolitan Water Supplyand SewerageBoard (NMWSSB).

Amount: Loant US$53.0million/equivalent. Credit: SDR 12.5 million (US$16.0million equivalent).

Terms: Loan: Repayablein 20 years, includingfive years grace, at the applicablerate of interest. Credit: Standard.

On-lending Governmentof India to GTN: As part of central Terms: assistanceto States for developmentprojects on terms and conditionsapplicable at the time.

GTN to MMWSSB: At 8.75X annual rate of interest,with repaymentover 25 years, includingfive years grace.

Goo would bear the foreignexchange and interestrate risks.

Project Description: The projectwould financeabout 60X of MMWSSB's1987-1995 investmentprogram aimed at increasingwater supplyand improvingwater distributionand sewerageservices in MetropolitanMadras. The projectwould make betteruse of existingresources and assistMadras in developinga plan to identifymedium and long-termwater supplysolutions of largerscope. It would also significantlystrengthen OM(WSSB'sfin4ncial and operationalperformance and improve its capacityto manage the sector. Specifically,the project would (a) augmentwater supplyand extenddistribution networksby 102 mld (about351 of present supply);(b) improveand extend sewagecollection and treatmentsystems; (c) initiatea programof low cost banitation;(d) support improvementsin operationaland financialefficiency aimed at making HMWSSB commerciallyviable and more efficient;and (e) improvepolicy formulation, analysis and prioritization through improved planning and management.

Project Risks: The major risks would be: (a) long term political ability to maintaintariffs at adequatelevels; and (b) diversionof effortsfrom nearbywater supplyoptions to higher cost more distantsources. GTN/MMWSSBhave agreed to schievelong-term commercialviability through improved operations, financial management,and tariff increases,if required. GTN and MWWSSBhave also agreed to updatingthe water supplyand seweragemaster plan to identifythe most economically cost-effectiveinvestment program which satisfiesthe medium and long-termwater supplyneeds of Madras. EstimatedCosts Local foreign Total ---- Us$ Million- Land .3 0.0 .3 Augmentationof WaterSupply 32.2 11.9 44.1 Improvementsto WaterDistribution System 8.1 2.9 11.0 Improvements to Sewerage System 9.4 1.9 11.3 InstitutionalStrengthening 3.8 3.8 7.6 EngineeringSupervision 8.0 0.0 8.0 BaseCost 61.8 20.5 82.3 PhysicalContingencies 6.2 2.4 8.6 PriceContingencies 11.7 3.8 15.5 Sub-TotalProject Costs 79.7 26.7 106.4 Dutiesand Taxes 5.8 0.0 5.8 Total 85.5 26.7 112.2

Financing Plan IURD/IDA 52.5 16.5 69.0 M BSSBInternal Cash Generation 29.7 9.3 39.0 GTE Grant 0.8 0.2 1.0 CGT Loan 2.5 0.7 3.2

Total 85.5 26.1 112.2

EstimatedDisbursements IBRD/IDA FiscalYear

…------US$ Million - - - Sank FY 1988 1989 1990 1991 1992 1993 1994 1995 1996 Annual 7.3 11.2 12.9 11.4 10.1 8.0 5.6 1.9 0.6 Cuomualative 7.3 18.5 31.4 42.8 52.9 60.9 66.5 68.4 69.0

EconomicRate of Returns About82. INDIA

MADRASWATER SUPPLY AND SANITATION PROJECT

S. UE WATERSUPPLY AND SANITATION SECTOR IN INDIA

A. Sector Context

1.01 The urban populationof India is expanding rapidly. The growth in urban populationfrom 107 millionin 1971 (20X of total population)to 156 million in 198l (242 of total)marked an increasein the annual rate of urban growth to 3.92 from 3.32 in the previousdecade. Even with the somewhat optimisticassumption made in the SeventhPlan that the annual urban growth rate will declineto 3.62 during the 1981-2001period, India't urban po7ala- tion will more than double during the period to a total of 326 millioni. 2001. raese growthrates are creatingrapidly expanding demands for housing and for the provisionof urban services,such as water supplyand sanitation.

1.02 The SeventhPlan of the CentralGovernment of India (GOI) recognizes that citiesare importantcenters of economic growth and that the real chal- lenge is to manage the growth by providingurban infrastructure,shelter and municipalservices at the requiredscale in an effectiveand efficient manner. Prior to 1975, due to backlogsin servicesand to competingdemands from other sectors,as well as deficienciesin managementskills and shortagesof key materials,investments in the water and sanitationsector were only about 12 to 22 of total public expenditures.This situation improvedslightly during the Fil.thPlan and the two annual plans of 1978 and 1980. Althoughthese investmentlevels did result in improvementsin the sector,they were still inadequateto achievesubstantial progress in overall servicelevels in the contextof the rapidlyincreasing population. Thus s- 1980, it was estimatedthat in India about 287 millionpeople, or 422 of the total population,had access to reasonably'safedrinking water and that only 43 millionpeople (62 of the population)were coveredby sanitationserices. In responseto these servicelevels, the 001 adopteda set of targetsfrom conceptsembodied in the InternationalDrinking Water Supplyand Sanitaf:ion Decade (1980-90)and greatlyincreased the aount of funds availableto the sector. Thus in the Sixth Plan (1980-85),42 of the total Plan provieionwas availableto the sector. In the SeventhPlan (1985-90),investments are being undertakenin water supplyand sanitationon a large scale (Rs 6,500 croresin the SeventhPlan, Rs 1,200 of which are from the CentralPlan).

1.03 While these investmentlevels represent suba -._i increases,it must be recognisedthat the Decade goals for India, of 100 and 80Z coverage for urban water supplyand waste %2isposalrespectively, are unlikelyto be reachedfully by 1990. There will still be a substantialshortfall in funds and lack of sufficientqualified manpower. Though in the past, physical targetshave been largelyachieved, a range of sector issues relatedto management,cost recovery,operational efficiency and maintenancehave proven -2-

more difficultto resolve. Financialdeficits from water and sewerageoperations have often ld to inadequateoperation and maintenanceof the con- siderableinvestments being made and are also likely to limit the rate of growth which can be achievedin the sector.

II. THE SECTOR IN MADRAS

A. The State of Tamil Nadu and the Madras MetropolitanArea

2.01 Tamil Nadu ranks eleventhin area and seventhin populationof the 22 IndianStates. Madras is the state capital,the nation'sfourth largest metropolitanarea and the largestport in South India. Since 1971, development in the water supplyand seweragesector in the state has been largely the responsibilityof the Tamil Nadu Water and Drainageboard (TWAD)which was constitutedfor the purposeof regulatingand developingdrinking water and drainageinvestments.

2.02 The Madras MetropolitanArea (MMA). The MA comprisesan area of 1,167 squarekilometers and had a 1981 censuspopulation of 4.6 millionwith a growthrate of about 2.3X annually. However,the MA grew rapidlyduring the previousseveral decades resulting in densificationof the already crowdedcity. More recently,incremental growth has occurredon the peripheryof the city especiallyalong the transportationcorridors leading into Madras. In additionto the city of Madras which expandedits bordersin 1978 by about 342 in land area, the MMA containsfour municipalities,four townshipsand 2S0 villages.1/ Major economicactivities in the area are centeredon agricultureand Industrywhich includesthe productionof tex- tiles,electrical equipment, machinery and motor vehicles. Specialmention shouldbe made of concentrationof water intensivepetrochemical and fer- tilizerindustries located in the Manali industrialpark just northeastof the city boundarybut within the MMA.

2.03 SectorOrganization in Madras. The MadrasMunicipal Corporation (MMC) retainedresponsibility for its own water supplyand seweragesystem until the formationof the Madras MetropolitanWater Supplyand Sewerage Board (MMWSSS)in 1978. The MMWSSBwas formedas a statutoryorganization for attendiitgto the growingneeds for water supplyand sanitationservices exclusivelyfor the MMA. In additionto servingthe City of Madras with water and sanitationservices, MMWSSB also servesthe industrieslocated in the Nmnali Industrialpark. Land use and physicaland investmentplanning for the MU are controlledby the Madras MetropolitanDevelopment Authority

I/ Referenceto the city of Madras now refers to the "old" city plus this additionalarea sometimesreferred to as the 12 Panchayats. -3-

(MMDA). Buildingand plumbingcodes are under the responsibilityof the MMC. Executionof low cost sanitationinvestments has been the responsibilityof the Tamil Nadu Slum ClearanceBoard (TNSCB)and the Tamil Nadu HousingBoard (TNHB)while policymatters are the responsibilityof MMWSSB. Responsibility for trade effluentand water pollutioncontrol is presentlydivided between MMWSSB and the State Water PollutionControl Board. Flood controlis the responsibilityof the PublicWorks Departmentof the State Government. Pric- ing policiesare the exclusivedomain of the State Government,and source water allocationis the responsibilityof the State and CentralGovernments. While coordinationcan be improved,MMDA is beginningto exert overall leadership. Proposalsare currentlybefore it to developbetter organiza- tionalarrangements for the sectorand to play a more active role in the developmentof overallpolicy.

B. The Madras MetropolitanWater Supplyand SewerageBoard

2.04 MMWSSBwas establishedunder the Madras MetropolitanWater Supplyand SewerageAct of June 22, 1978 (the Act), as the authorityto providewater supply,sewage and sanitationservices within the Madras MetropolitanArea. The major part of these serviceshad previouslybeen administeredby MMC. MMWSSB also assumedcontrol of facilitieswhich had been developedand operatedby the GroundwaterDirectorate (GWD) of the PublicWorks Department of GTN (TNPWD)for providinggroundwater to certainmajor industrialcon- sumerson the outskirtsof Madras City.

C. The ExistingWater Systemand Level of Service

2.05 With a maximumpresent availability of 293 mld, Madras city remains the lowest suppliedmetropolitan area in India with an average78 lcd (inclusiveof industryand unaccountedfor water estimatedat 15 to 20Z of production). The correspondingfigures for other citiesare Bombay 253, Delhi 220, Calcutta190, and Bangalore125 lcd. When demand of major industrialconsumers and unaccountedfor water are not included,the average per capitadomestic daily availabilityin Madras city is only 47 litres (Annex11), which is less than the minimumIndian standardfor domesticwater consumptionof 70 to 100 lcd for individualconnections in urban communities and 50 lcd for consumersusing public taps.

2.06 Even this low level of supply can only be maintainedduring years of normal rainfall. Failureor partialfailure of the monsoon in Madras is a cyclicalevent and has occurredon average once every seven years. The most recent total failureoccurred in 1983 and 1984. This failurecombined with the practiceat that time of overdrawingthe reservoirsystem resulted in almost completedepletion of the storagereservoirs and total failureof the system. The supply to the city was maintainedat a level of one hour per day on alternatedays by divertingwater to the city from industrialwells and by importingwater by ship, truck and railway tankers. Under operatingproce- dures of reducedpressure, water did not reach some of the extremitiesof the -4-

distributionsystem and was transportedto these areas by lorry and cart. Mass evacuationof the city was seriouslydiscussed. This was the second time mass evacuationseriously threatened the city of Madraswithin the decade. The 1986 monsoonalso failedand Madras is in a crisis situation during 1987. Legislationto regulatethe extractionof groundwater,would authorizeMMWSSB to monitorthe aquifer and to regulateexisting and new pumpingactivity to preventmining and enable conjunctivemanagement of surfaceand groundwatersources of water supply. MMWSSB and GTN have taken all administrativeactions for placingsuch legislationbefore the State Assembly.

2.07 Madras'water supply systemdates back to the year 1870. Madras unfortunatelyhas no dependablewater supplysource and has to rely solely on the seasonalmonsoon rains to fill its reservoirsand to rechargethe ground water aquifers. The main sourceof water currentlyavailable to the Madras projectarea comes from the Poondi-Cholavaramand Red Hitls reservoirs(Map IBRD 19905),which collectwater from a comparativelysmall drainagearea of 3,500 squarekilometers. All three of these reservoirsare extremelyshallow (averagedepths are 2 to 4 meters)and subjectto high annual evaporationand seepagelosses amounting to 50-60Z of the total reservoirinflow. Water impoundedin the Poondi reservoiris conveyedto Cholavaramand Red Hills reservoirsin open channelsand thencein two brick-linedconduits to the Kilpaukwater treatmentplant which has adequatecapacity (presently 250 mld to be increasedto 270 mld by 1989 outsidethe Project)to treat che yield of the presentsurface water source. Treatedwater is pumpedto the distribution systemwhich consistsof 1311 kilometers(km) of mains rangingin size from 100 mm to 1200 mm in diameterand ground and elevatedstorage tanks with a capacityof 135 mld. (Map IBRD 19906). Groundwatersources have been developedby MNWSSB in the outlyingurban areas, particularlyin the Minjur, Panjettyand Tamaraipakkamareas in the Arani-KortaliarRiver basins northwestof the city, primarilyfor industrialusers, but also to supplement the surfacewater supplyto consumersin the city. Duringthe first Madras Urban DevelopmentProject (MUDP-I), improvements to headworks,transmission systems,treatment facilitiess pumping stations, distribution and metering systemswere carriedout. No furtherwater supplyimprovements were included under MUDP-II.

2.08 The inadequacyof the piped water supplyhas encouragedconsumers to seak other sourcesof water and has resultedin the constructionof several thousandprivate shallow-dug wells as well as use of tubewellpumps (about 5,750),and India Mark II handpumps(about 1,100). The total yield of these wells is estimatedto be less than 10 mld, or about 2 to 3 litreson average per personper day. Water from these wells within the city is of very poor quality,often only suitablefor gardenwatering. Industriesin the city but outsidethe MMWSSB supplysystem draw about 42.5 mld from their own wells. This is about two-thirdsequivalent to total industrialconsumption for industriesinside of the MMWSSB supply system. The 1987 estimatedyields from all existingMMWSSB sources,is about 293 mld with surfacewater sources normallysupplying about 200 mld whileground sources provide the remaining quantities.In yearswith good monsoon rains, 240 mld is providedfrom surfacesources for somemonths of the year. D. The ExistingSewerage System and Levelof Service

2.09 The existingsewerage system consists of: (1) collectionof sewage in gravitysewers leading to 61 pumpingstations; (2) pumpingstations and forcemainsfor pumpingsewage to treatmentplants; and (3) treatmentand disposal(Map IBRD 19907). DuringMUDP-1, rehabilitation of a numberof the existingsewage pumping stations, forcemains and trunksewers were completed. Go sewerageworks included under ML'DP-II. The existingcity sewerage system was initiallydesigned for an anticipated1961 population of 600,000.That levelof populationwas reachedby 1936and severalimprovement works were carriedout to strengthenthe system. Originallythe entiresewage flow was conveyedto NorthMadras and dischargeduntreated to the sea nearKasimode. 2.10 The cityhas beendivided into five sewage treatment and collection 3ones,(Annex 2). Sewagefrom each zoneis pumpedto treatmentand disposal sites, Partof the raw sewageat each treatmentsite is usedto irrigate paragrassfarms. A portionof the sewagefrom North Madras is stilldis- chargedinto the sea at the Kasimodeoutfall. However, a two phasesewage treatmentplant (biofilter) with a capacityof 2 x 80 mld is presentlyunder constructionat Kodungaiyurto replacethe sea outfall.It is expectedthat the firstphase of 80 mld will be commissionedin April1987. Althoughthe capacityof thisPhase I treatmentworks is 80 mld, the incomingflow from Zone 1 willonly be 33 mld due to presentwater restrictions. The 33 mld secondarytreated wastewater from Kodungaiyur will be madeavailable to expandingindustries in the Manaliarea as coolingwater (para 3.04). 2.11 A pilotwaste water reuse program is beingplanned by MKWSSBwith the assistanceof the ongoingUNDP/WHO funded water resource study (para 3.01). A pilot tertiary treatment plant near Kodungaiyur Sewage Treatment Plant is being built as a basisfor determiningcosts as partof a feasibilitystudy of alternativeoptions. B. VaterDemand 2.12 The severityof the water shortagein Madras,especially during times of droaght,will continueuntil large sources of supplyare developedin the future. The severityof the watershortage is apparentwhen comparing theoreticalwater demand under unrestricted availability with quantitiesof wateravailable under conditions of rationing(Table 1). Theoreticalwater demandis basedon populationprojections and per capitarequirements taken -6-

from the iaterMaster Plan of 1979 1/ (Annex1). It becameapparent during the preparationof the Water Master Plan that the costs of bringingwater to Madras from distantsources would be extremelyhigh. Since the availability of the needed quantitiesof water were far from assured,GTN decided to designwater mains for a non-industrialconsumption level of 93 lcd for the year 2000. Water requirementsunder both assumptionsare shown in Table 1 below and in Figure 1. Under both assumptions,comparisons with present availabilityof 293 mld indicatethe severityof the problemand that even with the proposedproject, availability at projectcompletion in 1995 will still be only two thirdsof rationedsupply. Furtherdetail regardingwater demand is presentedin Annex 1.

Table 1: ESTIMATEDWATER REQUIREMENTS (WITH AND WITHOUTRATIONING)

l I Population I Water Requirement l

I __I (in millions) I(Inclusiveof Unaccountedfor Water) I lYearlPrime Mixed Com- Slum Without With | Iresiden- residen- mer- | Rationing* I Rationing l l ____tial tial cial I (mld) I (mld) l 119861 1.90 0.53 0.15 1.17 1 516 1 437 119891 2.21 0.52 0.16 1.18 I 591 I 488 l 119911 2.37 0.56 0.17 1.19 I 648 I 526 1199612.79 0.65 0.19 1.23 I 769 I 600 l 1200113.29 0.74 0.22 1.28 I 911 1 683 l Theoreticaldemand for water.

P. The Bank'sSector Role and AssistanceStrategy in India

2.13 Since.1974, when the Bank Group helped financeits first water supply and sewerageproject in India, ten creditstotalling US$788 million and one loan for US$40 millionhave been approvedincluding the Tamil Nadu Water Supplyand SanitationProject (Cr. 1454/SF12-INtUS$73 million,1984). This projectnow appearsto be proceedingsatisfactorily after prolongedimplemen- tationdelays and internalorganizational and systemdifficulties. A further US$200million for water supplyand seweragehas been providedas part of a broaderprogram of infrastructuredevelopment in urban areas. In Madras, this has been throughMUDP-I and II (paras2.07 and 2.09). Four projects,in Bombay,Maharashtra, Uttar Pradesh,and Punjabhave been completed.

1/ Tamil Nadu Water Supplyand SeweragePre-Investment Studies Madras NetropolitanArea - WHO/IND/PIP/O01- UNDP/IND/75/008Engineering-science, in associationwith Shah TechnicalConsultants (PVT) 1976-79. Figre 1

INDIA MADRASWATER SUPPLY AND SANITATION PROJECT ProjectedWater Demand and Production

JOW __.. 4000

900 _

aoo_ GrossAverage Day Demond li3asedon Unrestricted Avollobilityof Water

700 -

GrossAverage iDayDemond 600 - (Basedon Limited3 -. ~~~~~~~~~~~~Avollobility of

.MMWSSB400_ Water Productiona c I / / / / / / ~~~~~~~~~~~~~~~Aroni-KortallarLn i _9r / / I7-f-r/ / / /ioroJectf-IN~~~~Sources NoiwTubeweils -7 / / f -I- 300 .4'.4oad.__L _w_ i _.

Groundwater-E'xistingSource

100 _ SurtcceWater-Existing Source

4986 1988 1990 i992 1994 4996 1998 2000 Yeor

WoddBonlk-31058 -8-

2.14 Past lendingfor water supplyand sanitationhas largelyfollowed a state-widepattern as part of a broad programof infrastructuredevelopment and institutionalstrengthening in the sector. In terms of physical implementationand efficientresource utilization, most of these projects have met their objectives. While there have been achievementsin resource mobilizationand cost recovery,progress in these areas has generallybeen less than satisfactory.The Bank is addressingthis problemby more care- fully definingand monitoringactions and targetsfor institutionaldevelop- ment and financialperformance. In addition,the Bank is increasingits knowledgeof financialmanagement and resourcemobilization issues through sectorwork so that the actionsrequired to achieveproject objectives can be betterunderstood and more sharplydefined.

2.15 As our understandingof key issueshas improvedthrough sector work and lendingoperations, the Bank has pursuedpolicy reformin two ways, first by discussingthe findingswith key officialsat all levelsof governmentand second,by includingpolicy reform in projectdesign. Many improvementsin planning,lower cost technology,pricing policies, and financialmanagement have been introducedduring project preparation. These policy reformswere not the resultof explicitproject conditionality, but ratherconstituted a method of informaltechnical assistance and policy dialoguebetween the Bank and the borrower. Severalbroader sector policy issueshave been the subject of explicitconditionality. These have includedinstitutional and financial arrangementsin water supplyand sanitation,and tariffreform. The future strategywill continueto emphasizeworking with state and centrallevel policyand financialintermediaries.

2.16 Within the contextoutlined above, the objectivesfor Bank Group supportto the water supplyand sanitationsectors are (a) to improve resourceutilization, and (b) to improveresource mobilization and cost recovery. To achievethese objectivesover the longer term, it is important (a) to achievea more effectivedivision of responsibilitiesin the sector, and (b) to strengtheninstitutional capacities and trainingprograms.

III. THE PROJECT

A. ProjectOrigin and Rationalefor Bank Support

3.01 In the past, GTN has pursuedwater supplyoptions which are long term, large scale and costly,relying on distantsurface supplies such as the KrishnaProject. Since the early 1970s,the Bank has advocatedsmaller and less costlyschemes based on groundwaterand surfacewater suppliescloser to Madras. In the mid-1970s,the Bank helped initiateUNDP/WHO studies of groundwaterand surfacewater supplyoptions for Madras,including studies of artificialrecharge and wastewaterreuse. The proposedproject builds on -9-

these studiesand is designedto optimizeuse of exisLingand nearby potential resourcesand providesMadras with the needed time to plan and construct solutionsof a largerscope. It would increasewater supplyby about a third, and throughconjunctive operations, establish a safetynet in drought years. 1/

B. ProjectScope

3.02 The projectwould financeabout 601 of MMWSSB's1987-1995 investment programaimed at increasingwater supplyand improvingwater distributionand sewerageservices in the MKA. The projectwould make betteruse of existing resourcesand assistMadras in developinga plan to identifymedium and long-termwater supplysolutions of largerscope. It would also strengthen MMWSSB'sfinancial and operationalperformance and improveits capacityto manage the sector.

C. Objectives

3.03 The projectwould assistMMWSSB: (a) increasewater supply by about 351 and improvereliability of the systemby providinga lifelinesupply in droughtyears; (b) improveand extendsewage collectionand treatmentsys- temR; (c) make betteruse of existingresources and assistMMWSSB to develop a plan which addressesthe medium and long-termwater supplyneeds of Madras; (d) recovera greaterproportion of projectcosts from beneficiariesfrom improvedbilling and collectionsand increasedtariffs, as well as from cost reductionsthrough greater operational efficiency; (e) strengthenits institutionalcapacity to shape publicwater policyby improvingpolicy formulation,analysis and prioritizationthrough improved planning and management;and (f) initiatea programof low-costsanitation.

D. Description

3.04 The projectcomponents are describedin detail in Annex 3, scheduled in Annex 4 and shown in IBRD Maps 19905, 19906 and 19907. The four major componentsare:

(a) Augmentationof Water SupplySources. (Base cost US$44.1million). This componentwould increasethe amountof water suppliedto Madras by 102 mld and improvereliable supply in droughtyears througha surface/groundwaterconjunctive use program. It includesthe developmentof 3 new well fieldsin the Kortaliarbasin, construction of check dams across the KortaliarRiver to retainthe seasonal

1/ Conjunctiveoperations refers to coordinatedmanagement and use of surface and groundwatersupplies of water resultingin improvedyields and reliabilityof extraction. -10-

floodsand increasegroundwater recharge, and seasonaltransfer of flood waters from the Arani River into the KortaliarRiver by linking them with a canal. Concurrently,33 mld of secondaryeffluent is expectedto be utilizedby industrialconsumption in the Manali industrialpark;

(b) Improvementsto the Water Supplyand DistributionSystem. (Base cost US$11.1million). This componentwould rehabilitate,upgrade and extend the water supplyand distributionsystem in Madras. The componentconsists of constructionof transmissionmains, ground level storageand pumpingstations to distributethe additionalwater and strengthenthe existingdistribution network;

(c) Improvementsto the Sewase System. (Base cost US$11.3million). This componentwould improvethe effectivenessand extend the existing sewagecollection system and provideservices to slums and low lying areas of Madras. It consistsof layingof new and replacement sewers,improving 10 sewagepumping stations,and provisionof collection,transmission and disposalarrangements for sewage in low lying areas and slums;and

(d) InstitutionalStrengthening. (Base cost US$7.6million). Through provisionof training,technical assistance and an employeeincentive program,this componentwould: (i) strengthenthe productivityof MMWSSB in three key areas of operationaland financialactivity: engineeringdesip and planning;operations and maintenance;and financialrecovery; (ii) promoteregulation of groundwaterextrac- tion; (iii) plan and developmedium and long-termwater supply solu- tions;(iv) introducea low cost sanitationprogram; and (v) improve policy formulation,analysis and prioritization.

B. The ProjectArea

3.05 The area plannedfor developmentunder MMDA's plan is severaltimes the size of the existingwater supplyand sewerageservice areas. Since financialand water resourceshave been insufficientto provide immediate water and sewerageservices for such a large area, these servicesare planned to be implementedin stages. MMWSSB presentlyserves the city of Madras, the industriesin the Manali IndustrialPark north of the city and a sites and servicesproject of the ThUB to serve about 48,000 peciple(8,000 plots) which was financedby IDA under NUbP II. The proposedproject will serve Madras City where water, sewerageand sanitationneeds are judged to be most pressing and the Nanali IndustrialPark. The presentservice area of M0W155 is 173 squarekilometers of which about 151 squarekilometers (about 87Z) has piped water and 117 squarekilometers (about 681) has water-bornesewerage service. Under the project,these figureswould increaseto about 163 square kilometers(about 94Z) for piped water and to about 145 squarekilometers (about841) for water borne sewerage. Most of the underservedarea is in the -ll-

12 Panchayatswhere only 50 of householdsare servedwith piped water and 102 with sewageconnections. The remainderof the city would continueto make use of alternativesystems until they can be includedin the low cost sanitationprogram planned by OMISSBand MMDA.

F. Cost Estimates

3.06 Cost estimates(base costs in June 1987 prices)for the projectare summarizedin Table 2 and presentedin more detail in Annex 5. Overall projectcost is estimatedat US$112.2million (Rs 1,508.0million), including US$8.6million for physicalcontingencies, US$15.5 million for price contin- genciesand US$5.8million for duties and taxes. The foreignexchange component is about US$26.7million or 241 of total pvojectcost.

3.07 The cost estimatesare consideredreasonable and are based on MMWSSB'sestimates which reflect its experiencewith other ongoingprojects in Madras. Most of the water sourceaugmentation components are at detailed design stage and water distributionsystem components are at predesignstage. An allowanceof 10 has been used for physicalcontingencies on costs of civil works,materials and equipment. Sewerageworks improvementsare at preliminarydesign stage and an allowanceof 151 has been used for the civil works, materialsand equipmentcost estimatesfor those componentsbecause of the statusof preparation. Price escalationwas calculatedin accordance with Bank guidelines. Rates of 61 per annum for local expendituresand 4% for foreignexpenditures were used in line with Bank guidelines.

