FOR OFFICIAL USE ONLY Report No: PAD2670 Public Disclosure Authorized
INTERNATIONAL DEVELOPMENT ASSOCIATION
PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT Public Disclosure Authorized IN THE AMOUNT OF EURO 154.1 MILLION (US$170 MILLION EQUIVALENT)
TO THE
PEOPLE'S REPUBLIC OF BANGLADESH
FOR A
DHAKA SANITATION IMPROVEMENT PROJECT Public Disclosure Authorized
February 28, 2020
Water Global Practice South Asia Region Public Disclosure Authorized
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
CURRENCY EQUIVALENTS
(Exchange Rate Effective January 31, 2020)
Currency Unit = Bangladeshi Taka (BDT) BDT 84.82 = US$ 1 US$ 1.10 = EURO 1
FISCAL YEAR July 1–June 30
ABBREVIATIONS AND ACRONYMS
ABR Anaerobic Baffled Reactor ADB Asian Development Bank AIIB Asian Infrastructure Investment Bank ARP Abbreviated Resettlement Plan BMGF Bill and Melinda Gates Foundation BOD Biological Oxygen Demand BOT Build-Operate-Transfer BWDB Bangladesh Water Development Board CAPEX Capital Expenditure CCTV Closed-circuit Television CDR Conceptual Design Report CERC Contingent Emergency Response Component COD Chemical Oxygen Demand CPF Country Partnership Framework CS&CEP Communication Strategy and Citizen Engagement Plan CWIS Citywide Inclusive Sanitation DA Designated Account DB Design-Build DBO Design-Build-Operate DCC Dhaka City Corporation DEWATS Decentralized Wastewater Treatment Systems DMR Dhaka Metropolitan Region DMTP Dhaka Metropolitan Transformation Platform DoE Department of Environment DRSC Design Review and Supervision Consultant DSIP Dhaka Sanitation Improvement Project DWASA Dhaka Water Supply and Sewerage Authority EIRR Economic Internal Rate of Return ERSMF Environmental, Resettlement, and Social Management Framework ESIA Environmental and Social Impact Assessment ESMF Environmental and Social Management Framework
ESMP Environmental and Social Management Plan FGD Focus Group Discussion FM Financial Management FSM Fecal Sludge Management GAP Gender Action Plan GBV Gender-based Violence GDP Gross Domestic Product GHG Greenhouse Gas GIS Geographical Information System GoB Government of Bangladesh GRC Grievance Redress Committee GRM Grievance Redress Mechanism GRS Grievance Redress Service IMED Implementation Monitoring and Evaluation Division IPF Investment Project Financing IT Information Technology IUFR Interim Unaudited Financial Report JMP Joint Monitoring Program LGD Local Government Division LIC Low-income Community LICSIP Low-income Community Service Improvement Plan M&E Monitoring and Evaluation MFD Maximizing Finance for Development MIS Management Information System MLD Million Liters Per Day MoLGRD&C Ministry of Local Government, Rural Development, and Cooperatives MWC Manila Water Company NGO Nongovernmental Organization NPV Net Present Value NRW Nonrevenue Water O&M Operation and Maintenance OCCR Operating Cost Coverage Ratio OPEX Operating Expenditure OR Operating Ratio PARC Project Audit Review Committee PDO Project Development Objective PIC Project Implementation Committee PMC Project Management Consultancy PMU Project Management Unit PPP Public-Private Partnership PPSD Project Procurement Strategy for Development PSC Project Steering Committee RAJUK Capital Development Authority (Rajdhani Unnayan Kartripakhhya) RAP Resettlement Action Plan RP Resettlement Plan RPF Resettlement Policy Framework
SDG Sustainable Development Goal SLS Sewage Lifting Station SPD Standard Procurement Document SPS Sewage Pumping Station SS Suspended Solids STEP Systematic Tracking of Exchanges in Procurement STP Sewage Treatment Plant SUF Scale-up Facility TAN Total Ammonia Nitrogen ToR Terms of Reference WASA Water Supply and Sewerage Authority WASH Water, Sanitation, and Hygiene WSUP Water and Sanitation for the Urban Poor
Regional Vice President: Hartwig Schafer Country Director: Mercy Miyang Tembon Regional Director: John A. Roome Practice Manager: Takuya Kamata Task Team Leader(s): Arif Ahamed, Deo-Marcel Niyungeko
The World Bank Dhaka Sanitation Improvement Project (P161432)
TABLE OF CONTENTS
DATASHEET ...... 1 I. STRATEGIC CONTEXT ...... 7 A. Country Context...... 7 B. Sectoral and Institutional Context ...... 8 C. Relevance to Higher Level Objectives ...... 10 II. PROJECT DESCRIPTION ...... 11 A. Project Development Objective ...... 11 B. Project Components ...... 12 C. Project Beneficiaries ...... 15 D. Results Chain ...... 16 E. Rationale for Bank Involvement and Role of Partners ...... 17 F. Lessons Learned and Reflected in the Project Design ...... 18 III. IMPLEMENTATION ARRANGEMENTS ...... 19 A. Institutional and Implementation Arrangements ...... 19 B. Results Monitoring and Evaluation Arrangements...... 21 C. Sustainability ...... 21 IV. PROJECT APPRAISAL SUMMARY ...... 22 A. Technical, Economic and Financial Analysis (if applicable) ...... 22 B. Fiduciary ...... 25 C. Safeguards ...... 27 V. KEY RISKS ...... 33 VI. RESULTS FRAMEWORK AND MONITORING ...... 35 ANNEX 1: IMPLEMENTATION ARRANGEMENTS AND SUPPORT PLAN ...... 45 ANNEX 2: DETAILED PROJECT DESCRIPTION ...... 49 ANNEX 3: ECONOMIC ANALYSIS ...... 69 ANNEX 4: FINANCIAL ANALYSIS ...... 72 ANNEX 5: RESULTS CHAIN ...... 77
The World Bank Dhaka Sanitation Improvement Project (P161432)
DATASHEET
BASIC INFORMATION BASIC_INFO_TABLE Country(ies) Project Name
Bangladesh Dhaka Sanitation Improvement Project
Project ID Financing Instrument Environmental Assessment Category
Investment Project P161432 A-Full Assessment Financing
Financing & Implementation Modalities
[ ] Multiphase Programmatic Approach (MPA) [✓] Contingent Emergency Response Component (CERC) [ ] Series of Projects (SOP) [ ] Fragile State(s)
[ ] Disbursement-linked Indicators (DLIs) [ ] Small State(s)
[ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country
[ ] Project-Based Guarantee [ ] Conflict [ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster
[ ] Alternate Procurement Arrangements (APA)
Expected Approval Date Expected Closing Date
20-Mar-2020 30-Jun-2025
Bank/IFC Collaboration
No
Proposed Development Objective(s)
The Project Development Objective (PDO) is to increase access to safely managed sanitation services in select areas of Dhaka City and to improve DWASA’s efficiency in sanitation service delivery.
Components
Component Name Cost (US$, millions)
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Institutional Support for Sanitation Service Delivery 3.54
Sewerage and Wastewater Treatment 154.30
Alternative Sanitation 4.23
Project Implementation and Management Support 7.93
Contingent Emergency Response 0.00
Organizations
Borrower: People's Republic of Bangladesh Implementing Agency: Dhaka Water Supply and Sewerage Authority
PROJECT FINANCING DATA (US$, Millions)
SUMMARY-NewFin1
Total Project Cost 483.00
Total Financing 483.00
of which IBRD/IDA 170.00
Financing Gap 0.00
DETAILS-NewFinEnh1
World Bank Group Financing
International Development Association (IDA) 170.00
IDA Credit 170.00
Non-World Bank Group Financing
Counterpart Funding 143.00
Borrower/Recipient 143.00
Other Sources 170.00
Asian Infrastructure Investment Bank 170.00
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IDA Resources (in US$, Millions)
Credit Amount Grant Amount Guarantee Amount Total Amount Bangladesh 170.00 0.00 0.00 170.00
Scale-up Facility (SUF) 170.00 0.00 0.00 170.00
Total 170.00 0.00 0.00 170.00
Expected Disbursements (in US$, Millions)
WB Fiscal Year 2020 2021 2022 2023 2024 2025
Annual 2.00 10.00 25.00 35.00 48.00 50.00
Cumulative 2.00 12.00 37.00 72.00 120.00 170.00
INSTITUTIONAL DATA
Practice Area (Lead) Contributing Practice Areas Water
Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks
SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)
Risk Category Rating
1. Political and Governance ⚫ Substantial
2. Macroeconomic ⚫ Moderate
3. Sector Strategies and Policies ⚫ Substantial
4. Technical Design of Project or Program ⚫ Substantial
5. Institutional Capacity for Implementation and Sustainability ⚫ High
6. Fiduciary ⚫ High
7. Environment and Social ⚫ High
8. Stakeholders ⚫ High
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9. Other ⚫ High
10. Overall ⚫ High
COMPLIANCE
Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [✓] No
Does the project require any waivers of Bank policies? [ ] Yes [✓] No
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment OP/BP 4.01 ✔
Performance Standards for Private Sector Activities OP/BP 4.03 ✔
Natural Habitats OP/BP 4.04 ✔
Forests OP/BP 4.36 ✔
Pest Management OP 4.09 ✔
Physical Cultural Resources OP/BP 4.11 ✔
Indigenous Peoples OP/BP 4.10 ✔
Involuntary Resettlement OP/BP 4.12 ✔
Safety of Dams OP/BP 4.37 ✔
Projects on International Waterways OP/BP 7.50 ✔
Projects in Disputed Areas OP/BP 7.60 ✔
Legal Covenants
Sections and Description A Project Steering Committee (PSC) shall be set up at the line ministry within three months of project effectiveness and shall meet at least twice a year in the initial two years, and subsequently as frequently as needed to review the project’s progress.
Sections and Description The Implementing Entity shall monitor and evaluate the progress of the project and prepare project reports for the
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project. Each such Project Report shall be furnished to the Bank semi-annually and not later than forty-five (45) days after the end of the period covered by such report.
Sections and Description The Implementing Entity shall constitute a Project Audit Review Committee (PARC) within six months of Project effectiveness, that must meet every six months to review Project's audit reports.
Sections and Description The Implementing Entity shall establish a dedicated sewerage organizational unit for the STP and Trunk Mains (capital and operations management for each catchment), and organizational units for front-line sewerage services delivery, within nine months of Project effectiveness, headed by a full-time Officer not less than at the rank of Superintending Engineer, and staffed with specified personnel with expertise in procurement and contract management, engineering, financial management and service delivery.
Sections and Description The Implementing Entity shall develop a water and sewerage tariff framework, and shall get this approved by competent authority, within six months of Project effectiveness.
Sections and Description The Recipient shall have its Financial Statements audited in accordance with the provisions of Section 5.09 (b) of the General Conditions. Each audit of the Financial Statements shall cover the period of one fiscal year of the Recipient. The audited Financial Statements for each such period shall be furnished to the Association not later than six months after the end of such period.
Sections and Description The Implementing Entity shall set up a Project Implementation Committee within three months of project effectiveness. The Committee shall meet at least once quarterly, and more frequently if required, to coordinate DWASA’s planned activities in the city for rehabilitation and new construction of the sewerage system, STP, and related operational matters.
Conditions
Type Description Effectiveness The Co-financing Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right of the Recipient to make withdrawals under it have been fulfilled.
Type Description Effectiveness The Project Implementation Manual has been issued and put into effect in a manner satisfactory to the Association.
Type Description Effectiveness The Subsidiary Agreement has been executed on behalf of the Recipient and the Project Implementing Entity.
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Type Description Effectiveness The Implementing Entity shall set up the Project Management Unit (PMU) before project effectiveness, and maintain throughout the project life, led by a full-time Project Director and all specified staff, to be responsible for the coordination and the overall management, implementation and supervision of the Project.
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I. STRATEGIC CONTEXT
A. Country Context
1. Bangladesh is one of the world’s most densely populated countries with an estimated 165 million people residing in a geographical area of approximately 144,415 km2. Bangladesh has enjoyed relatively high and stable growth over the last two decades, accompanied by rapid poverty reduction. Gross Domestic Product (GDP) grew well above the average for developing countries at around 6 percent per annum since 2000. The poverty rate dropped by half from 48.9 percent in 2000 to 24.5 percent in 2016.1 With per capita gross national income (Atlas method) at $1,944 in 2019, Bangladesh has moved into lower middle-income country status since 2015. Manufacturing—particularly ready-made garment (RMG) exports—and construction have been major drivers of the recent economic growth. The country has experienced a profound social transformation with the influx of girls into the education system and women into the labor force. In the World Bank’s Human Capital Index 2018, Bangladesh has performed better than the South Asian and lower middle-income average in the education and health indicators, with the exception of stunting.
2. Despite robust growth, the pace of poverty reduction has slowed down, especially in urban areas. With rapid urbanization, the absolute number of urban poor was higher in 2016 than in 2010. The welfare gap between eastern and western Bangladesh has also reemerged, correlated with different rates of progress in demographic change and educational attainment, as well as slower agricultural growth. The pace of job creation in the formal sector also slowed down. Total employment grew only by 1.8 percent between 2011 to 2016, compared with 3.1 percent per year between 2003 and 2010. Key structural reforms are needed to sustain the growth momentum and improve inclusiveness of growth. With RMG constituting 84 percent of total exports, it will be critical for Bangladesh to diversify its export base. Additionally, reforms are needed to improve infrastructure and connectivity, enhance access to credit, improve human capital, boost agricultural productivity and simplify business regulations.
3. Dhaka is spread over 307 km2 and is administered by two city corporations.2 The Dhaka Metropolitan Region (DMR)3 is one of the fastest growing urban agglomerations in the developing world. It accounts for 10 percent of the country’s total population and a third of the country’s urban population and generates more than a third of the nation’s GDP. By 2035, the population living in the DMR is projected to increase to about 26 million (ibid 2015).4 A recent World Bank study5 stressed the importance of Dhaka’s growth to Bangladesh’s economy.
4. Dhaka’s governance is mired by the multiplicity of institutions operating in parallel, often with little coordination. For example, the Dhaka City Corporations (DCCs) (North and South) are mandated to
1 World Bank Poverty Assessment (2019) based on Bangladesh Bureau of Statistics upper poverty line. 2 In 2011, the DCC was divided into Dhaka North and Dhaka South City Corporations. 3 RAJUK. 2015. Dhaka Structure Plan 2016-2035. The Dhaka Structure Plan defines the DMR to include the core area of Dhaka comprising the two corporations and some surrounding regions totaling about 1,528 km2 and with a population of 17 million. 4 RAJUK 2015. Dhaka Structure Plan 2016-2035. 5 World Bank. 2018. Toward Great Dhaka.
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manage urban services, but a number of other national and local agencies6 with similar functions are also active in the city. This often results in poor service delivery that can have significant environmental impacts.
5. Pollution of water bodies around Dhaka is a common phenomenon. Untreated domestic sewage and industrial effluent are illegally discharged into rivers and canals. This adversely affects the environment, living spaces, and public health of Dhaka’s residents. Studies7 have highlighted the considerable economic, environmental, and public health costs of pollution and inadequate sanitation. About 3.5 million people living in Dhaka’s low-income communities (LICs), especially women, are the most vulnerable to the impacts of poor sanitation and high levels of pollution. As Dhaka expands spatially and will attract more people in the future, these factors may pose a binding constraint to economic growth. Climate change further exacerbates the challenges associated with sanitation and inland flooding across Bangladesh and in Dhaka.
6. Globally, Bangladesh ranks among the countries with economies most at risk from climate change impacts. The Bangladesh Climate Change Strategy and Action Plan 2009 identified inland monsoon flooding,8 tropical cyclone and related storm surges, and droughts as the three major climate hazards facing the country. A temperature increase of 1–3°C and an additional 20 percent monsoon rainfall by 2050 are predicted for the Ganga-Brahmaputra-Meghna basin, suggesting more severe inland flooding in Bangladesh and Dhaka. According to a World Bank study, by 2050, 3.2 million of poor people in Bangladesh, including those in LICs of Dhaka, will be exposed to the climate change-enhanced risk of inundation, compared to the 2 million poor people currently exposed to the risk.9 Another study indicates that climate change will cause a continuous increase in rainfall-, temperature-, and weather-related extreme events in Dhaka.10
B. Sectoral and Institutional Context
7. DWASA, set up under a Special Act in 1963,11 is responsible for providing drinking water, sewerage, and stormwater drainage services to the city of Dhaka. DWASA’s area of operation includes the areas under the DMR, and some surrounding areas, totaling 401 km2 and catering to about 17 million people.12
6 These include RAJUK, Dhaka Water Supply and Sewerage Authority (DWASA), Dhaka Transport Coordination Authority, Bangladesh Water Development Board (BWDB), Roads and Highways Department, Department of Environment (DoE), telecom, and power agencies, and so on. 7 The World Bank Water Supply, Sanitation, and Hygiene Poverty Diagnostics, 2018, reported a large proportion of urban population suffering from arsenic and E. coli contamination of their water supply. See: World Bank. 2016. The Costs of Meeting the 2030 Sustainable Development Goal Targets on Drinking Water, Sanitation, and Hygiene; IRC. 2016. True Cost of Poor Sanitation; and World Bank. 2010. Economics of Sanitation Initiative. 8 River and rainwater flooding, caused by monsoons and cyclones, and inland and tidal flooding caused by storms in the low- lying coastal areas. 9 World Bank. 2011. “The Cost of Adapting to Extreme Weather Events in a Changing Climate.” Bangladesh Development Series. Paper No. 28. 10 Shourava, S. A., and S. Shahid. 2015. “Impact and Adaptation to Climate Change in Dhaka City of Bangladesh.” Conference Paper. 11 East Pakistan Ordinance XIX (1963), later DWASA was re-organized according to Act No. 6, Dhaka WASA Act (1996). 12 DWASA. 2013. Dhaka Sewerage Master Plan; and DWASA Annual Report 2017-18
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8. DWASA is administratively a part of the Ministry of Local Government, Rural Development, and Cooperatives (MoLGRD&C). The Water Supply and Sewerage Authority (WASA) Act empowers DWASA to function as an autonomous commercial entity, but, in practice, it is dependent upon the ministry for most of its capital investments, key organizational appointments, and major policy decisions. DWASA suffers from human resources capacity deficits, and women comprise a very small proportion of managerial and technical positions. At present, there is no water and sewer regulator in Bangladesh.
