World Bank Document

Documentof The World Bank FOR OmCIAL USE ONLY Public Disclosure Authorized Rpwt No. 5614 Public Disclosure Authorized BRAZIL LOAN 1309-BR SECONDMINAS GERAIS WATERSUPPLY AND SEWERAGEPROJECT PROJECT COMPLETIONREPORT Public Disclosure Authorized April 22, 1985 Public Disclosure Authorized Projects Department Latin America and the Caribbean Regional Office Thk imnont h a resnotud disrinbutim and may be used by rcpkits only in the perfonanne of I dwdrofclk dutes Is cnmab may not odrwise be didosed without Wodd Bonk auth.rtdioun. UNITS AND MEASURES Imm - millimeter - 0.04 inches lcm - cenrimeter - 0.39 ilches lm - meter - 3.28 feet lkm - kilometer = 0.62 miles 1 1 - liter = 0.26 US gallons lm3 - cubic meter - 264 US gallons 1 m3/sec - cubic meter - 22.8 Mgd (million US gallons per second per day) FISCAL YEAR January 1 to December 31 ABBREVIATIONSAND ACRONYMS BNH National Housing Back (Banco Nacional da Eabitacao) PLANASA= National Sanitation Plan (Plano Nacional de Saneamento) SWC = State Water Company COPASA = Sanitation Company of Minas Gerais (Companhia de Saneamento de Minas Gerais) NTL = National Tariff Law ORTN = National Treasury Security Index (Obrigacoes Reajustaveis do Tesouro Nacional) OT = BNH Technical Supervisory Agency (Orgao Tecnico) UPC Monetary unit adjusted quarterly in accordance with changes in the ORTN (Unidade Padrao de Capital) FOR OFICIAL USE ONLY BRAZIL LOAN 1309-BR SECOND MINAS GERAIS WATER SUPPLY AND SEWERAGE PROJECT PROJECT COMPLETIONREPORT Table of Contents Page No. Preface . i Zasic Data Sheet . .ii Highlights . iv 1. Introduction . ......... 1 The Sector . The Borrower and Executing Agency . 1 II. Project Preparation and Appraisal. 2 Preappraisal and Appraisal . ... .... 2 Negotiations. 3 Project Description and Objectives . 3 III. Project Implememtatiox. a 3 Effectivenessand Start Up . 3 ImplementationSchedule . 4 Reporting . 4 Procurement. a . .. 4 Costs . 4 Disbursements. 5 Performance of Consultants, Contractors acd Suppliers. 6 Performance of the Beneficiary and the Borrower. 6 IV. Operating Performance . 7 V. FinancialPerformance . 8 VI. InstitutionalPerformance. 9 VII. Economic and Social Re-evaluation . 10 Project Achievements . 10 Economic RaLe of Return. 10 VIII. Bank Performance . 11 IX. Conclusions . 11 1Thisdocument has a restricted distribution and may be used by recipients only in the performance of their official duties- Its conients may not otherwise be disclosed without World Bank authorization. Table of Contents (cont'd) ANNEX67S I. Subproject Selection Criteria II. Compliance with Loan Conditions III. Small Size CommunitiesProgram Iv. Medium Size Communities V. Project Costs VI. Descriptionof the FINEST II and FINEST III Programs VII. COPASA- Actual and Project Financial Statements VIII. Economic Rate of Return IX. Comments on the PCR from the Ministry of Planning, BNH and COPASA Map No. IBRD 17798 (PCR) . BRAZIL LOAN 1309-BR SECOIND IINAS GERAIS WATER SUPPLY AND SEWERAGEPROJECT PROJECT COMPLETION REPORT PREFACE This is a Project Completion Report (PCR) of the Second Minas Gerais Water Supply and Sewerage Project for which Loan 1309-BR was approved in July 1976 for the sum of US$40.0 million. The Loan was closed in April 1982; there were no cancellations. The PCR was prepared by the Latin America and Caribbean Projects Department on the basis of the findings of a September 1983 mission, information contained in the Beneficiary's (COPASA) Completion Report and documents in regional files. The Borrower (BNH) and the Beneficiary were most helpful in providing information. In accordance with the revised procedures for project performance audit reporting, this PCR was read by the Operations Evaluation Department (OED) but the project was not audited by OED staff. Following standard OED procedures, copies of the PCR were sent to COPASA, BNH, and the Government for their comments. Comments which were received are in agreement with the report's findings and are reproduced in Annex IX. ip~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ - (ii, - BRAZIL LOAN 1309-BR SECONDMINAS GERAIS WATERSUPPLY AND SEWERAGEPROJECT PROJECT COMPLETIONREPORT Basic Data Sheet Key Project Data Item Appraisal estimate Actual Total project cost (US$ million) 134.0 1/ 158.3 21 Uaderrun/overrun(Z) - 18.4 Loan amount (US$ million) 40.0 40.0 Disbursed 40.0 40.0 Cancelled _ _ DaLe Physical Compoaents Completed 6/80 6/82 ProporLioa Completedby Appraisal Target Date (Z) 100 70 3/ ProporLion of Time Overruns (Z) - 50 - Economic Rate of Return C!) - Serra Azul n.a. 3.5 - Medium Size Cities n.a. 1.1 - Small Communities n.a. n.a. Financial Performance good Institutional Performance good Other Project Data Item Original Revisions Actual Plan FirsL mentioned in files 1/5/75 GovernmenLApplicaLion n.a. Negotiations 