DMIA Table 2: ADs wATESUPY An ShTATION PRECT SUMMARYAVPRJC C as v mK1,19 *--X nllli-UiO

MM Loa. -oin TOTS. LOCAL_re. TOTS. UK _N

1. RUSIHtRtlII0ffWEI Owh)y Si lotal 436.65 157.95594.60 32.20 11.90 4410 31 s4t 271 it. OltS tO llERoswnilBl MS Subtotal 108.62 39.55 147.18 9.13 2.93 11.06 101 13 261 III.WUIUtStO Sot sSTI StaTotal121.28 26.33 153.61 9.39 1.9S 11.33 10t lit 17 IV.IKSTIJTIONL STRCHSTHN III 50.15 50.15 100.30 3.80 3.90 7.60 n 9t 501

U.LSO 4.27 0.00 4.2? 0.33 0.00 0.33 5o9TOTRL 54.42 50.15 104.5? 4.13 3.00 7.93 Ut. D6HENERISPERUISION COSt 107.1S 157.15 7.57 7.97 71 10t 0o

U911. OST 9.12 2.98 1107.11 61.81 20.59 92.40 731 1001 251 PVISICU.COIlIIIEM ICIES 90.92 26.45 115.37 6.23 2.34 8.58 St 251 21EECOHUHUCHCTES IC2?.10 1.9 213.89 IIJI 3.75 15.46 14 24 SITOTS.1003.14 353.32 146.4? 79.76 26.6? 186.43

Vill OSItS tUiS 71.5? 0.00 71.5? 5.91 0.00 5.91 51 ll

It. tOtALCOSt1154.71 353.321509.0 86.5 26.67 11224 t 24x -12-

C. Financing

3.08 The proposedblend of IbRD loan of US$53.0million and IDA credit of US$16.0million would finance652 of projectcost net of dutiesand taxes or 62X of total project costs of US$112.2million. About US$85.5million or 76X of total projectcosts is local cost. About sixty-fourpercent (641)of projectcosts would be financedfrom a loan from the GOI/GTN,thirty-five percent(351) from internalcash generationfrom MNWSSB and one percent(1x) would be grant funds from GTN. (Table3 below and page 5 of Annex 10 present both the projectfinancing plan and the financingplan of MMWSSB as an entity,respectively). Among other things,grant funds would be used for low-costsanitation activities including the proposedpilot sub-project (para 4.12). The World Bank loan/creditfunds would be on-lentto MMWSSB throughGTE for the proposedproject at an interestrate of 8.75X,a payment period of 25 years, includinga grace period of 5 years. The interestrate for plan schemescharged to MWWSSB is expectedto be 8.75X.

Table 3: PROJECTFINANCING PLAN 1986 THROUGH1995 Local Foreign Total X …US$------US Million…------IBID/IDA1/ 52.5 16.5 69.0 62 M36S85 InternalCash Generation 29.7 9.3 39.0 35 GTN Grant 0.8 0.2 1.0 1 CTM Loan 2.5 0.7 3.2 2 Total ProjectCost 85.5 26.7 112.2 100

1/ The loan/creditwould be made availableto GOI, which would make the proceedsavailable to GTE in accordancewith GOI's standardarrangements for developmentalassistance to the states.

B. Statusof Preparation

3.09 Design for the first two years of implementationis complete. NMWSSB has alreadycompleted detailed designs and tenderdocuments for many of the major water supplyaugmentation components. Severalcontracts have already been awardedfor tubewell,pumphouse and associatedtransmission watermain construction(para 3.12). It is an indicationof the extremeurgency placed on early deliveryof about 55 mld of groundwaterto Madras due to drought concernsthat NNVSSB is proceedingwith this work now. MM688B will be engag- ing consultantsby April 1988 to assistwith detaileddesign and tender evaluationfor the water treatmentplant and sewagepumping station rehabilitationcontracts (see OperationalAction Pln (OAP),Annex 12).

3.10 Terms of reference(TOR) for technicalassistance and studiesare almostcompleted. TOR for design assistanceand updatingthe water supply and seweragemaster plan, the low cost sanitationstudy, and reductionof unaccounted-forwater study have been reviewedand approvedby the Bank. -13-

MHNSSI will requestproposals from consultantsfor these assignmentsby November,1987. TOR for reform of the tariffstructure will be reviewed by the Bank in October,1988. TOR for consultanciesfor improvingoperations and maintenanceare under preparationby MHWSSB. About 190 man months of local consultantservices and about 40 man months of expatriateconsulting serviceswill be providedto MMWSSB for the assignmentsdescribed above. Buch consultantswould have qualificationsand experienceacceptable to the Bank and would be selectedin accordancewith the latestrevision of the Dank'sGuidelines for ConsultantSelection.

I. Land Acquisition

3.11 GTE has createda specialcell to assistMM3088 in land acquisition for this project. Normal time span for land acquisitionis 6 montbs for Governmentland and 12 months for privatelands. Land for the first two year of operationshas been acquiredand dated actions leadingto the timely acquisitionof the remainderare includedin the OAP (Annex 12). Detailson the currentstatus of acquisitionis providedir, Annex 15.

J. Procurement

3.12 All major equipmentsupply and turnkeycontracts would be awardedon the basis of internationalcompetitive bidding (ICB) in accordancewith Bank Group guidelines,with the exceptionof materialand equipmentcontracts relatedto new tubewellconstruction and associatedconnecting pipelines. These lattercontracts, already awarded by LCB, have been appraisedbut will not be finnced by the Bank. In evaluatingthe bids for equipmentand materials,local mamufacturersparticipating in internationalbidding would be given a preferentialmargin equal to 15X of the c.i.f. costs of the com- peting imports,or the existingrate of customsduty, whicheveris lower. It is likelythat the majorityof contractsfor equipmentand materialsand turnkeycontracts would be won by local bidders. The value of turnkeyand materialsand equipmentcontracts to be awardedunder ICB proceduresis estimated,respectively, at the equivalentof US$9.4 million,and US$26.2 million, totallingUS$35.6 million. Procurementarrangements are summarized in Table 4 and Annemes 6, 7 and 8.

3.13 Responsibilityfor the civil works contractsfor the Arani-Kortaliar link canal will be implemented by the Tamil Nadu Public Works Department (TUPUD) for 0S1855. The value of the work to be procured under TNPWD's LCB procedures, which have been found acceptable to IDA, is about US$6.6 million. 31S015 would monitor implemntation of the component. About US$4.0 million of the loan/creditis allocatedto this item. -14-

Table 4: PROCUREMENTTABLE (US$ million)

ProcurementMethods ProjectElements Total ICB LCB N.A. a/ Cost

Civil Works - 45.1 - 45.1 (27.1) (27.1) Turnkey 9.4 - 9.4 (7.1) (7.1) Materials& Equipment 32.9 4.9 - 37.8 (26.2)b/ (1.4)b/ (27.6) TechnicalAssistance/ - 2.0 2.0 Training (2.0)c/ (2.0) Land - - 0.4 - 0.4 EngineeringSupervision - - 11.7 d/ 11.7 UnallocatedContingencies - - (5.2) (5.2) Taxesand Duties - - 5.8 5.8 TOTAL 42.3 50.0 19.9 112.2 (33.3) (28.5) (7.2) (69.0)

Note: Figuresin parenthesisare the respectiveamounts financed by the credit/loan. a/ Not applicable 6/ All procurementafter date of effectiveness. c/ These items shall be procuredin accordancewith the Bank'sGuidelines for ConsultantSelection. d/ IncludesMNWSSB start-upcosts of US$1.4million.

3.14 The RedhillsWater TreatmentPlant contract(base cost US$4.1mil- lion) would be bid as an ICB turnkeycontract against a performance specificationcombining the evaluationof the supplyof equipmentwith the civil works to determinethe least cost; for this purposeoperating costs would be capitalizedto comparealternative offers. MMWSSB is familiarwith water and sewagetreatment plant biddingand evaluationprocedures having previouslyawarded similar contracts against performance specificatidna. Similarly,ICB contractsfor sewagepumping station upgrading would be awardedon a turnkeybasis. for these turnkeycontracts, a margin of preferenceof 1SX, or the applicablecustoms tariff, whichever is less, would be given on the c.i.f. componentrepresenting equipment and goods proposed to be suppliedfrom abroad.

3.15 Civil works contractswith an aggregatevalue of about US$45.1mil- lion equivalentwould be awardedon the basis of local competitivebidding (LCB) proceduresaecceptable to the Bank since these are contractswhich individuallyare less than US$5.0million each. These relativelysmall contractswould be for installingtubewells, transmission and distribution -15-

mains, sewers,link canals,check dams, and provisionof improvedwater serviceand sanitationfacilities for the urban poor. The LCB proceduresare satisfactorysubject to the revisionsdescribed in Annex 7. Small size contractsfor materialsand equipmentnot exceedingUS$100,000 individually, and aggregatingto not more than US$2.5million would also be awardedunder LCB procedures.

3.16 Prior reviewby the Bank of invitationsto bid and of proposedawards and final contractswould be requiredfor (a) all ICB contracts;(b) all civil works LCB contractsover US$500,000;and (c) a sampleof materialand equipmentsupply LCB contracts. Thus more than 801 of the total estimated contractvalue would be subjectto Bank review. Nevertheless,every effort will be made to group contractsin the interestsof efficiencyand to reduce the total number.

K. Disbursements

3.17 The amountsof disbursementby categoryare shown in Table 5, and the estimatedquarterly disbursement schedule is shown in Table 6. The proposedBank funds of US$69million would be disbursedin 8 1/2 years. The estimateddisbursement schedule shown in Table 6 is consistentwith the 9 year standardBankwide disbursement profile for the sector. The difference betweenthe profileperiod of 9 years and the 8 1/2 year disbursement scheduleof the proposedproject is becausethe projecthas been under implementationsince early 1986. This impliesthat the implementation scheduleprecedes the disbursementschedule by about 1 1/2 years. The abilityof MMWSSB to executemajor water supplyand seweragecomponents, which comprisethe major part of this project,is well established.

Table 5: MADRASWATER SUPPLYAND SANITATIONPROJECT DISBURSEMENTBY CATEGORY Category Loan/CreditAllocation PercentageDisbursement (US$ million) 1.(a)Equipment and materialsprocured 26.2 100l of foreignexpenditures under internationalcompetitive or 100% of ex-factory bidding. localexpenditures.

(b) Equipmentand Materialsprocured 1.4 60% of expenditures. under localcompetitive bidding.

2. Turnkeyworks procured under 7.1 75 of expenditures. internationalcompetitive biddingpractice. 3. Civilworks awarded under 27.1 60% of expenditures. localcompetitive bidding. 4. Consultingservices, technical 2.0 1001of expenditures. assistanceand training. S. Unallocatedcontingencies 5.2 TOTAL 69.0 -16-

Table 6: MADRASVATU SUPPLYAND SANITATIONPROJECT ESTIMATEDSCHEDULE OP DISSURSEMINS IBRDFiscal Year and Quarterly Cumulative Percentageof QuarterEnding: -- US$ million-…- TotalLoan/Credit

1988 September30, 1987 0.6 0.6 0.9 December31, 1987 1.7 2.3 3.4 March31, 1988 2.4 4.7 6.8 June 30, 1988 2.6 1.3 10.6 1989 September30, 1988 2.6 9.9 14.3 December31, 1988 2.9 12.8 18.5 March31, 1989 2.8 15.6 22.6 June30, 1989 2.9 18.5 26.8 1990 September30, 1989 3.2 21.7 31.5 December31, 1989 3.4 25.1 36.4 March31, 1990 3.4 28.5 41.3 June30, 1990 2.9 31.4 45.5 1991 September30, 1990 3.0 34.4 49.8 December31, 1990 2.9 37.3 54.0 March31, 1991 2.9 40.2 58.3 June 30, 1991 2-.6 42.8 62.1 1992 September30, 1991 2.6 45.4 65.8 December31, 1991 2.6 48.0 69.6 March31, 1992 2.6 50.6 73.4 June 30, 1992 2.3 52.9 76.6 1993 September30, 1992 2.2 55.1 79.8 December31, 1992 2.2 57.3 83.0 March31, 1993 2.2 59.5 86.2 June30, 1993 1.4 60.9 88.3 1994 September30, 1993 1.6 62.5 90.6 December 31, 1993 1.5 64.0 92.8 March 31, 1994 1.5 65.5 94.9 June30, 1994 1.0 66.5 96.4 1995 September 30, 1994 0.7 67.2 97.4 December31, 1994 0.5 67.7 98.1 March31, 1995 0.4 68.1 98.7 June30, 1995 0.3 68.4 99.2 1996 September30, 1995 0.3 68.7 99.6 December31, 1995 0.3 69.0 100.0 -17-

3.18 No disbursementswould be made againstland costs,administrative costs or taxes and duties in India. Disbursementswould be fully documented, except for those on civil works contractsunder US$500,OOO,and equipmentand materialcontracts and trainingand servicescontracts under US$200,000,for which disbursementswould be made againstcertified statements of expenditures (SOE). Supportingdocumentation for items disbursedagainst 80s would be retainedby MMWSSBand made availableto IBiD staff for review on request. Such expenditureswould be auditedannually by auditorsacceptable to the Bank (para 3.22). Retroactivefinancing not exceedingUS$0.4 million (0.6Z) of the credit/loanis recommendedfor projectrelated expenditures for civil works awardedafter December3, 1986 under LCB proceduresacceptable to the Bank. To facilitatedisbursement under this project,a specialaccount will be establishedin US dollars,with an authorizedallocation in the Reserve Bank of India, of US$3.2million equivalent. This amountrepresenta four months' estimatedaverage project expenditure to be financedthrough the SpecialAccount. Replenishmentwill be made quarterlyor wheneverthe spe- cial accountis drawn down by about 50X of its initialdeposit, whichever occurs first.

L. Implementationand OperationalAction Plan

3.19 Schedulesfor the design,procurement, construction and commissioning of the projectare shown in Annex 9 and are consideredreasonable. Commis- sioningof the augmentationof water supplycomponent is expectedby 1988. The closingdate is expectedto be December31, 1995. The OAP is shown in Annex 12, and would includetime-bound actions and performancetargets for the first year of projectimplementation. MMWSSB will update the OAP annuallyin agreementwith the Bank.

3.20 ProjectCoordination. MMWSSB has agreedto institutionalizecoor- dinationof all of MMWSSB'sprogram related information. A coordinationunit reportingto the ManagingDirector will be establishedto conveyproject informationto specificaudiences both within and externalto MMVSSB. This unit would be responsiblefor preparationof Bank disbursementapplications, and for coordinationof reportingon physicaland financialprogress, cost forecasting,and projectmonitoring. Projectmonitoring is expectedto occur in responseto trackingthe physicaland financialprogress of design and constructionunder the OAP. The unit would consistof full time staff persons secontedfrom the resourceplanning wing of MHIWSSB.

M. Supervisionand Monitoring

3.21 Projectsupervision coefficients for this projectare not expectedto be significantlydifferent from the averagefor water projectsin the region. BecauseMNWSSB would like to accelerateboth the implementationof the water supplyand institutionalchange components of the project,the projectis expectedto requireabout 13 staff-weeksper year of supervisiontotalling -18-

about 104 staff-weeksover the astimated8 year projectimplementation period. The averagefor water projectssupervision in the region is about 12 staff-weeksper year.

V. Accountsand Audits

3.22 Under its enablinglegislation, MMWSBB is requiredto have its financial statementsaudited by qualifiedindependent auditors. It is expected that MMWSSB shouldexperience little difficulty in complyingwith the Bank's normal requirementsin this respect. At present,MOWSSB is up to date with its audits. Audits for 1983/84,1984/85 and 1985/86have been completedand only releaseof the audit reports is required.At negotiations,assurances were obtainedthat MWSSB will maintainseparate project accounts (including capitaland operatingexpenditures) and acceptablerecords; that its accounts will be auditedby independentauditors acceptable to the Bank; and that audit reportswill be submittedto -.e Bank within 9 months of the end of each fiscalyear. At negotiations,assurances were also obtainedthat auditorsreports will includean evaluationof internalcontrols and financial managementprocedures accompanied by recommendationsof improvementsif necessary. The first year to be auditedwill be 1987/88. In addition,when Bank/IDAreimbursements are requestedthrough SOEs, independentauditors acceptableto the Bank/IDA,will certify that underlyingfiles and data fully supportthe requestsfor disbursements.Since MWSSB is audited by government auditorswho maintaina continuous(in-house) presence in MMWSSB, the certificateof such auditorson individualSOBs prior to submissionto the Bank will be sufficientin lieu of a periodicalor annual report by the same auditors.

IV. ORGANIZATIONAND MANAGEMENT

A. Past Performanceand PresentSituation

4.01 Organization.MZWSSB was initiallyformed as as ad hoc authority,in May 1977, to overseethe crettionof the statutorybody. The management, administrative,and engineeringteam assembledby the ad hoc group remained with MMWSSBin upper level posts after formaloperations began. Some of these seniorofficjrs served as counterpartpersonnel under the WHO/UNDP studiesand are responsiblefor implementingprograms which emerged from these studies(para 3.01).

4.02 MMNSSB is a corporatebody, establishedby the State Governmentin 1978. The Chairmanof the Board and all membersof the Board are nominated by the State Government. The Secretaryto Governmentfor Municipal Administrationand Water supplyis ex-officioChairman of the Board. The Secretary to Government of Finance, the Member-Secretary of the MMDAand the Commissionerof MMC are ex-officio directors. There are three full-time -19-

directorsin management,finance and engineeringfrom the managementof KMWSSBand six non-officialdirectors, nominated by Government,to represent various sectorsof the community. The ManagingDirector of MMWSSB is the Board'schief executiveofficer and is responsiblefor all aspectsof the Board'smanagement. He is assistedby the Financeand EngineeringDirectors. In the general traditionof posts of this nature,the MAnagingDirector is a seniorcivil servantfrom the IndianAdministrative Service with wide experiencein state and local administration.The presentincumbent is new to IKWSSBhaving recently been assignedto this post. The post of Finance Directorwas recentlyfilled with an experiencedprofessional. The Engineer- ing Directoris qualifiedand capablein his respectiveprofession and duties. The post of Controllerof Financehas been filledand the incumbent has been in place since early 1985 and has been successfulin correctingmany deficiencies.A FinancialAccountant and a Managerof Data Processinghave also joinedMMWSSB's management. The most importantremaining vacancies are a Controllerof Financeand ManagementInformation, and a second Financial Cost Accountant.Assurances were obtainedat negotiationsthai the remaining two vacancieswould be filled in agreementwith the OAP and that MMWSSB would consultwith the Bank prior to changingits structureor organization.

4.03 MMWSSB is organizedin five separatesections (see Organizational Chart,Annex 16) for managementpurposes: (i) water supplyand sewerage planning,design and construction,under the EngineeringDirector and Chief Engineer;(ii) water supplyand sewerageoperations, under the Chief Engineer Operations;(iii) finance,accounting and internialaudit, under the Finance Director;(iv) personneland administrationunder a Managerof Personneland Administration;and (v) inventorycontrol and purchasing,under a Materials Manager. Each of the above officersis responsibleto the ManagingDirector.

4.04 Staffing. MMWSSB'stotal labor force is currently6,878 persons,of which 4,725 were transferredfrom MMC when MMWSSB assumed its water supply and sewerageservice responsibilities in 1978/79. Employeenumbers have increasedby an averageof 61 per year since 1978. Administrativeand technical personnelincreased by an annual averageof 132 and labor by 3X. Estab- lishmentcosts have increasedby an averageof 1 per year while revenues increasedby only 4X for the same period. MNWSSB recognizesthe problemof overstaffingbut is sensitiveabout takingaction. Employmentof new employeesis currentlyan importantpolitical perquisite of the Board of Directors. Duringnegotiations, assurances were obtainedthat recruitaentof administrativeand technicalpersonnel will be limitedto absolutelyessential personnelover the next five-yearperiod (1987 to 1992), in order to stabilizegrowth of the administrativeand technicallabor force. The existing staff levelsare generallyadequate to enableMMWSSB to dischargeits presentduties and those requiredunder the projectexcept as stated in para 4.02.

4.05 Operationsand Maintenance.MMWSSB's operation and maintenance(O&M) programis organizedaround 6 area and 99 depot officeswhich are responsible -20-

for production,distribution and treatmentof water and for sewerageoperations. Depot officesdeal with consumercomplaints, sewer obstructions, repairsto primaryand secondarywatermains, house connectionsand metering. Area officeshave overallresponsibility for the 6 main O&M areas of the city includingthe 99 depot officesreporting to them, but also have responsibilityfor the 61 pumpingstations, one water treatmentand 3 sewagetreatment plants servingthe city. Apart from these 6 offices,HMWSSB has two additionaloffices responsible for O&M, one for surfacewater supply in their Region I office,and one for groundwatersupply in their RegionII office.

4.06 Operationsand maintenancehas not been a high priorityactivity of MMWSSBmanagement in the past. Reward and job recognitiongenerally occur more often in the engineeringconstruction and planningand developmentwings of the organization.Less than desirableattention consequently has been paid to efficiencyissues in the plant and depot operations. At the depot level,the main problemsare frequentsewer obstructions,utilization of manpowerand inadequateequipment. In the pumpingstations and treatment plants,the problemsare a lack of propermeasurement of flows,insufficient funds for equipmentrepair and replacement,lack of standbypower and insuf- ficientgrit removalfacilities. At both the depot and plant levelsof operations,there is no satisfactoryinformation system which links worker and equipmentperformance, costs, budgets,and financialefficiency. As part of the OAP, MMWSSB has agreed to expand its managementsystem to include performancebudgeting and cost centerswhich are lower in the hierarchyand closer to the actualwork performed. MMWSSBhas also agreed to acquiremore power equipmentto increaseproductivity and to increasemanpower and super- visory training.

4.07 MaterialsManagement. MMWSSBmaintains an inventoryof some 4,000 items valuedat about Rs 45.0 millionof non-consumableand consumableitems. Storesare locatedat three locationson 16,000square meters of land in the MMA. They are inadequateto serve the expansionplans of MMWSSB. One site is inadequatein terms of its locationin a congestedpart of the city and all three sites are badly in need of repairsand new constructionof covered storagefacilities, improved organization of yard space for large diameter items,stores for inflammablematerials, material handling and weighing equipment,vehicles, a chain link perimeterfence, office and workmensspace, and improvedstaffing, accounting procedures and management. MMWSSB is presentlyresolving some of the above problemsby codifyingits inventoryas a preludeto computerization,increasing the availablestorage space by acquiringland for a new storetand reviewingits purchasingprocedures with the view to updatingthem. It has modernizedinventory monitoring and is improvingits forwardplanning procedures for fast moving items. It is now conductingan analysisof the aging of inventoryto ensurethe disposalof slow-movingitems. Vendor recordsare being updated in order to improve evaluationand prequalificationof suppliers. MMWSSB has agreedas part of the OAP to continueto modernizeits inventoryoperations and to undertake the necessarysteps to achievethis objectiveas soon as possible. -21-

4.08 Xetering. About 281 or 41,381 of the connectionsfor water supply are metered,however, many of the meters are not functioning. It is estimatedthat at least about 351 or 12,000of these are defectiveat any one tim althoughthe actualnumber is probablyhigher due to inadequate verification. Periodicfield checkingof meters is not consistentlydone and only about 50 defectivemeters are repairedweekly in the MKWSSBrepair facilities. This is clearlyinadequate to keep up with currentdemand and much less than is requiredto reduce the 12,000backlog. It is estimated that the capacityof the repairfacility could be three times its present output if better managementprocedures were adopted. MMWSSB currentlydoes not maintaina significantinventory of domesticwater meters. Numbersof defectivemeters vary with distancefrom the three main distributionhead- works in the city and the peripheryof the distributionsystem where pressures are least and at times negativedue to hand pumpingfrom mains during non-supplyhours. In the higher pressureareas, MIWSSB estimatesthat meters may functionproperly for up to two years but only for very short periodsof time on the peripheryof the system. Under the project,MMWSSB will improve the operationsand maintenanceof its existinginstalled meters and agrees to improvethe managementand outputof the meter repair and testingfacility as part of the OAP.

4.09 Bulk meteringcurrently exists to only a limitedextent in the operations of HMWSSB. As a result,production data for water supplyare estimated and may be overstatedsince they are calculatedfrom pump manufacturerper- formanceratings and power use. As part of the OAP, MMWSSB has agreed to rehabilitateexisting meters and procureand installnew productionand systembulk meterswhere requiredto establishan accuratewater production data base.

4.10 Meter Reading. MNWSSB estimatesthat roughly601 of its meter readersare effectiveand that the remaining401 will need trainingand improvedsupervision. As part of the OAP, MHWSSB has agreed to initiatea programof random checkingof meters to verify accuracy,improve record keepingof the bills servedand of the aging of the accounts,improve follow-upnotices and initiateperformance based managementprocedures whereby individual meter reader performance is tied to performance targeting and review. MhWSSB has also agreed to carry out an assessment of its current metering practices under the OAP.

4.11 Public5tadpipes. There are 5,585 public standpipes in the city of Madras whi serve 1.3 millionpeople who consume about 26 mld of water. Standpipeusers have been subsidizedby the NMWSSB for the past severalyears becauseof disputeswith the MMC which is obligatedto pay. Invoicessent by the MVSSB to HNC have gone unpaid for many years. The total amountout- standingis about Rs 79.0 million. CTN has agreed to pay MMNSSB these back chargesin 5 annual installmentscommencing in December1987 and terminating December1991. The currentannual bill is Rs 8.11 millionwhich GTN has also -22-

agreed to pay. An unknownbut relativelylarge numberof these standpipes serve not only the poor who reside in the 1,200 slum hutmentareas of Madras, but also higher level incomepopulations in the Panchayatson the periphery and slum-tenementsin the city. Many of these standpipeswere built during the 1973/74and 1983/84droughts to make water availableto anyone without access to water, regardlessof income. MMWSSB has since adopteda policy of not activelypromoting new connectionsbecause of a lack of supply,leaving many who could afford betterservice to rely on water from a public tap. The problemis exacerbatedin the slum tenementareas which adjoinhutment areas where both incomepopulations share commonwater taps. Most of the resi'ents in these tenementbuildings occupy the premisesillegally since they were assignedoriginally to someoneelse who met specificwelfare criteria. Neitherthe TNSCB which has jurisdictionover the use of these buildingsor MMWSSB,which providesthe water, has addressedthe equity issue. As part of the OAP,MMWSSB has agreed to conducta surveyof these areas to identifythe poor and to carry out the recommendationsof the study.

4.12 Low-CostSanitation. Forty-threepercent of the populationof the MMA (about2.0 millionpeople) are not directlyconnected to the MMWSSB seweragesystem. Of these,about 0.4 millionreside in slum areas or in low-lyingareas in the old city. The remainderof about 1.6 million live in the 12 panchayatsmost of which are unservedexcept for two (Villivakkamand Thiruvanmiyur)currently undergoing connection schemes, and in the areas outsidethe city limits. In the areas outsidethe city limits,MMDA has developedwith the assistanceof IDA credits(687-IN and 1082-IN)40,000 sites and serviceplots in 6 differentlocations which serve 200,000people. These sites are about 80% occupied. The most recentproject of 8,000 sites is connectedto the MMWSSB system for both water and sewerage. The other sites,now fully occupied,have self-containedsystems and are not connected. However,because of soil and hydrologicalconditions, a large number of the 2.0 million peoplecurrently unsewered are not likelyto receivewater-borne sewerageservice in the near term and becauseof their low economicstatus are candidatesfor low cost sanitationsolutions.

4.13 Severallow cost sanitationmethods such as pit latrinesand septic tanks have been employedin the past in Madras with mixed results.This has been attributedto soil in much of the city being clay with a low percolation rate. In both the elum areas and the peripheralpanchayats this situationis ex&cerbatedby lack of space for buildingdispersion trenches or leaching pits, and by high water tables five to six meters below the surfacewhere contaminationof the aquiferis possible. With the help of MMDA, MMWSSB is currentlystudying appropriate low cost optionsincluding pour flush latrines,shallow bury sewersand small bore sewers. As part of the OAP, MMWSSBhas agreed to carry out an assessmentof low cost sanitationneeds, technicaloptions and institutionalrequirements to initiatea low cost sanitationprogram in the MMA. The resultsof the study would be accounted for in the Master Plan update and would be reflectedin an overallsanitation strategyfor Madras.A pilot programof 4,000 units would followthe updated -23-

study to test the recommendations.The pilot programwould also test the feasibilityof MMWSSB servingas the apex organizationin the MMA in order to bring focus and scope to the sub-sector. Under the pilot program,MMiSSB would be responsiblefor providingfinancing and policyand technical guidanceto qualifiedexecuting agencies already operating in the sub-sector such as TNSCB and TNHB. The resultsof the pilot programwould be used to developan expandedlow cost sanitationprogram in the MMA.