9. At the beginning of this century, Dhaka was continuing its rapid population growth and the water and sanitation sector was increasingly confronted with three challenges: (a) the quantity of water supply was inadequate, and the quality was inconsistent; (b) there was almost no systematic collection and treatment of wastewater; and (c) the sector was not financially sustainable. In 2006, DWASA began to change this situation, starting with water supply. Its ‘Dhaka Water Services Turnaround’ (2010–2016) was largely successful and is acclaimed for delivering clean, reliable, affordable, and continuous water to the city’s residents. At present, DWASA city water supply coverage is 100 percent, providing water to more than 382,000 water supply connections, of which more than 97 percent are metered. Its overall nonrevenue water (NRW) declined from 29.6 percent in 2012 to 21.3 percent in 2017, which is a significant achievement considering the city’s rapid growth and aging infrastructure.
10. With significant progress being made in water supply, DWASA now has turned its attention to improving the city’s wastewater service. Despite the demand for wastewater transmission and treatment from the city’s large and fast-growing population, Dhaka’s sewer system of 881 km is old, undersized, and largely unfunctional. The city has only one sewage treatment plant (STP) that serves the 65 km2 Pagla catchment. The Pagla STP’s capacity is just 120 million liters per day (MLD), but only 30–40 MLD arrives at the plant because of the damaged and/or clogged sewer collection and transmission network. Currently, at least 80 percent of the city is not covered by any formal piped sewer network or sewage treatment capacity. As a result, almost all of Dhaka’s sewage (estimated at 1,250 MLD) discharges untreated into water bodies surrounding the city.
11. The utility has an ambitious plan, as outlined in its Sewerage Master Plan that was prepared with the World Bank’s support, to complete five new STPs by 2025. While the Sanitation Master Plan indicates that ideally sewerage services should cover all of Dhaka’s urban area, it also recognizes that 100 percent piped network coverage may not be realistic over the short term given the technical, socioeconomic, and financial constraints. Therefore, the Sewerage Master Plan provides for a phased intervention strategy to address Dhaka’s sanitation challenges, with the first phase covering the Pagla catchment that contains over 4.2 million people. Thus, the current project will focus on providing maximum sanitation coverage in the Pagla catchment (see annex 2 for details).
12. Currently, DWASA is profitable; the net profit13 was 5 percent of total sales in FY18. However, this will change quickly once the new wastewater expenses and the associated increase in depreciation are felt in FY20. For example, by FY28, the utility’s net loss (before government investment support) is expected to be around BDT 4.2 billion (US$52 million). DWASA benefits from strong financial support from the Government for investments and debt service, but self-generated revenues are capped at a tariff increase (for water and sewerage combined) of only up to 5 percent per year.14 DWASA is aware of its
13 Net profit/loss equals net operating profit minus depreciation, interest, and taxes. 14 According to the provisions of the WASA Act (1996), DWASA charges a flat rate tariff for water and an equal amount for properties connected to sewerage.
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financial dependence and is urging the Government to increase water tariffs beyond the 5 percent annual cap—and especially given the city’s significantly improved water service. It has also taken other actions to increase revenues such as actively collecting old outstanding customer bills and increasing technical capacity in its customer service and financial departments. However, without the GoB’s assistance, major capital projects would not be possible for the foreseeable future and there is no possibility of large-scale private sector financing.
13. DWASA has the ambitious vision of becoming the best public sector water and sanitation utility in Asia. The Dhaka Sanitation Improvement Project (DSIP) therefore represents an important initiative to help achieve that vision and to assist DWASA in meeting the significant challenges outlined earlier. First, it will take the initial steps in reestablishing a functioning wastewater collection and treatment regime in one major section of Dhaka and prepare the feasibility study and designs for the next catchment area. These investments will have an immediate positive impact on the city’s environment and increase its climate resilience. The project will also build a major wastewater function inside DWASA, providing the institutional and stakeholder foundation for sustainable citywide sewer service. It will identify sanitation solutions and financing for low-income city residents where a piped sewer network is not possible. It will also build project management capacity inside DWASA, opening the door to the possibility of managing future partnerships with the private sector.
C. Relevance to Higher Level Objectives
14. The World Bank Group’s Bangladesh Country Partnership Framework (CPF) for FY16–FY20 (Report No. 103723) prioritizes three focus areas: Focus Area 1: Growth and Competitiveness, Focus Area 2: Social Inclusion, and Focus Area 3: Climate and Environment Management. The CPF specifically identifies strengthening governance and institutional capacity in the water sector as a priority to improve overall management and service delivery. The DSIP will contribute to Focus Area 1 by making Dhaka more livable with safely managed sanitation services and hence mitigate constraints to economic growth. It will support Focus Area 2 by reducing gender gaps in access to sanitation services, increasing recruitment of female professionals in DWASA, promoting women’s participation in decision making through technical and managerial training, and improving citizens’ engagement through well-managed grievance redress mechanisms (GRMs). The DSIP will contribute to Focus Area 3 by treating sewage and septage, reducing contamination of surface water and groundwater, and mitigating the public health impacts of inland flooding, thereby increasing the project area residents’ resilience to floods and cyclones.
15. The proposed project is consistent with the World Bank’s strategic goals of ending extreme poverty and boosting shared prosperity as it supports two interlinked objectives: ending extreme poverty through increasing sanitation access, which is key to improving livelihoods and health, and boosting shared prosperity through improving sanitation services in low-income areas to ensure equitable access. The project also supports Bangladesh’s Sustainable Development Goal (SDG) 6 2030 commitments of ensuring safe drinking water and safely managed sanitation for all and halving the proportion of untreated wastewater discharging into water bodies. The project shall also elevate the sector policy dialogue including maximizing finance for development (MFD).
16. The project is well aligned with the objectives of the IDA18 Scale-up Facility (SUF). By addressing pollution and saving considerable economic costs of pollution and inadequate sanitation, the project will unlock the economic constraints of Dhaka as an investment location and pave the way for
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transformational economic impact on the DMR. The project’s core benefits include improved livability and enhanced public health, a necessary condition for continued public and private sector investments in the DMR. The project will provide support to the proposed Dhaka Metropolitan Transformation Platform (DMTP), a major initiative to sustain the momentum of the economic growth of the metropolitan city. Public investments in sewerage and treatment plants will crowd in private sector initially as partners and service providers and pave the way for private financing later. Investments in wastewater management infrastructure, improved efficiencies in operations, tariff rationalization, and improved customer services in Dhaka will set the template for Chittagong, Khulna, and Rajshahi, to similarly unlock the economic growth constraints in these cities.
17. Due to the increasing need of external financing and the need to access financing beyond regular IDA allocation for Bangladesh, combined with the economic transformation potential of the proposed project, the GoB decided to use IDA SUF for its financing. Funds will be made available to DWASA under a Subsidiary Loan Agreement with the GoB. SUF financing is relevant for Bangladesh as the country’s debt distress risk is low, and the project will not lead to a deterioration of the risk of debt distress. As explained above, the project is well aligned with the objectives of IDA18 SUF by attracting the private sector initially in a design-build/design-build-operate (DB/DBO) approach in the medium term that will pave the way for build-operate-transfer (BOT) and later attracting private financing. The technical assistance activities under this project will also help DWASA in examining the feasibility of more advanced financing options to mobilize financing for investments and improve efficiency of operations such as BOT.
II. PROJECT DESCRIPTION
A. Project Development Objective
PDO Statement
18. The Project Development Objective (PDO) is to increase access to safely managed sanitation services in select areas of Dhaka City and to improve DWASA’s efficiency in sanitation service delivery.
PDO Level Indicators
19. The achievements of the PDO will be measured using the following indicators:
• People provided with access to safely managed sanitation services • People provided with access to safely managed sanitation services - Female • Operating Ratio for DWASA combined Operations (Water and Sewerage) maintained below 0.715
20. A set of intermediate indicators will be used to track component-level outputs and results. The Results Framework, including indicators to be monitored, is presented in section VI.
15 This translates into an Operating Cost Coverage Ratio (OCCR) of 1.43.
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B. Project Components
21. The project components have been structured to reflect the PDO.
Component 1. Institutional Support for Sanitation Service Delivery (Total cost US$7.08 million including contingencies US$0.17 million; IDA US$3.54 million; Asian Infrastructure Investment Bank [AIIB] US$3.54 million)
22. The component will provide institutional support to DWASA for sustainable sanitation service delivery. The component will include
• Subcomponent 1.1. Support for establishment of a strengthened sanitation function in the DWASA’s organizational structure, and support its operational and financial strengthening by: (i) conducting training of DWASA personnel in STP operations, trunk maintenance management and operation and maintenance management of sewers; (ii) conducting training of [DWASA personnel] in procurement and contract management; (iii) conducting training on climate change and improving operational efficiencies in sanitation systems through energy-efficient technologies and Information Technologies (IT); (iv) strengthening of its GIS and MIS for sanitation and (v) preparation and implementation of a gender action plan for DWASA; • Subcomponent 1.2. Support to commercial and financial strengthening activities for sanitation functions of DWASA through (i) developing and implementing a sewer connection strategy and plan; (ii) developing a water and sewerage tariff rationalization framework; (iii) improving DWASA’s billing and collection system; and (iv) providing technical assistance in accounting, financial management and auditing functions of DWASA; • Subcomponent 1.3. Strengthening communications and public engagement with citizens, including (i) engagement with the low-income communities and female-headed households and providing training in climate adaptation for improved water, sanitation and hygiene practices; (ii) providing assistance for the implementation of DWASA’s communication and stakeholder engagement strategy; (iii) making improvements in citizen engagement including setting up an IT-enabled complaints management system; (iv) carrying out improvements in grievance redressal; and (v) conducting citizen report card surveys by third-party agencies; • Subcomponent 1.4. Technical assistance for a study for exploring the feasibility of advanced financing options in future infrastructure investments for DWASA; and • Subcomponent 1.5. Coordination with other stakeholders, including technical assistance to address coordination issues on sanitation between DWASA, DNCC, DSCC, DoE, RAJUK, and other utilities and agencies through (i) setting up a policy and coordination mechanism amongst these agencies; and (ii) carrying out of relevant studies and consultations to support this sub-component to improve the overall urban environment and management of Dhaka’s development (see annex 2).
23. This component will directly contribute to improved operational and financial efficiencies (see Components 2 and 3) and include relevant training on climate change. The improved operational
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efficiencies will contribute to a more reliable, better managed, and more intensely used sanitation system by increasing the number of connections to the sewer network and the number of users of alternative sanitation systems—thereby raising the beneficiaries’ satisfaction and resilience to floods and cyclones (see Component 2 for details).
Component 2. Sewerage and Wastewater Treatment (Total cost US$446.52 million including contingencies US$9.01 million; IDA US$154.3 million; AIIB US$154.3 million; GoB US$137.92 million)
24. The component will include
• Subcomponent 2.1. Provision of support for rehabilitation, replacement of sewerage and re- activation/new construction of sewer connections to maximize connections in the Pagla catchment to ensure last mile coverage using a Design-Build model and incentivizing contractors to maximize service connections by financing house-service connections; • Subcomponent 2.2. Support the replacement and/or rehabilitation of Eastern and Western Trunk Mains using a Design-Build approach; • Subcomponent 2.3. Support the construction of a new Pagla Sewage Treatment Plant at the existing treatment site, including provision of about 200 million litres per day primary and secondary treatment capacity using a Design-Build-Operate model; and • Subcomponent 2.4. Support finalization of feasibility studies, engineering designs and bidding documents for priority sewerage and wastewater treatment interventions in the Uttara catchment (see annex 2).
25. The designs will ensure that fewer sewage pumping stations (SPSs) are required and, where needed, new and more efficient SPSs replace the older and poorly functioning ones. The proposed systems will increase energy efficiency and reduce greenhouse gas (GHG) emissions by generating energy from treatment of biosolids16 and use of pipes with lower carbon footprint. The project will assist DWASA in implementing technology-enabled processes including supervisory control and data acquisition system, geographical information system (GIS), and so on, for improved operations management. The component is about 93 percent of total project financing and is expected to result in sizable net emission reductions.
26. The interventions will support reduction in the volume of untreated wastewater and fecal sludge discharged into water bodies and drainage canals. This will reduce flood risk and impact of floods as floodwaters will be less contaminated.17 Thus, the residents of Dhaka will be more resilient to floods and cyclones.
16 According to the estimation in the Conceptual Design Reports, energy reuse potential from biogas ranges from 25 percent to 50 percent depending on the sewage treatment technology chosen. 17 The rehabilitated and new climate-resilient sanitation infrastructure will be less likely to be overwhelmed and/or damaged.
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Component 3. Alternative Sanitation (Total cost US$8.46 million including contingencies US$0.20 million; IDA US$4.23 million; AIIB US$4.23 million)
27. This component will help DWASA provide alternative sanitation services in areas where sewers are not feasible and/or where there are tenurial barriers, such as in low-income settlements. The component will include
• Subcomponent 3.1. Improve sanitation and septage management within Pagla catchment, through upgradation of unimproved toilets of poor households through the support of select non-governmental organizations; • Subcomponent 3.2. Provision and installation of demonstration units for alternative sanitation solutions viz. supporting pilot demonstrations of DEWATS, communal septic tanks;18 and • Subcomponent 3.3. Provision of services involving septage emptying, transport and treatment, including leasing of emptying and transport equipment to private operators19.
28. All these activities will reduce the contamination of water bodies by untreated fecal sludge, thereby reducing the impact of floods and cyclones and increasing the residents’ resilience to these climate-exacerbated events. The component will also focus on reducing the gender gap in access to sanitation services by poor households, including those headed by women.
Component 4. Project Implementation and Management Support (Total cost US$20.94 million including contingencies US$0.25 million; IDA US$7.93 million; AIIB US$7.93 million; GoB US$5.08 million)
29. This component will support DWASA in coordinating and implementing project activities, complying with the World Bank fiduciary procedures and safeguards. This component comprises
• The establishment of the Project Management Unit and recruitment of the specific individual consultants; • Procurement of consulting firms for Project management and design-review and contract supervision to support Project implementation; • Carrying out of audits of Project internal processes; • Fiduciary and environmental and social management of the Project including implementation of the gender action plan and preparation and implementation of relevant safeguard documents; • The acquisition of specialized equipment; and
18 This builds on the recommendations provided in the Low-income Community Service Improvement Plan (LICSIP) (World Bank 2015) undertaken for DWASA. The options suggested are for those households that cannot be serviced through LICSIP recommendations. 19 The project will support procurement of the specialized and specially purposed vehicles to provide for emptying and transport of fecal sludge from households. An exception to the revised Country Financing Parameters for Bangladesh has been granted by the Bank to allow procurement of these specially purposed vehicles under the goods category.
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• Project reporting.
Component 5. Contingent Emergency Response (US$0)
30. A provisional zero amount component is included under this project to allow for rapid reallocation of loan proceeds from other project components during an emergency, under streamlined procurement and disbursement procedures. In addition, the contingent component may also serve as a conduit for additional funds to be channeled to the project in the event of an emergency. The details of this Contingent Emergency Response Component (CERC) have been provided in the annex of the Project Implementation Manual.
31. A breakdown of cost for each component is presented in Table 1. Counterpart funding will cover land acquisition, resettlement compensation, import duty and value added taxes on foreign imports, fuel, workshop and sitting allowances, honoraria, consumables, printing and advertising expenditures.
Table 1. Project Costs and IDA Financing by Component (in US$, millions) Project Cost IDA AIIB Counterpart Project Components with Financing Financing Funding Contingencies 1. Institutional Support for Sanitation Service 7.08 3.54 3.54 — Delivery 2. Sewerage and Wastewater Treatment 446.52 154.30 154.30 137.92 3. Alternative Sanitation 8.46 4.23 4.23 — 4. Project Implementation and Management 20.94 7.93 7.93 5.08 Support 5. Contingent Emergency Response 0.00 0.00 0.00 — Total 483.00 170.00 170.00 143.00 Project Total (IDA + AIIB + GoB) 483.00
C. Project Beneficiaries
32. About 1.5 million people (including about 0.75 million women and 0.05 million people in low- income settlements) shall benefit from safely managed sanitation services in the Pagla catchment. Of this, about 100,000 people will benefit from alternative sanitation solutions.
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D. Results Chain Figure 1. Schematic Overview of the Project’s Theory of Change
Note: O&M: Operation and maintenance.