3/29/76 - 5/3-7/76 Board Approval 7/6/76 - 7/6/76 Loan AgreemenL Date 8/22/76 - 8/27/76 EffectivenessDaLe 11/30/76 - 1/18/77 Closing Date 9/30/80 - 9/30/82 4/ Borrower Banco Nacional da Habitacao (BNH) Executing Agency Companhiade Saneamentode Minas Gerais (COPASA) Fiscal Year of Lhe Borrower January 1 - December 31 Loan Data InLeresL raLe (%) 8.85 CommiLment fee (%) 0.75 Term 20 years Grace Period 3 years Amortization 34 semi-annual paymeats Follow-on Project Name Third Minas Gerais Water Supply and Sewerage Project Loan Number 1850-BR Amount (US$ million) 139.0 LoanlAgreement DaLe 07/18/80 1/ Includes physical and price contingencies 2/ Project, as completed, differed substantiallyfrom project, as appraised. 3/ Based on gross fixed assets at the end of 1979. 4/ Final disbursementwas on April 15, 1982. - (iii) - BRAZIL LOAN 1309-BR SECOND MINAS GERAIS WATER SUPPLY AND SEWERAGEPROJECT PROJECT COMPLETION REPORT Basic Data Sheet (continued) MISSION DATA No. of No. of ND. of Staff Date of Type of Mission Month/Year Weeks Persons Weeks Report Ideatification 5/75 1.5 1 1.5 5122/75 Preappraisal 7/75 1 1 1 8/15/75 Appraisal 10/75 2 4 8 6/22/76 Post-Appraisal 1/76 3 2 6 2/23/76 Negotiations 4/76 1.5 4 6 n.a. Technical Review 4/76 1.5 1 1.5 7/08/76 Supervision 9/76 0.5 1 0.5 10/01/76 Supervision 2/77 0.5 2 1 3/10/77 Supervision 3/77 0.25 1 0.25 4/13/77 Supervision 7/77 1 1 1 8/22/77 Supervision 3/78 1 1 1 4J07/78 Supervisioa 7/78 1 2 2 8/15/78 Supervision 10/78 0.5 2 1 11/29/78 Supervision 5/79 1 2 2 7/05/79 Supervisioa 4/80 0.5 2 1 5/12/80 Supervision 7/80 0.5 1 n.5 9/22/80 Supervision 11/80 3 2 6 1/13/81 Supervision 2/81 0.5 1 0.5 3/19/81 Supervisioa 5/81 0.5 2 1 6122/81 Supervision 5/82 n.a. 2 n.a. not in file Supervision 2/83 n.a. 2 n.a. 3/08/83 Supervision 4/83 0.5 2 1 5/20/83 Completion 9/83 1 2 2 TOTAL 24 missions 50.75 Country Exchange Rate Data I. Name of Currency: Cruzeiro (Cr$) Year: Exchange Rate: Appraisal Year Average - 1973 US$1 = Cr$ 8.21 Intervening Years' Average - 1975/82 US$1 = Cr$ 44.69 Completion Year Average - 1982 (first trimester) US$1 = Cr$141.15 II. Name of Currency: Unidade Padrao de Capital (UPC) Year: Exchange Rate: Appraisal Year Average - 1975 UPC = US$ 14.12 InLervening Years' Average - 1975J82 UPC = US$ 12.74 Completion Year Average - 1982 UPC = US$ 10.30 - (iv) - BRAZIL LOAN 1309-BR SECONDMINAS GERAIS WATERSUPPLY AND SEWERAGEPROJECT PROJECT COMPLETIONREPORT HIGHLIGHTS 1. The project was designed to finance a time slice of COPASA's investmeat program for 1977-1980. Its main objective was to provide waLer services to about 640,000 inhabitants of mostly medium and small-size cities and sewerage services to about 400,000 inhabitants in the area of Belo Horizonte (para. 1.01). 2. The project, as implemented,was substantiallydifferenL from the project as appraised. In 1980, the Serra Azul System (para. 3.04) became the main project component. As a result, works in metropolitan Belo Horizonte representeda much larger share of the project cost than expected at appraisal; the total cost of the program was substantially increased; and Bank financing amounted to 5% of the program, instead of 13X envisaged at appraisal (para. 3.07). 3. The number of project beneficiaries surpassed appraisal expect- ations. The project, in 1982, provided water to about 1.6 million addi- tional inhabitantsof whom 284,000 live in small communitiesaud 369,000 in medium-sizedcities. The inclusion in the project of the Serra Azul System was instrumentalin achieving the better than expected performance. Addi- Lional populaLion benefiLtingfrom sewerage services totalled about 640,000 inhabiLants (paras. 3.04, 7.02 and 8.02). 4. The substantialchange in the size and scope of the project re- flects weaknesses in the planning capabiliLy of COPASA, mainly due to shifts in priorities thaL accompany changes in COPASA's authorities. Because of Lhese deficiencies,the project completioa report suggests that a standard project approach rather than time slice financing, would have been more advisable (OED Note: See also COPASA comment, page 2, Attach- ment 1, Annex IX). 5. COPASA's ficancialperformance, alLhough below appraisal targets, was adequate. During 1976-1979, COPASA experienced a shortfall of 31X of revenues in meeting Lhe revenue covenant. In 1980 the cash shortfall re- presented 14% of revenues. COPASA complied in 1981 and subsLantiallycom- plied in 1982 wiLh the less sLringenL revised revenue covenanL introduced after Lhe approval of the National Tariff Law (para. 5.01). 6. The projecL, as parL of the Bank's involvementto support the im- plemeatationof PLANASA, contributed to help BNH to evolve from iLs original role of a financial intermediary to thaL of a truly sectoral agency.

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