4.14 IndustrialWaste. MMWSSB is bound by law to enforcethe regulation of trade effluentsin the MMA. However,MMWSSB statesthere are no major industriesdischarging effluent to the Madras seweragesystem which they have definedas their sewerageservice area (para 3.05). This representsan area much smallerin size than the MKA. MMWSSB'sposition is that the state Water PollutionControl Board (WPCB) is responsiblefor enforcingregulations governingindustrial wastewater discharge. By executiveorder MMWSSB is responsiblefor pollutioncontrol only within the Madras Citv boundary. Outside the area, but withinMMDA, pollutioncontrol is the responsibilityof the IPCB. Water supplysources are monitoredby the WPCB which is supposed to seek the assistanceof MMWSSB wheneverrequired regarding water resources issues. MISSB has begun to establishtargets for improvingsome of the problemsof pollutionin the city. These matterswill be furtherdiscussed with MMWSSBand GTN as a part of the OAP.

4.15 Pilot Privatization.MMWSSB operates67 tankers,22 for sewage collectionand 45 for water deliveries. Exceptfor the collectionof septic tank material,the pricingfor these servicesis below cost. MMWSSB has agreed to privatizeits septictank collectionoperations on a pilot basis in one of the more affluentareas of the Panchayatson the peripheryof the old city where privatizedservice would be affordable. MWVSSBagrees with the principalof privatization,but is concernedthat servicelevels may not be maintainedor improvedif the servicewere not in its directcontrol. However,MMWSSB agreesthat as pricingfor these servicesis improvedthrough bettermanagement practices, the scope for privatizationmay be expanded duringproject implementation.

4.16 ManagerialAccounting. MMWSSB'saccounting system is based on double-entryaccrual accounting principles and practicesfor publicwater agencies. Generaljournal vouchers, impreat funds and an annual budget form the core of the accountingand controlsystems. The systemis centralized, manualand slow in producingmanagement information. Though audits were delayedby about two years, they have now been broughtup-to-date to 1985/86. Budgetarycontrol is weak becauseof untimelyreporting and uneven supervision. Improvementlies in computerizationand improvementsin the qualityof analysis,timeliness of managementinformation and in the expansionof MMWSSB'sbudgeting process to includeforward planning. Doubleentry accrual accountingprocedures have necessitatedthe recruitmentof trainedaccount- ants to fill top and middle level positions. -24-

4.17 Training. An MMIWSSBtraining school for artisans,tradesmon, skilled and semi-skilledpersonnel has been constructed,equipped and staffedunder the water supplyand seweragecomponent of the MadrasUrban Development Project (MUDP-hI,Cr. 1082-IN)with assistancefrom the United Kingdom's NationalWater Council. The school is officiallyrecognized by the CTN as a technicaltrade schoollicensed to providecertificates of competency. Accordingto MMWSSB,numerous unskilled and semi-skilledworkers aspire to upward mobilityin the organization,but are preventedfrom doing so because of a lack of trainingand certification.As part of the OAP, MMWSSIhas agreed to strengthenthe schooland to promoteits role as a vocationaltrade schoolin those fields in which it alreadypossesses competence. The school will also be upgradedto address both the trainingneeds of the NMWSSB resultingfrom the proposedProject, and TWAD. A detailedmanpower and trainingneeds assessmentstudy has been undertakenby TWAD. This study, along with a trainingneeds assessmentof MMW8SB to be completedby the management(06M) consultant(para 3.10) duringproject implementation, will form the basis for strengtheningthe trainingschool. In addition,training providedby the schoolwill be supplementedunder the projectby specialized trainingin Indianinstitutions and by overseastraining primarily for professionalgrades. Consultantsin leak detection,planning, tariff structure, and operationsand maintenancewho plan to assistMMWSSB under the proposedproject would also provideon-the-job training (para 3.10).MMIOSSB's plannedtraining activities in the years 1987/88-1995provide for average trainingperiods of: 50 man-monthsper year withinMMWSSB and its school,and 20 man-monthsper year in other inatitutionsand overseas.

B. FutureOrganizational Performance

4.18 Targetsfor the first year of projectimplementation (OAP, Annex 12) are groupedaccording to the three main technicalareas of focus of the institutionalstrengthening component of the project:engineering design and planning;operations and maintenance;and financialrecovery. These targets will become part of MMWSSB'scomputerized management information system to facilitatereporting to MKWSSBmanagement and Bank supervisionteams.

4.19 Role of the Board of Directorsin PolicyAnalysis. While engineering and physicalplanning capabilities within the variousexecuting agencies in the sectorhave traditionallybeen strong,leadership is uneven on sector coordinationand finances,long-range planning, operations and maintenance, water conservationand industrialwaste control. The issuesbetween NMEUSB and MMC on cost recoveryfor public standpipesand enforcementof solid waste collectionand disposalto preventclogging of sewersare two examplesof this difficulty. Most policy makingbodies in the water sectorin Madras have operatedexclusively in an administrativeoversight capacity to control the use of agencyresources and are less inclinedto formulatepublic water policyor to use policyas a means for governingthe sector. Systemsand proceduresfor effectivepolicy formulation,analysis and prioritizationhave not developedadequately. Qualityof informationprovided to the boards of -25-

directorsby their staff is often uneven.Prioritization within higher order Soals is rarelycarried out with rigor and objectivity. Consequently,policy boards in the sectorin Madras are often less effectivethan their potential indicates. MNWSSB management,the Board of Directorsand the CTN have agreed to a joint Bank/MMWSSB/GTNreview of MMWSSB'sannual investmentplan and budget. MMWSSBhas also agreed to promotea programto improvethe policy analysisand formulationskills of the unofficialmembers of the board of the water authority.

V. FINANCIALASPECTS

A. MMWSSBFinancial Position and Performance

5.01 Introduction.On April 1, 1979, the beginningof the fiscalyear, MM1SSB assumedthe responsibilitiesand assetsand liabilitiesof the MMC and CWD of the GTN for water supplyand seweragein the projectarea. Under the act establishingMMWSSB and authorizingthese transfe's,MNWSSB is required to be self-financingand to generatesufficient income to meet its expenses and contributetowards future obligations and costs. Annual revenuesare over US$10 millionand MMWSSB has about US$50 millionof net fixed assets in operation. Capitalexpenditures since 1978 have been about Rs 650 million in currentvalues. This was spentmostly on rehabilitation,upgrading and minimalextension of existingwater supply into unservedareas of the city; and for rehabilitation,upgrading and extendingthe seweragesystem. Rela- tivelylittle of these expenditureswere used to augmentwater resources. Capitalexpenditures for the foreseeablefuture are expectedto be substantial as MMWSSB embarkson a programto increaseits supplyof water.

5.02 TariffLevel and Structure. Table 7 summarizesthe old and new -01NSSBtariff levels for water and sewerage. The old tariff levelsand structurehad remainedunchanged for 6 years and failedto providerevenues to enableMNWSSB to generatesufficient cash to cover all costs including annualcontributions for equipmentreplacement and systemexpansion. Thirty nine percent(39%) of billedwater revenuecame from meteredcharges; of this, 82% was generatedby industry,public administration and commerceand 11X by public standpipeswhen collected. Unmeteredwater revenueaccounted for 122 and seweragetax revenue42Z. Connectionfees and other miscel- laneousaccounted for another7X of total revenues. -26-

Table 7: WATER AND SEWERAGETARIFFS

WATER ({) (1) (Rs) (is) Old New Old Now Yield Yield Tariffs Tariffs (in revenue)(in revenue) Metered Domestic 0.50 1.00 2 2 Commercial 1.00 3.00 3 4 PublicAuthority 1.00 3.00 13 19 Industrial 1.50 5.00 14 34 Port Trust Ship 3.00} 5.00) Port Trust Non-Ship 2.00} 2.00) 2 1 Standpipes 0.50) 0.50} Slum Supply 2.00} 2.00) 5 1 , ~~~ ~~~~~~~~~39Z61X Unmetered Domestic No water charge Rs 50/mo flat rate Comuercial Rs 10/mo Rs 50/mo 12Z) 10) flat rate flat rate I I Standpipe I No water charge Rs 75/mo I } flat rate . 54Z } 36Z Tax on Annual 1 1/2Z of ARV per half year } } Rental Values } } (AV) } SEWERAGE } }

Tax on ARV 5 1/2Z of ARV per half year 421) 261) SewerageSurcharge 201 of water } } charges } } MiscellaneousFees 7Z 31 TOTAL 1001 1001

5.03 In additionto the revenuesgenerated from water tariffsshown in Table 7, water and seweragetaxes are leviedby MNWSSB for all unmeteredand unconnectedproperties based on a percentageof assessedproperty rental values. The tax is levied on a slab systembased on the annual valuation. The number of dwellingscurrently assessed by the NMC is 176,650. The water and swerage component of the property tax is 71 for all valuation bands and generatesabout 541 of all water and sewerage revenues. As a part of this 71 tax, a 1-1/21water tax and a 5-1/21 seweragetax are assessedon all registeredproperties. In the case of unmeteredconnected consumers, the 1-1/21water tax representsa contributionto the cost of providingwater. In the case of unconnectedconsumers, the water tax representsa charge for the operationand maintenanceof publicfacilities such as standpipesand tanks. Unmeteredconsumers connected to the publicsupply systemare currently being chargedthe same rate as the unconnectedconsumer. -27-

5.04 All assessedproperties pay a 5-1/21 seweragetax irrespectiveof whethera connectionto the public collectionsystem exists. The justifica- tion for this is that environmentaland publichealth benefitsare derivedby all citizensfrom the existenceof a piped seweragesystem.

5.05 The averagemonthly domestic water bill (includingthe water and seweragetax) for metered connectionswas Rs 12 and for unmeteredconnections it was Rs 6. A Rs 12 bill is 21 of the monthlyincome of an averagefamily in the 40th percentile. Both of these water bills were calculatedon the basis of a currentdomestic tariff of Rs 0.50 per 1,000 liters. They indi- cate that higherdomestic tariffs would be affordable.

5.06 New Tariff Level and Structure. In November1985, the Board of Directorsconsidered a proposalfor revisedtariffs (Table 7 and Annex 10) as a conditionof appraisaland decided to seek approvalfrom GTN to revise tariffsto generatesufficient income for meetingtheir financialcommitments and for financingthe proposedcapital investmentprogram includingthe proposedproject. The proposalwas designedto increasetariffs by about 1101 and revenuesby 931. Four principleswere followedby MMWSSB in the designof the proposal:(a) progressivepricing should be followedto encourageconservation; (b) differentialpricing should be followedto be affordableand equitableto the populaceat large; (c) the rate structure shouldbe transparentand simpleto understand;and (d) free allowances shouldbe reduced(para 5.13).

5.07 In December1986, the GTN appro-4dthe proposalas submittedby the MMWSSB. Under the new tariff increase,the averagetariff weighted for all categories(domestic, commercial, industrial, port trust ship and nonship, standpipes,and slum supply)is about Rs 2.73 per 1,000 liters. This figure comparesfavorably with average tariffsof about the same magnitudefrom other water authoritiesin India,namely in KanpurtAllahabad and Lucknow. The averageincremental cost of water proposedunder the project is estimated to be about Rs 5.05 per 1,000 litersbased on a 101 opportunitycost of capital. The new averagetariff of Rs 2.73 is 541 of the full incremental cost, while tariffsfor industryand port trust ship are priced at full incrementalcost.

5.08 Based on the tariff proposedfor domesticresidential users of Rs 1.00 per 1,000 liters,the averagemonthly domestic water bill (including water and sewagetaxes) for meteredand unmeteredconnection is Rs 18. A Rs 18 per month bill representsabout 2.71 of monthly incomeof an average familyin the 40th percentile.

5.09 Profitability.Net incomehas been negativefor the past three years (Annex6). While revenuesare shown on the incomestatement to have been sufficientto cover operatingcosts, actual collections for the period amountedto only 76Z of incomeaccrued for the period. Consequently,actual -28- incomewas insufficientto coveroperating expensesfor two of the three years. This situationhas resultedin the use of fundsearmarked for capital investmentto coveroperating deficits (para 5.14). 5.10 Operatingexpenses increased for the periodby an average11 per year in nominalterms or abouttwice the inflationrate for the sameperiod. Mostof the realgrowth in expensesis due to increasedpayroll for salaries and wageswhich went up nominallyby 122 and 10 respectively(see para4.04), and powercosts which increased by 131 per year (Annex10). 5.11 Billingand Collection.Billing for the 176,650properties assessed for waterand seweragetaxes in the MNC is computerizedwith a billingcycle of twiceper annum. Computertime was untilrecently purchased from other publicagencies but M01SSBhas recentlypurchased its own microcomputers and is graduallycomputerizing its operations.Billing and collectionsare almostcompletely computerized in the new system. Billinginformation is providedannually by MNC and billsare preparedand servedby 0NW881;353,300 billsare preparedannually. Delays in the preparationof billsare not uncommondue to unavailabilityof computertime. Billsare payablewithin 30 daysof receipt. Collectionis made througha networkof branchbanks and 16M681collectors. For the pastthree years (PY83/84to 85/86),collections haveaveraged a&out a thirdof totalbillings and 771 of incrementalbillings for the yearresulting in a net averageincrease of about211 in annual backlog. Consultantshave completedstudies to improvecollection of water and sewerage charges and taxes. As part of the OAP, MOWSSBhas prepared a detailed set of targets for monitoring improvements in both billing and collectionswhich can be monitoredmonthly and quarterly(Annex 12, item 8(d)). 5.12 CustomerReceivables. Customer receivables relative to billingsare high (0.70average for the pastthree years) indicating poor collection performancein the yearcollection is due,but also poorpolicies and proceduresfor writingoff doubtfulaccounts. The averageage of customerreceiv- ableshas rangedfrom 12 to 24 months. MM88B doesnot havea policyof writing-offdoubtful accounts. The sum of the ratiosfor collectionand receivablesefficiencies has not significantlychanged for the past three yearsindicating little willingness on the partof MM1 8B to writeoff bad debts. The effecthas beento overstateM018SB's net incomeand liquidity. As partof the OAP,10S855 is preparinga set of policiesand proceduresto implementa programto writeoff doubtfulaccounts and to makeappropriate adjustmentsto the accountingrecords. 5.13 FreeAllowances. Free allowances of watercurrently account for about101 of totalwater production and up to 30,000liters per monthper consumerconnection is providedto domesticand commercialconsumers. M1WSSB submitteda proposalto Government,along with its proposalto increase tariffs,to eliminatefree allowances immediately except for the domestic category.These proposals were approved by GTN in December1986 (Annex 10). -29-

Revisionsto sectionsof the enablinglegislation also were approved by GTN to broadenthe definitionof certaincategories of consumersand to facilitatethe reductionof freeallowances. Under the approvedregulations, freeallowance for the domesticconsumer will be reducedby 50 from30,000 to 15,000liters per monthover a two-yearperiod and wouldaccount for only about51 of totalproduction at thattime. As partof the OAP,MMWS85 plans eventuallyto eliminatefree allowances completely and has agreedas partof a studyof its tariffstructure to reviewways of eliminatingthe free allowances(para 3.10). 5.14 WorkingCapital. The managementof workingcapital has becomea high priorityactivity for 3M0850as a resultof the preparationof the proposed project.While MWSSB has not systematicallymanaged or plannedits working capitalrequirements in the past,the need for doingso was not pressing since 0M018Bcould always rely on the CTN for additionalrevenues when it founditself in a deficitsituation. As partof the OAP,100S8B has agreed to takecorrective actions and to pay greaterattention to the managementof its workingcapital. It is planningto expandits budgetingsystem to includeperformance based budgeting and controlaround cost centers and to improvethe planningand controllinks between working capital management and operations(civil works, inventory, equipment renewal and replacement,collections,and payroll).300S9B has agreedto assignresponsibility for the managemntof workingcapital to the controllerof finance. B. FutureFinancial Performance 5.15 Assumptionsfor financialprojections for M00SSBup to FY95are presentedin Annex10. Thesestatements include summaries on: WaterProduc- tionand Consumption,Water and SewerageRevenues, Receivables, Income and Expenditures,Sources and Uses,and BalanceSheets. Key financialindicators for use duringproject supervision are presentedin Annex10 48 wvll. 5.16 Profitability.The projectedfinancial statements are basedon the recenttariff increase of December1986, a furtherincrease of about25X in 1992and on plannedimprovements in the reductionof costsand in billing and collection.The objectiveof the tariffincrease was to generatesuffi- cientcash to coverthe costof operationsand maintenance,debt serviceand about401 of annualtotal investment. Collection efficiency is projectedto increaseto 851 as a resultof: Computerizationof W08SB'saccounting and managementinformation systems; computerized monitoring and follow-upof customerbillings and collections(refer to OAP, Annex12, item8(d)); improvedmanagement and supervisionof billingand collectionbecause of improvementsin performancebased budgeting procedures; improved customer educationpractices and a willingnessby MM3SS to disconnectservice for non-paymentof bills. Thesemeasures would have the impactof reducing customerreceivables carried over fromone year to the nextto an averageage of under2 monthsby the end of the project.Profitability and liquidityare projectedto producesufficient revenue surpluses to coverall costsand an -30-

increasingpercentage of annualcontributions to a fund for rehabilitation and replacement. At negotiations,MMWSSB agreed to a financialperformance cash generationcovenant to cover operationsand maintenance,increases needed in workingcapital, debt service,and a provisionfor contributing internallygenerated funds to MMWSSB'sannual total investmentprogram for replacementand expansionin accordancewith targetsestablished in the OAP.

5.17 Managementof WorkingCapital. Demandshave been placedon the FinanceDirector for funds for: advancesfrom contractors;replenishment of inventoryfrom materialsmanagers and from constructionand O&M engineers; payablesincluding payroll from accountingclerks; and major rehabilitation and replacementfrom the EngineeringDirector. The FinanceDirector has attemptedto meet these competingcash needs withoutproper budgetingand planningsystems (para 5.14). Operatingexpenses, rehabilitation and replacementof equipmentand financingof capitalinvestment will take up the major portionof the availablecash of MMWSSB. Cash needs for rehabilitation and replacementwill be determinedsystematically and budgetedaccordingly. To ensure that MMHSSB will have sufficientliquidity, under the OAP MMWSSB will: (a) set up a rehabilitationand replacementfund to be effectivefor FY88, and ensure that this fund be maintainedat a level no less than annual estimatesfor depreciationand in accordancewith the annualbudgets set up for this purpose;and (b) meet the targets indicatedin the OAP for annual contributionsto the financingof capitalinvestment.

VI. ECONOMICAND SOCIAL BENEFITS

A. Background

6.01 This is the first Bank Group assistedwater supplyand sanitation projectfor the city of Madras,and is the first stage in a programof water supplyand sewerageworks recommendedin a 1979 UNDP/WHOfunded Master Plan reportfor the Madras urban area. The Projectmeets only a portionof the currentand projectedwater supplyand sewerageneeds of the projectarea, but is an effectiveinterim measure, pending the completionof further detailedstudies of alternatewater resources,and the longer term development of a larger,and probablymore distantwater supply source.

6.02 Withoutthe project,the water supplyand sewerageservice levels in Madras cannotbe maintainedeven at their presentlow level. With the project,present service levels would be maintainedand in some instances improved. The high risk of completefailure of the water systemwould be dramaticallyreduced by the safetynet of conjunctiveoperations. The additionalwater would permit some industrialexpansion in the Manali Industrial Park which otherwisewould not occur. The systemfor the collectionand disposalof human wastes would be improvedthereby reducing the frequency with which sewers back-upand surcharge,causing contamination of water courses,dwelling areas, footpathsand roadways. Serioushealth risks would -31-

be reducedconsiderably. The projectwould strengthenthe capacityof MNWSSB to improveits financialviability and operationalefficiency, and developa long-termplan.

B. Environmentaland Health Impact

6.03 The water supplycomponent will enable the level of the present intermittentsupply to be maintained,and marginallyimproved, as water demand continuesto grow with the projectedincrease in population. The incidenceof water-relateddisease shoulddecline with the more uniform distributionof piped water,marginally improved pressures and longer supply hours, particularlyfor consumersusing publictaps. Improvementand exten- sion of the sewagecollection system will reduce contaminationof streets, footpathsand dwellingareas which presentlyoccurs when sewageflows exceed the capacityof the system. Thus, the proposedwater supplyand sewerage improvements,by ensuringan equitabledistribution of water, albeiton an intermittentbasis, as well as improvedcollection and disposalof human waste,will reducepotential sources of diseasethat presentlypervade the urban community,particularly the slum areas.

C. PopulationServed

6.04 It is estimatedthat, by FY92, an additional0.57 millionpeople in the projectarea will benefitfrom the extensionand augmentationof water supplysystems and that the approximately3.75 millionpresent consumers will benefitfrom improvedwater services. The supplywill be increased throughoutthe projectarea, from the averageof 78 lcd to the averageof 87 lcd in 1991 and then declineto 82 lcd by 1996. This quantitystill falls below the acceptedupper limitsof Indian servicelevels (para 2.05). Local authoritieswill provideadditional public latrinesin the urban areas, and MI4WSSBwill providepublic taps in the areas where need is greatestand restrictedflow is recommended.

D. PovertyImpact

6.05 Of the total incrementalpopulation of 1.21 millionpeople to be servedby 1995, approximately0.50 millionrepresent the urban poor. Of the 3.75 millionpeople who will benefitfrom improvedwater servicesunder the project,about 1.5 million fall within the urban povertygroup defined as householdswith incomesunder Rs 660 per month. Additionalpublic taps will be providedto better serve this sectionof the urban communityliving on propertiesnot connectedto the water system,and the peopleliving in slums. The designtargets in this respectare 150 peopleper publictap, and a distanceof not more than 100 meters betweendwellings and taps. As a conse- quence,the daily waiting times for water collectionwill be reducedand walkingdistances shortened, in additionto other servicelevel improvements. By 1995, an estimated25% of the populationwill be servedby public taps and the remainderby meteredor unmeteredconnections. The presenthours of -32-

supply are about 4 hours daily, becauseof lack of water. These hours will be marginallyincreased on completionof the projectand water supplypres- sures will be marginallyimproved. Whereashardships imposed by the present water shortagesaffect all levelsof the community,the poor are unable to affordmeans by which these hardshipsmay be alleviated(such as wells, pumps and storagetanks) and would thereforebenefit more than middle or higher incomegroups.

E. EconomicBenefits

6.06 Average incrementalcosts (AIC),used as a proxy for the long-run marginalcost of water supply and sewerage,are based on the capitalcost of the projectin the period 1986/87to 1994/95. Incrementalrecurrent costs associatedwith this investmentprogram are includedfor a 40-yearaverage operatinglife of assets. All calculationsrefer to constant1986/87 prices. Revenueprojections do not includepossible future changes in tariffs because of uncertaintyof whether they would occur. Price distortionsare minimal except for wages paid to unskilledlabor. Thus, labor costs are projectedat both nominaland shadowwage rates. The shadowwage rate is taken to be equal to 70% the nominalrate. Annex 13 summarizesthe analysisfor the AIC and the economicrate of return (para 6.07).

6.07 The calculatedeconomic rate of return,using revenuesas a proxy for benefits,underestimates the real economicreturn of the project since it excludesbenefits which cannotbe meaningfullyquantified. For example,the amount by which consumersvalue additionalconsumption above the price paid for additionalwater, is not included. This amountsto approtimately3 to 5 mld of water sold by privatevendors at an averageprice of Rs 27 per 1000 liters. This consumer's surplusis significantbecause even with the incre- ment of water being added as a result of this project,the total availability to the MMWSSB servicearea of clean,wholesome water is projectedto remain insufficientto satisfyessential demand. Furthermore,although projected improvementsto the sewerageand sanitationsystem are slight,they are essentialto maintainminimally acceptable standards of serviceand, therefore, the benefitsfrom this componentof the projectto health,sanitation, and environmentare substantial. Finally,other nonquantifiablebenefits that are omittedfrom the IR calculationinclude increases in labor produc- tivityand employmentopportunities, increased property values, the promotion of economicdevelopment, improved institutional capabilities, and the reduc- tion in the drudgeryand anxietiesassociated with currentlevels. The economicrate of return is 81.

P. Affordability

6.08 DomesticConsumers. Of 176,650properties assessed for property taxes, 165,170are domesticproperties. Forty percent(402) of the householdscovered by the MKA are in the slums,are not assessedfor property tax and do not have any house connection. Consequently,of the 900,000 -33- householdswhich live in the MMA, 540,000live on taxableproperties repre- sentedby 165,170domestic properties or 3.3 householdsreside on average in eachproperty. The estimatedincome distribution of these540,000 householdsis shownin Annex13. 6.09 For thisanalysis, the conservativeassumption of monthlyconsumption of waterper connectionof 25,000liters has beenadopted, based on an assumedaverage of 18 personsper propertyand a domesticconsumption of about47 litersper capitaper day (18 x 47 x 30). On a per householdbasis, thiswould be equivalentto 5.5 personsper householdand dailyconsumption of about259 liters(5.5 x 47). Totalaverage water supply for Madras has beencomputed at 78 lcd by MMW8SB. 6.10 Studiesconducted by MMDA and the TNSCSconclude that more than23% of Madrashouseholds have monthly incomes of lessthan Re 400; moreover, about401 of householdshave incomesunder Rs 600 per month. Assuminga uniformdistribution of householdwithin each incomegroup, the marginal connecteddomestic consumer would have a monthlyincome of Rs 660 in 1986 prices. It has beenassumed that only 501 of the cost of livinghas been neutralizedfor thisincome category. The annualrental value of the lowest incomedomestic connected consumer of wateris Rs 1,000. Basedon free allowancesof 15,000liters per monthper connection,the averagewater and seweragebill for meteredand unmeteredconnections would be lessthan 2.71 of monthlyincome. 6.11 Industrialand CommercialConsumers. The proposedincrease in tariffs is affordableto industrialand commercialconsumers as well. Survey results(Annex 13) indicatethat the averagemonthly water bill for industry and commercewould be lessthan one percent(11) of totalmonthly expendituresand lessthan 2.5Z of monthlyexpenditures when the waterand power billsare addedtogether. VII* AGREEMENTSREACHED AND RECOMMENDATIONS

1.01 Duringnegotiations, agreements were reachedon the followingwith CTE: (a) a schedulefor collectionof pastwater charge claims for standpipes fromMMC and the TESCB(para 4.11); (b) thatthe GTN has takenall appropriateactions required to obtain passageof legislationto regulategroundwater extraction and usage in the IMAat thistime and haveagreed with the Bank to a remedyin the eventregulation of groundwaterhas not occuredby June 30, 1988 (para2.06); -34-

7.02 Duringnegotiations, agreements were reachedon the followingwith !K8SSBs

(a) adoptionof a financialcovenant which would requireMMWSSB to take all appropriateaction to generatecash sufficientto cover operations and maintenance,debt service,increases needed in working capital,and providesufficient internally generated funds for capital expendituresindicated in the operationalaction plan (para 5.16);

(b) recruitmentof administrativeand technicalpersonnel will be limited to absolutelyessential personnel for the next 5 years to 1992 in order to limit the growth of numbersof administrativeand technical personnel(para 4.04);

(c) essentialposts would always be filledand that MMWSSB will take appropriateaction to fill the post of Comptrollerof Financeand ManagementInformation Systems and a secondfinancial cost accountant, and that MMWSSB would consultwith the Bank prior to making any materialmodification in its structure,or organization(para 4.02);

(d) to update the operationalaction plan annually(para 3.19);

(e) audited statementsand reportstogether with an evaluationof inter- nal controlsand financialmanagement accompanied by recommendations of improvementsdeemed necessary,and assurancesthat audits (agency and SOS audits)will be carriedout by auditorsacceptable to the Bank and submittedno later than 9 monthsafter the end of each fiscalyear (para 3.22).