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33. The proposed project is aligned with the MFD approach and is an MFD-enabling project. A Tariff Rationalization Framework prepared by DWASA and targeted for rollout by the Government during project implementation is envisaged to strengthen DWASA’s financial viability and address the binding constraint in attracting private sector participation in the sector. Another initiative under the project is the DB/DBO approach planned upon project implementation which is aimed at paving the way for BOT and later attracting private financing. In addition, the project will include technical assistance to conduct feasibilities to attract private financing to the water utilities in the long run. The project shall also elevate the sector policy dialogue including MFD as informed by the above project activities.
34. Further, the project will help in reducing the time women spend in caring for children and other family members who fall ill because of inadequate sanitation. Technical and managerial trainings will be provided to DWASA’s female employees to advance their careers. Other important benefits will be the increase in property prices due to improved, less-polluted living spaces and better sanitation services; reduced pollution of rivers and water bodies; and improved health outcomes. Benefits will accrue beyond the Pagla catchment as the project will provide DWASA the templates and capacities for replication in other catchments of Dhaka.
E. Rationale for Bank Involvement and Role of Partners
35. Over the past three decades, the World Bank has been working to build capacity for water supply management in Bangladesh’s urban centers, including in Dhaka and Chittagong. In parallel, there has been an ongoing engagement with the urban sector both in municipalities and in larger cities. The preparation of the Sewerage Master Plan was a strong signal of DWASA’s interest in prioritizing sanitation. The organizational improvement exercise conducted by DWASA underlined the need for an institutional architecture necessary for long-term sustainability of investments in wastewater management. DWASA has received financing from the Export-Import Bank of China to construct the Dasherkandi STP to cater to the needs of the Dhaka East catchment. Other catchments are being proposed for funding from the Asian Development Bank (ADB) and other donors. The World Bank shall collaborate with the ADB on engaging with DWASA and the GoB, especially on measures for rationalizing tariffs for eventual full cost recovery.
36. The World Bank will bring its experience in the design and supervision of sewerage, wastewater, and septage infrastructure projects from East Asia, Latin America, and Eastern Europe. The World Bank’s experience has already informed project design, including innovations that are new in Bangladesh.
(a) Engaging the private sector through DB and DBO contracts (b) Facilitating public-private partnerships (PPPs) for the collection and transportation of fecal waste (c) Promoting public awareness on sanitation and maximizing sewer connections by community mobilization and communication programs and the use of a wide range of house connection options (single, multiple, condominium type with small-bore pipes and shallow inspection pits, and so on) (d) Ensuring comprehensive coverage by serving hard-to-reach and low-income areas using alternative sanitation solutions
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(e) Leveraging the World Bank’s knowledge, network, and experience in the global citywide inclusive sanitation (CWIS)20 initiative to begin a comprehensive sanitation program for the first time in Bangladesh
37. The Water Resource Group 2030’s efforts in promoting the private sector in Bangladesh have included the ongoing work on a PPP initiative in the nearby Gazipur City Corporation. The DSIP will leverage such initiatives to elevate the profile of private sector operations and financing.
38. The project will also contribute to the DMTP that highlights the periodic flooding and waterlogging from collected rainfall as a critical challenge that affects the life of the city’s residents. The project will support the DMTP through relevant analytical work, particularly in ways to enhance institutional coordination on issues of drainage and fecal sludge management (FSM).
F. Lessons Learned and Reflected in the Project Design
39. The following lessons have been drawn from the closed Dhaka Water Supply and Sanitation Project (P093988) and other similar operations:
• Project readiness. Realistic time lines, targets, and readiness of designs are necessary for large and complex infrastructure projects. This can help avoid a situation where the entire process that includes identification, feasibility, design, procurement, construction, and commissioning is not completed within the standard project cycle. Therefore, to mitigate unnecessary implementation delays, a project preparation advance has supported the preparation of project investments. As a result, at least US$140 million in investments, including design and bidding documents for the Pagla STP and the Eastern Trunk Main, shall be finalized before project approval. • Integrated sanitation planning. While integrated solutions for drainage, sanitation, and solid waste would be ideal, their complexity needs to be balanced with the capacity of the implementing agencies. Recognizing the need for integrated urban solutions21 and the current capacity in the sector, the DSIP will position itself with DWASA to streamline implementation while also focusing on building a coordination mechanism involving multiple institutions, including DCCs (North and South), DoE, and other agencies. • Sustainability and institutional measures. To ensure sustainable services, institutional measures and infrastructure investments need to be addressed simultaneously. The DSIP includes several institutional measures: (a) establishment of a strengthened sanitation function in DWASA’s organizational structure, (b) commercial and financial strengthening of DWASA, and (c) improved customer orientation and engagement to encourage residents in the project area to connect to sanitation systems, including from LICs.
20 CWIS is a global initiative led by the World Bank in partnership with the Bill and Melinda Gates Foundation (BMGF) and other nongovernmental organization (NGO) partners to support cities in achieving the SDG of ensuring safe, inclusive, and financially sustainable sanitation services. 21 The World Bank is developing the DMTP that brings together various projects and programs focused on Dhaka City, including on service delivery, transport, city planning, and so on. One of the priority areas under this platform is sanitation. A Dhaka- focused sanitation project also fits with the GoB’s goal of achieving the SDGs and development priorities for Dhaka.
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• Procurement and PPP. DB/DBO contracts are effective means to increase private sector participation. Under the World Bank-supported wastewater management project in Ho Chi Minh City, the DBO allowed the utility to bring in a contractor with the lowest life cycle cost for wastewater treatment and provide training to the utility on efficient operations. Under the DSIP, the introduction of the private sector through a DB/DBO contract will lead to a PPP for the construction and operation of the sewers and the sewage and septage treatment plant, and these will help build an enabling environment to expand private sector participation in the sector in the medium to long term. Project preparations have considered different technology options and taken account of the complexity of the works, and procurement methods have been finalized accordingly. • DWASA desires to be a utility that embraces technology and innovation as one of its core values. In that regard, this project will promote treatment innovations through the DBO approach allowing the operator to propose the most up-to-date technologies, with a requirement that the plant generate and recover methane for on-site energy use. With project support, DWASA will develop an information technology (IT) enabled customer- friendly complaints management system, for example, a cell phone-based application, that will permit customers to report pipe blockages and so on as well as serve as the main grievance reporting platform. Online bill payment is already possible for DWASA customers, but the billing system will be further improved under the project (see annex 2).
III. IMPLEMENTATION ARRANGEMENTS
A. Institutional and Implementation Arrangements
40. DWASA shall be responsible for overall project implementation. At the ministry level, a Project Steering Committee (PSC) will be established in the Local Government Division (LGD), chaired by the Secretary of the LGD, to provide overall guidance and policy direction. The PSC will meet at least twice a year for the first two years of project implementation and, as needed thereafter, take stock of progress and make course corrections. DWASA will be responsible for the design and implementation of all project components. The DWASA PMU, dedicated to implementation of the project, will comprise a full-time project director (not below the rank of an Superintending Engineer), a full-time deputy project director, and other personnel with specialization in requisite disciplines (that is, procurement, financial management [FM], project management, monitoring and evaluation [M&E], environment, safeguards, and so on) at the DWASA headquarters, posted from within DWASA and/or recruited from the open market. DWASA has implemented World Bank-financed projects and is familiar with World Bank procedures. However, given the technical complexity and scale of the investment, (a) a design review and supervision consultancy and (b) an implementation-stage Project Management Consultancy (PMC) shall assist the DWASA PMU in the supervision of construction contractors and operators and for efficient project management.
41. Under Component 2, after the end of the operations period of the DBO contract, the relevant DWASA sewerage unit (for STPs and trunk mains or a separate contractor) will take over the operations of assets, having received requisite training from the contractor (that will be a part of its contract). Under Component 3, the PMU will demonstrate innovative alternative sanitation and FSM interventions on a pilot basis in the Pagla catchment, for learning and potential scale-up on a citywide basis by designated
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agencies (DCC [North and South] with DWASA’s technical assistance). This is in line with the institutional arrangements and coordination suggested in the Institutional and Regulatory Framework for FSM in Dhaka.22 The PMU will engage private sector agencies and NGOs to provide services of desludging, O&M of treatment systems, and so on. DWASA will purchase septage emptying vehicles and lease these to private desludging operators for emptying and transport of septage. DWASA will also make land available for decanting stations in selected SPSs, communal septic tanks, and DEWATS pilots.
42. Institutional coordination. An effective coordination mechanism is necessary for smooth project implementation. The Pagla catchment has dense settlements with domestic/commercial/public institutional areas, and therefore, coordinated planning with other agencies and the public is needed for smooth implementation of physical works with least amount of disruptions or adverse impacts on the ground. The Environmental and Social Impact Assessment (ESIA) has provided directions for actions and the preparation of relevant safeguards instruments, which will guide interagency coordination at the operational level.
43. The DWASA will set up a Project Implementation Committee (PIC), chaired by the Managing Director of the DWASA and comprising the following members: the project director of the DSIP as a member secretary and representatives from MoLGRD&C, Planning Commission, IMED, DoE and Ministry of Finance. In addition, the PIC will co-opt members from other utilities as needed including but not limited to DCCs (North and South), Dhaka Metropolitan Police, Titas Gas Transmission and Distribution Company Limited, Dhaka Power Distribution Company Limited, Dhaka Transport Coordination Authority Other public and private agencies such as Bangladesh University of Engineering and Technology and International Center for Diarrheal Disease Research – Bangladesh may be invited as needed. The committee shall meet at least quarterly, or more frequently if required, to address any coordination issues related to DWASA’s planned activities for rehabilitation and new construction of the sewerage system, STP, and other operational matters. While the PSC shall provide overall guidance and policy direction to the project, the PIC shall smoothen project implementation at the operational level. The PIC forms a part of Component 1 of the project (see Annex 2).
44. During implementation, the PMU shall discuss greater engagement of the DCCs in project implementation, for example, in launching a joint communication and stakeholder engagement plan, FSM and its scaling up, flooding and drainage mapping, and so on that are also focus areas of the DMTP.
45. Gender issues. Sanitation has significant gender implications. Inadequate sanitation is known to cause various waterborne and insect-borne diseases, which increase the time burden on women as they are most often the caregivers for unwell family members. Evaluation of sanitation services is most often limited to access and use, with very little or no attention to gender equity and even less focus on the enhanced positive outcomes that could result from women’s participation in sanitation-related decision- making processes. A gender vulnerability assessment and a focus group discussion (FGD) with DWASA’s female employees, conducted during project preparation, found that gender gaps exist in time burdens from inadequate sanitation services at the community and in career progression opportunities for women at the utility. Limited career progression opportunities result in huge gaps between men and women at both professional and staff levels in DWASA. In 2015, women made up 5.1 percent of the total staff-level
22 GoB. 2017. Institutional and Regulatory Framework for Faecal Sludge Management (FSM)
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positions in DWASA and 9.5 percent of the total professional-/management-level positions.23 The FGD identified several career progression constraints faced by women including (a) limited access to skill development opportunities because of household responsibilities and travel constraints, for example, few women are able to benefit from international-level technical trainings and management and leadership skill trainings, and (b) lack of separate sanitation facilities in DWASA offices, which leads to difficulties in maintaining sanitation and hygiene and adversely affects work efficiency. The DSIP will attempt to address these identified gender gaps in time burden and career progression by (a) expanding its sanitation services to low-income settlements mainly through the alternative sanitation component; (b) providing a wide range of services for DWASA’s female employees, including engineering and nonengineering cutting-edge technical trainings, orientation trainings and leadership skill trainings in DWASA’s offices; and (c) constructing necessary sanitation facilities in the DWASA headquarters and zonal offices to improve the work environment for women. DWASA will also conduct an outreach program to encourage female students in science, technology, engineering, and mathematics to enter the sector as a part of the communication campaign to be implemented under the project. The DSIP will help DWASA in monitoring the number of female professionals in the utility and their career progression. Female staff who achieve career progression will be tracked as part of the project M&E. Based on detailed discussions with DWASA management and staff, it was agreed that progression from the current grades / relevant placements as per service rules for 5 percent of the female staff is a challenging but achievable target for the indicator.
B. Results Monitoring and Evaluation Arrangements
46. The project-level monitoring and reporting will be conducted by the PMU, with support from the PMC. The PMC will implement the M&E framework developed during preparations. The M&E system will be used to take corrective actions, improve coordination, and facilitate learning throughout project implementation. To ensure that the project contributes towards strengthening DWASA’s M&E capacity in the long term, appropriate measures have been built into the project design. Component 1 shall specifically support strengthening of the DWASA’s management information system (MIS), GIS and building of the DWASA’s operational performance monitoring systems and progress reporting. All project level information will feed into DWASA’s strengthened MIS as proposed under the project. The project- level monitoring and reporting arrangements are presented in Annex 1.
C. Sustainability
47. In spite of a large number of investments in infrastructure, DWASA has not been able to implement measures for ensuring long-term financial sustainability including full cost recovery and debt servicing. This is partially due to the limited autonomy of DWASA and the lack of sector policies on financial sustainability. This project shall, while strengthening DWASA’s FM efficiency, elevate the policy dialogue on sector financing with the GoB.
48. Project preparation has included detailing of activities to strengthen DWASA’s capacities for managing sanitation (dedicated organizational units), assets, and operations (using DBO contractors and capacity building) and improving financial sustainability (through connection promotion strategies, tariff framework rationalization, and customer orientation). DWASA’s financial assessment has also showed improvements in operational performance and revenue collection for water and sanitation services (see
23 DWASA/ADB 2015; Officers and staff in DWASA are classified under 1 to 4 classes. The first and second classes are considered as professional/management level, and the third and fourth classes are considered as staff level.
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section IV and annex 4). While DWASA has embarked on a huge capital investment program in water supply over the last decade, and now, in sanitation, it has been able to manage its cash situation well. However, the potential ballooning of depreciation and maintenance expenses can significantly increase the pressure on DWASA’s finances. The ADB’s Dhaka Water Supply Network Improvement Project has also recommended strengthening the tariff framework, and the World Bank will collaborate with the ADB for engaging the GoB and DWASA on these issues (see annex 4).
49. DWASA will establish dedicated organizational units to manage the sewerage infrastructure (trunk mains, sewers, and septage treatment plants) developed under this project. This shall provide the organizational template for other STP/sewerage-related capital investments under DWASA’s sanitation capital expenditure (CAPEX) program in the future. These units shall be staffed with adequate personnel with experience in engineering, procurement, contract management, and asset and operations management. To ensure post-project sustainability, the DB/DBO contractors will establish operating procedures and provide training to relevant DWASA (or contracted) staff for managing or supervising operations. The frontline sewerage services will be delivered by dedicated teams in the field in the respective territorial divisions of DWASA. Thus, the project will institutionalize DWASA’s asset management and operations capacity.
50. During project preparation, DWASA developed a strategy for increasing connections to the sewer system in the Pagla catchment, a plan to enhance public awareness, customer engagement, and services provision to prepare the environment to improve willingness to pay for sanitation services. The project will also support the operationalization of specialized platforms for communications and receiving feedback on DWASA’s services. These strong communication and community mobilization measures, together with rehabilitated and new sewers and house service connections, will ensure utilization and sustainability of assets.
IV. PROJECT APPRAISAL SUMMARY
A. Technical, Economic and Financial Analysis (if applicable)
51. Technical analysis. The combined analysis of data and assessments in past studies, up-to-date data collected from topographical surveys, geotechnical data, closed-circuit television (CCTV) camera inspection of existing sewers, wastewater quality analysis, GIS data, and on-site infrastructure assessments, together with the outcome of hydraulic sewer network calculation and updated SPS design, all contributed to a conclusion on the best way forward. The technical design also evaluated if and where rehabilitation of existing works and installations would be feasible and advantageous. The results convincingly showed that not much of the existing collection, pumping, and treatment infrastructure is suited for rehabilitation (see annex 2). All results of the technical analysis and justification of the suggested way forward have been described in conceptual design reports (CDRs) for (a) the Pagla sewer system, including laterals and house service connections; (b) trunk mains (Eastern Trunk Main and Western Trunk Main); and (c) sewage and septage treatment. The CDRs were used as supplementary information to the bidding documents, which have also been elaborated. To optimize the use of funds, the sewage collection system and the trunk mains have been designed for a long-term horizon up to 2050, whereas the Pagla STP is designed for a short-term horizon up to 2025. This approach safeguards the sewer lines, for which capacity upgrade is difficult and ensures that these sewer lines can remain in place and function properly in the long run. The STP shall be based on a modular design of multiple, parallel treatment trains that will
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permit easy and fast capacity expansion, whenever the need arises. Under the DSIP, the sewer network will focus on the most densely populated areas in the catchment, where all the necessary and feasible sanitation infrastructure must be installed by the contractor. This will reduce inconvenience to local residents and businesses to only a one-time intervention.
52. Tendering will be generally based on DB and DBO contracts. This approach will speed up overall progress, reduce risks, lower CAPEX and OPEX, and ensure smooth implementation of the project with one single responsible contractor for each contract package. The CDRs, together with the specifications in the bidding documents, will guide the detailed designs, which need to be elaborated by the contractors. The DB approach will be applied to the two sewer packages and to the two trunk main packages. To ensure that the planned number of households are indeed connected, the sewer DB contracts will include a combination of engineering works and social mobilization and community engagement. To further maximize connections, full financing up to household plumbing is planned, and the contractors’ payments shall be linked to outputs, for example, number of households or properties connected to sewers. Bidding documents for the Pagla STP will be based on the World Bank’s new DBO standard procurement document (SPD) for wastewater treatment plants. The bidders shall be required to propose a treatment technology that falls under any of the three permitted ‘families of technologies’ for their main biological treatment, which are defined as (a) conventional activated sludge, (b) modern trickling filter, and (c) combinations of (a) and (b). These ‘families of technologies’ have been developed based on the recommendations in the Sewerage Master Plan and CDRs, the complete range of modern energy-efficient technologies, options for rehabilitation of existing works and installations, and options for new construction. Pretreatment and/or rehabilitation of existing facilities, within the permitted technology range and employer’s specifications, will be up to the bidders to propose.
