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The World Bank Document of The World Bank FOR OFFICIAL USE ONLY 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
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