7.03 Duringnegotiations, assurances were reachedwith MMWSSBon the followingdated actionsfor the OAP (Annex12):

(a) issuingproposal requests for leak detection,upgrading the Water and SewerageMaster Plan/designconsultancy; assessment of low cost sanitation;tariff reform study; and O&M managementconsultancy (para 3.10);

(b) a jointBank/MWSSBI/GTN review of MMWSSB'sannual investmentplan and budget (para 4.19);

(d) expandingits managementsystem to includeperformance targetting and budgetingaround cost centers(para 4.06 and 5.14); -35-

(e) completingits analysisof aging inventoryand its programfor disposal of slowmoving items; and implementationof its programfor managinginventory (para 4.07); (f) improvingexisting meter and meter readingoperations and the completionof an actionplan for same(para 4.08 to 4.10); (g) a pilotprogram for low-costsanitation (para 4.13); (h) completionof a workprogram lor strengtheningits trainingschool (para4.17); (i) a set of billingand collectiontargets (pars 5.11 and 5.16); (j) developmentand adoptionof a set of policiesand proceduresto write off doubtfulaccounts and to disconnectdoubtful accounts (para 5.12); (k) creatinga rehabilitationand replacementfund to be effectivein FY88 to be maintainedat a levelno less thanannual estimates for depreciationand in accordancewith the annualbudgets for rehabilitationand replacement(para 5.17); (1) civilworks for the Arani-Kortaliarlink canal would be executedby the TamilNadu PublicWorks Department (TNPWD), but thatNMWSSB would remainas the leadexecuting agency (par& 3.13);

(m) exploringthe possibilityof privatizationof its sewagecollection operationson a pilotbasis in one of the moreaffluent panchayats on the peripheryof the old city (para4.15).

7.04 Recommendation.The proposedproject constitutea a suitablebasis for a Bank/IDAblend to GOI providinga Bankloan of US$ 53.0million and and

IDA creditof SDR 12.5million (US$16.0 million equivalent). Retroactive t financingfrom December 3, 1986,not exceedingUS$400,000, is recommendedfor project-relatedcivil works. -36- ANNEX1 Page3 of 3

INDIA

MADRASWATER SUPPLY AND SANITATION PROJECT POPULATIONFORECASTS AND DEMAND

1. The 1167 squarekilometer Madras Metropolitan Area (MMA),is com- prisedof the City of Madrasand its environs. The projectarea is identical with the limitsof the City of Madras,which coversan area of 173 square kilometersincluding an additionalarea of 12 panchayatson its periphery added in 1978. The 1981 populationof Madrascity is 3.27 million inhabitantsas per the 1981census. No extensionof the Nadrascity boundary is expected,and no changein the projectarea is envisagedfor the foresee- able future. 2. The projectedpopulation levels and land use patternsfor the project area are basedon data providedby MKDA. The projectionsreflect GTN's policyto limita furtherincrease in populationdensity in the centralurban core area and to encouragedevelopment in areasadjacent to Madrascity limits,initially along major transportationcorridors. Population projec- tionsalso reflectMNDA's proposals to limit industrialdevelopment in the urbancore area,and to continueto discouragethe developmentof any intdustriesusing largequantities of water. Industrialwater consumption, which is totallymetered, is actuallystatic due to shortageswhich cannotbe resolvedin the shortterm, giving credibility to MMDA'sproposal for limited industrialdevelopment in Madrascity. Increasein employmentwill thus be limited,and it is expectedthat migrationwill not appreciablyincrease but be maintained at about presentlevels. MMDA thereforeexpects that the slum populationwill leveloff under the impactof Governmentcontrol.

3. For the purposeof projectingpotable water demandin the project area, and analyzingservice levels, the latestMMDA's data and recommenda- tionswere used 1/ which lead to the populationforecast indicated in Table1.

Table 1: POPULATIONFORECAST IN THE PROJECTAREA (Populationin Millions)

Prime Mixed Commer- Year Residential Residential cial Slum Total 1986 1.90 0.53 0.15 1.17 3.75 1989 2.21 0.52 0.16 1.18 4.08 1991 2.37 0.56 0.17 1.19 4.29 1996 2.79 0.65 0.19 1.23 4.86 2001 3.29 0.74 0.22 1.28 5.52

4. The accuracyof the populationprojections is not an importantmatter in the contextof the projectbecause there is no prospectof meetingthe totalwater needs of Madraswithin the foreseeablefuture (para 2.14).

I/ "MadrasMetropolitan Area Demography-1981"prepared by MHDA. -37- AX 1 Page 2 of 3

S. ^aterDmands. Theoreticalwater demandsare basedon population projectionsin Table 1 and the followingper capita requirementstaken from the WaterMaster Plan of 1979.

Per capita requirements literlperson/day

Consumer Class 1977 2002

Residential 146 162 Mised residential 90 128 Commercial 90 128 Slum 45 67

6. To domesticdemand is added institutionaldemand and demandfrom industryinside the City whichwere basedon recentsurveys by HWWSSB. Projectedincreases of waterdemand outside the City in the Wanalicomplex were decidedby an expertcommittee established by the Governmnt in 1985. Those figuresare summarizedin Table2 below.

Table2: VATIMDWUMD VITUT RgESCTIMOU (INCLUSIVROFUM&CCOUVTD-P=-WATU) Population iPer capitarequirementi Category requirement~ | (inmillion) I (Icd) I (old) rl-~~------I------I----~------~------I--- |Prime Mixed Cor- Slum UPrimeMixed Comrn- Su UPrimeNised Com- Slum In- IndustriesUTotai Iresi- resi- mer- Iresi-resi- mer- Iresi-resi- mer- sti- Idea- den- cial Iden- den- cial Iden- den- cial tu- In- Out-I Itial tiat 1tial tial Itial tial tion-side sidel I I I al city cityl I I I (a) (a) (b)I _^__I__--- _------_-__------I ------1j…__------_ ------_ ------f ----- I…---- 198611.900.53 0.1501.1711 152 114 114 53 1289 60 17 62 10 8 70 1516 198912.210.52 0.1641.1851 153 116 116 55 1338 60 19 65 15 17 77 1591 1m 112.37 0.556 0.1731.1911 155 118 118 57 1367 66 20 68 20 25 82 1648 199612.79 0.65 0.1951.2291 158 123 123 63 1441 80 24 77 22 30 95 1769 200113.2890.737 0.2191.2761 162 128 128 67 1533 94 29 85 25 38 107 1911 (a) Basedon survey (b) Per Expert comittee 1985 -38- Pag 73of 3

7. Duringthe WaterMaster Planning exercise in 1976-79,1/ it became apparentthat the costsof bringingwater to Madrasfrom far away sourcesin the futurewould be extremelyhigh, and that the availabilityof the needed quantitiesof waterwere far from assured. Consequently,Government decided to designwater mains for a non-industrialconsumption of 93 litersper capitaper day for the year 2000. The water requirementunder this restrictedassumption is calculatedin Table 3 below.

Table31 ESTIMATEDWATER IBQURIUTS 2/ (xICUSIIvOf UVACACUNTD-FOR-1ATR)

Year I Populationmillion WWater requirement(mld) Industries(mld) T Total I (a) | I (mld) 3 Domestic Co_mercial | Domestic Commer- Insti- Inside Outside | eg93Q lcd cial e tutional city city I _. __ _ _ t 93 lcd (b) (b) (c) 1986 1 3.60 0.150 1 335 14 10 8 70 437 1989 I 3.917 0.163 I 364 15 15 17 77 I 488 1991 I 4.118 0.172 I 383 16 20 25 82 5526 1996 I 4.675 0.195 I 435 18 22 30 9S I 600

2001 3S.299 0.221 I 493 20 25 38 107 I 683

(a) Demographystudies - M DA, 1984 (b) Based on survey (c) Technicalcommittee, constituted by COTN, 1985

1/ TamilNadu Water Supplyand SeweragePre-Investment Studies Madras MetropolitanArea - WWIIND/NPIP/001- UNDP/IND/75/008 Engineering-Science, Arcadia,California in associationwith Shah TechnicalConsultants (PVT) LTD, Bombay,India. 2/ Gross averagedemand based on limitedavailability of water. -39- ANNEX2

INDIA

MADRASWATER SUPPLYAND SANITATIONPROJECT

UNACCOUNTEDFOR WATER

In the Water Supplyand SewerageMaster Plan preparedduring 1976-79, it was estimatedthat on the basis of limitedtests unaccounted for water in Madras would be about 20-30X of production. However,the test techniquesemployed pressures much higher than those normal in the Madras distributionsystem and the estimatesare thereforeconsidered high. Due to the methods employedby MMWSSB in distributingwater in four hour periodsper day to all parts of the servicearea, the pressuresin the distributionmains are extremelylow - varyingbetween 0.3 and 0.9 metersabove ground level. This is achievedby throttlingthe valvesat the pointswhere distribution mains connectto the centraltransmission mains. With these pressures, leakageis expectedto be unusuallylow. Even with the increasein supply providedby this project,demand will far exceed supplyand HMWSSB will continuethe currentoperation - being able to offer slightlybetter service for longer periodsof time. Therefore,based on demand analysesundertaken in July 1986 the percentageof unaccountedfor water is about 202. It shouldbe understoodhowever that at such time as very large,longer term supply is providedin Madras, giving 24 hour supplyat more normal working pressures,the percentageof unaccountedfor water will probablyincrease to about 402 of production. This will be due to the known poor condition of many old watermainsand serviceconnections. MMWSSB has agreed to implementa programof leak detectionand repair to reduceunaccounted for water.

SEWERAGETREATMENT/COLLECTION ZONES

Zones Localities Treatment Capacity Remarks Plant site in mld.

I. Tondiarpet,George Kodungaiyur 80 Secondary Town, Chintadripet& portionof Triplicane.

II. Perambur,Sembium, Kodungaiyur 80 Secondary Choolai,Purasawalkam, Nungumbakkam.

III. Anna Nagar,Aminkikarai, Koyambedu 34 Secondary Kodambakkam,T. Nagar treatment

IV. West Mambalam,Saidapet Nesapakkam 23 Secondary treatment V. Triplicane,Mylapore, Adyar, BesantNagar, Perungudi 45 Primary IndiraNagar treatment -40- ANNEX3 Page 1 of 6

INDIA

MADRASWATER SUPPLY AND SANITATIONPROJECT

A. PLANNEDIMPROVEMENTS TO WATERSUPPLY SYSTEM

1. Augmentationof water supply in this projectconsists of development of nearby sourceswhich will providetime for planningand implementingmajor mediumand long term solutionsbased on conveyingwater from sourcesseveral hundredsof kilometersaway.

2. The Bank earlierhelped initiateUNDP/WHO studies of groundwaterand surfacewater sourcesin the vicinityof Madras, and in 1985 a UNDP supported hydrologicaland hydrogeologicalstudy was completedof the Arani, Kortaliar and Palar river basins. This study identifiedthree new wellfieldsat Poondi,Kanzigaiper and KortaliarFlood plainshaving a safe yield of about 55 mld of water. The study also indicatedthat the Arani river has a surplus flood flow, of which about 27 mld can be diverted through a link canal into the KortaliarRiver and thence to the Poondireservoir system. It will also be possibleto constructfive check dams on the Kortali4rRiver to impound surpluswater for infiltrationduring the monsoon season to stabilizethe groundwater table,which has been fallingdue to increasedpumping for agriculturaland other uses and due to the frequentdroughts.

3. In order to stop and reversesalt water intrusion,which is threaten- ing the Minjur wellfield,where salt water intrusionhas advancedabout 4-6 km over the period 1969 to 1985, a surfacewater grid for an artificial rechargecanal and injectionwells will be constructedbetween the Arani and KortaliarRivers. This will interconnecta numberof existingtanks further ast of the above mentionedlink canal and utilizesurplus water going to the sea from both the rivers for rechargingpurposes. Injectionwells will be drilledfor quick rechargeof water into the aquifer to reverse the salt water intrusion.

4. Finally, an integrated management of surface and ground water sources will be introduced based on recommendations of the UNDP supportedproject. The concept is to use surface resources first and as rapidly as possible in order to reduce the evaporationlosses from the surfacereservoirs. From Januaryto June each year the supplywill entirelybe drawn from surface water storagein Redhills,Cholavaram and Poondireservoirs. No ground water will be extractedduring this period. Over the followingsix months groundwatersources would be dependedupon to supply about 501 of the total domesticand industrialrequirements, while the remainingdemands would be met from the surfacestorage reservoirs. The groundwater potentialis more reliableand dependablein years of droughtand providesa much needed safety net in such years. Throughthe integratedoperation of surfaceand groundwatersources it is estimatedthat LOUSB will be able to recoveron average20 mld which would otherwisebe lost to evaporation. -41-

ANNEX 3 Page 2 of 6

5. The availabilityof water will increasewith 55 mld from the addi- tionalwells under this projectout of which 25 mld in FY 88/89 and 30 mld in FY 89/90 (referto Annex Wl). The 27 mld from the proposedlink canal betweenthe Arani and KortaliarRivers is expectedin FY 91/92,while the 20 mld from integratedoperations of surfaceand groundwatersources is scheduledin FY 93/94,where the total availabilityof sourceswill have increasedto 395 mld. This includesunaccounted-for-water through the transmission and distributionsystems which are estimatedto total about 20% (refer to Annex 2).

6. When the new sourceshave been developed,industry will be allocated an additional20 mld for use at the Manali industrialcomplex, while the KoyambedyNarket complexin the City will receive10 mld. All other increaseswill go towardsnon-industrial purposes, reflecting Government policy to limit industrialgrowth, particularly growth of water consuming industries. For furtherindustrial water demandsMMWSSB has negotiatedwith a number of industriesto make availablesecondary treated wastewater (about 33 mld) from the Kodungaiyursewage treatment plant.

B. PROJECTCOHPONENTS

1. The followingis an outlineof componentsin the project.For more detailsrefer to scheduleof projectcomponents in Annex 4.

WATER SUPPLY

Constructionof Tube Wells

2. In order to supply 55 mld of water from new wellfieldsat Poondi, Kannigaiperand KortaliarFlood plains altogether30 tubewellswill be drilledand equippedunder this project.

3. Under the proposedintegrated operations of water sourcesup to 200 mld will have to be extractedover a periodof about 6 months each year from the existingwellfields at Panjetty,Minjur and Tamaraipakkamas well as from the above mentionednew wellfields. This will requirestrengthening the six wellfieldswith 30 new tubewellsout of which 10 are standbywells. The tubewellsare to be drilledto a depth of 25 to 35 metres below ground level and will have M.S. strainersand plain casingsof a diameterof 350 mm. A pumphousewill accommodatea switchboard. Half of the tubewellswill have a standbygenerator to secureoperations during power failures.

4. The tubewellsare to be ctxnectedto a feedermain of suitable diametervarying from 200 mm to 456 - dependingon the number of tubewells to be linked to the particularfeeder main. The feedermains will be connectedto a transmissionmain.

5. The final systemof wellfieldsand their capacitieswill be as indicated in Table 1. -42- AN=EX3 Page3 of 6

Table1: GROUNDWATERsoURCES Wellsfrom integrated Existing New Well watermanagement WellFields Fields policy Total Yield Yield No. of No. of Yield Yield No. of in No. of in addl. stand- in in Wellfieldwells mld wells mld wells by wellsmld- mld

1. Panjetty 12 36 - - 6 4 22 58 2. Minjur 15 25 - - - 1 - 25 3. Tamaraipakkam A Kortaliar FloodPlains 22 32 6 13 9 2 19 64 4. Poondi - - 15 27 3 1 7 34 5. Kanigaiper - - 9 15 2 2 4 19 49 93 30 55 20 10 52 200 6. Due to the urgencyof supplyingadditional water to Madrasbefore mid 1987when a crisissituation may occurbecause of the failureof the 1986 monsoon,the majorityof the 30 new tubewellshave already been drilled. It is anticipatedthat initialwater from the new KortaliarFlood plains wellfieldwill be pumpedinto the systemfrom April, 1987. TransmissionWater Main fromTube Wells to Redhills 7. The trunkmain will convey ground water from the feedermains for a distanceof 35 km passingthrough two boosterstations at Magaraland Koduwalliand willdischarge the waterinto the clearwater sump at the proposedtreatment plant site at Redhills. TransmissionWater Main from Redhills to KilpaukWater Treatment Plant 8. Groundwaterhas to be conveyedfrom Redhills to the existingKilpauk treatmentsite for onwarddistribution to the cityduring the 6 monthsperiod fromJune to December.As thisis potablewater it cannotbe allowedthrough the existingconduits from Redhills to Kilpauk,which convey raw water. A separateclear water transmission main is thereforenecessary. This transmissionmain will be constructedas a gravity1400 m- prestressedconcrete pipelinefor a lengthof 11.75km to carry109 mld of clearwater intothe undergroundsump at KilpaukWater Treatment Works.

Constructionof CheckDams 9. To replenishthe groundwater and to rechargethe entireaquifer from Poondito Minjurfive check dams will be constructedacross the Kortaliar Riverto impoundthe surplusflows by meansof spill-overweirs with tilting shuttersat the middlefor scouringoperations. -43-

ANNX 3 Page4 of 6

Arani-KortaliarLink Canal 10. A linkcanal of a lengthof 7 to 8 km will be constructedfrom a new diversionregulator (anicut) to be builtacross the AraniRiver near a place calledKalpattu. The capacityof the canalwill be from34 to 42.5m /sec in orderto conveythe surplusseasonal flows from the AraniRiver over the shortperiod (10-15 days) in whichthese surplus flows occur. The canalwill drain intoKortaliar River just above Tamaraipakkam anicut. ReversingSaltwater Intrusion 11. By connectingfour existing tanks and the existingcanals between the AraniRiver at LakahmipuramAnicut and KortaliarRiver downstremas of Vallur Anicutthe surpluswater can be collectedand pumpedto a batteryof injectionwells to be locatedalong the coastalbelt in Minjurarea. Increasingthe Capacityof PoontdiCanal 12. The existingopen lined canal, which connects the Poondi,Cholavaram and Redhillsreservoirs shall -have its eapacityincreased from 230 mld to 490 mld in orderto depletethe Poondireservoir over a periodof about2 monthsin orderto minimizethe evaporationloss. - TreatmentWorks at Redhills 13. Underthe integratedmanagement of watersources no groundwaterwill be extractedduring the periodfrom January to Juneeach year. Duringthis periodthe industriesin the Manaliarea plusthe domesticrequiremvnts of zone 1, whichup tillnow havebeen suppliedfrom groundwater soure~es, will have to be suppliedby surfacewater from Redhills reservoir. In orderto treatthis surface water a new conventionalwater treatment plant with rapid gravityfilter and a capacityof 109 mld willhave to be constructedat Redhills.At a laterstage when water from future far away sourceswill be conveyedto Madras,it is anticipatedthat the conduit(s)will terminatein the Poondisystem, so thatthe proposedwater tretment works at Redhills will be the firstphase of a muchlarger treatment works. WaterTransmission Main fromRedhills Treatment Works to Nanali 14. Treatedwater from the new treatmentplant at Redhills will haveto be conveyedto the Manaligrid in orderto supplythe industriesas wellas the domesticrequirements in xone1. For partof the distanceof 12 km from Redhillsto Manaliit willbe possibleto utilizethe existingpumping mains fromthe Panjettyand Tamaraipakkamwellfields to Nmnali,as thesepumping mainswill not be operationalduring the periodswhere treated surface water will be suppliedfrom Redhills treatment works. It willconsequently only be necessaryto lay a new pumpingmain with suitablepumps from Redhills treatment worksup to the junctionwith the existingpumping mains, which is at a distanceof about3.6 km. -44-

AVNEX 3 Page 5 of 6

Improvementsto Water DistributionSystem

15. Additionalclear water undergroundstorage tanks of 10 mld at Kilpauk and 4.5 mid at K.K. Nagar will be constructedto increasestorage capacity. Pumphouseswill be includedin both Kilpaukand K.K. Nagar to convey the water and to distributeit in the respectiveareas.

Laying 750 m dia TransmissionMain from Kilpaukto K.K. Nagar

16. The pumpedwater from KilpaukPumping station will be conveyedby a 750 m transmissionmain. This transmissionmain is designedto carry 30 mld and 10 mld is allowedfor KoyambeduMarket terminalon its way. The length of the main is 12.6 km along the inner ring road.

Rehabilitationof DistributionNetwork

17. Some of the distributionmains laid prior to 1936 are completely corrodedor tuberculatedthus losingtheir conveyingcapacity. This is due to intermittantdistribution of water. Initially111 km of distribution networkwith sises varyingfrom 100 - to 200 mm will be rehabilitatedin this project.

LayingNew DistributionMains

18. Due to increasein quantitiesof water availablefor the city supply, some of the existingdistribution mains in the tail end areas will be rein- forcedand some of the unservedares in the city will also be covered. In additionnew areas (12 panchayatsadded to city in 1978) will be provided with water supply. Twenty four kilometers(24 km) of distributionmains to those areas have been designedand includedin this project.

ProvidingPublic Fountains

19. There are a number of slums and slum tenementsin the city which eannotafford to have individualhouse connections. Some of the newly added Panchayatsareas do not have piped drinkingwater supply. 1000 public fountains in those areas at the rate of one public fountainfor 150 to 200 persons are includedin the project.

StrengtheningTrunk Mains

20. The outer portionsof the servicearea which were designedto have equitablewater supplydo not get adequatepressure. It is proposedto strengthenthe trunk mains to maintainuniform pressure in the outer areas also. -45- AWNEX 3 Page 6 of 6

Itprove_entsto 8ewerageSystem

21. The object is to extend and increasethe capacityof the existing seweragesystem to receivethe additionalquantities of water which will be collectedas sewageas a result of the augmentationof the water supply system in Madras.

Improvementsto SelectedPumping Stations

22. Ten sewagepumping stations, most of which were constructed30 to 40 years ago, have been identifiedas being in particularneed for improvements. This will includereplacement of presentpumpsets with new pumpsetswith higher capacitiesin order to avoid surchargeduring peak flows due to increaseddischarges. Each pumpingstation will also be providedwith a standbydiesel generatorset t, operateduring periodsof power failure.

Improvemots to ExistingSewage CollectionSystems

23. In accordancewith the SewerageMaster Plan proposalsthe sewage collectionsystems in fourteenareas in three zones will be improvedeither by replacingolder sewersor laying sewers in parallelwith existingones or extendingsewers into areas previouslynot covered,all designedfor the year 2002 flow. Three risingmains for pumpingsewage from pumpingstations will also be constructed. Altogetherabout 36 km of sewer pipes will be laid in dimensionsfrom 150 mm to 1050 mm

New SewerageSystem for SaligramamArea

24. Saligramamis one of the panchyatswhich was added to Madras city in 1978. It presentlyhas no piped seweragesystem, even though some individual houses have their own septictanks with dispersiontrenches inside their premises. In parallelwith provisionunder the projectof piped water supply with house connections,the area will be providedwith a comprehensive seweragesystem with about 27 km of sewer lines in dimensionsfrom 150 mm to 700 em and a sewagepumping station,which will pump the collectedsewage througha forcemainto the existingsewage treatment plant at Koyembedu.

SewaRe Collectionand Disposalin Low-LyingAreas

25. A numberof low lying areas hold slum tenementsand housingcolonies from which sewagegoes either to septic tanks or to oxidationditches, as sewage cannotbe conveyedby gravityto existingtrunk sewersdue to dif- ferencein elevation. For eleven slum areas within the city, conventional pumpingsystems with forcemainswill be constructedunder the projectto convey sewageto the nearest sewagepumping station or treatmentplant. This will includethe layingof 7500 meters of sewersin sizes from 150 m to 300 am, and installationof six sewagepumps. INDIA

MADRAS WATER SUPPLY AND SANITATION PROJECT SCHEDULE OF PROJECT COMPONENTS

Component Location Description Capacity/Size Function

1. AUGMENTATION OF WATER SUPPLV SOURCES 1.1 Construction of tubewells Poondi 30 Nos. tubewells to be 55 mId - 350 m To extract ground- drilled for depths di die tubvewlls water tubewells and to pump ranging from through transmission 25 to m 35 . mains to Redhills Reservoir. 1.2 Transmission water main Kannigaiper 30 Noe. Turbine from tubewells pumps 45 HP each to the Kortaliar 30 Nos. construction of common point at Redhills Flood Plains pumphousoe Reservoir

Rising mains for a 200 - 0 to total length of 95 km 800 mm 0 2 Nos. - Booster pumps 4 Nos. - Booster puWps 100 & 270 HP pumps 1.3 Transmission Watermain Redhills - 1.400 ma transmission from Redhills 109 mId For conveying 109 mid to Kilpauk Kilpauk for a length of 11.75 a Water Treatment Plant km of water from Redhills to Kilpauk. t 2.1 Construction of Vall1yur 5 Nos. Masonry dam check S Nos. 300 mm To stabilize ground dams Athangik-vanoor across river Kortaliar Thirukandalam length Ht. about water table by im- 1.75 m Breadth pounding Flood flows Alinrgivakkam 3.5 m Jagannathapuram and rocharging the aquifers. 2.2 Araniar-Kortallar Between Araniar Connecting Canal Between Lined Canal link canal and Kort-llar size To convey the flood Araniar near Kalpattu to 15.00 mx 2.00 m. discharge rivers Kortaliar of Araniar above river to Kortaliar Tamaraipakkam anicut. river. Appurtenances at Head end & Tail end. 3.1 Increasing the capacity Existing lined For conveying 490 mId Depth of flow 2.1 m To convey of Poondi Open lined channel from water 490 mId of channel of from Poondi to side slope txl Bed water as against Poondi to Tamarasipkkam width Tamaraipakkam 1.8 m present capacity of trapezoidal section 230 mid. 3.2 Red Hills water treatment Red Hills Treatment of surface 109 mtd As plant reservoir water part of conjunctive from Redhills use plan. to reservoir treat Sur- to meet re- face water quirements from Redhills of Manali reservoir before convey- industries and partial ance to Manali industrial supply to Madras city, area and Madras. .

3.3 Conveying main from At the inspection To treat surface water 109 mId Indust. For Redhills to Manali Bungalow site at from Redhills treating surface to to meet 73 mId domes (zone-L) water from Redhills Redhills the requirements of 36 mid Area - 10 Ha. lake before convey- Capacity/Size Function Component Location Description

consumers at Manali Industries. ance to Manali.

52 mid - 350 mm the exist- Panjetty 30 Nos. Tubewells to 3.4 Strengthening depths 0 tubewells. ing welilfields be drilled for ranging from 25 to 35 m 20 Nos., pumphouses.

3.5 Upgrading the new Tam_raipakkam & welifields Flood Pla1ns ground- 20 Nos. Turbine pumps. 20 Nos. 45 HP To extract Kannigaiper. water and to pump Poondi each turbine pumps. through maina upto Redhills.

Rising mains for a total 200 m to 600 m lenUth of 20 km. To create an artifi- Minjur well Diversion channels to Recharge capacity 3.6 Providing barrier of 12,500 m3/day cial recharge hydraulic saline intrusion field divert *xcess run-off against reservoirs barrier to recover and to existing Pan- for recharge and series protect Minur and from a. of injection wells for jetty welifields recharge of aquifer. salt water Intrusion.

II. IMPROVEMENTS TO THE WATER SUPPLY AND DISTRIBUT10N SYSTEM

t. Construction of additional ground level storage of 18.0 million litres and pumphouse at KI1pauk Water Works system reinforced cement 10 million litres To increase Ci) Underground tank Kilpauk Water A storage capacity. Works concrete underground tank - one unit system A RCC underground tank - 4.5 million litres To increase (t1) Underground tank K.K. Nagar storage capacity. Head Works one unit water Masonry RCC structure 30 mld To pump treated (iii) Water pumping station Kilpauk Water from Kilpauk Water Works housing 5 noe. centrifugal of 140 HP. 8333 1pm Works to K.K. Nagar pump with inter- against 28.39 m head Head Works mediate tapping for Koyambedu Marketing Complex.