53. Economic analysis. The DSIP will reduce overall vulnerability to public health risks of the urban residents by reducing fecal exposure from untreated sewage. The project interventions will also reduce risks of serious environmental degradation and enhance human capital development of future generation. The sanitation infrastructure under Component 2 comprises nearly 90 percent of the total investment, and the economic analysis is based on this component. Even though Components 1, 3, and 4 will deliver significant benefits, these are not included in the economic analysis.
54. A cost-benefit analysis in a ‘with and without’ methodology was carried out. The analysis attempts to estimate nonmonetary, financial, and economic costs of poor sanitation in comparison to the ‘with project’ scenario. In the relevant cases, financial values have been assigned to nonmonetary impacts such as patient time lost because of illness, time spent for accompanying patients for seeking health care and/or taking care of sick children, and wages forgone because of absence from work both for the patients and caregivers. Many nonmonetary benefits due to safely managed sanitation through sewerage and on- site facilities such as dignity, comfort and privacy, and environmental quality are not included in the analysis. Because of data limitations, economic benefits due to reduction in biological oxygen demand (BOD) and potential increases in real estate rental and property prices are not included. Revenues generated from the sewer connections are considered as direct financial benefits. The analysis, however,
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would claim only 69 percent24 of the total benefits as the component will also rehabilitate the existing sewer network for which tariffs are already collected.
55. The economic analysis covers a project life of 30 years, and cash flow is discounted at 10 percent, which is the cost of capital.25 Based on the analysis, the project’s economic net benefit is significant at 10 percent discount rate, with positive net present value (NPV) for 30 years and an economic internal rate of return (EIRR) of 15.6 percent. The details of the economic analysis are provided in annex 3.
56. The overall risk rating of the project is High, and caveats of high risks are assigned to (a) environmental and social, (b) institutional capacity for implementation and sustainability, (c) fiduciary, and (d) stakeholders. The sensitivity analysis simulates the impact of all the indicated risks on the EIRR at 10 percent discount rate independently and for all of them realizing together.
57. The analysis reveals that the economic viability of the project vastly depends on tackling the risks identified during the appraisal. Subsequent supervision activities will focus on reducing the abovementioned risks to ensure that the project remains economically viable.
58. Financial analysis. For water supply, domestic, community, and LIC customers are charged BDT 11.02 per m3 (US$0.14 per m3), whereas commercial, industrial, and government customers pay BDT 35.28 per m3 (US$0.44 per m3). Sewerage charges are levied on connected properties and on those located within 100 feet of a sewer—DWASA has 84,000 sewer connections (2018). The tariff for sewerage is the same as for water supply, and therefore, a property with both connections pays double its water bill.
59. A financial assessment of DWASA was carried out and a financial projection model developed to assess the long-term financial impact of current operations and future investments. The details of DWASA’s performance in several operational parameters including NRW, water connections, OCCR/operating ratio (OR), and operating margin are provided in annex 4.
60. In the medium term, DWASA will face significant financial challenges because most of the water supply and sewerage capital investments will not generate significant additional revenues as they are mostly replacing existing fixed assets or getting these to become functional again. The sizable capital investment program will have a profound financial impact on increasing depreciation expenses. Moreover by 2023, O&M expenses are likely to increase, seriously affecting cash flows. Hence, it is imperative that tariff revisions stay ahead of inflationary impacts. Tariff rationalization is a must to ensure that consumers only pay the tariffs commensurate with the services provided.
61. An analysis was carried out to determine DWASA’s justified tariff and comparing it to the current average tariff charged to consumers. The analysis assumes that a justified tariff should fall between an OCCR of 1.5 and 2.0 (OR of 0.67 and 0.50, respectively) that shall achieve returns like other well- performing utilities, for example, Manila Water Company (MWC) and Bangkok Water Authority (BWA). For DWASA to achieve a 1.5 OCCR (OR of 0.67), the average tariff needs to be set at BDT 16.28 per m3, while BDT 21.72 per m3 would be needed to achieve a 2.00 OCCR (OR of 0.5) like MWC (see annex 4). The
24 This proportion is the number of sewer connections made functional by the project to the total number of sewer connections in the ‘with project’ scenario. 25 Based on the data from World Bank Dhaka office and International Monetary Fund, the average interest rate for domestic public debt is 9.7 percent and that for foreign public debt is only 0.9 percent. On average, the cost of government borrowing is around 5 percent. For cash flow analysis in the base case, a very conservative 10 percent discount rate is used.
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justified tariff should fall between these two points. Even with the higher tariff that equates to an OCCR of 2.0 (OR of 0.5), DWASA will fall short of the benchmark returns of both MWC and BWA. The most startling difference is in the return on assets indicating an overextended CAPEX program. At the minimum, DWASA needs a tariff adjustment of approximately 10 percent to BDT 13.9 per m3 net of cost increases that, under current debt-servicing conditions, will eliminate the net losses in four years and reduce them thereafter. DWASA will then be able to maintain some profit over operations and increase cash flow for repaying the principal only on the sizable debt burden.
62. The project will support the following actions to ensure DWASA’s financial sustainability:
(a) Increase the number of sewage connections. Currently, sewerage revenues account for about 35 percent of revenues from water supply. The project interventions will result in restoring services to existing connections and increasing new connections. These measures will lead to higher revenues for DWASA. (b) Tariff framework. Based on the earlier analysis, a tariff rationalization framework has been developed by DWASA. This lays out the path for achieving an OCCR between 1.5 and 2.00 (OR between 0.5 and 0.67, respectively) by project closure. Annex 4 also presents other suggestions for improving DWASA’s FM.
B. Fiduciary
(i) Financial Management
63. An FM capacity assessment of DWASA was carried out following the World Bank’s standard guidelines. The overall FM risk of the project is assessed to be ‘High’. The following FM arrangements have been suggested for the project:
(a) Budgeting. A budget will be prepared and maintained for the entire term of the project, and detailed budgets for each fiscal year will also be produced based on the Procurement Plan and other relevant work plans, to provide a framework for FM purposes. (b) Reporting and internal control. The project will submit the interim unaudited financial report (IUFR) to the World Bank within 45 days from the end of each quarter. The IUFR shall be prepared according to an agreed format and supported by the appropriate set of documents and evidences. (c) Disbursement. Disbursement of the IDA funds will be made based on the IUFRs. Funds will be disbursed through a single Designated Account (DA) that will be maintained by DWASA. The same amount of initial advance to the DA will be provided from both IDA and AIIB. Subsequently, the expenditures will be reported in the IUFRs in a 50:50 ratio for IDA and AIIB. Regarding financing of taxes under the project, all customs duties and value added taxes on foreign imports will be borne by the Govt. For all procurement including goods, works and services, the VAT and Income Taxes (IT) will be financed by IDA credit (paid from CONTASA account). However, the total amount of VAT/IT to be financed under the Credit should not be more than 15% of the total IDA financing.
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(d) Internal audit. The internal audit for the project will be conducted by a private chartered accountant firm twice during implementation based on agreed terms of reference (ToR). (e) External audit. DWASA will submit the entity-audited financial statements to IDA not later than six months from the end of a fiscal year. The audited project financial statements (PFS) will be submitted by the Comptroller and Auditor General of Bangladesh. The audited PFS will be due on December 31 each year. Nevertheless, there are no overdue audit for DWASA. (f) Staffing. An FM specialist will be recruited for the PMU based on ToR agreed with the World Bank. An accounts officer and one accountant will be recruited to support the FM specialist in carrying out day-to-day accounting and book keeping functions. (g) Governance and oversight arrangements. Policies governing IDA funds, including on anticorruption, will apply to the entire block of funds. (h) Audit committee. To ensure that the project audit issues raised by the internal audit and entity audit are reviewed and to ensure robust follow-up of the audit recommendations, a Project Audit Review Committee (PARC) will be constituted. The PARC will meet twice a year to review the audit reports and follow up on audit recommendations.
(ii) Procurement
64. Procurement under the project will be carried out in accordance with the World Bank Procurement Regulations for IPF Borrowers, July 2016, revised November 2017 and August 2018, and the provisions of the Project Procurement Strategy for Development (PPSD) and the Procurement Plan that may be updated from time to time with the World Bank’s approval.
65. Procurement capacity and risks. DWASA will be responsible for all procurement under the project. A detailed procurement capacity assessment has been carried out for DWASA, which indicates ‘High’ risk in procurement operations and contract management. There are perceived weak implementation capacities. Even though DWASA has experience in contract management and World Bank procurement, it lacks experience in procuring and managing DBO and DB contracts, which may lead to delays.
66. Managing procurement risks. To minimize procurement-related risks, the following mitigation measures will need to be taken:
• Develop and use a PPSD by DWASA in agreement with the World Bank, considering the volume of items to be procured, prevailing market conditions, activity level risks, and so on. An initial Procurement Plan has been developed as part of the PPSD. • Use the Systematic Tracking of Exchanges in Procurement (STEP) system to prepare and manage the Procurement Plan and all procurement transactions. • Train project officials including evaluation committee members on the World Bank Procurement Regulations, country procurement laws, STEP, and other aspects of procurement.
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• Form bid/proposal evaluation committees that are acceptable to the World Bank and have the necessary expertise depending on the type of contract and with the mandatory membership of a procurement consultant. • Use national e-Government procurement. • Appoint experienced procurement consultants for the entire project period based on ToR acceptable to the World Bank. • Use the World Bank’s SPDs and standard/model procurement documents satisfactory to the World Bank. • Carry out annual integrated fiduciary reviews/procurement post reviews of a sample of contracts selected depending on the associated risks. • Carry out other due diligence measures including (a) verifying recommended bidders’ post qualification information during bid evaluation; (b) making bidders aware of fraud and corruption issues in writing and/or at pre-bid/proposal meetings, as applicable; (c) preserving all procurement-related documents to facilitate smooth post procurement reviews; (d) publishing contract award information at the Central Procurement Technical Unit and the respective agencies’ websites within two weeks of contract award (and on United Nations Development Business online for international contracts); and (e) keeping financial proposal in a safe custody.
67. Special measures for internationally advertised contracts. DWASA will form an evaluation committee to assess proposals/applications/bids for international procurement. This committee will have at least five members including the project focal person and local procurement consultant, one international technical expert, and one international procurement expert recruited on contract. DWASA will ensure strict confidentially of the bid evaluation process and timely completion of the evaluation. The bid/proposal evaluation committee members will conduct evaluation of the bids by themselves without delegating any task to any other official/staff/person in any circumstance. The bid evaluation will be completed preferably in one go and will be conducted preferably in a location other than the implementing agencies’ own offices to ensure minimal interruption and leakage of information. The World Bank’s ‘No Objection’ shall be required on the formation of the bid/proposal evaluation committee and for any change in its membership.
68. Procurement Plan. The Procurement Plan will be maintained in STEP, and its revisions will need the World Bank’s review and approval. A General Procurement Notice will be published on the World Bank’s website and in the United Nations Development Business online.
C. Safeguards
(i) Environmental safeguards
69. The project will have an overall positive impact on the communities and the natural environment in Old Dhaka because of improvement of sanitation facilities. However, the project will have the following potential impacts and risks during construction and routine maintenance stages:
• Land acquisition and resettlement
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• Generation of sludge, contaminated soils, debris, spoils, and solid waste • Huge traffic disruption and other construction-related nuisances in dense built-up areas and narrow roads • Risks of soil and water pollution from construction and routine maintenance activities • Workers’ health and safety risks mainly because of exposure to untreated sewage and its odor • Community health and safety risks mainly because of exposure to construction activities and labor influx • Disposal of treated sewage and sludge from the treatment facilities and their impact on the receiving environment
70. Based on this, the project is considered as ‘Category A’ and will trigger OP/BP 4.01 and OP/BP 4.11.
71. The project will reconstruct and/or rehabilitate the existing STP, replace two of the existing trunk sewers, rehabilitate the existing/build new sewers, and build/rehabilitate SPSs or sewage lifting stations (SLSs). Although the locations for the STP, SPS, trunk, and sewer infrastructure have been identified, because a DB/DBO approach is proposed, these locations will be confirmed only when the DB/DBO contractors are on board. Therefore, an Environmental, Resettlement, and Social Management Framework (ERSMF) and an ESIA for the project have been prepared. The Environmental Impact Assessment and Social Impact Assessment will be revisited during the implementation before the commencement of works.
72. DWASA will be responsible for the overall implementation of the project and will assign a dedicated PMU to implement the project. The project will require close monitoring, and thus, the following measures will be implemented:
(a) Strengthening the PMU by including dedicated environmental and social safeguards personnel and deputing personnel with prior World Bank-financed project implementation experience (b) Providing training during project preparation and implementation through workshops and learning opportunities (c) Hiring two safeguard consultants through PMC during the project implementation (d) Strengthening of Environment Monitoring Division of DWASA to ensure environmental safeguard compliance for DWASA-implemented projects
73. The PMC and contractors will have adequate environmental and social specialists to supervise and implement the Environmental and Social Management Plan (ESMP) and any impact mitigation instruments like Resettlement Plans (RPs)/Abbreviated Resettlement Plans (ARPs). A two-tier GRM will be established to address the concerns of affected communities and workers: one to address the concerns of the project-affected persons and communities and the other to deal with the complaints of the workers employed by the construction contractors.
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74. The ESMPs developed under the ESIA of the subprojects will be included in the respective bidding documents. As a requirement under the bidding documents, the contractors will need to submit a Construction Environmental Action Plan for the PMU’s approval before mobilization. In addition, the contractor will need to submit a job safety/hazard analysis at the beginning of construction works at each new site addressing the measures associated with various hazards at those sites. These reports will be reviewed and approved by the PMU after ensuring that mitigation measures proposed in the analysis are in place at the work sites.
75. While environmental and social staff of the contractor will be responsible for implementing the ESMP, the environmental and social specialists of the PMC and PMU will be responsible for overall monitoring of the ESMPs throughout project implementation. The following reports will be prepared as part of the ESMP implementation:
• Monthly environmental monitoring reports by the contractor on the status of implementation of the environmental, social, health, and safety aspects • Quarterly environmental monitoring reports by the PMU on the status of implementation of the environmental, social, health, and safety aspects, which will be shared with the World Bank
76. During preparation of the ERSMF and ESIA, relevant stakeholders were consulted, including the local communities. During the consultations, project details were shared publicly, and the stakeholders’ feedback and input were requested. The ERSMF and ESIA were disclosed on both DWASA and World Bank websites26 on April 25 (ERSMF) and June 4 (ESIA and RAP). The ESMF and ESIA were translated into Bangla and were published on the DWASA website, and hard copies of these documents were made available at the local DWASA offices for public access. The quarterly monitoring report will also be disclosed on the DWASA website during project implementation.
77. GHG analysis. The net emission reductions because of wastewater collection and treatment for Component 2 are greater than the net emission increases under Component 3, leading to estimated net emissions of −605,466 tCO2-eq for the project overall. Thus, the project is expected to result in an overall net emissions reduction. The combined gross emissions are 2,589,325 tCO2-eq and the combined average annual net emissions are −15,137 tCO2-eq.
78. The wastewater collection and treatment activities under Component 2 have estimated net emissions of –947,871 tCO2-eq over the 40-year economic life of the project. The gross emissions are 1,852,310 tCO2-eq and the average annual net emissions are –23,697 tCO2-eq. Treatment at the Pagla STP and the wastewater collection system to be financed under Component 2 is expected to cause net emissions reductions. Collecting and treating wastewater causes a net reduction in methane and N2O emissions. The baseline scenario assumptions made for Component 2 are highly conservative to avoid greenwashing under Intergovernmental Panel on Climate Change 2006 guidelines. Because the untreated wastewater in the drainage canals is causing the drainage canals to become overloaded under anaerobic
26 The ESIA main report is available at https://wbdocs.worldbank.org/wbdocs/viewer/docViewer/indexEx.jsp?objectId=090224b086d49b38&respositoryId=WBDocs& standalone=false; the ERSMF is available at https://wbdocs.worldbank.org/wbdocs/viewer/docViewer/indexEx.jsp?objectId=090224b086bfc3b9&respositoryId=WBDocs&s tandalone=false.
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conditions, the net emissions reductions due to collection and treatment may be even higher than estimated here.
79. The septage and sludge collection and treatment activities under Component 3 have estimated net emissions of 342,405 tCO2-eq over the 40-year economic life of the project. The gross emissions are 737,015 tCO2-eq and the average annual net emissions are 8,560 tCO2-eq. While providing septage/sludge emptying services to households in isolation reduces net emissions, this component will lead to net emission increases because of the use of anaerobic systems for treatment at the DEWATS sites.
