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World Bank Document Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 53372-PA PROJECT APPRAISAL DOCUMENT Public Disclosure Authorized ON A PROPOSED LOAN IN THE AMOUNT OF US$40 MILLION TO THE REPUBLIC OF PANAMA FOR A METRO WATER AND SANITATION IMPROVEMENT PROJECT Public Disclosure Authorized April 15,2010 Sustainable Development Department Central America Country Management Unit Latin America and the Caribbean Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized CURRENCY EQUIVALENTS Currency Unit = Balboa US$ 1 = 1 Balboa FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS ACP Autoridad del Canal de Panama (Panama Canal Authority) ANAM Autoridad Nacional del Ambiente (National Environmental Authority) AP Aguas de Panama (private company selling bulk water to IDAAN) ASEP Autoridad Nacional de 10s Servicios Publicos (National Public Service Regulation Authority) CAF Corporacion Andina de Fomento (Andean Development Corporation) CONADES Consejo Nacionalpara el Desarrollo Sostenible (National Council for Sustainable Development) CQS Selection Based on the Consultant’s Qualifications DA Designated Account DGCP Direccidn General de Contrataciones Pliblicas (General Department of Public Contracting) DPL Development Policy Lending EA Environmental Assessment EMF Environmental Management Framework EPU External Project Unit FBS Selection Under Fixed Budget FM Financial Management FMA Financial Management Assessment GDP Gross Domestic Product GoP Government of Panama IBRD International Bank for Reconstruction and Development (World Bank) ICB International Competitive Bidding IDA International Development Association IDAAN Instituto de Acueductos y Alcantarillados Nacionales (National Water and Sewer Agency) IDB Inter-American Development Bank IFC International Finance Corporation IFR Interim Financial Report IPPF Indigenous Peoples Planning Framework IRF Involuntary Resettlement Framework IRP Involuntary Resettlement Plan ISA International Standards on Auditing ISDS Integrated Safeguards Datasheet ISR Implementation Status Report JICA Japanese International Cooperation Agency JMP Joint Monitoring Program (of the World Health Organization/UNICEF) LCS Least-Cost Selection LSMS Living Standards Measurement Survey M&E Monitoring and Evaluation MDGs Millennium Development Goals MEF Ministerio de Economica y Finanzas (Ministry of Economy and Finance) MlNSA Ministerio de Salud (Health Ministry) MIVI Ministerio de Viviendas (Housing Ministry) MOP Ministerios de Obras Publicus (Public Works Ministry) FOR OFFICIAL USE ONLY NCB National Competitive Bidding OM Operations Manual PDO Project Development Objective PMR Panama Metropolitan Region PSCBP Proyecto de Saneamiento de la Ciudady Bahia de Panamd (Panama City and Bay Cleanup Project, financed by the IDB) QBS Quality-Based Selection QCBS Quality and Cost Based Selection SBDs Standard Bidding Documents SEPA Procurement Plan Execution System SIL Specific Investment Loan SOE Statement of Expenditures ss Sole Source wss Water Supply and Sanitation WSSLIC Water and Sanitation in Low Income Neighborhoods (on-going WB-financed project) Vice President: Pamela Cox Country Director: Laura Frigenti Sector Director Laura Tuck Sector Manager: Guang Z. Chen Task Team Leaders: David Michaud & Lilian Pena Pereira This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. PANAMA Panama Metro Water and Sanitation Improvement Project CONTENTS Page I . STRATEGIC CONTEXT AND RATIONALE .................................................................. 1 A . Country and sector issues ..................................................................................................... 1 B . Higher Level Objectives ...................................................................................................... 5 C . Rationale for Bank involvement .......................................................................................... 6 I1 . PROJECT DESCRIPTION .................................................................................................. 6 A . Lending instrument .............................................................................................................. 6 B . Project development objective and key indicators ............................................................... 6 C . Project components .............................................................................................................. 7 D . Lessons learned and reflected in the project design ........................................................... 10 E . Alternatives considered and reasons for rejection ............................................................. 1 1 I11 . IMPLEMENTATION ..................................................................................................... 1 1 A . Institutional and implementation arrangements.. ............................................................... 1 1 B . Monitoring and evaluation of outcomes/results. ................................................................ 12 C . Sustainability ...................................................................................................................... 12 D . Critical risks and possible controversial aspects ................................................................ 13 E . Loadcredit conditions and covenants ................................................................................ 16 IV. APPRAISAL SUMMARY .............................................................................................. 17 A . Economic and Financial Analysis ...................................................................................... 17 B . Technical ............................................................................................................................ 18 C . Fiduciary ............................................................................................................................ 18 D . Social .................................................................................................................................. 19 E . Environment ....................................................................................................................... 20 F . Safeguard policies .............................................................................................................. 2 1 G . Policy Exceptions and Readiness ....................................................................................... 2 1 Annex 1: Country and Sector or Program Background .......................................................... 22 A . Country context .................................................................................................................. 22 B . Sectoral and Institutional Context ...................................................................................... 22 C . Socio-Economic situation in the project Area. according to the LSMS 2008 ................... 23 D . IDAAN................................................................................................................................ 24 E . The situation in the Col6n business unit ............................................................................ 26 F . The GoP Strategic Plan for 2010-2014 .............................................................................. 27 G . Tariffs and Subsidies.......................................................................................................... 28 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies .................. 36 Annex 3: Results Framework and Monitoring ......................................................................... 38 Annex 4: Detailed Project Description ....................................................................................... 42 Annex 5: Project Costs ................................................................................................................ 51 Annex 6: Implementation Arrangements .................................................................................. 52 Annex 7: Financial Management and Disbursement Arrangements ...................................... 57 Annex 8: Procurement Arrangements ....................................................................................... 61 Annex 9: Economic and Financial Analysis .............................................................................. 68 Annex 10: Safeguard Policy Issues ............................................................................................. 87 Annex 11: Project Preparation and Supervision ...................................................................... 91 Annex 12: Documents in the Project File .................................................................................. 96 Annex 13: Statement of Loans and Credits ............................................................................... 98 Annex 14: Country at a Glance .................................................................................................. 99 Annex 15: Map IBRD No. 37726 ............................................................................................. 102 PANAMA METRO
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