20 mid To pump treated water station K.K. Nagar Masonry RCC structure 4 pumping Head (iv) Water 3 nos. centrifugal from K.K. Nagar Head Works housing service reser- pump of 170 HP. 8333 1pm Works to against 35.550 mts head voirs at Virugambakkam and Saligramam. D

2. Laying transmission main 750 mn diameter from Kilpauk Pumping Station to K.K. Nagar Pumping Station Component Location Description Capacity/Size Function

(i) Transmission main K1ipauk Pumping Pumping main 780 mm dia for a To convey treated water Station to K.K. length Sagar Pumping of 12600 a of 30 mid from Kilpauk Station Pumping Station to Kilpauk Medical Collage and K.K. Nagar Head Works. 3. Upgrading and strengthening the existing distribution system

[1) Transmission K.K. Nager Service Rising Main 600 mm die- 100 a Reservoir to Viru- length To convey treated water 300 mm di1-1200 a length from K.K. Nager Head Works gambakkam Service 250 Reservoir no di-1500 a length to S.Rs. at Vtrugambekka_ with inter- 150 _m di- 600 mediate branch a length end Saligramam. at 100 *m d1i- 500 a length 1200 and 1300 a to S 1igramA_ Service Reservoir* 1ii) Rehabilitation of Various CZ and PVC 110 mm 0 PVC - 4t.86 km Distribution Network pipes To replace old and corroded 160 mm 0 PVC - 28.68 km lines In distribution 200 m 0 PVC - 6.475 km systems ,aid decades ago. tUOO m CI - 10.83 km 150 am 0 CZ - 10.66 km 200 mm O PVC - 3.08 km (III) Laying new distribution Twelve panchaysts PVC lines 110 mm 0 PVC 24 mains added to city - km To provide supply of water to unserved areas. (iv) Providing public Various Single tap public 1OOC Nos. fountains fountain To provide water supply for as per economically type design weaker section of inhabited areas. ItI. IMPROVEMENTS TO THE SEWERAGESYSTEM 1. Imrovements to the Seweraso Collection System SEW1ERAGE

Replacement/parallel and Arumbakkam SW pipe and CI 150 _ SW pipe 1.671 km To new sewers in certain roads/ area pipe sewers provide a sewer net- streets in 250 m SW pipe 0.32 km work in in Arumbakkam area Arumbakkm aresa certain roadS/ 300 r SW pipe 0.618 km streets in Aruab kkam 400 so CI pipe 0.314 km areas to provide the 450 mm CZ pipe 0.257 km existing waste water 500 am CS pipe 0.542 km collection system to meet ftture dmand. Replacement/parallel and T. Nsagr (old) SW pipe and CS 375 new sewers in certain roadsl mS SP 0.153 km To provide a sewer net- pumping sta- pipe In sewers in 400 m Ct pipe streets in T. Nagar (old) tion area 0.540 km work in certain roads/ T. Nager (old) 450 m CZ pipe 0.411 pumping station are pumping are km streets In T. Sager rI 500 m Ct pipe 0.121 km (old) areas to improve 600 m CI pipe 0.6 7 km the existing waste 700 m CZ pipe 0.611 km water collection system 600 ma CS pipe 0.338 km to meet future demand. 900 mm Ct pipe 0.268 km 1050 ma CZ pipe 1.301 km Component Location Description Capacity/Size Function

Sewer T. Nagar (new) T. Nager (new) SW pipe and CZ pipe 150 mm SWP 0.605 km To provide a sewer net- replac-emnttparallel and P.S. area sewers in T. Nagar 250 m SWP 2.179 km work in certain roeds/ new sewers in certain (new) P.S. area 300 mm CI pipe 0.1B2 km streets in T. Hager reads/streets in T. Nagar 400 n CI pipe 0.095 km (new) areas to Improve new P.S. area existing waste wat-r collection system to meet future demand.

Replacement/parallel and Seidapet 'A SW pipe and CI pipe 375 mm SW pipe 0.091 km To provide sewer net- new sewers in certain P.S. area sewer in Saidapot *A, 400 mm CI pipe 0.224 km work in certain roads/ roads/streets in Saidapet P.S. area 450 m CI pipe 0.148 km streets In Saidepet "A" 'A' P.S. area 600 me CT pipe 0.356 km area to improve the 700 -m CI pipe 0.047 km existing waste watar collection system to meet future demand.

Replacement/parallel and Ashok Nagar CI pipes in Ashok 700 m CI pipe 0.19 km To provide sewer net- new sewers in certain P.S. area Nagar work in certain roadst rads/streets in Ashok streets in Ashok Nager Nagar P.S. area to improve the existing &aste water collection system to met future demand.

Replacement/parallel and Ice House SW pipes and CI pipes 450 mm Cl pipe 0.346 km To provide sewer net- new sewers in certain P.S. area in Ice House P.S. 600 mm CI pipe 0.200 kL work in certain r.ads/ roads/streets in Ice House 750 mm CI pipe 0.604 km streets in Ice House P.S. area 000 me CI pipe 0.257 P.S. to improve the existing waste water collection system to met future demand.

Replacemnt/parallel and Worth Mylapore SW pipes and CI pipes 375 am SWP 0.603 km To provide sewer net- now sewors in certain P.S. area in Worth Mylapore 450 me C2 pipe 0.827 km work in certain roads/ roads/streets in North 400 m CI pipe 0.193 km streets in Worth Mylepore P.S. area 500 m CI pipe 0.533 km sylepore to improve 800 sm CI pipe 0.830 km the existing wasto water 700 ma Ct pipe 0.363 km collection system to 750 me CZ pipe 0.549 km meet future demnd. 900 ma CI pipe 0.894 km 900 ma CI pipe 0.338 km 1050 mm CI pipe 0.314 km

Replacement/parallel and South Mylapore SW pipes and CI pipes 375 SWP 0.208 km To provide sewer network new sewers in certain areas sewers in South 450 me CZ pipe 0.382 km in certain roads/streets roads/streets In South Mylapore P.S. 600 ma CI pipe 0.314 km In South Mylepore areas Mylapore P.S. area 700 m CI pipe 0.403 km to improve the w"ste 800 ma CI pipe 0.245 km water collection system -Z 900 ma CZ pipe 0.515 km to meet future demand. 1050 am CZ pipe 0.631 km Om.

Replacement/parellel and Candhi NWgar SW pipes end CS pipe 400 ma CS pipe 0.219 km To provide sewer network new sewers in cortain P.S. sewers in Gandhi 450 m CZ pipe 0.100 km in certain roads/streets roads/streets in Gandhi Nager P.S. 500 am C2 pipe 0.376 km In Gandhi Nagar area to Wager P.S. area 700 ma CI plOs 0.060 km improve the w"astowater collection system to meet future demand. Component Location Description Capacity/Size Function

Replacement/parallel and BV Nagar CI pipes in DV Nagar 400 mm CI 0.015 km To provide sener network new sewers in certain PS area in certain roads/streets roads/streets in 8V Nagar in BV Nagar areas to P.S. area Improve the vaste water collection system to meet future demand.

Replacement/parallel and Adyar (old) SW pipes and CI pipes 600 mm CI 0.352 km To provide sewer network new sewers in certain area sewers in South 700 mm CI 0.021 km in certain roads/streets roads/streets in Adyar Mylapore P.S. in Adyar (old) areas to (old) P.S. area improve the weste watat collection system to meet future dem_nd.

Replacement/parallel and Foreshore SW pipes and C1 pipes 400 mm CIP 0.588 km To provide sewer network new sewers In certain estate area in Foreshore estate 450 mm CIP 0.456 km in certain roads/streets roads/streets as in 600 mm CIP 1.051 km in Foreshore estate Foreshore estate area B00 me CIP 0.030 km areas to Improve the waste water collection system to meet future demand.

Rising main from proposed Foreshore CI pipes 400 mm CP 1.6 km To pump the flow to New Foreshore estate P.S. estate area Adyar P.Stn.

Replacement/parallel and Velachery area SW pipes sewers in 150 mm SWP 2.040 km To provide sewer netuork new sewers in certain Velachery area 250 mm SWP 2.100 km in certain roads/streets roads/streets in Valachery 375 mm SWP 0.841 km in Velacheri area to area improve the waste water collection system to meet future demand. Replacement/parallel and Grcames Road SW pipes and CI pipe 375 SWP 0.593 km To provide sewer network new sewers in certain area sewers Greames Road 400 CI 0.362 km in certain roads/streets roads/streets in Greames P.S. 450 CI 0.346 km In Greames Road areas to Road P.S. 600 CI 0.837 km improve the waste water 700 CI 0.482 km collection system to 900 CI 0.686 km meet future demand. Rising main from MUNI NMNHI area CI pipe in NMN*I 300 me CI 1.0 km To meet future demand P.Stn. P.Stn. and to pump the sewage to Erakkencheri Pg.Stn.

Rising main from mtiuII NUNHII area CI pipe in NrNHII 150 mm CI 0.450 km To meet future demand P.Stn. Pg.Stn. *nd pump the sewage to NlNI P.Stn.

2. Imorovements to Selecting Pumping Station

Pump station equipment Tondiarpet A Replacement of pumps 15.5 mId, peak dry To meet future sewage pumping station with new pumps 3 nos. weather flow demand and to pump to 5.8 mld x 9.3 mts 75 KVA respective treatment 9.3 mId x 13 mts Diesel plant. 15.5 mld x 23 mts Generator I nos. Component Location Description Capacity/Size Function

Pump station equipment Tondiarpet C Replacement of pumps 10.4 mid peak dry To meet future sowage pumping station with new pumps 3 nos. weather flow demand and to pump 3.9 mId x 11 mts 75 KVA respective treatment 6.26 mid x 17.5 mts Diesel plant. 10.4 mId x 34 mts Generator 1 no.

Pump station equiPment Tondiarpet F Replatement of pumps 7.55 mId peak dry To meet future sewage pumping station with new puwps 3 nos. weather flow demand and to pump to 2.83 mld x 4 mts 35 VA respective treatment 4.53 old x 6.2 ats Diesel plant. 7.55 mid x 12.2 ate Generator no.

Pump station equipment NMNHI Replacement of pumps 6.41 mid poak dry To meet future sewage pumping station with new pumps 3 nos. weather flow demand and to pump to 2.40 mId x 7.2 ats 35 KVA respective treatment 8.34 mid x 9 Ut. Diesel plant. 6.41 mld x 13.2 eta Generator I no.

Pump station equipment N"NHI Replacement of pumps 0.75 mld peak dry To meet future sowage with new pumps 2 nos. weather flow demand and to pump to 0.28 mId x 6.3 mte 1S KVA respective treatment 0.45 mid x 6.7 a D. Gen- plant. 0.75 mld x 7.8 m erator 1 no.

Pump station equipment Saidapet C Replacement of Pumps 12.22 mid peak dry To meet future sewage pumping station with now pups 3 nos. weather flow demand and to pump to 4.58 mid x 8.5 mts 50 KVA respective treatment 7.32 mid x 10.5 m D. Gen- plant. 12.22 mid x 16 m erator I no.

Pump station equipment Sesant Nagar I Replacement of pumps 10.49 mid peak dry To meet future sevage pumping station with new pumps 3 nos. weather flow demand and to pump to 3.93 mld x 17 a 75 KVA respective treatment 6.29 old x 23 a 0. Gon- plant. 10.49 mid x 41 m crator 1 no.

Pump station equipment Besar Nagar II Replacement of pumps 4.62 mid peak dry To meet future *swage pumping station with new pumps 3 nos. weather flow demand and to pump to 1.80 mid x 16 m 50 KVA respective treatment 2.89 mid x 22 mts D. Gen- plant. 4.82 oId x 37 a erator 1 no.

Pump station equipment Indira Nager Replacement of pumps 14.82 mId peak dry To meet future sewage pumping station with new pumps 3 nos. weather flow demand and to pump to 0 5.53 mid x 17 a 100 KVA respective treatment S 85omld x 21 O . Gen- plant. 14.78 old x 35 a arator 1 no. Component Location Description Capacity/Size Function

Pump station equipment Foreshore Estate Replacement of pups 11.80 mid peak dry To meet future sewage with new puAps 3 no*. wv-ther flow demand and to pump to 4.42 mId x 7.5 * 50 KVA respective treatment 7.07 old x 9.5 m D. Gen- plant. 11.80 mId x 15 a orator l no.

Replacement/paralleling Saligramm area SW pipes and CZ Length To provide and new sewer sewer net- line in pipes sewer in Size in Mt. work in certain roads/ certain roads/streets Saligramm area in Saligramam streets in Sal igramm 150 am area to improve the SW pipe 12.000 existing waste water 250 me collection system to SW pipe 7.000 meet future dem_nd. 300 m SW pipe 3,000 375 m SW pipe 2,960 450 an Cl pipe 1,200 600 mm CI pipe 700 700 m Cl pipe 0

3. Collection. Transmission and Dia-osal Arrangements in Low Lying Areas

11 suas within Laying SWP/CI SHP pumps-6 nos. To collect waste the city pipeline and 150 0 SWP-3804 m water and dispose giving connections m into the existing to the existing 250 0 SWP-266S m system by conventional system mm method. 200 0 CI-941 m me 2SO 0 CI-10 a mm 300 0 CI-79.50 m mm IV. INSTITUTIONAL STRENGTHENING A. Plannina and Design Strengthening 1. Quality Control Laboratory materials To be determined To improve MVWSSS analy- 'V 8 equipment tical capability in water supply/sewerage quality control laboratory. 2. System Mapping Aerial photo-based to- Photo area cover- To prowide comprehensive 0 pographic mapping and age of 1,170 sq.ka system mapping of _MSSO 0% plotting of water dis- and a"pping area service area for planning. 0 tribution and sewage of 315 sq.km at esign & operations use. collection systems on scale 1s3.000 the mappino. Component Location Description Capa ctylSia- Function

3. Engineering Update of water supply/ 120 men-Months To provide "WSSOwith Consultancl1- sanitation Master Pl-n (locol) plan for medium to long for Madras 20 man-months torm. (foreign) 3eduction of unsecounted 70 mrn-month- To oase-s unaccounted for water (local) for water situat1on in 16 man-months M0dras & establish per- (foreign) manent unit in MWSSS. S. Operation and Maintenance Stronsthenino 1. Depot/Area Maintenance tools and To be determined To improve effective- Operationq equipment ness of operations and meint. in Depot/Area. 2. Metering Operations Water meters 50 - 200 am di- To improve monitoring _atera 10 - bulk of production and meters of various consumption. sltes 20.000 consumer moters 3. Training Operations Training materials and equipment - To Improve and expand training center opera- t ion.

4. Computerisation Microcomputers (IBM PC/ 14 microcomputers To increase efficiency XT co patibles) and I main frame aye- of all units in _ SS. Main trame syatem tea S. Consultancy for Opera- Technical assistance 36 man-months To provide advisory tions & Maintenance Wing (local) assistance on all 12 man-months aspects of operation (foreign) and maintenance.

C. Financial Recovery Pro9ram

1. Materials Management Materialsa equipment Mobile cranes. To improve stores for stOres facilities fork lifts. vehi- operation. Cles. steol shoot piles. storage racks. etc. 2. Consumer Education Materials & equipment Miscellaneous ma- To strengthen and ox- terials & equip- pend consumer educa- ment tion program. Go 3. Billing & Collection Equipment Equipment To reorganize and ex- 0 pond billing and collection wing, 4. Performance-based Budgetting Equipment Equipment S. Working Capital Management Equipment Equipment PIPE MATERIALS During appraisal it was agroeed that the pipe materials to be incorporated in the project would be as followst

Water SuDPlV Pipe Material Classification Size (mm) Alternatives

Distribution Main < 100 PVC/Cl/CI

Distribution Main 100 - 200 Cl/l

Feeder Main > 250 CI/DC/PVC

Trunk Main c 750 CS/DI

Force 1 Main 780 - 1200 PSC/Steel /CI/DI ' 1200 - PSC/Steel 1 Cement lined.

SeweragI Pipe Material Classification Site (mm) Alternatives Ln Gravity Sewers 150.250,350 VC/CI/DI (depending on depth) 400-1200 CI/CD > 1200 Brick Pipe Arch

Forcemain 200-1200 CI/Cl Abbreviations

PVC Polyvinylchloride CI Cast Iron Dt Ductile Iron PSC Prestreased Concrete VC Vitrified Clay

'lb -55- ANM= 5 Page 1 of 2 m ci CMStS InIg As of June 1, 1987 mROJSUPPLYmm1EorfilMINI ycM.V VIITIES Ctl (is Killo)

5.67 *7-* 69 60 9.91 91-9192-93 93- TOTA. 1. mwmuu111 EUl1|1ER S * OUTIES/ISIS 1.1 Cmtuuoftw tt11. 36.26 1.51 55.77 6.33 1.2Tr_An uon man fro tube eils toc_ poi t lbdlls 42.4? 56.39 56.3921.31 176.5617.26 1.3Ir_un ion votermin fr ills to kllpA 6.77 13.54 21.3 11.71 4.4? 2.1Cotructio d cheedne 7.53 17.22 16.14 10.69 0.46 2.2 kanlar-Koiar link 17.33 31.55 23.60 75.56 0.6 3.1Inesgo th c ity of Poi lwnlind da 1.31 17.22 14.74 36.27 O.lt 3.2Trehat vwas ledills 17.37 21.71 21.91 8.06 2.32 3.3Tramission We to Hilni Ar 4.94 6.1? 6.2t 17.35 1.61 3.4Strengtning the aisting uell tids 6.72 17.85 22.12 6.20 54.09 6.93 3.5ProAiding a hrler r gaint saine intruiun 16.14 16.14 21.53 10.76 61.5? 1.92 3.6b gradlgthe rw ei filds 2.11 5.61 6." 2.56 1722 2.16 SubTOtl 7.73 91.5093.39 69.13 61.1573.97 03.65 69.66 641.06 47.26 II. TIHIIIITSTBIlfT OSTWltSYIIN 1.1Contructin of adtionl ud ruw tas at Kilpmuklw vrks a K.K.Kl.w 0.00 S." 7.67 13.61 0.00 1.2 uing sttion at lilouk hed ws ndI.K.Ipr heldvtks 4.61 6.96 3.74 15.34 0.0Q 2.1Laying 75? die.C.I. coeiing onmfrlm PS to IXN 1B.t 19.86 7.73 46.2? 3.30 3.1 Truensuontuin fron lK kWg hd vos to svice rewrvois at UirqpbW andSdier 1.66 1.61 3.4? 0.33 3.2 Rehailitation ditstributionntiA 6.6S 9.9 9.95. 9.95 7.21 2.15 1.39 7.25 2.99 3.3 Lwingto dIstributionswins 1.67 2.79 Z.OO 6.46 0.16 3.1 Proidingpublic fonaint 0.88 0.8 0.74 2.50 0.00 3.5 Strengtheningof trunks an minm 5.67 7.00' 6.67 1.13 20.67 1.li SubTotal 0.00 37.14 15.56 29.87 20.15 15.10 5.96 1.39 155.7? 8.60 IIl.mNPIlTSTOSam SYtEI 1. bproet to thesWA collectionytV 6.61 21.53 26.91 21.53 17.87 10.76 2.5 109.17 8.29 2. I b t to selaec pmping Stations 1.69 3.37 7.87 7.07 1.69 0.00 0.00 22.1 1.23 3. Prtsion for collectionsst pun stati a d torcemin ftr Sdigr 3.33 5.54 5.51 5.5 5.54 2.22 27.71 0.96 4. Collection,trnsltion anddiposad arranguentsin Itr-lyingae. 4.31 4.31 0.19 Suotal 0.00 10.30 28.23 40.32 31.91 29.41 16.30 1.60 161.30 10.69 IQ. I tiUTTl STREIhTlEilIS 0.00 19.26 43.60 37.23 5.19 105.30 5.00 Q.llillD 0.50 3.7? 4.21 0.a0 SubTotal 79.23 161.99210.76 196.55 122.03116.78 106.11 76.051071.52 71.s7 VI.EIIIWEI SOUISIoCOSt 7.92 16.20 21.00 19.66 12.20 11.68 10.61 7.61 10?.15 UII.II COSt 87.15 176.1921l.86 216.21 134.2313D.66 116.72 63.661178.6? PVfSICSLC0OTSCIS 7.92 16.71 22.9 21.6? 13.55 13.35 11.43 7.65 115.3? PCECSTti (s) 0.00 5.37 21.4 34.3 3.75 39.51 122 38.1 213.99 TOTl.CONTIWUJI(l) 7.92 22.08 13.93 55.9? 4.70 52.5 55.65 46.26329.36 tOtllCONTIn61NCUS(UU) 0.63 1.71 3.35 4.16 3.29 3.8Q 3.92 3.19 24.0 Nil TOTSPECT COST 95.00 200.27M.9 2.10 176.93113.52 172.37 129.91 1S0.03 -56- inwo KvU miuminw oralituv wrumu1021

s uWmrNM Tom LR row ti _I U am I. _IUU 1 0 OY tt (DCI 1.l ue*tl.tt .W 133 593 ". 3.12 0.1 3." a 4 12 1.21,mmlum ami t. .11. Guio..PMat6i4u 73.0? 6.21 19.5 6M 6.66 12C. 111 14 so 1.3rv.1.a Utn *I fr ha11lu611 17,25 2A 37.27 1.5 1.6 2.02 2t so 2?4uw^ti.tof &"d5 .4 2.01 40.43 2.6 0.14 2.8 31 a Sl 2.2 mia r-frtalIt. 710. 3.65 74.3 6.22 0.27 6.49 n1 s 3.1Incredo tk o t d h No lia 34dP. 1.0 3.27 2.41 0.1 2m 2 3a a 3.2 tr.t.t ukstkIi1 5.4 22.5 .74 2.6 1.67 4.13 a in 3.3tr_ ud. uwe R 1 7.19 8.5 1.6 0.S1 0.S9 1.09 11 a N 3.1S"trtu them lntlgWu fdlm 3.M 4.31 4.96 3.29 0.33 3.61 a a t 3.6Snuidiag aorer ag' At llm ituu 576 2.9 69.65 4.3l 0.17 4.2 0 a 3.S*l otu u.dl ftdhm 1l23 1.01 15 1.07 0.16 1.13 11 17 St S Itu1 IS66 157.I 94.60A32.20 11. 1 0 US 61in m U. tS tO 1 mumm 1.1 mbt D01 uilitlauldWier grdt5 1si.ew 131US 0.n 13.1 1.11 G.S 1.5 a U a 1.2Piuq St.t at Kilo NW b I.K. 1wNod g 1 3.I3 1.5 15.34 1.01 0.1 1.13 1i iIS 2.1La" M . C.e.aft fatifrn rn teaN 19.02 23.94 42.9? 1.46 1.0 393 3 3.1tram.Iu1 t fro a1NW NidWVor to I r.wwir at Un . ad feip.. 3.01 0.13 3.14 0.21 0.01 0.22 11 a1 a 3.2kidilithotill ditItm et 4.49 1.77 4 1.16 0.13 3.29 3a a 1a 3.3Low m dlnutih _ 6.3 0.2 6.28 0.43 0.02 0.36 0 13 a 3.4 1ud pbhatuiznJiq 2.15 0.15 2.SD 6.1 .1 0.19 a1 02 2S 3.6SteWh % ofutnhdsadW0.54 16.34 19.87 0.65 0.79 1.43 U 21 53 S6 Totl 103.2 Ji.5 147.10 3.13 2.93 11. 101 IN 26S III IMOUItSto ISEI S101 1. Lr nb St iln St.WA 3.42 6. 101.9 7.13 0.5 7.9 7n 93 a 2. rwmts t SmenedhF Mm 9.64 11.62 21.26 0.72 07 1.9 Uit 5s6 3. fwAui.nfo CiIs t Sit woiq#Steti. SWhm m hr 51m 17.26 9.47 2.73 1.25 0.0 1.9 . 21 21 ml 4. Cdll.tlmibtu.a ad dis wawm in le-lvl wm. 3. 0.16 4.12 0.28 0.01 0.38 0a 11 4 Sihttl 127.28 26.33163.61 9.3 1.S 11.33 1in 1t 173 IU.INStIIIlhI StSl 9.15 JSD10.3 3.3 3.3 7.0 71 9I S LU.Uli t4.270.3 4.27 0.33 0.03 0.33 91 03 0a SoSIItIR 64.42 9D.1616.67 4.13 3. .9 it ssI Ul. goU=iEIwM SIUcm 107.1U 17.15 7.97 7.9? 7 10I o 011.11COt 934.1?27.9 1107.1061.2 21.68 82.39 M3 1003 a flifSIE. C ElIIS 01.92 21.46115.37 6.23 2.34 9.68 a3 M03 MEECCe III 16.10 51.6 213.H9 11.71 3.16 16. 1to 2t S131011133.14 33R321136.16 79.76 26.6?WA.43 93 2S 11 MmatUSrEs 71.6? 0. 71.67 5.91 O.3 6.81 63 02 1. lOll. M8611164.71 363.2 1 .03 I.6? 26.67112.24 1io 23 -57- ANNEX6

INDIA KADIASWATER SUPPLY AND SANITATION PROJECT PROCUREINMTBYCONPONMIT

-- - - - (US$ MILLION)----- TOTAL BANKI ITEM COST ICe TURNKEY LCB NA IDA I AUGMENTATIONOF WATERSUPPLY SOURCE

Ciil Vorks 29.76 - - 29.76 - 17.9 Turnkey 6.32 - 6.32 - - 4.8 Materials/Equipment21.08 17.46 - 3.62 - 11.4 subtotal 57.16 17.46 6.32 33.38 - II IMPROVEMENT8TO WATER SUPPLY/DISTRIBUTION

CivilWorks 7.56 - - 7.56 - 4.5 Naterials/Equipment6.28 6.28 - - - 6.3 Subtotal 13.84 -6.28 7.56 III IMPROVEMENTSTO SEWERAGESYSTEK

CivilWorks 6.73 - - 6.73 - 4.0 Turnkey 3.06 - 3.06 - - 2.3 Materials/Equipment5.93 5.72 - 0.21 - 5.8 Subtotal 15.72 5.72 3.06 6.94 IV INSTITUTIONALSTRENGTHENING CivilWorks 1.09 - - 1.09 - 0.7 Materials/Equipment4.53 3.44 - 1.08 - 4.1 TechnicalAssistance 2.02 - - 2.02 2.0 HMWSSIStartup Costs 1.37 - - - 1.37 - Subtotal 9.01 3.44 - 2.17 3.39

V LAND 0.36 - - - 0.36 -

VI ENGINEERUNGSUPERVISION COST 10.33 - - - 10.33 -

VII TAXES& DUTIES 5.81 - - - 5.81 -

VIII LLOCATEDANOUNT - - 5.2 TOTAL 112.23 32.90 9.38 50.05 19.89 69.0 -58- ANNEX 7

INDIA

MADRASWATER SUPPLY AND SANITATION PROJECT

LOCAL PROCUREMENTPROCEDURES

The local procurementprocedures (LCB) adopted by NMW88B have been reviewedand found satisfactoryon the basis that:

(a) Tender documentsare based on the same generalconditions of contract as used in ICB contracts.

(b) Contractorsare registeredon the basis of their past performance, solvencyand abilityto deliver in the categoryand scale of work for which they appliedfor registration. Foreignbidders will not be precludedfrom biddingunder these procedures.

gc) Tendersare invitedby publicadvertisement.

(d) A two envelopesystem (technicaland price bids) is used now. HNWSSB will adopt a one envelopesystem, with prequalificationof tendererswhen required. MMWSSB will be adoptingprequalification proceduresacceptable to the Bank prior to negotiations.

(e) Tender validityis usually 120 days and bids must be accompaniedby a tenderguarantee.

(f) Tendersare openedpublicly by MM088B officials;bids are scrutinizedby MMW88B procurementstaff and evaluationreports are presentedfor award recormendationdecisions by the tendercommit- tee.

(g) No price negotiationswill be allowedor take place after the bids are received.

(h) There will be no preferencegiven to Government-ownedfirms, small scale industries,etc. bidding on Bank financedprocurement.

(i) 10118Bwill includeexplicit bid evaluationcriteria in all tender documents used for Bank financed procurem_at.

(3) Contract performance security is limited, by CTV statute, to cash on demand draft which is held in a non-interest-bearingescrow account by M0851B.