(ii) Social safeguards
80. Most of the social safeguard issues are likely to transpire from implementation of the civil works required for the rehabilitation/reconstruction of the existing trunk mains, construction of alternative sanitation facilities, and rehabilitation/reconstruction of existing and construction of new SPSs. The new Eastern Trunk Main will traverse from Madhubagh to Pagla STP, and the two existing Western Trunk Mains start from New Market and Nawabganj and end at Narinda SPS. These two trunk mains traverse old parts of the city that are densely populated residential areas and crowded with various commercial activities. The Eastern Trunk Main will be built on public lands, but the alignment passes through similar areas. The new SPSs are likely to be built on DWASA’s own and/or other public lands—only if available at locations required by technical design. It is thus premature to rule out the need for some private land acquisition, until the technical designs are all finalized. With or without land acquisition, it is envisaged that the pipe- laying civil works may displace encroachers and non-titled persons/households who may have been living along the trunk main alignments and cause temporary closure of some businesses operated from the private premises. This will also affect people employed in these establishments. Others who may be temporarily affected include vendors who operate small-scale trading activities on the sidewalks and road shoulders. The use of pipe-laying technology (micro-tunneling versus open cut) and pace of construction works will determine the severity of impact on pedestrian and vehicular movements.
81. The project triggers OP/BP 4.12 on Involuntary Resettlement. DWASA has prepared an ERSMF, which includes a Resettlement Policy Framework (RPF) consistent with OP 4.12. As and when necessary, the RPF guidelines will provide the basis to identify the social safeguard issues under a given contract package and prepare and implement impact mitigation plans like RPs/ARPs. DWASA has disclosed the ERSMF document and its Bangla translation on its website and notified the public through two newspapers in Bangla and English (on April 9, 2019, in Samokal and Bhorer Kagoj [Bangla] and the Financial Express [English]). With the consent of DWASA, the World Bank has also disclosed the ERSMF and ESIA on its external website (April 25 and June 4, 2019, respectively).
(iii) Other Safeguards
82. Citizen engagement. The project includes a robust citizen engagement strategy: (a) community/stakeholder consultations as the primary tool to promote stakeholder participation in the project design and implementation process; (b) the Communication Strategy and Citizen Engagement Plan (CS&CEP) for repositioning DWASA and mobilizing citizens, community groups, academics, private sector, and so on as key actors to achieve ‘sanitation for all’; (c) citizen report cards to assess satisfaction and generate feedback on social outcomes of the project; and (d) GRMs to respond to the needs of beneficiaries, including project-affected persons. The second GRM will deal exclusively with issues that
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involve workers employed by the contractors, especially the low-skilled workers engaged for site development, construction, and other activities.
83. The project will support DWASA to ensure citizen engagement throughout the implementation period and monitor their involvement in decision making. Building community awareness and gathering beneficiary feedback will be carried out through open community meetings, workshops, surveys, and so on by widely publicizing these events using leaflets/brochures and other means of communication. A third-party agency will be commissioned to carry out the citizen report card surveys to measure customer, community, and stakeholder satisfaction with DWASA’s services and engagement and generate beneficiary feedback on the social outcomes of the project. Three rounds of annual surveys are proposed during the project period, starting with a baseline in Year 1, followed by two rounds in later years (for example, Years 3 and 4).
84. The project will track progress on customer and citizen engagement by means of periodic third- party administered citizens’ report card surveys. These surveys will measure awareness and satisfaction levels amongst beneficiaries and citizens, about DWASA performance in provision of sanitation services to households and communities. Further, DWASA shall also discuss with affected households, the social safeguard implications/impacts, such as temporary disruptions to businesses and various forms of inconveniences that may be caused by digging the existing road networks to lay the sewers, etc. In view of the potential impacts, DWASA and the contractors shall work with households for collectively identifying and agreeing on the last-mile rehabilitation/construction of sewers, etc. The location of the fecal sludge treatment systems shall also be determined in a participative manner with resident communities so that existing social and economic activities suffer least disruptions. Using the above citizen engagement and feedback measures, the project shall constantly improve the effectiveness of implementation of project activities, as well as in institutional structures and processes for services delivery.
85. Gender-specific considerations and gender-based violence (GBV)/sexual exploitation and abuse. FGDs held with women as part of the Social Impact Assessment brought out gender-specific concerns and requests, such as employment opportunities during project implementation; equal compensation and benefits; and awareness raising on sexually transmitted diseases, HIV, and human trafficking issues among the local communities and laborers. Although the risk assessment indicates that the project is of low risk for GBV, the related concerns will be addressed and closely monitored by working with DWASA and the contractors. The project will follow the recommended actions that the GBV Good Practice Note27 introduces.
86. Projects on International Waterways (OP/BP 7.50). This policy is triggered. Project activities will include construction of sewage collection and treatment infrastructure in the Pagla catchment of Dhaka City. Wastewater and septage will be collected, transported to the Pagla Treatment Plant (with some septage treated at decentralized sites), treated to standards stricter than Bangladesh effluent discharge quality standards and discharged into the Buriganga River. The Buriganga River is the only international waterway to which the project has a connection. And the Buriganga River flows only in
27 The note was prepared to guide task teams in identifying the risks of GBV in IPF projects. The full document is available at http://documents.worldbank.org/curated/en/399881538336159607/Environment-and-Social-Framework-ESF-Good-Practice- Note-on-Gender-based-Violence-English.pdf.
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Bangladesh – the most downstream state of the combined Ganges-Brahmaputra basin. The project thus falls under the exception to notification requirement under OP 7.50 for the project’s surface water use.
(iv) Grievance Redress Mechanisms
87. GRM. DWASA will establish two GRMs for the project, one of which will deal with complaints/grievances about any irregularities in applying the provisions adopted in the ERSMF (see ERSMF for details) and other issues transpiring from the project activities. It is a three-tier mechanism and will have multiple Grievance Redress Committees (GRCs) at the local level taking into consideration ease of accessibility by the people who will be affected by the project. All unresolved cases will be referred to the PMU and then to the LGD. Complaints/grievances under this GRM may range from land- and displacement-related issues to compensation payment to various inconveniences created by rehabilitation/construction of sewers and other works (for example, open-cut channels) for pedestrian and vehicular movements. Based on consensus, the GRCs will attempt to resolve grievances/complaints amicably and quickly to facilitate implementation of the civil works. The GRM does not preempt an aggrieved person’s right to seek redress in the courts of law.
88. GRM for dealing with labor issues. With its present scope and practice, the GRM as described earlier does not cover the workers who are employed by the construction contractors. However, based on lessons learned in other contexts, there is also an urgent need to establish a separate GRM to deal exclusively with those engaged in construction-related works that in many instances use significant proportion of the World Bank funds. Labor requirements for individual contract packages will remain unknown until the scope and design of the civil and other works are finalized. Grievances/complaints under this GRM may involve wage rates and unpaid overtime work; irregular and partial payments; lack/inadequacy of living accommodation, clean drinking water and sanitation facilities, medical care in emergencies, and protection against GBV/sexual exploitation; and abuse of female workers by labor suppliers/sardars, supervisors, and others who also deal with workers. The GRCs will be formed at the work sites to ensure accessibility for workers. All unresolved cases at the GRC level will be referred to the PMU for final decisions.
89. The ERSMF contains specifications of GRC memberships for both GRMs and a set of operational guidelines. DWASA and the contractors will adhere to these guidelines—as separately applicable for male and female workers. To ensure impartiality and transparency, hearings on complaints will be held in a nonthreatening environment and will remain open to all other workers at the site. The GRCs will record (a) the details of the complaints (separately for men and women); (b) the reasons that led to acceptance or rejection of the individual cases, as well as the number of accepted and rejected cases; and (c) the decisions agreed with the complainants. DWASA will keep records of all resolved and unresolved complaints and grievances and make them available for review as needed by the World Bank and other interested entities/persons.
90. Grievance redress service. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to
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the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/en/projects-operations/products-and-services/grievance- redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org.
V. KEY RISKS
91. Political and governance: Substantial. Political and governance risks, systematic fraud, and corruption are the key country risks. Government procedures for planning and executing projects, particularly for approving and amending Development Project Proposals, are onerous. DWASA’s implementation readiness has been confirmed through project preparatory activities such as organizational structure changes to prioritize sanitation, preparatory work for tariff framework, and connection promotion that are imbedded in the legal covenants.
92. Sector strategies and policies: Substantial. The WASA Act, the Environmental Act, and the Water Act need adjustments for effective implementation of the project. Changes are being proposed for standards for sewage discharge by the GoB, and these can affect the technologies and costs of treatment at the STP. Project implementation will clarify ways of resolving the key bottlenecks posed by proposed changes to the relevant rules. The project will provide practical experience to DWASA about using the DB/DBO approach that will be useful in the future for attracting private financing.
93. Technical design of project: Substantial. Past World Bank projects implemented by DWASA suffered from delays in preparation. At present, sanitation is being reprioritized in DWASA and the nature of the capital works is complex that may pose risks of delayed implementation. The project has completed the preparation of DB/DBO contracts for the STP and networks. The works shall be implemented employing consortia of international and domestic contractors with experience in similar Asian cities. In addition, a design review and supervision consultancy and an implementation phase PMC will assist the PMU. The use of technologies, for example, micro-tunneling, will minimize disruptions to residents and businesses during construction. Social and community mobilization personnel and processes will form a key part of the contracts for construction, so that a consultative approach, with the participation of the local neighborhood residents, is adopted.
94. Institutional capacity for implementation and sustainability: High. The DWASA staff have largely been focused on producing and supplying water and have had little experience in managing sanitation. To mitigate this risk, a dedicated sanitation unit will be created for capital assets creation for sanitation (STP and trunk mains), and this will provide a template for similar sanitation investments in other catchments of Dhaka. The frontline operations for sewerage and non-sewer sanitation shall be streamlined into the respective territorial divisions of DWASA. The PMC and contractors will develop standard operating procedures to be followed and provide training to the DWASA personnel and contractors. The contractors and the PMC will strengthen DWASA in developing capacity and skills in implementing complex designs and operations management of assets in the future.
95. Fiduciary: High. Past World Bank projects implemented by DWASA suffered from delays of procurement and inadequacy of evaluation experience. The large size and complexity of contracts under the project further pose fiduciary risks. In order to strengthen DWASA’s capacity in procuring and
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managing DB/DBO contracts effectively, a separate bid evaluation committee will be established. Further, the PMC will train DWASA personnel and assist in contract management.
96. Environmental and social: High. While no land acquisition is required for the wastewater treatment plant and no major resettlement is expected, the construction of trunk, secondary, and tertiary sewer networks in densely populated areas will have substantial social impacts. Social development and community mobilization personnel shall be embedded in all network contracts. Additionally, the safeguards framework prepared in compliance with the World Bank’s requirements will minimize the risk, disruption, and discomfort to residents in the project areas. The project will mandate, to the extent feasible, extending sewer networks and house service connections fully, achieve saturation, and then move to next location(s), to avoid multiple disruptions. The project shall specifically target the households that have locational and tenurial barriers with alternative sanitation services.
97. Stakeholders: High. The recently closed World Bank-supported projects implemented by DWASA suffered from the lack of coordination between DWASA, the DCCs (North and South), and other utilities and stakeholders responsible for infrastructure and services in Dhaka. At present, the mandates of various institutions overlap and there is limited coordination between the agencies. To mitigate this risk, the MoLGRD&C will oversee the coordination between the DCCs, DWASA, utilities, DoE, BWDB, and other responsible coordinating agencies (for example, RAJUK). A Project Implementation Committee will be established to smoothen project implementation on ground. The PMC shall also formulate further areas of collaborative studies and actions, especially between DWASA and DCC (North and South).
98. Other: High. There is a risk that DWASA will not be able to levy and collect tariffs adequate to cover operational and interest costs as the current tariff level and permissible increases may not suffice in the wake of ballooning expenditures in the future. To mitigate this risk, the project requires DWASA to approve (a) a tariff framework and (b) a connection promotion strategy and a communications and stakeholders’ engagement plan. In addition, the World Bank team will collaborate with the ADB and other donors to sustain the policy dialogue on tariffs with the LGD. .
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VI. RESULTS FRAMEWORK AND MONITORING
Results Framework COUNTRY: Bangladesh Dhaka Sanitation Improvement Project
Project Development Objectives(s) The Project Development Objective (PDO) is to increase access to safely managed sanitation services in select areas of Dhaka City and to improve DWASA’s efficiency in sanitation service delivery.
Project Development Objective Indicators
RESULT_FRAME_T BL_PDO Indicator Name DLI Baseline End Target
Increase access to safely managed sanitation services in select areas of Dhaka city
People provided with access to safely managed sanitation 0.00 1,500,000.00 services (Number)
People provided with access to safely-managed sanitation 0.00 750,000.00 services - Female (Number)
Improve DWASA’s capacity for sanitation service delivery
Operating Ratio for DWASA combined Operations (Water and No Yes Sewerage) maintained below 0.7 (Yes/No)
PDO Table SPACE
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Intermediate Results Indicators by Components
RESULT_FRAME_T BL_IO Indicator Name DLI Baseline End Target
Institutional Support for Sanitation Service Delivery DWASA sewerage GIS strengthened (Yes/No) No Yes Sewerage Connection Strategy and Plan developed and implemented under DWASA’s oversight according to plan No Yes (Yes/No) Number of DWASA personnel trained in STP operations, trunk mains maintenance management, and O&M management of 0.00 25.00 sewers (Number) DWASA Water and Sewerage Billing System strengthened (Yes/No) No Yes Percentage of female employees provided with technical, 0.00 60.00 leadership and orientation training in DWASA (Percentage) Percentage of female staff that achieve career progression through getting relevant placement after receiving technical, 0.00 5.00 management, leadership and orientation training (Percentage) Sewerage and Wastewater Treatment Experience STP operator contracted for a minimum of 3 years (Yes/No) No Yes Length of Trunk Mains completed (Kilometers) 0.00 18.00 Household sewer connections resulting from project 26,000.00 50,000.00 interventions (Number) Volume of wastewater treated per day at the Pagla Sewage Treatment Plant (Liters (Million)) 0.00 150.00 Alternate Sanitation People benefitting from safely managed sanitation in Pagla Catchment (Number) 0.00 100,000.00 Project Implementation and Management Support DWASA maintaining a Grievance Redress Mechanism (Yes/No) No Yes
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RESULT_FRAME_T BL_IO Indicator Name DLI Baseline End Target
Percentage of beneficiary households expressing satisfaction 0.00 50.00 with service provision (Percentage) Percentage of female-headed beneficiary households satisfied 0.00 50.00 with services (Percentage) Percentage of complaints redressed within stipulated redressal period (Percentage) 0.00 70.00 People in low-income settlements provided with sanitation 0.00 50,000.00 services (Number)
IO Table SPACE
UL Table SPACE
Monitoring & Evaluation Plan: PDO Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection This indicator measures the total number of people who benefited from safely Household connection managed sanitation services database maintained as a result of project Administrativ within the billing interventions. Safely Quarterly, e Data from collection system and People provided with access to safely managed sanitation facilities Year 3 DWASA and PMU record of septage managed sanitation services include use of improved Onwards Private collected and treated at facilities which are not Operator the Pagla Treatment shared with other Plant. households and where
excreta are safely collected, transported and treated off- site to comply with
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country’s discharge standards. Household connection database maintained Disaggregates the total Administrativ within the billing number of people by gender Quarterly, e Data from collection system and People provided with access to safely- who benefited from safely Year 3 DWASA and PMU record of septage managed sanitation services - Female managed sanitation services Onwards Private collected and treated at as a result of project Operator the Pagla Treatment interventions. Plant.
The Operating Ratio (OR) is calculated by dividing Revenue and cost operating expenses by numbers from the operating income. The OR of Administrativ Operating Ratio for DWASA combined Once a year, accounting database 0.7 is equivalent to the e data from PMU Operations (Water and Sewerage) from Year 2 maintained within Operating Cost Coverage DWASA maintained below 0.7 DWASA's accounts Ratio (OCCR) of 1.43. The division. OCCR is the total annual
operational costs being covered by revenues. ME PDO Table SPACE
Monitoring & Evaluation Plan: Intermediate Results Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection GIS for DWASA’s sewerage DWASA GIS Once a system and Trunk Mains, Unit to year, Data from the DWASA updated with all findings provide PMU DWASA sewerage GIS strengthened starting Ye GIS/Mapping unit. before and during project regular ar 2 implementation, such as updates
topographical, geotechnical,
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wastewater quality and CCTV camera survey data. Additionally the GIS database should include the complete customer database of sewer connections, operations and maintenance records, energy consumption, and expenses on repairs, etc. DWASA is preparing a connection promotion strategy and plan to implement during the project in order to maximize connections to sewers under the project. The strategy is expected to combine review and Household survey on changes as needed in project information Sewerage Connection Strategy and Plan regulations of DWASA, Once, in Administrativ conducted by third- Third-Party Agency. developed and implemented under measures to improve Year 2. e Data party communication DWASA’s oversight according to plan enforcement of rules, and agency. finally but not the least,
demand-side customer- facing awareness and communications activities to encourage more and more households to connect and benefit from the sanitation investments. The strategy will be completed, reviewed and approved by DWASA
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management.
DWASA is currently assessing options for changes in the organization structure for sanitation; planning and construction of capital assets (treatment plants, trunk mains, sewers, and so on); operations management of the above- The contractor will Once a Number of DWASA personnel trained in mentioned assets; and Data from measure the number of year, STP operations, trunk mains maintenance provision of front-line DB/DBO DWASA staff trained PMU starting in management, and O&M management of services to customers. As Contractor through on-the-job Year 3 sewers part of strengthening training.
DWASA's sanitation functions, DWASA staff assigned in sanitation services will be trained on STP operations and sewers maintenance management. The training will be conducted through a DB/DBO contractor. DWASA will deploy a billing software consultant to Assessmen assess their billing and t in year 1, Administrativ Reports from the office accounting systems. This design and DWASA Water and Sewerage Billing e Data from of Deputy Managing PMU will potentially lead to implement System strengthened DWASA Director (Finance). upgrade of software or ation in
addition of modules to Year 2 make billing, collection and accounting efficient for
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DWASA and user-friendly for customers. This will be a one-time activity of assessment, design and implementation of the solution. Focused technical, leadership and orientation training will be conducted for female DWASA staff. This indicator will measure the percentage of women trained. The project Once a Surveys will management consultants Percentage of female employees provided year, Post-training be administered by the will also conduct post- PMU with technical, leadership and orientation starting in Survey PMC under the training surveys to ensure training in DWASA Year 2 supervision of the PMU that female DWASA staff are
satisfied with the training and find them effective for career growth and will adjust the topics and frequency of training based on the inputs from the surveys. This indicator will measure Percentage of female staff that achieve female staff who are able to Once a Data from career progression through getting progress from their current year, DWASA Administrative/HR data PMU relevant placement after receiving grades and/or get starting Administrativ from DWASA technical, management, leadership and placement as a result of the Year 2 e Division orientation training training provided under the project. Experience STP operator contracted for a This indicator will track the Once, in Administrativ Administrative and PMU minimum of 3 years contracting and the Year 3 e data from procurement data
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operation period for the DWASA collected and operator for the Pagla STP. maintained by DWASA
The constructed length will be measured by the The total length of the trunk Quarterly, Data from DB contractor and mains and networks Year 2 PMU Length of Trunk Mains completed Contractor provided as a part of completed as a result of Onwards regular progress project interventions. reports.
The project includes support for new household connections and for rehabilitation works for existing connections that can be retained. This indicator will assess the Administrativ Household connection successful implementation Quarterly, e data from database maintained Household sewer connections resulting of the connection strategy. from Year DWASA and PMU within the billing from project interventions This indicator will measure 3. from the collection system the total number of contractor.
connections that are operational as a result of project interventions, including the works on networks, trunk mains, and connection strategy implementation. The indicator will measure Operational Operational data Quarterly, the total volume of data from collected and Volume of wastewater treated per day at Year 3 PMU wastewater received and the Pagla maintained by the DBO the Pagla Sewage Treatment Plant onwards treated at the Pagla Sewage Sewage contractor at the Pagla
Treatment Plant Treatment Sewage Treatment
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Plant Plant
Household connection database maintained This indicator measures the Administrativ within the billing total number of people who Quarterly, e Data from collection system and People benefitting from safely managed benefited from improved Year 3 DWASA and PMU record of septage sanitation in Pagla Catchment alternative sanitation Onwards Private collected and deposited services as a result of Operator at the Pagla Treatment project interventions. Plant.
DWASA's Grievance Redress Quarterly, Mechanism (GRM) will be Administrativ GRM database DWASA maintaining a Grievance Redress Year 2 PMU updated as part of the e Data maintained at DWASA Mechanism Onwards project. DWASA will
maintain this updated GRM. Customer response on the level of satisfaction with service on various indicators including community (especially women’s) participation in decision- making e.g. for the last-mile Sample household Percentage of beneficiary households rehabilitation/construction Once a Administrativ surveys conducted by Third Party Agency expressing satisfaction with service of sewers and location of Year e Data Third Party agency provision fecal sludge treatment
systems, land acquisition, compensation, front-line service delivery and resolution of beneficiary grievances, tariffs, O&M management, coordination with other local government
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entities and utilities, and social safeguard implications/impacts, such as temporary disruptions and other inconveniences caused by digging of existing road networks, etc. Disaggregates customer Sample household Percentage of female-headed Once a Administrativ response by gender on the surveys conducted by Third Party Agency beneficiary households satisfied with Year e Data level of satisfaction with Third Party agency services service on various indicators DWASA's Grievance Redress will be updated as part of Quarterly, the project. The strength of Administrativ GRM database Percentage of complaints redressed Year 2 PMU the response will be e Data maintained at DWASA within stipulated redressal period Onwards measured by the number of
complaints that are satisfactorily resolved. Database maintained This indicator will measure within the billing the total number of people Quarterly, Administrativ collection system and living in low-income People in low-income settlements Year 2 e Data from records of septage PMU communities that benefit provided with sanitation services onwards DWASA collected and deposited from improved sanitation at the Pagla Treatment services as a result of the Plant. project interventions.
ME IO Table SPACE
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ANNEX 1: IMPLEMENTATION ARRANGEMENTS AND SUPPORT PLAN
COUNTRY: Bangladesh Dhaka Sanitation Improvement Project
1. DWASA will be the nodal entity responsible for project implementation. DWASA will also be responsible for institutional strengthening including the staffing and functioning of the sanitation directorate/unit, tariff reforms, and capacity strengthening for sanitation service delivery (Component 1); design and construction of household connections to sewers and associated networks and trunk mains and rehabilitation/construction of the Pagla STP (Component 2); and alternative sanitation infrastructure design, construction, and operation (Component 3). The PMU will be set up in DWASA with key professionals and staff to spearhead project implementation. The PMU will comprise a project director, a full-time deputy project director, and other personnel with specializations in the requisite fields, including (but not limited to) procurement, FM, M&E, environment, social development, and sanitary engineering. The PMU will be established at the DWASA headquarters, and the personnel will be posted from within DWASA and recruited competitively from the market. Under Component 4, DWASA will also be responsible for technical assistance, third-party citizens’ report cards, and third-party audits to assess customer satisfaction with services and selecting and supervising project management consultants for the entire implementation period.
2. Design review and supervision consultant (DRSC) and PMC. DWASA will select and supervise (a) a DRSC and (b) a PMC firm tasked with providing implementation support for the entire project period. The DRSC will in particular carry out due diligence and recommend for approval the DBO/DB and sewer contractors’ proposals and designs. Further, the DRSC will carry out the supervision of works throughout implementation, especially for Components 2 and 3. This will include, but not be restricted to, assessment of project plans, implementation performance monitoring for each activity, provision of relevant engineering support, advice on contract management, and reporting on progress along with recommendations to the PMU. The DRSC will be a firm contract with personnel of expertise in relevant engineering and technical domains.
3. The PMC will be responsible for overall support to enable the PMU to manage all components of the project on time and within budget. The PMC will develop and use the project reporting templates and will assist the PMU with the preparation of annual plans, regular reporting, financial administration, IT tasks, capacity-building/training plans, stakeholder consultations, implementation of communication strategy, legal issues, and updating of the project documentation as needed. The PMC will include a team of experts and professional staff with necessary expertise in project management tasks relevant to the implementation of a large-scale infrastructure project and associated organizational, financial, social, environmental/safeguards, legal, and related dimensions. The PMC shall accordingly be composed of personnel with relevant expertise and experience. The PMC shall also provide drawdown consultancy inputs to the PMU for specialized services and training in, for example, climate-resilient actions by DWASA. The PMU shall separately procure the software services providers for developing/improving and implementing systems for billing, accounting, and FM. Similarly, consultants shall be procured by the PMU to strengthen DWASA’s GIS and MIS.
4. The PMC will provide support to DWASA in institutional strengthening of DWASA’s sanitation units. Additional specialized consultancies and trainings will be managed by the DWASA PMU with the
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assistance of the PMC. The DBO/DB contractor will be responsible for training and capacity building including operating procedures for the STP and the trunk mains, so that DWASA personnel and other contractors of DWASA are fully equipped to take over and operate the assets at the end of the contract period. The PMC will provide support to the PMU to develop operating procedures for operations management of alternative sanitation investments as needed and improve frontline sanitation services delivery and so on. The PMC shall act on behalf of the PMU in convening the inter-agency operational coordination mechanism with other Dhaka agencies.
5. Implementation arrangements for alternative sanitation. As proposed under LICSIP, DWASA will contract an NGO as a customer service agent or implementation partner to lead the assessment and consultations with community members on new works requirements, particularly for toilet upgrade and communal septic tanks. DWASA will contract a construction firm to build new infrastructure for the communities, for example, DEWATS. The NGO, that is, the customer service agent, will verify that minimum connection criteria are met and manage customer readiness for connections.
• Toilet upgrade/communal septic tanks. NGOs will be contracted to identify poor households requiring toilet upgrade (unimproved toilets), explain technical options and help with implementation and toilet improvement, a process similar to what was adopted to improve water supply in LICs. For want of space some of these household toilets would need to be connected to communal septic tanks, an option for toilet improvements. DWASA could
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bundle this together with communal septic tanks and decanting stations and contract as a package. • DEWATS. The contract package will include construction and O&M for a period of three years. • Desludging vehicles (for emptying and transport). DWASA will procure trucks for emptying and thereafter lease to local entrepreneurs, a successful process demonstrated by DWASA and in operation in Dhaka. • Septage treatment. The septage treatment plant will be bundled and contracted together with STP, which will include construction and O&M.
6. Implementation of the communication strategy will be initiated at the beginning of the project. As sanitation is a business and DWASA is going to restart this line of service, it is important to raise awareness about the project interventions in general and more specifically on the importance of connecting to the network to ensure sewage flow. DWASA has already prepared a CS&CEP as a part of the project preparation, including an implementation plan. The communications consultant of the PMU will begin to implement the strategy in consultation with DWASA.
7. Commercial strengthening. DWASA has prepared steps for rationalization of the tariff framework to increase tariffs to ensure long-term financial sustainability. The tariff framework will be approved by the DWASA, after which DWASA will implement the strategy for tariffs and revenue collections for sanitation services.
8. Customer interface and complaints management. DWASA will establish an IT-enabled complaints management system and, separately, a GRM, as described in section C (Safeguards) of the Project Appraisal Document.
9. GAP. DWASA will prepare a GAP to implement a range of gender-related interventions under the project. The implementation of the GAP will be managed by DWASA with support from the PMC. Both the PMC and DB/DBO contractor will provide trainings for women in the utility to improve their access to technical knowledge (for example, lab testing and treatment technologies) and develop their management/leadership skills (for example, contract management and treatment plant personnel management).
10. M&E. The project-level monitoring and reporting will be conducted by the PMU, with support from the PMC. The PMC will implement the M&E framework developed during the preparations. The DRSCs shall provide updates on the progress achieved in Components 2 and 3, while the PMC will report on Components 1 and 4. The PMC will also collate other independent audit reports and third-party administered citizens’ report card surveys that will measure customer, community, and stakeholder satisfaction with DWASA’s services, alongside the use of funds and physical progress. The M&E system will also be used to take corrective actions, improve coordination, and facilitate learning through the implementation of the project cycle. The PMU will take corrective actions based on the abovementioned inputs for improving implementation performance and will provide recommendations to DWASA on matters requiring DWASA and GoB interventions. Project performance will be monitored based on the indicators and methodologies presented in the Results Framework (section VI). In addition, the project M&E system will build new data sets on indicators pertaining to inclusion (for example, vulnerable or
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women-headed households connected or served) and gender (for example, number and roles of women employees at different levels in DWASA, their training, and follow-up). This will provide DWASA the evidence to strategically improve the effectiveness of investments and services during the project and in the future. The project level M&E information will feed into the DWASA’s strengthened MIS as proposed under the project.
11. Project reporting. First, the PMU will submit comprehensive quarterly progress reports on implementation with details on procurement, contracts, FM, disbursements, physical implementation, environmental, social, gender, customer orientation, grievance redressal, beneficiaries, communications, and public engagement aspects. For this, the PMU will collate reports from the DRSCs hired by the PMU. Second, an annual project progress report will be presented, which will be released in the public domain upon approval by the World Bank and displayed on the DWASA website. Third, the PMU shall make available the findings of the consultancies and survey reports commissioned by the project including those for the communication programs, citizen engagement, customer satisfaction, environmental, social and gender audits and appraisals, grievance redressal reports, trainings, evaluations, and other reports. These reports shall be accessible on the DWASA website.
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ANNEX 2: DETAILED PROJECT DESCRIPTION
COUNTRY: Bangladesh Dhaka Sanitation Improvement Project
1. The project will support institutional capacity strengthening for sanitation service delivery; the rehabilitation and construction of comprehensive sanitation infrastructure that combines sewer connections, sewerage, and wastewater treatment; and improved alternative sanitation system in the Pagla catchment area. Box 1.1 and Figure 1.1 describe the Pagla catchment and summarize the various project measures.
Box 1.1. Pagla Catchment Description The Pagla catchment is spread over 65 km2 and is bordered by the River Buriganga on its southwest and the River Balu on the east. The catchment is characterized as being predominantly urbanized with a well-functioning and planned road network. Shyampur and Demra on the southeast are new developments. Old Dhaka, the historic urban core of the city that runs along the eastern bank of the Buriganga River, consists of a complex mixture of commercial and residential establishments, but in this area, the physical infrastructure is overloaded and inadequately maintained. Roads are narrow and congested and are generally flanked by old multistoreyed and low- to medium-rise apartment buildings. The drainage network of Old Dhaka is characterized by the presence of both covered and open drains, but these are in a poor state of repair, with sewage flowing in them, and are often choked with solid wastes. The piped waterborne sewerage system covers most of the built-up areas of Old Dhaka. However, it is in very bad shape, and the DB/DBO consultant’s assessments indicate that more than 90 percent of the existing sewers may be unsuitable for rehabilitation in the future (see Component 2 for detailed discussion). The dwellers of the low-income settlements in the Pagla catchment do not have access to the existing sewerage system and are mostly reliant on communal toilets and individual toilets with pit latrines and holding tanks, with many also being dependent on insanitary toilets. Being a low-lying area, much of the catchment is prone to flooding and some parts remain submerged during the monsoon season. The catchment already has a high population density that is expected to increase further over the planning horizon of the project. The estimated population of about 4.1 million (2020) is projected to increase to 5.2 million by 2050 according to the RAJUK Dhaka Structure Plan (2016–2035). The Sanitation Master Plan projected a population of 4.6 million in 2021, increasing to 8.2 million in 2051. Source: Dhaka Sewerage Master Plan, 2013 and DSIP preparations.
Component 1. Institutional Support for Sanitation Service Delivery (Total cost US$7.08 million including contingencies US$0.17 million; IDA US$3.54 million; AIIB US$3.54 million)
2. Component 1 builds on the Sanitation Master Plan, organizational diagnostic, and further preparatory assessments. The capital investments proposed under the project are likely to place significant demands on DWASA’s organizational capacities, O&M requirements (using own personnel in maintenance, operations, distribution, and services28 zones as well as managing consultants and contractors), customer connection strategy, tariff rationalization, and so on. Implementing the trunk mains and sewerage infrastructure will require considerable coordination with other city agencies, for example, DCC (South), DoE, and so on. The following subcomponents will be supported:
28 DWASA has 10 maintenance, operations, distribution, and services zones in Dhaka.
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Subcomponent 1.1. Support for establishment of a strengthened sanitation function in the DWASA’s organizational structure and training and capacity building
3. The first subcomponent will support operational and financial strengthening of DWASA for improved operations and functioning of all project-supported sanitation infrastructure and for improved services delivery.
4. DWASA is currently assessing options for changes in the organizational structure for sanitation, planning and construction of capital assets (treatment plants, trunk mains, sewers, and so on), operations management of the abovementioned assets, and provision of frontline services to customers. The restructured units are being detailed, including roles and responsibilities and staffing. The project will, through the PMC, support the implementation of the organizational changes to strengthen DWASA’s sanitation functions. The following activities will be supported under this subcomponent:
• Training of DWASA personnel in STP operations, trunk mains maintenance management, and O&M management of sewers (covered under Component 2) • Training on procurement and contract management (for CAPEX and OPEX management, covered under Component 2) • Training on climate change (improving operational efficiencies in sanitation systems including the use of energy-efficient treatment technologies to reduce carbon emission, new IT-enabled systems, improved awareness on climate resilience-related challenges, and so on) (to be provided by the PMC) • Strengthening of DWASA’s management information system (MIS) for sanitation (separate consultancy package) • Strengthening of DWASA’s GIS for sanitation (separate consultancy package) • Preparation and implementation of Gender Action Plan (GAP) for DWASA (separate consultancy package)
Subcomponent 1.2. Support to commercial and financial strengthening activities for sanitation functions of DWASA, including development of a tariff framework to incrementally cover O&M costs
5. As sanitation infrastructure is constructed alongside an already ballooning water supply capital investment program, DWASA’s financial sustainability shall come under considerable pressure. It is expected that DWASA’s operating costs will increase with the O&M of sewer networks and the STP. The capital investments are very high compared to DWASA’s current revenues. The subcomponent will provide support for
• Development and implementation of a sewer connection strategy and plan, so that maximum properties are connected (to be developed by the PMC, to be implemented as a part of sewer construction contracts, with supervision support from the PMC); • Tariff framework rationalization (including rationalizing consumption and tariff categories) (to be provided by the PMC);
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• Improved commercial management for improving DWASA’s billing systems, for example, details on properties and their water consumption in the billing and reporting as a follow-up from tariff rationalization (to be provided by the PMC); and • Other suggested areas of improvement in accounting, auditing, and FM as identified in the financial analysis (to be provided by the PMC, see annex 4, section E).