(k) Procurementof materialsand equipmentusing DirectorGeneral Sup- plies and Disposals(DGS&D) Rate Contractsis not acceptableto the Bank as a form of LCB procurement. NAUSA VATS&SUNLT MNDSMIITATIOU PROJECT

CUIDUS W ICR/AC caC

STBA COSt Contract Claaifi- Phyiceal & Price Pfysical & Price Rol, lb, Descri,tion imres cation i3. Cost Coutiecie. Total Cgt some Ct Contijrnciea STtAl Cost 1. AIU O 05 1 .Y 8WRcum

A. Civil .krk

t I XNCotructiom of tue wells. LCe 5.65 0.62 6.27 0.42 0.05 0.47 CowtractS > I V 2 Trussam tb ille to Pdllll. LC1 52.96 8.38 61.34 3.93 0.62 4.55 V 3 tr3 an 35118 to Kilpeuk. ICa 35.27 6.89 42.16 2.62 0.51 3.13 Supply/lay contract V 4 Contruction of ebeck daos. LCB 36.85 18.89 55.74 2.73 1.35 4.08 V S Areni-wortalir link. LcD 68.25 21.45 89.70 5.05 1.49 6.54 Coatracts > I W 6 Peoudi open lined chacnel. LC8 32.65 15.96 48.61 2.42 1.15 3.57 Cotractc > I tl 7 Tr.etnt works at Red Dills. Ica 57.74 27.43 65.17 4.3 1.94 6.32 Tu cotrect t W 6 Tran"ission main to lalsli ares.LC3 5.30 2.34 7.64 0.39 0.17 0.56 1 9 Strength.euieties well field. LCD 5.50 1.18 6.68 0.40 0.09 0.49 V 10 Berrier "line iatrusion. LCD 58.12 25.48 83.60 4.31 1.74 6.05 Contract > 1 V 1 Ugrding the amw wIll fields. LCD 1..Wf ... Ji. 2.0lalfl. SU1BTrAL 360.01 129.00 489.01 26.76 9.30 36.08 B. ariel._ £ Eain_ t

I * COSUUCIO 05 1033 lELLS

V 12 Supply of pipes. LCB 29.19 3.26 32.45 2.17 0.24 3o V 13 8upply and 2.41 retrofinauoe erection of pup.. LCD 14.65 1.63 16.28 1.09 0.12 1.21 2. S183 TS L1. TO THE 3D3I5s Atmt of 05*6.7 mill. V 14 Supply of pipes and materials. ICB 103.96 18.83 122.79 7.78 1.23 9.01 will not be financed retroactively 3. COTrUCIOn aF0 CDC am w 15 Supply of equipment. ICa 3.64 1.67 5.31 0.27 0.12 0.39 4. 4AMI - K4TALIR LINKI V 16 Supply of equipment. ICB 6.94 2.09 9.03 0.51 0.16 0.67 5. ICI Tmg CPCTT OPp 03331. __ _ t$t~~~~~~~~~~~ISTIAEDC08T -Rsoeec (illion) ilonr---- Contract Clasaifii- 8Dlo PhyaicalG Price , Pbyical & Price nf. Ib. Description cation lawe gut _ rb Coat Mcies Total Cost Base Coot Coutloeigg Total Coat

V 17 Supply of qpi.eot. tCI 3.62 1.65 5.30 0.27 0.12 0.39 6. TRUA3S1Stl PAtV To KUAMLIAUt

V t8 Supplyof pipes 6 naterials. XCI 10.33 4.64 14.97 0.77 0.34 1.11 7. I U S:FUIa UI IZISNG MUlL P V 19 Spply of pipes. ICa 26.29 7.20 35.49 2.05 V 20 Swppty ad erection Of pM"p tCI 0.58 2.63 14.18 3.61 17.79 1.05 0.27 1.32 S. U8 a TUSOALTER IIUUTU81O

v12123 Sply of mte riat and eqlmt. tcI 6.46 2.61 9.07 0.48 0.19 0.67 9. U10mN1M TE NW VRIU FixE= 1 22 Supply of pipes. tCe 6.88 1.94 10.82 0.66 V 23 Supply G 0.14 0.60 eretion of p_p.. cIC 4 .45 0.97 5.42 SUTOTAL 234.59 .0.33 0..07 50.13 234.72 12.32 3.76 21.08 TOTL 44. 0 tt. no_13 WTOVASPPLY AMDDiSitWrIOX A. Civl Lkr

1. CaSINCT OUMaD TEl KLAUM & RAM V 24 At Kilpeuk. WL 8.68 1.38 10.06 0.64 0.10 0.75 V 25 At LtaSar. LCB 5.13 0.82 5.95 0.38 0.06 0.44 2. P 8TllAUKT G lUCU V 26 At KilPeukSadworks. Wi 8.63 2.63 11.26 0.64 0.20 0.84 V 27 At IK..agar lladworks. LCE 6.71 2.05 6.71 0.50 0.15 0.65 V 28 750. _ CI saisP6 TO Eager. LC 13.78 2.36 16.14 1.03 0.18 1.20 V Tr29mon fr ager to LC6 1.04 0.43 1.47 0.08 0.14 Yirugsubem G S.ligramm. 0.22 V 30 lahabdistribution netwrk. LCB 23.58 6.27 29.85 1.75 0.4" 2.21 Ctracts 1 V 31 Ic distribution mains. LCE 2.58 0.98 3.56 0.19 0.0 0.26 -ditto- 3 32 Public fouutains. LCW 0.25 0.06 0.31 0.13 V 33 Streagtbeniut 0.01 0.03 -ditto. of trunk amiss. LCD 10.23 _2.5 6 127 02.t9 SUITOTAL 0.1 096 -ditto- 80.61 19.54 100.15 6.11 1.45 7.56 ~~~~- c =t

ME, gas ECVI*tiou a.t_n hta Coat C.Scost ot C CIeI total Coat

1. 75M a aIX "Im to EM.

3 34 SupT of pipes & usteviss. t11 19.23 4.52 $3.75 2.18 0.S4 2.51 335 Sply of pipes & ut.sal. tXC 2.30 0.41 2.71 0.18 0.03 0.21 2. U8U W0TAIM MSutSITIM IUIIl

V 36 Suply of pies & msteriads ton 20.54 7.47 28.01 1.53 0.55 2.09 Spt estrete Lw CE, II a PVC pipe. 3. ATIN 1 D IWAtS f 37 Spply of pipes & materials. tea 3.77 l.93 5.70 0.28 0.14 0.42 -ditto- V 36 Suply of materials. XCI 2.19 0.83 3.02 0.16 0.06 0.22 4. UTIEMI WF mu RAINS

V 39 supply of pips ld natewi£s. 1C1 842A 17.7i 0.3. ditto- suSloThl 66.57 17.78 84.35 4.95 1.32 6.1? Ill. LWVWA TO 8 .tS IX

A. CivlWks

5 1 lwroimeuts to the swerage Lt 54.89 20.70 75.59 4.07 1.S4 S.61 Contracts > 1- 8 2 uWpowem.ntu to celected tCs 21.25 8.21 29.46 1.58 0.61 2.19 TSrney contract pep£a stations. 1. M= PU CLLCTI SMTI VWi SWM & Mu ftC SAIIW AM

8 3 Colleetion system. LCB 6.93 2.76 9.69 0.51 0.20 0.72

8 4 pumping station a equipent. XC8 8.32 3.31 11.63 0.62 0.25 0.87 Tourky contraet a S impingsain. LCD 1.66 0.66 2.32 0.12 0.03 0.17

S 6 Collection, trammission & die- LCB 2.15 0.94 3.09 0.16 0.0? 0.23 CoItrets > I3 posal arrtngeno in low ltyIn aSITOTAL 9.20 36.58 131.78 7.06 2.72 9.79 ,STIWTIIDCMST __se million)_ Co traet - -SW Dollars (Milii)- Classifi- Physical& Price Physical& Price Ref. No. DeacroAtion cati _marks passe Cost Contimencies Total Cost Base Cost ContiLenascis Total Cost

1 *U T TO On1 CLLCOT $TSTI

8 7 Supply of pipes & materials. IC& 46.60 17.87 64.47 3.46 1.28 4.74 8prt cutrcta for stone- ware, CI & other utrls. 2. MU1 n CLLCTI sMN, ru SW AID F0C3 PR SaUWAMM a 8 supply of pipes & aterials. ICs 9.83 3.91 13.74 0.72 0.27 0.99 -ditto 3. CILLCTW.TIBUSOP SAD DS81L AR3WIUTS IOW LTS3 AES 8 9 supply of pipes, pups & LCB 1D97 0.86 0.15 materials. .2.80.06 0.21 -ditto- SMBTOTAL 58.40 22.64 61.04 1.61 5.93 TOTAL 11.39 IV. ImsTWTIroML STRMECUhaiU c003 _0r3! A. slamina Alebinm Strenthenbin 1. Quality Cotrol waterialos/quipment Ica 8.00 1.76 9.76 0.65 0.07 0.72 2. System apping Tehnica Assistaece LCI 10.00 2.20 12.20 0.74 0.16 0.91 3. Ingineering Consultancies ICB 10.00 2.20 12.20 0.74 0.16 0.91 4. Low Cost Sanitation Civil Works LCD 6.50 1.43 materials 7.93 0.48 0.11 0.59 Contracts > 1 LCB 3.50 0.77 4.27 0.26 0.06 0.32 B. Osetat iom & maintenanceStrenathenina t. Depot/Area Operations Materilstquipuent LCB 1.00 0.20 1.20 0.07 0.01 0.08 2. Metering Operations materials ICB 3.60 0.79 4.39 0.27 0.06 0.33 3. TrainingOperatioun. Civil Works LCB 0.60 0.12 0.72 i0O4 0.M1 0.05 Uhterials/Iquiprent LCB 0.40 0.08 0.48 0.03 0.01 0.04 > 4. Computerisation Materials/Equipmet ICa 3.50 0.70 4.20 0.26 0.05 0.31 -' RunDees C illio )-U SDollTMATrdCOST Contract Classifi- Physical 6 Price Phyolas Price Remarks Ref. No. Destrintion cation Base Cost contiieniies Total Cost use Cost Contingercies Cost Rotal

5. Conuultancy for Operations & Maintenance ring. Teebuical Assistance LCB 2.30 0.46 2.76 0.17 0.03 0.20

C. Financial Recoverv Proaram

1I Materials Monagemeat Civil Works LCD 5.00 1.10 6.10 0.37 0.08 0.45 VaterialslEquipment LCB 6.00 1.32 7.32 0.45 0.10 0.54

2. Equip et Repair & Replacemet Xbterials/Equipm_t 1CB 23.00 5.06 28.06 1.81 0.28 2.08

3 COD _ r Education UsterialsENuipment LCB 0.45 0.09 0.54 0.03 0.01 0.04 MISSS Start-up Cost 5.55 1.05 6.60 0.41 0.08 0.47

4. silling & Collection Materialsllquipment LCB 0.36 0.07 0.43 0.03 0.01 0.04 MIUSSD Start-up Cost 8.54 1.35 9.89 0.63 0.10 0.73

S. Pertormace Based Budgetting MaterialstBquipment LCB 0.10 0.02 0.12 0.01 0.00 0.01 IwSUSBstart-up Cost 1.20 0.24 1.44 0.09 0.02 0.11

6. Workin Capital anageent Materids/Equipment LCB 0.04 0.01 0.05 0.01 0.00 0.01 USSS Start-up Cost .0j66 0.13 0.79 O.OS Q.OI 00

SUMTOTAL 200.30 21.15 121.45 7.60 1.41 9.01

V. LA 4.27 0.53 4.80 0.32 0.04 0.36

VI. 1116UEE UPEVIsIOI cOm 107.15 32.01 139.16 7.97 2.36 10.33

TOTAL COST 1,107.10 329.36 1,436.46 82.39 24.04 106.43 TAXES & DUTI 71.57 5.81 f TOTAL PROJECT COST 1,508.03 112.24 -64- hZ~

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- m340: MADRASWATER SUPPLY AND SANTAIION PROJECT Implollntafon Schedule

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LlliliX 9 il}g9' 11 ______-68- MIA ~~~~~~ANNE10 Page 1 of 18 M&MARWATER SUPPLY AND SANTATION PROJECT Key Flua4lal Performance Indicatora

93309LIROUATER (bit 1a tariffs) mumC TBITER tHliS U CUiU (am SID 1 ii) INDIANFII CIL YE 93-4 34-6 9 I? 6-8 It'"- 9041 9192 924-3 93494 945 I.ProdKctiom (-ESTI T0J-ECTET ED ExistingGowen 191.002.00 293.00 293 25..0293."0 23.00 .0 2. 2.00 29.00 23.00 NoeT 1ulls - - - - - 25.00 55.0 55.00 55.0 55.00 5.00 55.00 Arni -Kortalia ------27.00 27.00 27.00 21.00 avingsIn Evaploss ------20.00 20.00 subtotal (1) 191.00239.00 2.00 2 m.009.03 318.0034600 349.00 375.00375.00 39L500 3.00 2.tr &list LSes (2) 15.00 15.00 20.00 20.00 20.00 19.50 .19.00 1.50 18.00 11.50 17.00 17.00 (Old) 28.65 43.35 Sl60 59.60 58.6062.01 64.12 64.38 61.50 65.63 67.15 67.15 3.AvailableFor Consu (1-2) 162.35 245.65 234.40234.4 234.40255."9 291.80283.62 307.50 309.3932.5 327.85 4.1o1setic (a)3rd Cbarged NA NA 1.34 18.3418.36 20.20 22.22 22.22 22.22 22.22 22.22 22.22 (b) FAFor trd NA NA 25O. 25.00 25.00 27.50 30.25 30.25 33.23 33.2B 3.94 34.94 (c) Uutrd NA NA 29.74 28.74 29.74 30.38 34.33 29.63 34.25 29.34 39.05 39.05 Sb total (4) NA M 72.10 72.10 72.10 79.09 9.90 62.10 39.74 94.93 96.20 94.20 5.Couercial (a) NtrdCbarpd NA N 12.70 12.70 12.70 13.97 15.37 15.37 l.90 17.75 164 13.64 (b) FRFor Ntrd NA 0A 2.00 2.00 2.00 2.20 2.42 2.42 2.64 2.90 2.93 2.93 Gb total (5) NA NA 14.70 14.70 14.70 14.17 11.79 17.79 19.57 20.54 21.57 21.57 .ublic authwity (a)ItrO Charp NA NA 55.80 55.0 25.60 61.38 .52 67.52 74.27 77.98 81.0 31.09 -b)FA For trrd a 0.0 0.0 0.00 0.0 0.0 0.00 0.00 0.00 0.00 0.0° Subtotal (6) NA 55.90 55.60 55.00 6.38 67.52 47.52 74.27 77.8 11.18 91.3 .Inustrial la) 3trd Cheargd NA MI 59.30 9.40 60.50 65.93 71.1 78.35 92.24 82.27 92.26 82.26 lb)FAfor trd 0 0M 2.20 1.10 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 lob total (7) MI M 60.50 60.50 60.50 65.93 71.91 76.35 82.26 82.2? 92.26 82.26 0.PortTrust (a)Ntrd0hip MI MI 0.52 0.52 0.52 0.57 0.63 0.63 0.69 0.73 0.76 0.76 bNtrd Iship NA MI 2.28 2.20 2.28 2.51 2.76 2.74 3.03 3.19 3.35 3.35 subtotal (8) VA Mi 2.0 2.80 2.60 3.0S 3.39 3.39 3.13 3.91 4.11 4.11 1.Standpipe NA NA 26.0 26.40 26.40 29.04 31. 31.94 3.14 36.90 38.74 38.74 .9SI1.Supply NA 11 2.10 2.10 2.10 2.31 2.54 2.54 2.0 2.93 3.08 3.08 lI.TotalChrgd linct utrd) NA NI 205.20206.30 207.40226.29 249.21 29.95 271.56 213.30209.98 299.98 12.FreeAlloa1 M N 29.20 23.10 27.00 29.70 32.4 32.67 35.9 36.07 37.87 37.87 13.TotalNo Carged(1-11) M NA 97.0 66.70 85.60 91.71 8.79 97.05 103.44101.70 105.02 105.02 AMNE 10 Fij-T 18o _rn ustmui (ll 193 imwp" Emw ulEI a #_ mn Ua - cow_ oRns 111111FMCI. 9W 4437 39-0 901 9142 92- 93-94 94-5

I.IIter oldd(Rd) (------Iboic 30 * 18.36 136 1336 20.20 22.22 22.22 22.22 2.2 22.22 22.22 comci_t a 0 12. 12.0 12.7 13 1 15.3 1L3 16.90 17.15 1364 1L64 public*mty a I 5.0 5L.3 5.0 61.33 6.52 U.52 74.27 77." 31.0 81.U ladestrlal a 0 53.30" .4 0.50 65.93 71.91 78.352 .L26 2.27 3263 2.26 Put Trot SIt 30 3 0.52 0.52 0.52 0.57 0.63 0.63 0.69 0.73 0.76 0.76 PortTrst bwip 30 1 2.23 2.23 2.2 2.51 2.76 2.76 33 3.19 3.35 3.35 Std Pip 0 26.0 26.0 26.0 29.04 31.4 31. 514 3U." 33.74 34 on q1p a N 2.10 2.10 2.10 2.31 2.54 2.4 2.0 2.9 3.08 3.0 l6 totu (1) a 0 176.46177.56 17.6 If. 214.3 221.32237.31 2439 250.3 2.93

2.Lar lu (Ntrfd tituc 3.01 3.32 3.35 4.19 6.70 7.7 3.11 3l.11 .11 10.14 10.14 10.14 Camrcia 4.0 4.91 4.64 ." 13.91 1LX 16.03 16.03 15S1 2L9 21.21 2V.21 Pblic ltbrlty 14.21 1.L39 13.11 30.5 61.10 67.21 7.9 7.n93 1.33 113.36119.3 119.55 lastrial 12.4 1.79 20.45 51.4 110.41120.33 131.23 I." 915.13 210.21210.18 210.18 P-t Trot Nip 0.43 0.5 0.57 0.66 0." 1.04 1.15 1.15 1.26 1.36 1.95 PertTut laIb 1.21 1.6 1.67 1.66 1.66 1.83 2.01 2.01 2.22 2L9 3.0t 3.05 a Pipe 10."0 600 6.00 4.50 0.00 0.00 0.0 .0 0.00 0.00 0.00 0.00 Slup 2.3 1.00 1.00 1.53 1.5 1.9 1.35 1.5 2.04 2.6 2.31 2.3

M-tt(21 50.50 55.71 D.79 101.5 1%.27214.77 235.11 246.17 26.5 367.56374.3 374.39 3.1stw ese flat abte)

bRmtic 0.0 0.00 0.00 3.09 1236 12.36 I2L3 12.36 12.36 12.36 12.3I Cuwcla 1.75 1.22 1.19 1.52 2.60 2.0 .2.60 2.60 2.0 2.0 2.60 2.L0 1StIPIP 0.00 0.00 0.00 1.26 5.03 L03 .34 5.66 5. 5.93 5.93 5.93 Si-total 1.75 1.22 1.19 5.37 19." 19." 20.30 20.2 20.3 20.39 20.11 20.39

4.star Rea (Ta) 7.29 7.73 16.53 10.39 11.43 12.57 1G 15L21 16.73 18.41 20.25 22.27

LOtIUr ater b 1.-3 1.60 1.60 0.82 OM0.0.32 1.09 1.09 1.09 1.36 1.36 1.36

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TOtulltr eOm12-t) 61.17 6.31 75.11 112.6222L80 248.15 270.33 233.79 302.30403.21 417.38 419.41

7.ewap eson

ws.p To 264 28.54 0.6 38.10 41.91 46.11 50.72 579 6.37 6.0 14.25 31.60 _eap Wt 0.00 0.00 0.00 20.02 41.94 4 .64 51..99 S.30 75.7 77.41 77.41 tlo Swa 11uep 26.74 28.s4 60.6 S.13 33.35 91.71100.36 107.18 IL.6 14L.47151.66 I9.09

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b=1c 05 0.05 0.50 1.00 1.0 1.00 1.00 1.0t 1.00 1.25 1.25 1.25 Camecla 1.00 1.00 1.0 3.00 3.00 3.00 3.0 .0 4.00 4.0 4.00 Plic lethrlty 1.00 1.0 1.00 3.00 3.00 3.00 3.00 3.00 4.00 4.00 4.00 edusrllI 1.50 1. 1.S050 5.0 .0 5OO 5.00 5.00 L00 7.00 7.00 7.00 PertTrut Skip 3.0 3.00 3.00 5.00 5.00 5.0 5.00 L00 5.00 7.00 7.00 7.00 Prt TrustIks-MtP 2.00 2.00 LO 2.00 2.00 2.0 2.00 2.0 2.0 2.50 2.50 2.50 Kw Pip 0." 0.50 0.50 S'm 11 2.00 2.00 2.00 2.00 L20 2O0 2.0 2.00 2.00 2.S0 2.50 2.50 10.111Flat 1te (b/yr/cun hetl c - 120.0012U0L 120.00 120.00 120.00 120.00 120.00 120.00 120.00 Coindal 120.00120.I 120.O 60.0 600.00 00.00 0. 00.00 60.00 00.0000.00 00.00 ftupep - - 900.t000.00" 900.00 90.00 900.00900.0 900.00 900.00 900.00

11.b"at*s km - Pr a llOlbterSud a A0 1.11 2.35 4.13 4.11 4.08 4.27 4.23 53 5.3 L47 -1P hr U Ofl atPri U 30 1.27 W.65 2.92 2.93 2.2 3.1 3.06 4.03 3.9 4.01 -70- ANNEX10 Page 3 of 18

tins uinm (EC1916 vmrr) ln ItCJE SNIOt bi - c t FIICS

ism nmw,LVrm 1-89 415-856 Wu 87-8 " 80 9Wu 91-92 9 93-

rltfft W m (m-) (- A ED- -) 1.oing hbiem 12.70 20. 321 21.4 60.931N25 1 9 V.2A 69.5 5." 9.17 9.02 2.ll woo ti YT 38?.774.93 ".9 11.12 209.6928.1 28.22 59.9? M.276 39 37. 37.03 3.TotaOtd (1+2) 1.4? 19 82.03 2.66 27.63 336.3D319J1 347.5 3.9 4.73 430.214.5 41C11lectio 31.21 38.14 4.97 60.93162.3 235.41261.84 M.0 2.07 388.5687.19 3.0S S.Clostaihil. (3)ll 20.26 32 211.4 60.9311.5 101.9 87.8 69.45 51.89 43.17 43.02 43.01

DJU I son II DTM I.Opeu0.1 52.l2 60.11 63.63 92.59 ff.67 86.3857.20 12.5 33.1721.99 18.69 19.06 Z.usd krinqTte Vr 34.03 36.32 77.15 .52 %A8 10.29 .1 122.99133.W 1 61 1.91 181.3 3.141tu_d (12) 86.31 i.13 10.7 16111 91.9I 190.66171.39 165.89 166.57 186.86 190.9 200.42 q.Cullecti 26.20 32.A 6.19 61." 1.5? 133.16128.54 132.6? 141.9 168.1817.54 100.38 S.Clu1nghI... (3-4) 601 63.63 92.9 96?7 16.31 57.2092.5 33.17 21.99 18.69 19.6 20.04

C.11 rm TINuM go 1.0 iu "9 64.6 72.02 79.48 59.6139.74 1 .t0 .00 .00 .00 .00 ?.hW Oirg I. Ya 15.11 8.60 8.0 1.11 .38 7.53 8.29 8.60 9.06 9.97 10.10 10.1 3.1t4.O_ (1.2) 64.86 73.2? 0.62 87.59 66.9 17.2? 20.16 8.60 9.06 9.9? 10.10 1011 u.Cs11g6tlus m 1 0.19 1.5 1.14 27.9 27.5 27.40 20.16 8.60 9.6 9.97 10.10 10.10 S.CIoogbe (3) 64.6? 72.02 79.1 59. 39.74 19.87 .00 .00 .00 .00 .00 .00 60.1103(Ml nol W o 1AWnWI1. 66A0 62.75 62.75 5.S9 O.0 O.0D 0.00 0.00 0.000 . 0.00 a.bradhrn thYw 0.00 O 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3.teblO.d (1#2) 66.0 62.75 62.75 568.590.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4.Cotllecug,ljst 3.25 0.00 4.16 59.59 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5.Cli 01. (3-4) 62.7 62.75 58.59 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

EJIK. KIM 1.Opedwmeg1 0.04 4.66 S.59 6.13 0.0 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.md Ourngthe Yeam 9.60 8.19 7.53 8.2 9.11 10.02 11.02 12.13 13.34 14.6? 16.14 12.76 3.t.. 0. (1*2) 9.64 13.15 13.12 14.41 9.11 10.02 11.02 12.13 13.34 19.67 16.14 17.76 4.Collectios 4.91 7.56 6.99 14.41 9.11 10.02 11.02 12.13 13.3411.6 16.1 17.76 s.CIovinghim (3M) 4.66 5.S9 6.13 O.0 0.00 0.00 0.00 0.00 O.00 0.00 0.00 0.00

1.9i himIO8.77 212.4S236.0 269.00M.76 29.92 18.51 110.68113.17 87.43 7.4 72.63 2._wudOIrg TheYor n.51 103.3t143.26 15.03 321.17319.89 381.73 403.70 432.31 566.36 585.18 596.25 3.M1owhm (1.2) 2 8 315.79379.30 4f.11 54.22 594.8 57.23 4.37 54.4 653.79657.59 669.88 l.Colltctlusjstps 66.83 79.75110.22 226.5 309.3146.38 429.56431.20 458.1 581.3 581.96595.28 S.C blohw (3-4) 212.45236.09 59.08 227162".92 18.51 140.601131. 87.3 72.41 72.63 73.60

6.611SKCCIIIUIIS 212.45236.04 269.08 227.76 2".92 108.5114.60 113.1?VA.3 72.41 72.63 73.60 0.0 11t(SURtHEVI)a 2.20 1.38 3.35 4.73 .79 7.90 6.51 5.13 3.81 3.09 3.10 3.15 I.10DOIlTSCtUIC) 8.01 9.42 12.77 17.50 5.21 33.19 39.69 4.82 48.6? 51.76 54.87 58.02 J.lE1IICWALB I) 204.41226.62 256.31 210.26 219.63 155.32 100.98 68.31 3.76 20.6S 17.76 15.56

M58.79In Indefrfd to ll inc st WV as aCOlltf rISL hIBd thblin ld is r NIL. 'tMtSK ro 636:378161R1 VII M St161ff IofU a01liTXI1IH I to IIDtI6011011667,111 Onm 07-1 115flt I W9.48rdn do tm NIIIt bgag of 86-7fer .4r .#ldtin pic tp is id tobe cllttd to4 ad1 inimts fm 86-87to 890 a 11N-6,c M51M isK1 an _61t FM YRmt Wb.10.SIU OTED13tIl OC 1986 -71- AM 10 ?axe 4 of 18

Rs IEtROIATER (NC l0 TOM) IEO D11 tif 1961II PIOECII6S RW.IU- Cdm93RICH

63-64 W85 66 6H- $I-6 6 -9990 91-9 92-9S 9344 94-5

IN_lIEGEN (-¢--115111111----) (------POECTfO------*----

MeIte Charge - trId 50.50 55.71 55.7910.5 396.2214.7 235.1 24.6 263.5 367.56374." M." - FlIat .75 1.22 1.19 5.67 19." 19." 20.30 20.62 20.6 20.0 20." 20.59 - TM 7.29 7.6 16.53 10.39 11.43 12.57 13.83 15.21 16.73 IL41 20.25 22.27 - StdPipeSlwue Fld 1.63 1.60 1.40 0.02 0.62 0.62 .0 1.09 1.36 1.36 1.36 SubtotalMl) 61.17 66.31 75.1 113.62 223.50 2.615 270.3323.79 302.30406.21 417.38 419.41 2.sraw - Yu 26.74 29.54 60.U2 3.10 41.91 44.11 50.72 55.79 61.37 67.50 74.25 61.61 - Surta 20.02 41." 45.61 4.64 51.9 55.30 75.9? 7.4l 77.41 Su totall)2 26.74 29.54 60.U 5L.3 63.65 9S.11 10.36 307.18 116.67 143.47 151.66 159.09 3.0theroco"e 9.60 8.49 7.53 8.28 9.11 10.02 11.02 12.13 13.34 14.67 16.14 17.76

4Mtotal mecml to 33 97.51 103.34 143.26 165.03 321.41 349.A 361.n 73.70432.33 56.36 561 56.25

.Oirct later - Fow 12.47 13.11 16.6 18.02 19.23 22.32 21.39 30.37 32.50 3.91 41.64 44.S5 - t.aattce 2.06 2.55 2.93 3.14 3S3 .90 4.56 4.6 5.63 6.34 6.79 7.26 - Chaecals 2.1 1.95 2.94 J3.5 3.37 3.60 3.85 4.42 5.23 5.95 6.37 6.81 - Saqes 12.60 16.25 19.13 20.47 23.90 24.17 27.62 29.77 31.66 35.60 36.09 40.7

SPAtotal (5) 29.46 35.86 41.84 44.77 47.90 53.0 64.63 69.44 75.21 66.N 92n.8 ".36 6.Dlrott VWagn - POur 3.12 3.78 4.21 4.50 4.62 5.56 6.53 6.96 6.8 9.32 9.9? 10.67 = Iaintnent 4.16 5.09 5.86 6.27 6.71 7.77 9.09 9.72 31.39 2.97 33.9814.05 - Sages 25.61 32.49 36.26 O.94 43.60 49.21 55.29 59.16 63.30 67.73 72.4 .SS

Subtotalf6) 32.69 41.36 4.33 51.73 55.33 62.56 70.90 T5.6 92.8 90.03 96.33 103.07 7.Oerheads - Slary 12.47 14.02 19.66 21.06 22.53 24.11 25.90 27.60 29.53 33.60 33.63 36.18 - Aden.Expens 6.92 4.39 5.14 5.50 5.1 6.30 6.74 7.21 7.71 6.25 6.63 9.45 - Exploration 4.34 0.78 0.06 0.09 0 0.10 0.10 0.31 0.12 0.13 0.34 0.35 L"s ONCuuitlisuW 6.69 6.31 7.62 4.07 4.35 4.66 499 5.33 5.73 6.11 6.53 6."