Subcomponent 1.3. Engagement with citizens including the low-income communities and female-headed households for improved water, sanitation, and hygiene (WASH) practices and climate adaptation; mobilizing households to connect to sanitation systems; improved customer orientation and improved grievance redress; and communications strategy and citizens’ engagement
6. To improve service delivery, DWASA needs to strengthen its strategy for communications and public engagement. During project preparation, DWASA developed a communication strategy and citizens’ engagement plan that includes strengthening services for customers, LICs, excluded households, and female-headed households; improving citizens’ and stakeholders’ participation and engagement; and improving GRMs. The activities include
• Engagement with women in LICs and training in climate adaptation for improved WASH practices; • Assistance for implementation of communication and stakeholder’s engagement strategy (separate consultancy and works budgets provided for); • Engagement with citizens to connect to sanitation systems, customer orientation, and an IT- enabled complaints management system (part of the above technical assistance); • Grievance redress system improvement including that for compliance to the World Bank rules; and • Citizens’ report card surveys carried out by third-party agencies to collect citizens’ feedback.
Subcomponent 1.4. Technical assistance for exploring feasibility of advanced financing options in future infrastructure provisions for DWASA
7. In line with the programmatic support for implementation of the Dhaka Sewerage Master Plan, it will be useful to explore the possibility of more advanced financing options to mobilize financing for investments and improve efficiency of operations such as BOT in the future along with tariff structure rationalization. The subcomponent, through a separate consultancy package, will therefore include a study of financing options such as BOT, Design-Build-Operate-Transfer, and so on for DWASA in the future.
Subcomponent 1.5. Coordination with other stakeholders including technical assistance to address coordination issues on sanitation between DWASA, the DCCs (North and South), the DoE, RAJUK, and other agencies
8. This will include technical assistance to address coordination issues on sanitation between DWASA and the DCCs (North and South). It will also help coordinate with the DoE, which is the regulatory body for sewage discharge standards and pollution control. Other important agencies include RAJUK (the capital development authority), other utilities, and so on. Under this subcomponent, the project will
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support the setting up and functioning of the Project Implementation Committee (PIC). This can potentially become a long-term institutional mechanism. In addition, studies and consultations will be carried out under this subcomponent to improve the overall urban environment and management of Dhaka’s development. For instance, a proposed study will be on the impact of drainage, solid waste, and related environmental aspects on sanitation infrastructures for improved environment of Dhaka and options for agency coordination in managing drains, canals, and embankments (for floods).
Component 2. Sewerage and Wastewater Treatment (Total cost US$446.52 million including contingencies US$9.01 million; IDA US$154.3 million; AIIB US$154.3 million; GoB US$137.92 million)
9. In the Pagla catchment, as shown by the detailed analysis in the CDRs, about 90 percent of the existing sewers are unfit for future use, mainly due to insufficient hydraulic capacity, a slope into the wrong direction, and/or diameters smaller than the minimum permitted 200 mm. In addition, it showed that most sewers are completely silted up, and the sewage pumped at SPSs is only conveyed into the groundwater or open drains and does not reach the proper treatment facility. For similar reasons, the existing trunk mains are mostly unfit for future use as well. The existing situation implies that the existing sewer house connections do not facilitate the conveyance of sewage to treatment but indirectly release it to the environment. The low flow arriving at the Pagla STP is primarily industrial effluents discharged into the very last gravity sewer sections upstream of that facility. Further, the current Pagla STP is not able to meet the legally prevailing discharge standards set by the GoB’s DoE. Consequently, the project will support investments in the reactivation/new construction of sewer connections, rehabilitation/reconstruction of sewerage, and a new STP. This is the largest component of the DSIP.
10. The technical details of the DSIP are based on the combined recommendations according to the Dhaka Sewerage Master Plan29 and an update of input data and its analysis by the DB/DBO consultant hired under this project. The Dhaka Sewerage Master Plan had recommended refurbishment and new construction of secondary/tertiary sewers, the Eastern Trunk Main (using open-cut construction/microtunnelling) and associated SPSs, as well as new construction of the Pagla STP using the trickling filter technology. The update under the DSIP included topographical surveys, geotechnical data, CCTV camera inspection of existing sewers, wastewater quality analysis, GIS data, on-site infrastructure assessments, hydraulic sewer network calculation, updated SPS design, cost comparisons, and several more details, all of which have been summarized in CDRs, separately for (a) Pagla sewer system, including laterals and house service connections; (b) trunk mains (Eastern Trunk Main and Western Trunk Main); and (c) sewage and septage treatment. The CDRs will be used as supplementary information to the bidding documents. Together with the ‘employer’s specifications’, these CDRs will provide the necessary guidance for the detailed design that has to be done by the contractors. To optimize the use of funds, the sewage collection system and the trunk mains have been designed for a long-term horizon up to 2050, whereas the Pagla STP is designed for a short-term horizon up to 2025. This approach safeguards the sewer lines, for which capacity upgrade is difficult, and ensures that these sewer lines can remain in place and function properly in the long run, while the STP shall be based on a modular design of multiple, parallel treatment trains, that will permit easy and fast capacity expansion, whenever such a need arises in future. The focus of works in the sewer network under this project is on the most densely populated areas, where all the necessary and feasible sanitation infrastructure shall be installed. This will reduce inconvenience to local residents and businesses to only a one-time intervention.
29 DWASA. 2013. Dhaka Sewerage Master Plan.
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11. During project preparation, it was agreed to use DB contracts for the sewerage system and trunk mains and DBO type contracts for the STP, because these contracts help limit project risks (one single responsible contractor only) and offer the additional benefits of shorter total project duration and reduced cost. By mobilizing the private sector’s know-how, this approach is hence expected to offer the best value for money. The operations’ component was not included in the sewerage component, because DWASA preferred to carry out the sewerage operation using its own staff or other contractual arrangements. However, to guarantee proper sewer/trunk main O&M practices, the contracts will also include a subcomponent for the provision of all necessary tools and equipment for O&M of sewers and trunk mains, and it will also include a subcomponent through which the contractors are obliged to provide O&M manuals and training. To reduce the number of procurement packages, two sewer DB packages, two trunk main DB packages, and one single STP DBO package are planned. This was arrived at following the findings from the market study elaborated by the DB/DBO consultant, which recommended optimum sewer package sizes to maximize participation of local contractors and stimulate effective competition.
12. Both the Western Trunk Main package and the Eastern Trunk Main package, which are technically beyond the local contractors’ capacity and will thus be serviced by international contractors, is substantially larger with a cost of about US$70 million. Likewise, the Pagla STP package with a cost of US$70 million is likely to be primarily of interest to international contractors, technically and financially. Combining the Eastern Trunk Main and the STP in one single large package was considered for international contractors. However, given that the work requires specialists from very different backgrounds, who may not wish to be jointly liable for joint venture works they are not familiar with, this was not considered useful. The final SPS at the entrance of the Pagla STP shall be included in the STP package. This will guarantee that flow entry and STP operation can be harmonized/optimized by one single contractor. In sum, the suggested packaging follows the results of the market study to promote competition by local contractors to the extent possible.
13. To be successful in connecting the planned number of households, the DB contracts for those connections and sewers must include a combination of engineering works and social mobilization and community engagement. To further maximize connections, full financing up to the household premises is planned, and the contractors’ payments could also be linked to output-based results (such as the number of properties or households connected, and so on). For the trunk mains, instead of all open-cut construction, as had been suggested in the Master Plan, it is now planned to have a mix of open-cut and of micro-tunneling methods. This change of construction method was introduced because the trunk main alignment traverses some very congested areas with dense settlements and narrow roads, where open- cut construction will be impossible to implement. Micro-tunneling is also likely to obviate much of the physical and social disruption associated with the open-cut technology. Moreover, the trunk mains can be laid deeper, which allows the design to reduce the number of SPSs, compared to what exists at present. This will further increase pumping efficiency, reduce both CAPEX and OPEX, and permit the reduction of indirect GHG emissions. The Eastern and Western Trunk Mains will provide the main sewage conduits to the Pagla STP. Hence in future, additional households in areas not covered by the DSIP shall be fast and easy to connect. The trunk mains form a long-term ‘backbone’, with a 2050 design horizon, whereas STP capacity is defined for a shorter period and based on a modular approach. The DSIP thus provides for a treatment capacity as needed initially, which can later be augmented gradually with an increase in the number of connections and hence volume of sewage collected and conveyed. The DBO contract for the Pagla STP shall be based on open technology bidding, which is, however, narrowed down to selected
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‘families of technologies’, which will also include the trickling filter technology, as recommended in the Master Plan.
Table 1.1. Component 2 Project Measures and Estimated Costa Existing Facility Estimated Cost No. Project Items Project Measure (Capacity/Type) (US$, millions) 1 Pagla sewer network and 360 km sewers, 11 392 km sewers, 2 SLSs— 126.0 sewer connections SLSs serving about 1.5 million people (approximately 56,962 connections) 2 Eastern Trunk Main 12.8 km diameter 12 km new trunk main 73.2 (Madhubagh-Pagla STP) 900–1,350 mm diameter 900–2,600 mm including 2 SLSs including one SPS 3 Western Trunk Main 6.6 km diameter 600– 7 km new/rehabilitated 26.6 (Hazaribagh-Narinda 900 mm including one trunk main including one Pumping Station) SLS and one SPS SLS and one SPS 4 Pagla STP Installed capacity 96 200 MLD (primary + 82.0 MLD, operating at 30– secondary treatment) 40 MLD (primary treatment plus ponds) 5 Uttara Catchment Draft sanitation Draft sanitation design 2.5 design and bidding and bidding documents— documents review and revision Total Investment 310.3 Note: a. Based on the DB/DBO consultant’s information.
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Figure 1.1. Component 2 Project Measures
East sub West sub catchment catchment
Future sub catchment
Pagla STP
Source: Feasibility studies and preparations of conceptual designs and bidding documents for DBO/DB contracts and preparatory activities of the DSIP, DWASA 2019.
Sewer System
14. Based on the surveys conducted by the preparation-stage consultant of the existing sewers and documented in the CDRs, it is estimated that of the existing 359.7 km sewers, only 38.6 km can be rehabilitated and the remaining, that is, more than 90 percent of the existing sewers, are unsuitable for rehabilitation because of insufficient hydraulic capacity, sewer pipes with diameters smaller than the minimum permitted 200 mm, pipes with adverse slope, or inadequate flow velocity. The results of the ongoing CCTV camera inspections have indicated that only 5 percent of the existing sewers can be rehabilitated. In sum, under the DSIP, an overwhelming part of the sewer network will have to be constructed anew, and only a small part can be rehabilitated. In addition, the DSIP shall involve the construction of new sewers where previously no sewers existed.
15. The new sewer system will continue to be designed as a separate system, that is, it is designed predominantly for sewage flow, taking into account just a low percentage for unavoidable infiltration from groundwater and stormwater additionally, whereas the bulk of stormwater will continue being discharged to the rivers through the existing system of open drains. The design parameters for the sewer system and trunk mains have been reviewed and discussed in detail. The final agreements on design requirements are considered sound, avoid inappropriate overdesign, and are summarized and included in the CDRs.
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16. Sewer connection types and population covered. The focus of the project will be on maximizing house service connections in catchments with high population densities. While there will be direct sewer house connections, the most common type of connection shall be the connection of plots. Based on the initial data collected by the social assessment consultants, it is estimated that one plot connection is likely to serve one building with an average of about three to six households, with five persons per household. Consequently, a wide range of house connection options (single, multiple, condominium type with small- bore pipes and shallow inspection pits, and so on) will be used, depending on local conditions. Under the DSIP, a large proportion of the existing connections will be sought to be properly connected back to the rehabilitated or new sewers and additional households will be connected to newly constructed sewers. The practical experiences made with different connection conditions and solutions shall find due consideration in the bidding document’s specifications. A total population of about 1.5 million shall benefit from the project interventions under this component.
17. In terms of prioritization, the focus of the work in the sewer system shall be on the most densely populated areas first, to maximize the number of house service connections and population benefited. For that reason, the sewer works will focus on two of the three proposed sub-catchments only, that is, the ‘West Sub-catchment’ and ‘East Sub-catchment’. The ‘Future Sub-catchment’ to the very east will not be covered by sewers under this project, because it is sparsely populated (see Figure 1.2). As a general principle, the implementation conditions shall be defined in the bidding documents such that all the necessary and feasible sanitation infrastructure must be installed by the contractor, set in charge of a specific area, at one go and avoid repeated disruptions. To incentivize the contractors in maximizing service connections, the payments may be linked to output-based results (such as the number of house service connections and so on). This will reduce inconvenience to local residents and businesses to a one- time intervention. This effort to ‘saturate’ the DSIP areas with sanitation infrastructure implies that any future extension of the sewer system and house connections will take place in areas that are not serviced by the DSIP.
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Figure 1.2. Total Pagla Catchment Area and Its Three Sub-catchments
West Sub- East Sub- Future Sub- catchment catchment catchment
Source: Feasibility studies and preparations of conceptual designs and bidding documents for DBO/DB contracts and preparatory activities of the DSIP, DWASA 2019.
18. Sewer connection strategy and community mobilization. In implementing sewer connections, the combined activities of appropriate technical design and engaging with households and communities in the respective neighborhoods will be of critical importance. Experiences of implementation from similar cities show that community mobilization agents (for example, NGOs and/or social development and community mobilization personnel) need to be working closely with engineering personnel to build awareness and trust while in parallel customizing the design of the last-mile/meter physical works to be acceptable to the local community and have their support during the implementation. Hence, the design of the internal new sewer lines will have to be undertaken in situ with the participation/agreement of each household/plot. To overcome the potential unwillingness of households to connect (back or new connection), the project will also finance house service connections. Practical experience from projects in various countries (Brazil, Bolivia, and others) shows that both contracting the social activities to the sewer contractor and assigning it to the utility or to a separate NGO can work successfully. In the DSIP, a decision was taken that the appropriate social processes and personnel with expertise shall be specified in the draft bidding documents for bidders to propose, and the elapsed time for community processes will be built into the implementation schedule. The advantage of assigning this task to the DB sewer contractors
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is that there will be only one single entity responsible for the social and technical interventions, whereas splitting those activities over two separate parties would carry the risk of each side blaming the other in case of problems. The approach suggested is to avoid such a possibility.
19. The sewerage works will be tendered as DB contracts to minimize risk, cost, and implementation time, while incentivizing the contractor to deliver high house sewer connection rates. Two DB sewer contract packages are envisaged. Each package will cover a defined area, for which a conceptual design has been prepared by the DB/DBO consultant in the CDR, which will be annexed to the bidding documents as supplementary information. The contractor needs to present a detailed design for the complete area, (re)construct sewer lines, and connect households to sewer lines. In addition, the sewer implementation contracts will also be cognizant of constraints posed by the hours of work that will be permissible by the Dhaka South City Corporation and also the practical considerations of disrupting traffic movements on arterial roads and side streets, and so on. The envisaged works will not only generate the documents for the work done (as-built drawings and so on), but the documents can also be used to update DWASA’s database of its customers.
Trunk Mains and SPSs/SLSs
20. The current Eastern Trunk Main Madhubagh-Pagla is of 12.8 km length with pipe diameters ranging from 900 mm to 1,350 mm. It is routed through the SLSs of Bashabo and Swami Bagh. Its alignment follows relatively narrow roads, which are mostly 6–8 m wide, often crowded by street vendors and traffic. It is likely to be impossible to work with open-cut technology for large diameter trunk mains in these dense areas. Hence, the DB/DBO consultant has suggested a total of about 6.3 km for micro-tunneling in the most difficult sections and the remaining 5.8 km for open cut. The suggested diameters will range from 900 mm to 2,600 mm. Roughly at halfway of the Eastern Trunk Main, which is also where the construction method shall change from micro-tunneling to open cut, an intermediate SPS is suggested at Golapbagh. For a short section after the Golapbagh SPS, there will be a pressure pipe, whereas all other sections of this trunk main shall operate by gravity flow. At the Pagla STP, another final inlet SPS is foreseen. This concept implies that part of the future Eastern Trunk Main will be positioned deeper than at present, and thus, some existing SPSs along the Eastern Trunk Main will not be required any more. Those sites are freed up for other use, for example, as decanting stations for septage collected from non-sewered areas. Further, the proposed new and fewer SPSs will facilitate operation, greatly contributing to energy efficiency and reduced GHG emissions.
21. To the north of the Pagla catchment, DWASA is currently constructing the Dasherkandi STP. The sewage from Gulshan and Banani will be diverted to the Dasherkandi STP through the Hatirjheel Lake pipe interceptors, which are currently under construction. Only the remaining length of the Eastern Trunk sewer to Pagla will be reconstructed and expanded under the DSIP.
22. The current Western Trunk Main leads from Nilkhet to Narinda SPS, where it connects to the Eastern Trunk Main. Its diameter ranges from 600 mm to 900 mm, with a short final section of 1,800 mm. The roads along its alignment vary from wide to narrow with heavy traffic and commercial areas. This alignment is not as dense and crowded as the Eastern Trunk Main. Pipes of this trunk main are in poor operational condition, and at present, no sewage collected along this route reaches the Pagla STP, because the raising main after the Western Trunk Main’s final Narinda SPS is completely clogged/broken down. Thus, the flows pumped at this station only end up in the groundwater and/or in open drains (for details
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see Box 1.2. The details of the scope of rehabilitation/reconstruction of this trunk main have been worked out by the DB/DBO consultant.