Subtotal(7) 16.64 12.3 17.23 22.57 24.15 25.3 27.65 29.59 31.66 33.0 36.25 3.79

O.Totalv)rtindir 5+6.7) 79.19 0.10 107.45319.04 127.39 142.39363.18 174.90 16.75 210.71 225.46241.24

9.Bd Dtt 1.54 1.38 3.35 4.73 7.79 7.90 6.51 5.13 3,64 3.09 3.10 3.15 I0.S*totaWlll1 60.73 91.40 110.80 123.78135.17 150.29 169.693I0.03 1.59 213.60 229.56244.39

I.M1oringIncm(4-101 136.7 11.86 32.46 61.25 136.29 199.59 212.03 223.66 238.12 352.56 356.62351.t6 12.lm. Op reciatlon 30.0 8.55 9.16 21.62 24.64 37. 51.45 60.15 62.62 66.45 10.01 93.06 13.Prior period adjststs 0.9 0.02 0.05 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

34.09t6InclLs)(11-12-133 5.05 3.29 23.25 39.43 361.45163.60 160.50 363.51376.10 296.11 206.61 25LO0 IS.loteret - SII LeamW 22.11 24.34 28.13 32.59 36.53 42.9 46.34 52.83 56.01 58.46 60.31 61.72 - UKTltrwAinqs 3.47 4.09 4.09 4.30 4.30 4.10 3.80 3.60 3.60 3.60 3.60 3.60 -118Projt - - 0.00 0.00 20.66 37.22 53.55 53.5 5S.22 52.52 60.99 sub totailtS1 25.58 28.43 32.22 36.69 40.63 67.47 89.36 9."9 33.17 135.29114.43 146.31

16.511 I 1i(LOuS) (14-15) (19.73) (25.141 1.971 2.74 120.61 94.3 731.22 53.53 .9J93 170.63 370.13 3I1.70

.111229.71 334.15 406.73 4U3.3 623.9 6.24 1,316.643,6564 1,74".721,842.64 1, 32 2,313.80 IL.U iwb atloIlOI4I2 82.79 18.52 7.34 66.9 42.05 42.96 44.45 44.60 44.78 37.75 39.06 40.9 19.BWrtg ratio (10.12114 93.05 96.0 63.14 13.6 49.71 5.3J 57.93 59.50 S9.2 49.4 51.02 S6.73 20.Retursoe Ws1141117 2.55 o." 5.n 9.14 25.67 10.23 12.20 9.97 9.81 13.53 15.03 11.15 -72- mm 10 PSge 5 of 18

_SI t_ (lltc195111ff1) rmcccousuusrrnm u,ju-owmjm

1.1311s TU -8556-) (-----UCIO------

.l.ratl 1ci m 5.5 3.29 23.21 39.13 161.1511.61 10.95 163 176.102.11 2U. 21. (ireiot p detdp.) 2.0u1t 11.6 6.56 9.16 21.2 21.86 37.99 515 60.15s..4 62.6 .01, 3.A 3.oIta l 6ontls (1*2) 15.5 11.1 32.41 612 1529 19.9 212.0 223.6623.72 5.S 316.625.

.1W && rM ON Us ct - - 66.5611 165.7 163.31 6.4? 62.566.99 51.81 O. -t km"m 13.7i -Othv,(Pusc ) J6.6? 42.33 S5.21 91.1 760 H30 a1a 5 5S U1 51.s 1s1 M tta (4) .2 U2.33 NM2 116.U1211.20 Z.67 225.111.7 13.I I" 103.46Sl.I

UIs t - 175 11 13.7916 i.s 9.1 62 63 010O Otln (Pl $Sm) 62.7 (10.93)SA1 6.10 13.6 12.231.3 0.0 0.6 0A 0.6 0.6 tSott (5) 62.73(10.9) %.1 13.15 23.1 B.9" 23.91 6.96 9.1 6.2 6.5 6. 6.16aALL SO $ (3to5) 139.6 3.241.72 191.5692.5 1641 O 373.mm31.39 1 1.6. 1u , n.mirru

. P*t - - .6 2. 275.79M.1 1013.52£72.36 -.n1 0. - OtherMf Sdu) 114.0 31.5 1.6 "A. 13.6 122.6103.6 13.6 103.6103.IN 1. 103.6 Mbtl() 11. 39. 16. 179.633.6 39.6 35.11261.9 5.R22. 232.91103.6 6.LmOesmitah

-lt9rin - - 1.1 5.S0 ------U Pojet ------3.33 10.31 10.61 - Mli P Sdb.) - - 2.02 3.9 5.5 6. 1.1 11.01 63.39 S. 129.1S M tta (6) O. 0.6 O. 2t.02 3.1 7.1 12.3 6.86 14.11 66.7215.83 147.76 9.Iowt PWe - lkt bwlgs 2.81 4.0 - 4.0 1.0 4 3.7 3.59 3.60 3j9 3J0 3.59 -U Prjct - - - 6.66 26.66 37 53.50 62.S 70.76 77.32 1.61 6.." - Oth., (PlaSbd ) 11.39 17.69 19.6 2.1? 3R. 36.22 109 44.56 97.0 5014 S.99 53.0 So totl (9) 11.31 21.76 19.6 .92 55.23 ??. 18.22110.59 122.5 3. 13.10 137.9? lOlbt Swu.(89) 14.34 21.76 19. 36.94 9.21 6.1 110.6 119.5 1.6 197.76293.23 25.73 11.Jwm tollw*iqCb 13.1 7.65 6.51 67.60 17.31(129.56) (11.6U) (60.93) (53.63) (4.6) (61.16)(16.4)

1R.1 M (?1It) It1." 5.16 131.39 3. 40.8 3.12 109.12310.56 VA2 .9 M.

13.ai 6 etien (2.79)(16.4) 433 (92.25) 20. 111.13 56.93 33.02 13.03 1.36 71.60 15.10 14.ddMlp iqblac 12.26 119. 102.% 107. 15.03 35.66146.79 263.72 23615 29.7 39.14 375.7 IS.CI4blanc 119.9 1. 1017.2615.03 35.66 146.79203.72 2.7S 29.7 39.19 3174 0.

16OtS w teolo( ) 110U.5396 163.3 165.82311.64 210 11.78 16 7.176.5 179.27146.62 123.1t

Oita013R O 196

IE uA TM 6M(m136 ISmIIt. -73- ASNEX1o Page 6 of 18 MMS RETIIE (k onRat mrbX k 1916TARIS) PWMJECTOKM SEET 9 CliT P S

IK VINKIAICIL 03-84V 656 6- 17-t0 68-69 690 9O91 91-92 92-93 93- 995

I.fixed- RtCut 49.05 49.78 415.76779.31 673 1,356.671,637.60 2,148.23 2,236.51 Z,M3.14 2,500.33 3.351.97 Le"k ORacn 152.31160.93 170.09 191.91 216.76 254.74 306.19 366.35 421.97 495.42 565.42 659.20 Netfixd 8,ets 286.6727I.65 275.67597. 670.551,181.93 1,531.40 1,71.689 1,807.55 1,877.73 1,934.90 2,692.69

Z.Caiork-In-process 323.30414.76 516.78 373.25 622.63 74. 469.86474.48 694.30 861.51 1,0u.9O 256.64 3.Curreatsets - AdRc 26.22 22.46 40.0 29.47 49.17 45.32 38.67 37.16 54.82 68.02 79.02 20.26 - Netkebls- )lvrold NI N NI 47.26 36.93 23.71 13.01 5.13 3.84 3.09 3.10 3.15 - others 204.42226.65 250.4 162.90ll.71 131.61 87.97 63.21 34.92 17.56 14.66 12.43 - Invntory 54.03S3.66 41.58 113.56132.62 90.69 90.1108.52 95.67 93.61 35.55 1.31 - CSu/ h*i 119.49102.95 107.26 15.03 35.66 146.79203.72 236.75 249.8 304.14375.M 490.84 - Deposits 3.59 3.59 446 4.46 4.46 4.46 4.46 4.46 4.46 4.46 4.46 4.46 S total(3) 407.75409.31 44.53 372.79411.55 442.56 43.95 435.53433.40 401.07 512.54 532.45 4.cm Loss(Profits) 39.06 64.21 73.16 70.42(50.40) (144.53) (215.76) (269.29) (332.22) (503.05) (673.23) (76.93) 5.JT01RSSt0 (1 to4) 1,056.701,167.13 1,310.14 1,403.6 1,664.54 1,974.0 2,243.46 2,422.61 2,603.11 2,717.26 2,775.11 2,69S.5

9.CmITRLRe UKIUTIES

6.OriimnlContribution 210.06271.90 271.90 213.31 213.31 213.31 213.31 213.31 213.31 213.31 213.31 213.31 7.60THants - ! Project - - 0.00 4.75 14.7? 26.56 42.17 51.11 60.29 66.91 75.40 75.40

- E3istinWgNOthers 250.47239.54 295.64 304.04 317.04 329.24 339.54 339.54 339.54 339.54 339.54 339.54

Sbtotal (7) 250.47239.54 295.64 30.79 331.01357.0 311.7 30.65 399.83.45 . 414.94 8.L0Tolwns - U8Project - - 0.00 66.56206.75 372.22 535.53 624.99 707.56 M.19 814.62796.21

- ExingNWXOthers 292.65335.16 365.39 433.77 507.79 575.19 630.t5 672.99 710. 696.59654.60 576.95

Subtotal (6) 292.65335.18 315.39 500.33 714.54 947.71 1,165.981,297.901,418.06 1,471.791,469.42 1,373.16

9.11T1trrdings 54.15 54.15 54.15 54.15 54.15 52.25 46.75 46.75 46.75 46.75 46.75 46.75

10.CuentLiabilities - DepositsforUorks 112.23131.10 152.62 168.10 184.91 203.4 223.74246.12 270.73 2.90 327.58360.34 - leemt Pbla 27.23 13.45 22.94 16.57 27.65 25.4 21.75 21.06 30.82 36.24 ".43 11.39 - OierL1i1litis 27.42 32.70 25.95 28.55 31.40 34.54 37.99 41.79 15.97 50.57 55.63 61.19 Subtotal (10) 166.0 1M7.33201.71 213.22 243.96 263.42 213.40 306.97 347.52 366.61 427.64 432.92 It.Int prale on6TH low 02.36 09.03101.36 114.06 126.76 139.46 152.16 164.66 177.56 190.26 202.9 215.66

12.10RILUS U CAITIL1,056.79 1,167.13 1,310.151,403.6 1,684.631,973.95 2,243.39 2,422.53 2,603.03 2,717.17 2,M.02 2,696.75

13.CrrentRtio (CA/Cl) 2.4i 2.31 2.20 1.7 1.61 1.66 1.54 1.41 1.25 1.24 1.20 1.23 -74- ANNE 10 rage 7 of 18

KEY FINANCIALPERFORMANCE INDIcAToRS (YEARS1987 TO 1995)

IA.FINANCIAL RATIOS _ 1987 1 1988 1989 1990 1 1991 1 1992 1 1. Working Ratio (Z) 142 143 144 1441 451 45

| 2. Debt ServiceCoverage (2) I 3.1 1 2.4 1 1.9 1 1.8 1 1.7 1 1.7 1 3.RORa AnFA (Z) 126 118 112 110 1 10 1 10

1 4* Cistoaer Receivables (X) | 40 | 26 | 18 | 13 | 8 3

S. Collection Efficiency (2) I 55 I 68 1 75 1 79 I 84 1 88 i I I I I I I I 1 6. Annual Billings Rs (M) | 322 | 350 | 382 | 404 | 432 1 566 I I ~ ~~~I I I I I I I I 7. Apnual Collections Rs (M) | 304 406 430 | 431 | 458 j 581

o8 TotalBillings Rs (M) I 549 5595 | 570 I 544 I 545 | 654 l 9. AverageWat.&Sew. Revenue (RsIm3)1 2.921 2.93 | 2.92 1 3.08 | 3.06 1 4.03 1 of wIter produced I I I I I I I Is. P0IT/OPERATIONALPERFORMANCE I I I I I I

to GrossIncome Rs (M) 1 322 1350 1 382 1404 1432 j566 j 1 2. AdministrativeExpenses Rs (M) | 186 1 200 1 212 I 224 I 239 | 353 1 3, DeprociationRs (M) 1 25 38 I51 160 |63 166 I I 4. NetIncome Before Interest Rs (W)I161 1 162 1 161 1 164 1 176 | 286 | t Noet Itco.e after Interest Rs (M) | 121 | 94 | 71 1 54 | 63 | 171 | 6. Vaber of Technical/Managerial| I I I I I I 1 Staff 1 1 1 1 ! 12120 1 -75- AM333 10 Pag"e8--f 18

MAJORASSUMPTIONS UNDERLYING FINANCIAL PROJECTIONS

A. General Notes

1. MKWSSB'sfiscal year runs from April 1 through March 31 of the following calendar year. The first period shown in both the income and expenditure statement and the flow of funds statement represent MMWSBSs operating history, namely the three-year period between April 1, 1983 and March 31, 1986. All projections thereafter are for fiscal periods.

2. The income and expenditure statement, the flow of funds statement and the balance sheets are based on preparations of 36188B's financial department and are subject to audit. Once the audits are performed and completed, those statements will be adjusted accordingly. Audits have been completed for 1983/84 and 1984/85. Audit for 1985/86 should be completed by March 1987.

S. Revenue Projections

3. Revenue comprises:

Water revenues and Sewerage revenues

Water revenues comprise: - Revenue from metered consumers - Revenue from unmetered consumers charged on flat rate (new for unmetered domestic and existing for unmetered commercial) - Revenue from standpipe and lorry supplies to slums billed to Government (for water supplies and for maintenance of standpipes/ roadside tanks).

Sewerage revenues comprise: - Sewerage tax - New surtax on sewerage tax adopted December 1986.

4. Metered revenues are computed as a product of projected metered water supply volumes and old and new tariffs after accounting for free allowance. Flat rate revenues computed as products of projected number of households/ commercial establishments/public staadposto and old and new flat rates.

5. Tariffs - as indicated by the Revenue Projection Departmnt and shown on page 2 of 15 Annex 11.

6. Free allowance - Reduced from current maximum of 30,000 liters per month per connection to l5,000 per month for domestic and commercial connections. No free allowance for all ocher categories. Full effect realized from 1987-88; 501 reslised in 1986-87. -76- ANNBX 10 Pageof 18

7. Flat rate - Unmetereddomestic consumers (numbering about 103,000) chargeda flat rate of Rs 120 per year. Unmeteredcommercial consumers (numberingabout 3000) chargeda flat rate of Rs 600 per year. For Stand- pipes and Slum Supplies(numbering about 5585 and 908 respectively,the CTE would be chargeda flat rate of Rs 900 per year. Full effect of introducing flat rate increasedfrom 1987-88and 50% realizedin 1986-87.

8. Water and seweragetax - Increasedby 10 per year from currentyear billingsexpected due to'

* additionalnew properties. * possiblerevaluation of asnual rental value in the near future (ARV has not been revaluedin the last 10 years). * additionalexisting properties comin underthe tax base.

9. Seweragesurtax - Introducedfrom 1986-87. Full realizationfrom 1987-88with 102 realizationin 1986-87. Computedas 202 of water bill to all except for standpipeand slum supplies.

10. Revenue from standpipesand slum supply - Assumedto be billedto G and computedon the basis of fixed rate per tap. The rate assumedis Rs 75/tapmonth or Is 900/tapper year. Revenue from maintenanceof roadside tanks, to be billed to GTE, at the rate of Rs 75 per tank per month. There are, at present,900 such tanks. In additionslum supply is chargedat the rate of Rs 2.00/1000liters for the volume supplied.

C. Incomeand ExpenditureProjections

Ineome

I1. Water and seweragerevenues are computedas explainedin the last few paragraphs. Other incomecomprising interest from bank deposits,sale of tenderforms, etc., increasedby 10X each year from the currentyear.

Expenditures- Water

12. (a) Power. Power costs of water increasedby 72 per year for inflation from currentyear's figures. In addition,it is increasedfor additional water flow as follows:

(1) When 55 mld flows in 1989-90- additionalpower costs equivalentof 502 of costs expandedin Region II (existingwell fields).

(ii) When 27 mld flows in 1991-92- no additionalpower cost.

(iii) When 20 mld flows in 1993-94- additionalpower cost equivalentof 252 of Region II (existingwell field)plus equivalentof 102 of Kilpaukregion (watertreatment plant). -77- AUNE 10 Page o0-of16

13. (b) Chemicals- Chemicalco8t (alum,chlorine, etc.) for treatment of water increasedby 71 per yearfor inflationfrom current year's figures. In addition,it is increasedfor additionalwater flow as followst (i) When 55 mld flowsin 1989-90- no increase(as wateris extracted fromgroundwater sources). (ii) When 27 mld flowsin 1991-92- additionalchemical cost equivalent of 15 of Kilpauk(water treatment works) chemical costs. Ciii)When 20 mld flowsin 1993-94- additionalchemical cost equivalent of 101 of Kilpauk(water treatment works) chemical costs. 14. (c) Maintenance.Maintenance cost (includingrepairs increased by 7n per year for inflationfrom current year's figures. In addition,it is increasedfor additionalwater flow in proportionto the totalincrease in waterflow (e.g. in 1989-90maintenance costs will go up by 348-293as the totalwater production increases from 293 mld to 348 mld). 15. (d) Wages. Compriseonly wages for labor(and does not include salariesfor supervisoryand administrativestaff). Wagesincreased by 71 per year for inflationfrom current year's figures. In additionwages increasedfor additionalwater as follows:

Ci) When 55 mid flowsin 1989-90- additionalwages equivalent of 501 of RegionII wages(existing well fields). {ii) When 27 mld flowsin 1991-92- no additionalwages. (iii) When20 mid flowsin 1993-94- additionalwages equivalent of 251 of RegionII wages(existing well fields)plus 101 of Kilpauk(water treatmentworks) wages. Bzpenditure - Sewerage 16. (a) Power. Power cost of severage increased by 72 per year for inflationfrom current year's figures. In addition,it is increasedfor additionalwater flow in proportionto the totalwater excluding groundwater suppliedto industry(for e.g., in 1988-89sewerage power costs will go up by 283-240as the totalwater excluding groundwater to industryincreases from 240 mid to 283 mld). 17. (b) Chemicals.There are no chemicalcosts for sewerage. 18. (c) Maintenance.Increased by 71 per yearfor inflationfrom currentyear's figures. In addition,it is increasedfor additionalwater flow as follows: (i)When 55 old flowsin 1989-90- additionalwages equivalent of 101 total sewerage wages. (ii)When 27 mld flowsin - no increase. Oiii)When 20 mld flowsin - no increase. -78- P'age l1of 18

Indirect Costs 19. Salaries. Increased by 71 per year for inflation from current year's figures. No additional increase in manpowerprojected as existing manpower considered sufficient for both construction supervision and operation and maintenance of new schemes. 20. Administration expenses. Increase by 7% per year for inflation. No additional increase dueto new schemes expected. 21. Exploration costs. Increased by 7X per year for inflation from current year's figures. Exploration activity level maintained at current levels. 22. Overhead capitalized. Deducted from total costs as they are chargeable to cpitalaccount. Include direct project supervision, allocated salaries and administrative expenses and all exploration costs. Computed (based on past experience of Metrovater Board) as exploration costsplus 151 of salaries and administrative costs. FiancialCosts 23. Depreciation. Computedat 2.81 of end of year gross fixed assets based on past experience of Metrowater Board(2.8Z represents a weighted average of different percentage depreciations applied to different categories of assets). 24. Interests. Interests on the following loans are charged to Income and Expenditure account. (i) World Bank project loan (charged from 1989-90 onwards when the first phase of 55 mld groundwater scheme is completed). (ii) Market Borrowings - Loans (Bonds) raised by Metrowater earlier. (iii) GTMloans takenfor past and ongoing schemes. 25. Interest rates are 10%per annumfor World Bank loan and 8.5Z for other loans.First, the total interest payable is computedat this interest rate on the outstanding loan balance. It is assumed that all the interest payable in a year is actually paid during that year (except for Re 1.27 million payable on a GT1 loan requested for conversion to equity). A part of the interest paid is capitalized and the remaining part is charged to Income and Expenditure account. Interest to be capitalized is computed as interest on portion of the loans relating to the capital work-in-progress. The difference between the total interest paid and interest capitalized is then charged to the Income-Expenditure account. 26. Details of loan, interest and capital work-in-progress of World Bank Project are presented in separate statements for the period 1986-87 through 1994-95. -79- ANNEX10 Page 22 of 18

RatiosComputed in Income-ExpenditureStatement

27. (i) WorkingRatio - Directcosts + overheads+ bad debts TotalIncome. (ii) OperatingRatio = Directcosts+overheads+bad debts*depreciation TotalIncome (iii) Returnon ANFA= OgeratingIncome* Avg.net fixedassets in operation * OperatingIncome - Total Income- (directcosts, overheads, bad debtsand depreciation) D. Sourcesand Uses of FundsProjections 28. sourcesconsist of: (a) Internalgeneration comprising operating income and depreciation obtainedfrom income-expenditure statement. Forty percent (401) of internallygenerated funds are expectedto financeannual investment. (b) Loandrawdown for WorldBank, and GTN plan schemesall received fromGTN. Loansfor plan schemesare computed at 55X of totalcapital costs and are receivedas per phasing of capitalinvestment program. Loansfunds for the WorldBank Projectare composedat 55% of totalcapital costs. (c) Grantsfrom GTN are used to finance5% of totalcapital costs for plan schemesand the WorldBank Projectand targetedfor low cost Sanitationschemes. They are receivedas per phasingof capitalinvestment. 29. Uses comprise: (a) Capitalinvestments for plan schemesand the WorldBank Project per their phasing. (b) Loanrepayments in respectof: (i) Marketborrowings part of whichmature in 1986-89and 1989-90. (ii) WorldBank Project loans from 1991-92 (i.e., after a 5-year graceperiod). (iii) GlT loansas per existingand new loan agreements. 30. WorldBank Projectloans and Governmentof TamilNadu capitalloans are assumedto be repayablein 20 annualinstallments after a 5-yeargrace periodwith no graceon interestpayments.

31. Interestpayments on long-termloans - computedat 10X per annumon WorldBank Project loan outstandings and at 8.5Xper annumon outstanding loanbalances in respectof GTN plan schemeloans and marketborrowings. -80- AXNEt 19 Fjrl'8rof 18

32. Increasein workingcapital from previousyears level (basisfor computationof workingcap tal is explainedlater).

33. The cash generatedis added to the openingcash balanceand trans- ferred to BalanceSheet as currentasset items.

E. BalanceSheets Projections

34. Additionsto fixed assets take place throughtransfer from capital work-in progress(which includes not only the capitalinvestments but also the capitalizedinterest) when the projects/schemesget completed.

35. For the World Bank Project,transfer from CapitalVIP takes place in four phases - in 1988-89when 25 mld groundwateris completed,in 1989-90 when an additional30 old groundwateris completed,in 1991-92when 27 m14 Aarani-Kortaliarcomponent is completed,in 1993-94when 20 mld starts flow- ing in as savingsin evaporationlosses and in 1993-94when the sewerae and other componentof the projectsare completed.

36. For the other GTN Schemes,transfers have been effectedbased on completionof differentcomponents of the schemes. Detailsof additionsto fixed assets is presentedin a separatestatement for 1986-87to 1994-95.

37. Capitalwork-in progress. Additionsto capitalSIP is based on completionof differentphases of the variousproject's capital investment programand transfersfrom capitalWIP to fixed assets. Detailsof additions to and transfersfrom capitalVIP in respectof World Bank projectand other GTE Schemesare indicatedin two separatestatements.

CurrentAssets

38. (a) Advances. Relates largelyto advancespaid to contractorsand suppliersand to a smallerextent to advancespaid to employeesof Ketropower. Projectedto increasein proportionto capitalwork-in progress.

39. (b) Receivables.The followingimprovements are assumed in billing and collectionprojectionss

1986-871987-88 1988-89 1989-90 1990-91 1991-92 1992-95

Water charge 50 601 701 75X 80% 851 90o collection Tax collection 40X 55Z 70% 751 801 851 90X (Figures represent percentage of total demand,See page 3, Annex11). ANNUH 10 Page 14 of 18

40. In respectof money due from CTN for standpipeand alum water, it is assumedthat Rs 59.61 millionoutstanding at the end of 1986-87will be collectedin four annual equal installmentsfrom 1986-87to 1989-90. In addition,GTM will pay 1001 of demand raised in a year duringthat year itself. In respectof money due from NMC (Rs 58.59 millionat end 1985-86) the amount is transferredto balancesheet as a reductionin 'ORIGINALCON- TRIBUTION'and the balancedue from MMC is made 'nil' from end 1986-87 onwards. Miscellaneousreceivables (related to other income)are assumedto be collectedat 1001 of billingsin any year.

41. (c) Inventory. Relates largelyto capitalinventory and to a smallerextent to O&M inventory. Projectionscomputed as four months equivalent of materialvalue in capitalinvestment during the next year (which in turn is assumedto be equal to two months of capitalinvestment during the next year) plus one month cost of chemicalsand 0WE maintenancespares (W maintenancespares are assumedto be equal to 401 of OlM maintenancecost).

42. (d) Cash. Obtainedfrom sourcesand uses of funds statement.

43. (e) Deposits. Relate to depositsmade in ElectricityBoard, Telephone#etc., by Metrowater. Projectedto remain at current levels.

44. AccumulatedLosses. Projectedfrom 'AccumulatedLosses' at end 1984-85as accumulationof net loss obtainedfrom Income-Expenditure Statement.

45. OriginalContribution. Liabilities(in excess of assets) originally transferredto Metrowaterat the time of the formation. Reducedfrom current levelof Rs 271.9million in 1985-86 and by Rs 58.8 millionin 1986-87to accountfor dues from )MC transferredto this account. Retainedat 1986-87 level throughoutthe projectionperiod.

46 GCTNGrants. Cumulativegrants receivedfrom GTN in respectof capital expenditure. Increasesduring the projectionperiod correspondingto the grants receivedfor differentprojects.

47. GTN Loans. Cumulativeloans receivedfrom GCT in respectof capital or other expenditure. Currentlevel (in 1985-86) of GTN loans includesabout Rs 150 millionloan given by GTN to Metrowaterin 1979 at the time of its formation. GTN loan levelsincrease or decreaseduring the projectionperiod dependingon net loan received/repaidin respectof future projectsand earlier schemes. The original(1979) loans of Rs 150 million is retainetdat the same level throughoutthe projectionperiod.

48. Market BorrowinRs. Publicbonds raisedearlier by Ketrowater. No furtherbonds are assumed to be raised in the projectionperiod. Repayment of a portionof a borrowingoccurs in 1988-89and 1989-90. Further repay- ments take place only after the projectionperiod. -82- ANNEX 10 Page 15 of 18

CurrentLiabilities

49. (a) Dopsits for works. Relate to depositsreceived by Metrowater from public as well as certaininfrastructure development organizations (such as HousingBoard) projected to increaseby 10X per year during the projection period.

50. (b) AccountsPayable. Relate to monies due from Netrowaterto contractorsand supplierspending settlementof their bills (connected largelywith capitalworks). Projectedto increasein proportionto capital work-in-progress.

51. (c) Interestpasable on originalloan. Provisionmade by Metrowater in respectof loan from MT in 1979 (of Rs 150 million)Netrowater has requestedUTN to convertthis loan to equity. Pendingdecision from CTh a provisionof is 12.7 million is made each year by Metrowater. Projections assumea similarprovision (of is 12.7 million)each year throughoutthe projectionperiod.

52. (d) Other liabilities. Relate to miscellaneousliabilities and are projectedto increaseby 101 per year throughoutthe projectionperiod. -83-AMN10 ?age 16 of 18

INDIA

MADRASWATER SUPPLY AND SANITATION PROJECT

MMW8SB HISTORICALFINANCIAL PERFORMANCE (Rs millions)

1983/84 1984/85 1985/86

OperatingRevenues 98 103 143 OperatingExpenses 81 92 111 Depreciation 10 9 9 OperatingIncome 6 3 .23 InterestExpense 26 28 32

Net Income (20) (25) (9)

Average Age of Customer 20 20 20 Receivables(months) Collections/TotalBillings .24 .25 .31 CustomerReceivables/Billings .73 .72 .66 Working Ratio .83 .89 .78 Quick CurrentRatio 1.04 .81 .83 Debt 8erviceCoverage Ratio 1.1 0.5 1.6 ROR on Net Fixed Assets - Historical 2.5 (1.0) (5.7) - Revalued neg. neg. neg. InternalCash Generation 16 12 32

,, j r-** INDIA MADRAS WATER SUPPLV AND SANITATION PROJECT

NEW WATER SUPPLY CHARGES AND TARIFFS (As of January 1, 1987)

Table 1: T friffRte ofn Metered Consumer Ratt ri I tee a ures n RDO

Purpose/Class Up to 50.000 Up to 1 lakh Above 1 takh Minimum rate Rate for M33>s1: Dgmestle,_ litres lItres litres chargeable Sew-rage

(1) Residential Free ellowanco of water is 2.00 (for entiro con- Subject to a minimum of Plus sewerage alowed up to 30,000 ltre. sumption for more Rs 10/p.m. per connection surcharge at per onth. 80,001-50,000 then 50.000 Itres.) if the consumption is be- 20% on water Itre. 1.00 low the free allowance.

(11) Non-residential 3.00 free allowance of water 4.00 5.00 Subject to a minimum of -do- is allowed up to 15.000 ltre. Rs 50/p.M. per connection per month, In respect of all categories except domestic residential. CLASS ll: taoe_rcial

(1) General purpose 3.00 4.00 5.00 -do- -do- commercial

(11) Building construction 3.00 4.00 5.00 -do- -do- (111)General purpose com - 3.00 4.00 5.00 -do- -do- mercial from Board's groundwater sources

CLASS II: Industries

(i) Industries In general 3.00 4.00 5.00 -do- -do-

(ii) Aerated water & ice 3.00 4.00 5.00 -do- -do- factories

(111)Supply of water to - 4.00 5.00 -do- -do- ships. (Up to 1 lakh Itre.)

(iv) Supply of water to 3.00 4.00 5.00 -do- -do- general purpose Indus tries from Board groundwater sources

CLASS tVt Public Authority

(I) Public Offices (Rs 3 per 1.000 litres for entire consumption) -do- -do- (ii) Hospital (Govt.) 1.00 2.00 (for entire consumption -do- more than 50,000 Itre.) CLASS V (1) Hydrants a public Flat rate of Rs 75 per public fountain per month fountains Including maintenance charge. (11) Ma1ntenace chargesO

(ii)Moblle water supply Rs 2 per 1,000 litres fo entire quantity supplied. to slums Purp_eeCllse Up to W0,a00 Up to 1 lOkh Above 1 lekh U"lnimm rate mte for litres litres litres CharJeeble S_ewr s

(vI) Maint. charog for Re 75 per month per tank. steel tanks I CLASS VI, Casual Wtr.SUDli

(1) Mobile vtr. supply at Rs 125 for every load up to 6.400 Itrs. consumers

(1i) Others zt water works Rs 5 per 1.000 litreo. "ire Charoes

(i) For tanks hired out Rs 200 per two days and Re 2S for evary additional day.

Table ISs Tariff Rate of Unmoteaod Consumers PurooS-/C lass Rate per month Rate of Sewerage (Fisur-s in Rupees) CLASS 1s Domestic

(1) Residential Re 10

(11] Non-residential Rs 50 Plus sewerage surcharge at 20% on water charge. CLASS ItI Com_merial t1) Offices; business Including cattle yards. Rs SO drying yards laundries. pharmacies. nursing home. private clinic.

(ii) Hair dressino/shaving selons; office Rs 50 tea shop; bakeries; photooraphic studios; Stops; mutton; beef stalls end dhall making. t1i1) All other petty shops/trades. Re 50 CLASS tII: Industries

(M) Miscellaneous Rs 50 t"ASS IVs Public Authority

(1) Offices Rs 50 (ii) Government Hospitals Rs 50

CLASS V: Public SuDOlY

(t) Tubewell puaps or Mark It group Rs 25 per month Plus sewerage per pump surcharge at (1i) Orphanages I recognized by State Government or 20% on water Government of India will be treated at par with charges. domestic residents. * -86- ID0, ,1

mm Wm LYURi sMNIMTPT INTRSLW Y POSITIN

mm Flo WE 9f 7-0 9 -91 -92 92-9 93-" 95

- TOt 'U) 301 375 3959 40 41 420 40 45 4 -Svud byNhro(Z) 90 91 92 93 9 95 97 9 99 *Seriv by wIo( .) 3m 3413 34 32 31 30 116 4274 "43 4

2JltW lIter Cmmtom - t 12651 3372234109 35970 3M10 3136939627 402? 4226943666 - barel 751 7592 7841 8 9364 9630 8922 9214 9516 9829 - Pdlict eority 892 9 a 892 992 992 R 9 992 - trl 47 503 519 537 554 572 5 610 630 651 S otel(V) U31 42709 11 4547 6960 4871 602 5161 533SW8552 libmeteredIoter C.me u et 103001I0100 10300 10320613 13M310 1042421O3 1046 *tC c 3990 3001 3045 309l 3137 3194 3232 321 3330 3379 siXtota1(3) 106000101000 10605 106297I 106W90107214 107522 107632 10113

4.PulicStmn* t 5585 5595 5935 6085 6335 6595 6585 6595 6585 6585

-JmIdtsdeTwu 908 988l 988 909 906 908 908 908 908 908

6ihtr r aoilible forCMqt1nm d) 176 175 174 190 210 205 225 227 246 246 (ni' indtrial)

?.WlsbleL.P.C.O -Totwl pulatlon I 47 5 le 51 4 53 52 54 53 -Tepuatieser vd 54 a1 19 52 55 52 5 53 SS Si -87- ANN=X 12 :.age 1 of 10 INDIA

MADRASWATER SUPPLY AND SANITATIONPROJECT

OPERATIONALACTION PLAN

TECHNICALASPECTS

1. Reductionof Unaccountedfor Water Component (by MKWSSB/Ingr.Dept.)

a) TORi for reductionof unaccounted-for-water Terms of referenceand programto IBRD for couaent/noobjection. letterof invitation revisedand clearedby the IBRD. TOR sent to GTM.

b) OTN and BSankto clear short list. Submittedto GOI.

c) Issue LOI. October31, 1987

d) Engage consultants. April 30, 1988

e) Completestudy and relatedwork program. October 31, 1989

2, Water Supplyand SewerageMaster Plan Update/ Design Consultancy

a) SubmitTOR's to IBBD June 1987

b) Submit short list of consultants. Submittedto GOI.

c) Inviteproposals. August 31, 1987

d) Engage consultants. January 31, 1988

e) CompleteStudy. July 31, 1989

3. Assess the Low Cost SanitationAlternatives

a) Submitshort list of consultants. IBD cleared. May 1987

b) Issue LOI. November 1987

c) Engageconsultants. May 31, 1988

d) CompleteStudy. November30, 1989 -88- ANMEX12 Page 2 of 10

FINANCIALASPECTS

4. The financialobjective of the projectis to establishin NKHS8I the basis for improvingoperatonal efficiency, so that the presenttariff increasesachieve and providefor:

a) the recoveryof the full cost of operationsand maintenances

b) debt-serviceobligations;

c) all increasesin workingcapital; and

d) contributiontowards investment expenditure for replacementand expansion.

With regard to para. d) above, the major assumptionsbeing made in the financialanalysis for the projectare that internallygenerated funds for the M0W85B are assumedto be availablebased on: existinglevels of water supplyand tariffs;improved collection ratios and managementpractices; price and item quantititesas specifiedin Annex 11 of the StaffAppraisal Report; and on the levelsof capitalinvestment as indicatedin Annex 11 of the sae document.

Based on the above, the scheduleof expectedinternally generated fundsis as follows: YEAR ANDtWN Re (N)

1986/87 0 1987/88 0 1988/89 52 1989/90 126 1990/91 133 1991/92 144 1992/93 147 1993/94 123 1994/95 134

The above projectionswould be periodicallyreviewed by 10155B.

S. In developingproposals for the tariff structureand rates,101883 should thoroughlyexamine and evaluatethe following:

a) Include as an item in the tariff reform During project study an exmination of the extent to implementationas which 0N11S1'sactivities convey part of tariff -89- AWNC 12 Page 3 of 10

'benefitsto a wider publicthan its reform study. own connectedcustomers, and the possibilityof recoveringby taxes or other chargesfor such benefitsin the form cf incomefor MM115;

b) Examinewhether the proposedlevels of Affordabilitystudies chargesare within the reasonable case for differential ability-to-payof all consumergroups, rates includedin and whethera case existson these or any tariff reformstudy. other groundsfor differentialrates to be appliedto particularconsumer groups or levelsof consumption;

c) Etaminethe effectivenessof the proposed Duringproject imple- water rates in discouragingwaste and mentationas part of non-essentialuse of water, since this tariffreform study. is NMD888'spolicy and submita proposed action programby appraisal;

d) Exmine consistencyof the tariffswith During projectimple- the methodsof metering,billing and mentationas part of collection. tariffreform study.

6. I.mlementationof TariffStudy

SubmitTOR's and consultantshort list to October 1988 IBiD for review.

INSTITUTIONALASPECTS

7. InstitutionalStrengthening

a) Establisha functioningproject monitoring Completed. unit in 01881Btaking into accounts(i) the Pully operational. need to have the unit reportto the senior authorityin the agency; (ii) the interdisciplinarynature of the task; and (iii) the staffingrequiremento of the unit whose focus is expectedto shift to projectimplementation once preparationactivities cease and implementationcoanees;

b) Carry out an analysisof personnel June 30, 1988 policiesand procedureswith the view of (i) assessingthe impactof project -90-

ANNEX12 Page 4 of 10

initiativeson currer.tpolicies and procedures,and (ii) assessing MOWSSB's policiesand proceduresin general,in order to ascertainfeasibility and to recommend areas for improvement.

c) Preparea detaileddescription of how the After passageof groundwater legislation, once passed into groundwater law, would be implementedand managed by legislation. MMWSSB. Specificreference should be made to: how MMWSSBwould monitorexisting and new pumpingactivities in the proposed area; and the relationshipbetween MNWSSB and the DistrictCollectors Office and the Tamil Nadu Power Companyin implementingthe proposedlegislation; and the recoveryof the costs of managingthe aquifer.

8. ImProvementsto Billingsand Collection

PersonResponsible: Comptroller

a) Reportingto the Board of Directors Quarterly

b) Recoveryof costs for standpipes

i) Claims of approximatelyRs 79.48M to December31, 1986 be deliveredto NNC and the slum clearance (Done) board for past due amountsowed.

ii) Agreementreached on paymentschedule May 4, 1987

iii) Final settlementdate. December1991

c) Outstandingreceivables from NKC

i) Resolveoutstanding receivables owed by Completed NEC for past due water taxes. These re- ceivableshave been in disputesince 1979 regardingdefinition of water taxes at the time.

ii) Final settlementdate. June 1987 -91-

ARNMX 12 Page 5 of 10

d) Collectionperformance (water charges & water taxes)

i) First quarterFY87/88 = Rs 65.00M June 30, 1987 ii) Secondquarter FY87/88 - Rs 72.00M September30, 1987 iii) Third quarterFY87/88 a Rs 72.00M' December31, 1987

The followingimprovements are assumed in billingand collection projections:

1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-95 Watercharge 50X 60Z 70X 752 80% 85X 901 collection

Tax collection 40X 552 702 752 801 851 901

(Figures represent percentage of total demand-as shown in Table on page 3, Annex 11).

9. Installation of Financial Management and MIS System

Person responsible: FinanceDirector/Comptroller

a) Finalize consultant'scontract. August 1988

b) Hire comptroller of finauce and MIS. June 1988

c) Train computer programming staff. July 1988

d) Link forecasting model to financial package. December 1988

e) Create a financial management cell under the August 1988 new COP.

f) Train members of this cell in the use of the September 1988 forecasting model.

g) Design, test and develop reports for January 1989 management and Board of Directors. -92-

ANNEX12 Page 6 of 10

10. Installationof PerformanceBased Budgeting

Person responsibles Comptroller

a) Trial implementation(an attemptwill be 1988/89 made to implement performance budget proceduresfor FY 1988/89 on a trial basis and the full fledgedbudgeting system in 1989/90).

b) Hire and train the following persons: June 30, 1988

- 1 FinancialAccountant - 1 Accountsand BudgetingOfficer - 16 StatisticalAssistants - 1 PersonnelClerk

c) Preparevarious budgets and supportdocuments September30, 1988 separatelyfor the capitaland recurrentexpenditures.

d) Revise object-wiseclassification of accounts. September30, 1988

e) Establishbudget centers and identify September30,1988 controllingofficers and projectmanagers.

f) Train staff in the preparationand use of per- September30, 1988 formancebudgeting procedures and documentation.

g) Design transparentevaluation system for December31, 1988 evaluating performance of the various work programs.

h) Integrateperformance budgeting system into March 31, 1989 the overalMIS system.

i) Implementnew budgetprocedures on trial basis. December31, 1988

11. Improvementsto WorkingCapital Management

Person responsible: Comptroller

a) Hire and train Cost Accountantin new system. June 30, 1987

b) Based on functionaland master budgetdata, June 30, 1987 identifythe permanentand variablecompo- nnts of workingcapital. -93- ANNEX12 Page 7 of 10

c) Classifynet receivablesover one yearold June30, 1987 as "otherassets". d) Establishseparate bank accounts for capital July31, 1987 and recurrentexpenditures. e) Developand obtainapproval of a policyfor September1, 1987 bad debts. 12. Computerization a) Billingand Collectionof WaterCharges i) Updatebilling registry for waterc.arges. November30, 1987 ii) Updatocollection registry. December31, 1987 iii) Completearrars analysisfor eachconsumer. February28, 1988 iv) Test run of consumerbillings with arrears. April30, 1988 v) Inaugurateregular billing with arrears. September1, 1988 b) AccountingSystem i) Createchart of accountswith balancesas of April 1, 1986: withoutsub-accounts Completed with sub-accounts April30, 1988 ii) Inputtransactions for April86, reviewfor Completed accuratenessand correctfor errors. iii) Completetraining and technicalassistance April30, 1988 programby ECIL. iv) Inauguratefull fledged computerized system. May 31, 1988 c) MaterialsMaagement MIS System i) Computerizeinventory (ABC system). April30, 1988 ii) Developmaterials Igmt. MIS system. April30, 1988 iii) Trialrun of computerizedMIS system. April30, 1988 iv) Inauguratefull fledged system. June 1, 1988 -94- ANNEX12 Page8 of 10

v) Computerizematerials management performance September30, 1988 budgetingprocedures. d) Operationsand MaintenanceMIS System i) Conductfield survey. June30, 1988 ii) Createdata base. August30, 1988 iii) Develop0/M MI8 system. August30, 1988 iv) Trialrun of MIS system. September15, 1988 v) Inauguratefull fledged system. September30, 1988 e) ConstructionManagement MIS System i) Createdata base for priceschedule. June 1, 1988 ii) Designand developsystem for forecasting June1, 1988 projectcosts. iii) Designand developsytem for monitoring July1, 1988 and implementation. iv) Trialrun of MIS system. August15, 1988 v) Inauguratefull fledged system. September1, 1988 f) OverallProject Monitoring MIS System i) Createproject monitoring unit. April30, 1988 ii) Integrateindividual MIS systemsinto one October1, 1988 overallsystem. iii) Trialrun of system. November1, 1988 iv) Inauguratefull fledged system. November15, 1988 g) AdditionalComputer Capacity i) Recruitone systemanalyst December31, 1987 ii) Estimatecosts for additionalcapacity. June30, 1988 -95- ANU 12 Page 9 of 10

iii) Orderequipment. December31, 1988 iv) Installequipment. March 1, 1989 v) Trainpersonnel. March1, 1989 13. RenewalsAccount for EquipmentRehab sad Replacement Personresponsibles Comptroller and ChiefEngineer 0/M a) Createseparate accounting control procedures April1988 and guidelines. b) Developrehab and replacementbudget for April 1988 FY i988/89.This budget will determinehow much will be neededfor the firstyear of the renewals account. c) ObtainBank comment. April1988 d) Establishprocedures for transferof deprecia- April 1988 tioncharges to thisaccount.

e) Obtainagreement from GTN for toppingoff the April 1988 accountwith grantfunds from GTN. 14. Prepareterms of referencefor tariffreform April 1988 for reviewby bank staff. 15. Developand implementa write-offpolicy for April 1988 doubtfulor disputedaccounts. 16. Follow-upon the GTN proposalfor training April 1988 for the MWSSB Boardof Directors. 17. JointBankAMMWSSB/CTN review of MMWHSB's January1988 annualinvestment plan and budget. 18. Prepareterms of referencefor the operations April1988 and maintenanceconsultsncies. 19 Preparean actionplan for improvingexisting April 1988 meterand meterreading operations. 20. Preparean actionprogram for strengtheningthe April 1988 trainingcenter along the linesdiscussed during appraisal. -96- .4313 12 Page 10 of 10

23. Preparea financialmanagement and maintenance April 1988 plan.

24. Improvementsto Operationsand Maintenance

Responsibility:Chief Engineerof O/M Wing

a) Modify organizationstructure required. April 1988

b) Appointoperations and maintenance April 1988 coordinator(0/1 coordinator).

c) Preparestatement of scope of work. April 1988

d) Preparedraft annualwork plan needed April 1988 to achieveobjectives of the subproject.

e) Prepareterms of referenceand short lists April 1988 for managerialand technicalassistance (MA) and (TA).

f) Bank comment April 1988

g) Board approval June 1988

h) Employconsultants September1968

i) Implementannual work plan October 1988 MM 00 WKY t AitIN MM 'oI of2 ~~~~~~~---ECMIllalZltl~~l CLYIS-iiri PW

VW P8610 ftuS LIE Lm IE 101.F 1101 am am1)Wmll. 01w11113so(16) (70) MtS S £

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IC RC IN IN 11.5 11SChtD3.9 OU 3.59b/01 L 23.80 O6. NU0OISC * 1.31 Mth IS 3.5M / L -3.36 INIS MI ' 4t.67 M1 LM 42 b/ l L-124.11 * 1 KUM* S0S LtIS 1.S4bS L-U97.L11iS -98- ANNEX 13 Page 2 of 2

INDIA

MADRASWATER SUPPLY AND SANITATION PROJECT

AVERAGEINCETAL COST DiscountRate AverageIncremental Cost (Z) (Rs/1000liters) AIC at Market AIC at Shadow Prices Prices 7.0 3.96 3.59 8.0 4.31 3.89 9.0 4.67 4.21 10.0 5.05 4.54

PERCENTAGEDISTRIBUTION OF HOUSEHOLDSBY INCOME/a

monthly Household EntireMadras Population | PopulationPaying MNWSSB Charges Income Numberof Numberof Households (RS) Households Percent | (Estimated) Percent

Not Specified 5,400 - 1I 0 - 399 202,500 - 22 400 - 599 152,100 - 17 I 600 - 800 152,100 - 17 1 152,100 - 28 801 - 1,500 252,000 - 27 I 252,000 - 47 1,501 - 2,500 88,200 - 10 I 88,200 - 16 2,501- 5,000 41,400 - 5 I 41,400 - 8 Above - 5,000 6,300 - 1 I 6,300 - I

TOTALS 900,000 100 I 540,000 100

/a Current1986 values. ANNEX14

INDIA

MADRASWATER SUPPLY AND SANITATION PROJECT

MADRASMETROPOLITAN WATER SUPPLY AND SANITATION BOARD

Affordability Indices - Industry/Commerce

Water, Power Costs and Total Costs

Water Water Electricity Monthly ConsumerCategory Bill Taxes Costs Expenditure (Rs p.m.) (t p.m.) (Rs p.m.) (Rs)

1. Small Industry 78 58 1352 69534

2. Commercial 690 97 1168 61751 (Hotel,Shops,etc.)

3. Offices (private) 43 61 713 77545

4. Commercial 64 36 484 68355 (Hospital,Educ.Ins.)

5. All Others 34 43 448 15070

6. All Categories 268 59 821 47672

Water, Power Costs and Total Costs - X Figures

Water Water Electricity ConsumerCategory Bill Taxes Costs (X of exp) (Z of exp) (X of exp)

1. Small Industry 0.11 0.08 1.94

2. Commercial 1.12 0.16 1.89 (Hotel,Shops,etc.)

3. Offices (private) 0.06 0.08 0.92

4. Commercial 0.09 0.05 0.71 (Hospital,Educ.Ins.)

5. All Others 0.23 0.29 2.97

6. All Categories 0.56 0.12 1.72 -100- 15

INDIA

MADRASWATER SUPPLY AND SANITATION PROJECT

LANDACQUISITION

1. Land Acquisitionfor the Constructionof 30 Tubewells. Of the 30 sites requiredfor the wells, 22 are Governmentlands; the remaining8 are privatelands. Necessaryland acquisitionproceedings for acquiringthe privatelands and land alienationproposals for transferof Governmentlands have been inititated. Works have commencedon many of .he tubewellsites.

2. Land for ConveyingMains and BoosterStation. It is proposedto lay the conveyingmains and constructbooster stationmostly in Government, Panchayatand districtroads and to a small extent in private lands. Neces- sary proposalsfor getting the formalconsent from the partieshave been taken up.

3. Land for Layingof New TransmissionWater Main from Redhillsto Kilpauk. The transmissionmain will be laid in the MMWSSB lands where an earlierabandoned conduit exists.

4. Land for Constructionof Check Dams. The check dams are located in the river bed for which no land acquisitionis necessaryexcept for a token provisionfor possibleencroachment of existingsites.

5. Land for Arani-KortaliarRiver Link Aqueduct. The aqueductis across the river. The landsare required,only along the canal alignment. The Public Works Departmentis the executingauthority for this item and action has been initiatedby that departmenton land acquisition.

6. Land for Increasingthe Capacityof PoondiOpenlined Channel. There are lands alreadyavailable with MWSSB aiong the existinglined canal which will be used for widening. Token provisionis made for possibleencroachment of existingsites.

7. Land for Strengtheningof Well Fields and UpgradingNew Well Fields. The Sites for the wells will be fixed after identifyingthe locationsfor the wells. The mains will howeverbe laid in the Government,Panchayst and districtroads. The land acquisitionproposals for the well sites will be taken up after identifyingthe well sites. .I ,, " ,H

At *I; -102-

ANNEX17 Page 1-of3

INDIA MADRASWATER SUPPLY AND SANITATIONPROJECT

Listof SelectedDocuments in ProjectFiles

1. Regulationsfor Levyand Collectionof Water-SupplyCharges NMWSSB 2. BudgetEstimate (1986-1987) MMWS8B 3. StatusReport on ConsumerStatistics 1M085B 4. MadrasMetropolitan Area Demography (1981) mA S. StructurePlan for MadrasMetropolitan Area (Volume1) ExistingSituation JDA 6. StructurePlan for MadrasMetropolitan Area (Volume2) Guidelinesfor Growth lMDA 7. MadrasWater Resources Study UNDP GOI 8. MadrasWater Training Project Reporton ResourcePlanning ?DWSSB

9* Organization and Management Report

10.Augmentation of WaterSupply to MadrasCity ProjectReport & Estimates(Based on UNDPfindings) MMSSB 11. Reporton Assessmentof Affordabilityto Pay for Water September 1986 NmWSSB 12. Improvements to MadrasWater Supply and WasteWater System eport and Estimates(Based on the UNDPand UNDTCDstudies) -103- ANNEX 17 Page 2 of 3

13. Study on Billingand CollectionProcedures December1986 MMI8SB

14. Report on Analysisof Billing,Collection and Outstandings June 1986 MMWSSB

15. Report on Analysisof Billing,Collection and Outstandings August 1986 MMW8SB

16. InstitutionalStrengthening Strengtheningof WorkingCapital Management December1986

17. Metro Watcr Consumer Education

18. SecondMission Report (UNDP/UNTCD/GovernmentProject ID/178/029) Proposalsfor Managementand Planningof Water Resourcesfor Madras City September20, 1985

19. Report on PerformanceBased Budget

20. InstitutionalStrengthening Terms of Referencefor Operationand Maintenance Water Supply Sector MMWSSB

21. Basisand AssumptionUnderlying Financial Projections June 1986 MMWSSB

22. Billingand CollectionAnalysis Metro Water Madras-2

23. FinancialAccounting (Part I & II) Metro Water World Bank Project

24. Report on PerformanceBased Budget NMWSSB Board,Madras 600 002

25. ResourcesMobilisation and Utilisation Madras-2 Metro Water -104-

Page3 of 3

26. Reporton Waterand SeverLorries - TheirPerformance - Maintenanceand Proposals Preparedby - 8.0.E.Wing iSSB 27. Reporton PersonnelAdministration WorldBank Team MIWSSB 28. SewerageOperations Preparedby 801,Arba EngineerIV & ThirukaugumarlA.B HMMVSB 29. WorkingCapital Management Madras-2 MetroWater 30. Reporton Depots Prepared by Area Engineer III & Sewerage Operations Engineer 31. Reporton InventoryControl and Procurement InstitutionalImprovements

32. InternalAudit Manual of OMIWS& 88 NJWSSB 33. SystemAutomation Analysis Preparedby D. Hamlin(Consultant) August,1986 M-W88B MA-PSECTION

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MADRASWATER SUPPLY 20 IIJDIA ?o AND SANITATION PROJECT MAIN COMPONENTSOF . >d .n< SEWERAGESYSTEM I / / I

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.MADRASURBAN AREA AREAPRE 1978 AREASADDED IN 1978 77,g,rr_.rw ft . '- '.M -- _ INTERNATIONALBOUNDARIES = ' ~~~~~~~~~~~~~~~~~~~~~~~~U

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MARCH1987