23. A brief overview of the trunk mains and SPS in the Pagla catchment is presented in Box 1.2.
Box 1.2. Trunk Mains and SPS in the Pagla Catchment A schematic diagram of the trunk mains and SPSs in the Pagla sewerage catchment is shown in Figure 1.3. The following SPSs were studied during the project preparations to assess where the current influent flow to the Pagla STP comes from: • Narinda SPS is the (oldest and) final SPS on the Western Trunk Main. • Shamibag SPS is the last SPS on the Eastern Trunk Main. Figure 1.3. Schematic Diagram of Trunk Mains and SPSs
Assessments of the final SPSs upstream of the Pagla STP during the preparations showed that (a) the Narinda Pumping Station has seven pumps installed, of which three are running, but for short durations only, with an obstruction preventing wastewater from being pumped from Narinda SPS to Pagla and flows being directed into the groundwater and stormwater drains, and (b) similarly, the Shamibag SPS is also operated only sporadically and wastewater is not delivered to Pagla from this SPS. In conclusion, most wastewater that reaches the Pagla STP at present has its origin from the nearby industrial and residential areas that drain by gravity into the final sections of the Eastern Trunk Main. This implies that any rehabilitation of SPSs or of any part of Pagla’s sewer system is unlikely to increase flows to the Pagla STP. To make the Pagla sewerage system work properly again, a holistic approach is needed.
24. The DB/DBO consultant’s assessment of all SPSs in the Pagla catchment shows that the SLSs/SPSs are predominantly in very bad shape; the M&E equipment, including pumps, mostly needed to be replaced; and the civil work structures are usually too small to accommodate the future design flows and
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the necessary pumps. Of all the SPSs, only Narinda SPS is in a usable condition. Overall, upgrading would only be possible at very few SPSs, and most existing SPSs would require complete replacement as necessitated by design. Nevertheless, the option of maintaining and rehabilitating the existing system of SPSs and sewers and trunk mains was examined as an incremental measure, both in the Sanitation Master Plan and in the updated CDRs. The analysis showed, however, that several aspects weigh against such a proposal. The most relevant reasons are the following: (a) minimum coverage of existing sewers is frequently not guaranteed (most of the existing infrastructure is hence laid so shallow that there is a high risk of new damages after rehabilitation); (b) about 95 percent of the existing sewers are not fit for rehabilitation for reasons described in the previous section; (c) maintaining the shallow depth of the existing trunk mains would lead to problems with the new connection of households in low-lying areas; and (d) the envisaged new eight SPSs in the Pagla catchment will increase energy efficiency and reduce GHG emissions, as compared to the energy efficiency of operating several more SPSs required for the existing sewer system. In conclusion, it was recommended, in the CDR, that the new deep trunk mains along with a limited number of new SPSs are more cost-effective and less risky than the rehabilitation of existing sewers, SPSs, and trunk mains. The future secondary/tertiary sewers can and shall thus be laid according to state-of-the-art minimum technical standards. Further, the sites of abandoned SPSs can be used for septage decanting stations and will thus continue to be useful for the future overall sanitation system.
25. Just as for sewerage, the two envisaged trunk main packages will also use the DB approach to ensure that (a) only one contractor will be involved for each package, thereby leading to potential cost savings, reduced change orders, and shorter project schedules, and (b) risks for design and construction will remain with one single contractor.
Pagla Wastewater Treatment Plant
26. The existing STP at Pagla is located on a 110.5 ha site approximately 8 km from the city center in the southeast of Dhaka City and approximately 1 km north of the Buriganga River. A condition assessment of the treatment plant undertaken during the preparation of the Master Plan revealed major problems in the plant’s functioning, including little inflow (mostly effluent from nearby industries), dysfunctional components, and noncompliance of treatment results with legally prevailing discharge standards set by the GoB’s DoE. Further, the facility suffers from poor supervision and lack of maintenance. At present, the Pagla STP is only receiving 30–40 MLD against a design flow of 96 MLD, albeit based on less stringent effluent requirement as is the case now. The existing works and installations are woefully inadequate to handle the future capacity requirements of 200 MLD in 2025, and 600 MLD in 2050. For the same reason, the Pagla STP’s present effluent quality cannot and should not be mistaken as an indicator of its potential performance under future flow conditions.
27. The Sewerage Master Plan analyzed the total available spectrum of possible future treatment technologies, based on life cycle cost assessment and nonfinancial criteria. It evaluated options for the construction of a new STP versus the rehabilitation/upgrading of the existing facilities at Pagla. Among others, the option of converting the existing lagoons into aerated lagoons was analyzed but was dismissed in the Master Plan analysis due to huge land requirements and high energy costs. The Master Plan hence finally recommended constructing a new STP, employing the trickling filter technology, which turned out to be the least-cost option.
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28. The Environmental Clearance for DSIP, issued by Department of Environment (DoE) on 23 October 2019, requires Pagla STP to comply with the Environment Conservation Rules 1997 (ECR 1997). This standard is primarily governed by a maximum permitted effluent concentration of BOD5 < 40 mg/L. In parallel, DoE is currently working on a revision of ECR 1997. While the details of that upcoming standard are not yet final, the expected trend is clearly towards stricter parameters. This is also in line with regional trends. For instance, the currently prevailing standard (issued in 2017) in neighbouring India defines, 30 amongst others, a limit of BOD5 < 20 mg/L in metro cities . In the light of that background DWASA took a decision to design Pagla STP already now for somewhat stricter limits than those set forth in ECR 1997. Those parameters and their limits are oriented on the available Draft ECR 2017 and on discharge requirements applied to other newly planned STPs in Dhaka, such as Rayerbazar STP and Dasherkandi STP. Key to this decision are low carbon emissions, nitrification, and disinfection. The most relevant effluent requirements for Pagla STP thus are BOD5 < 30 mg/L, Total Ammonia Nitrogen TAN (NH4-N + NH3-N) < 15 mg/L, and Faecal Coliforms < 1,000 MPN/100 mL. This ensures that Pagla STP’s process technology and plant layout will already now take due consideration of future requirements, and can be easier adjusted to those, should it become necessary. The cost implications of that decision have already been phased into the DSIP cost estimates.
29. The new Pagla STP shall be constructed at the site of the existing treatment plant. Based on the recommendations made by the DB/DBO consultant in its CDR, it is suggested to permit an ‘open technology’ approach. However, to avoid obscure technology proposals being forwarded, which may be based on designs that are impossible to verify reliably, it is suggested to provide some guidance on permissible technologies. To that end, ‘families of technologies’ have been defined, for which proven design rules exist. Any such permitted technology must be able to be accommodated on the existing STP premises, even for ultimate flow requirements of 800 MLD. Acceptable ‘families of technologies’ are recommended as (a) conventional activated sludge, (b) modern trickling filter with plastic media, and (c) combinations of (a) and (b), such as the trickling filter/solids contact process. The DB/DBO consultant has prepared exemplary conceptual designs and layouts in the CDR for those three technology options to confirm their feasibility in terms of treatment efficiency and land occupancy. That CDR shall also be used as an annex to the bidding documents for supplementary information of bidders. Bidders will be free to choose any technology option that falls under those ‘families of technologies’ for the main biological treatment stage. They are also free to suggest any kind of pretreatment before the chosen main treatment stage. Likewise, the question, whether some/none of the existing facilities may continue to be used after rehabilitation, will remain open to bidders, as long as those units/stages match the ‘employer’s specifications’ and ‘mandatory requirements’ in the bidding documents.
30. Modular approach. The DB/DBO consultant will define a clear module size (50 MLD, 100 MLD, or other, as deemed most appropriate), which will then be applied both to the STP works and installations under this project and will also be reflected in the suggested expansion phases. This will permit easy and fast expansions, allowing to adjust treatment capacities to future developments as needed.
31. Sludge management at Pagla STP. The envisaged sludge treatment foresees sludge stabilization in anaerobic digesters and dewatering to at least 25 percent dry solids. The former is required to minimize bad odor emissions, reduce sludge quantities by about 30 percent, generate electricity from biogas, and use the energy to reduce the energy needs of the STP. The latter is considered a sensible balance between the implicated cost and minimized final sludge quantities after treatment. For sludge disposal/reuse, it
30 Central Pollution Control Board (CPCB), Government of India, 2017
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was suggested to estimate the quantity and quality of treated sludge be detailed and discussed with the DoE and Department of Forestry and Agriculture for possible reuse. The quality of the treated sludge could be reconfirmed as and when the treatment plant becomes functional and a plan evolved for lifting and reuse of treated sludge. The reuse of compost produced from co-composting treated fecal sludge with solid waste, practiced at many fecal sludge treatment plants, and Bangladesh’s national standards for compost provide the way forward for the use of treated sludge as soil conditioner in agro-forestry. However, should the quality limit the use of treated sludge in agro-forestry, DWASA will need to explore disposal at the city corporation’s solid waste disposal facility or setting up a disposal facility at the Pagla STP site.
32. The DBO contract award for the Pagla STP shall be based on the combined evaluation of CAPEX and OPEX, thereby guaranteeing the best value for money. The OPEX shall be considered in bid evaluation for a prolonged period of about 10–15 years, to give strong weight to OPEX, independent of the actual duration of the contracted operation period but will not be financed under the project. This is of relevance because CAPEX of most technologies falling under the permitted ‘families of technologies’ shall be relatively similar, with a typical variation of only ±10 percent. However, OPEX can vary widely and may double from one technology to another. Hence, taking due cognizance of OPEX implications will be a must in bid evaluation. Due care will be taken in the contract conditions to prevent bidders from front-loading cost.
33. The mandatory key input and output requirements for the Pagla STP design are the following:
• Required STP flow and load capacity: initial capacity of 200 MLD and peak hourly flow of 12,500 m3 per hour; with influent pollution load of 70,000 kg BOD per day, 150,000 kg chemical oxygen demand (COD) per day, and 80,000 kg suspended solids (SS) per day. • Final capacity defined as 800 MLD, sufficient for 2050. • Modular treatment concept, permitting for easy addition of extra modules at a later stage. • Maximum land area permitted for the first construction phase of about 20 ha out of the total land area available (110.5 ha). • Minimum dry solids in dewatered sludge of 25 percent. • Receiving water body for treated wastewater: Buriganga River. • Provision of mandatory protection levels for flood protection. • Mandatory construction of sludge digestors, biogas holder, biogas treatment, and combined heat power installations to produce electric and thermal energy from biogas. • The STP to meet the discharge standards for treated sewage in Bangladesh that are expected to enter into force any time soon and which will replace the prevailing standards dating back to the 1990s. The requirements of the new standards—according to current knowledge— among others, BOD5 ≤ 30 mg per L, COD ≤ 200 mg/L, SS ≤ 100 mg per L, TAN ≤ 15 mg/L, and Coliform ≤ 1,000 most probable number per 100 mL.
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Component 3. Alternative Sanitation (Total cost US$8.46 million including contingencies US$0.20 million; IDA US$4.23 million; AIIB US$4.23 million)
34. The construction of trunk mains and the extension of the sewer system is likely to incrementally cover a substantial portion of households in the Pagla catchment. Sewers will be the preferred option, and the project will attempt to maximize sewer coverage through conventional, small-bore,31 and settled sewers. However, there is likely to be a proportion of households that may be in hard-to-reach areas and extending sewer coverage to these households in the next 5–10 years may be difficult. These could be owing to households with unimproved toilets32 (18 percent of the households in Dhaka have unimproved toilets according to the Joint Monitoring Programme33) and locational difficulties of reaching these settlements through sewers or because of limitations posed by lack of tenure, space, and so on as is common in low-income settlements in Dhaka. Besides providing support to poor households to upgrade unimproved toilets, alternative sanitation arrangements need to be provided to those households that cannot be connected to the sewer networks. Improved toilet constructions for LICs will be accomplished through commercial contracts with NGOs instead of grants provided to poor households. NGO’s contracted will identify poor households with insanitary toilets, discuss options to improve toilets and help in construction to improve the insanitary toilets.
35. Water and Sanitation for the Urban Poor (WSUP) through a detailed survey has mapped all the LICs in the Pagla catchment (209 in all). The survey revealed that most of the slums were built on private lands (82 percent) and only 15 percent slums on public lands, and only 3 percent have mixed ownership, built on both private and public lands. There is no big slum in the Pagla catchment area, and the survey indicated that the majority of the slums (more than 80 percent) have less than 200 households each. The estimated total population in the 209 slums in the Pagla catchment area is about 146,000.
36. The survey result indicated that 21 percent latrines are private latrines, whereas 78 percent latrines are community type, and 1.0 percent are hanging latrines. The data indicated that most of the families in the slums are dependent on community type latrines as about 95 percent of the people in the surveyed slums use community type latrines and 1.0 percent use hanging latrines. There are 6,333 latrines in the 209 surveyed slums, of which only 47 latrines have pits and 434 latrines have septic tanks for effective containment. About 92 percent of the latrines are connected to drains or water bodies through pipelines and only 8 percent get partially treated in pits or septic tanks that are functioning. The survey results also indicated that the containment system of most of the slums is either absent or not functioning.
37. Among the 209 surveyed slums, manual desludging was found in a fraction of the slums (11 percent) only. The practice of mechanically emptying using a vacuum tanker was not reported by any of the slum representatives. In the absence of poor containment and lack of FSM, fecal wastes in most of the slums are disposed into open drains, nearby water bodies, and open environments, posing significant health and environmental risks.
31 As suggested in LICSIP, small-bore sewers are shallow sewer networks that connect wastewater from latrines to a larger sewer network using small-diameter, gravity-fed lines buried close to the ground surface to evacuate waste from the LIC. Small- bore sewers are a good option for areas where there is a low risk of eviction, within 600 m of a planned or existing DWASA sewer, and where there are few existing operational septic tanks. 32 Unimproved—pit latrines without a slab or platform, hanging latrines, bucket latrines, or latrines discharging to drains. 33 UN-WHO Joint Monitoring Programme, 2015.
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38. The survey findings indicated that about 75 percent of the slums have a road network with sufficient road width to provide access to vacuum tankers for emptying containment structures, and in about 25 percent slums, the vacuum tankers will have partial access. In about 37 percent slums, space is available for the construction of a communal septic tank. Simplified sewer networks can be installed in slums having good internal road networks, for which a feasibility study has been carried out during the project preparation phase for piloting under the DSIP.
39. The WSUP’s detailed survey has therefore classified the surveyed LICs, as follows, considering the suitable technical interventions for FSM services:
• LICs that can be connected to existing/planned sewer networks • LICs with households with containments (pits/septic tanks) that cannot be connected to sewers but are accessible for emptying • LICs with households with unimproved toilets and space not available at the household for containment upgrade but space available in the neighborhood for community septic tanks that can be accessed for emptying • LICs with households with containments that cannot be connected to sewers and are also inaccessible for emptying
40. Upgrade of unimproved toilets. The project will support the upgrade of poor households’34 unimproved toilets. The NGOs contracted will assist in the identification of poor households with insanitary toilets that need to be upgraded, present technical options and assist households to improve insanitary toilets, a process similar to what was adopted to improve water supply in LICs. Households provided with improved toilets will, wherever possible, be connected to sewers or provided with alternative sanitation as detailed below. About US$2.0 million has been earmarked to support this intervention.
41. Households that cannot be connected to sewers, for reasons elaborated earlier, will be provided with alternative sanitation arrangements. However, alternative sanitation options for hard-to-reach areas should consider the full cycle of sanitation (containment, emptying, transport, treatment, reuse, and/or disposal). The suggested options are the following:
• Households with space constraint for toilet upgrade—communal septic tank to serve a few households (governed by space availability and limited to a maximum of 10 households) • Households with emptiable containment structures accessible to emptying—emptying and treatment of septage • Households with emptiable containment structures but not accessible to emptying— DEWATS
34 Between 3,600 and 6,000 poor households will be provided support to upgrade unimproved toilets. Around 18 percent of the 1 million households in the Pagla catchment have unimproved toilets (JMP 2015) and between 20 (Fecal Sludge Management: Diagnostic for Service Delivery in Urban Areas, World Bank 2016) and 33 percent (Fecal Sludge Management: Diagnostic for Service Delivery in Urban Areas – Report of a study in Dhaka, Bangladesh, Water and Sanitation Program 2016) of the population is poor.
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Figure 1.4. Full Cycle of Sanitation
Source: Global Health Hub 2012.
42. A schematic of the planned interventions for sanitation improvements is shown in Figure 1.5.
Figure 1.5. Planned Interventions for Alternative Sanitation
Support to poor households Improved toilet connected to Unimproved toilets for toilet improvements sewers or alternate sanitation options
Alternate sanitation for households that cannot be connected to sewers
Households with emptiable Containment, emptying + containment structures and treatment accessible for emptying
Households with insanitary toilets and space a constraint for toilet Pilot communal septic tanks + improvements emptying and treatment
Households with containment structures not accessible to sewers Pilot DEWATS and emptying
43. While space availability would guide the abovementioned choices, it would be prudent to pilot these approaches before scaling up. The WSUP has mapped LICs in the Pagla catchment and identified those where space is available to pilot the alternative sanitation options. The design and bidding documents for the alternative sanitation options have been completed as part of the project preparatory activities.
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44. DEWATS. Households with containment systems that are not accessible to vacuum tankers and cannot be connected to sewers will be provided with DEWATS. Because the solids are retained in the septic tanks, the wastewater from the septic tank will be free of solids and therefore settled sewers35 would be an appropriate option to convey the wastewater to the DEWATS plants. DEWATS, an improvement over anaerobic baffled reactor (ABR), which was suggested as an option in LICSIP, is proposed as an additional treatment besides ABR and is needed to meet the country’s discharge standards. The treatment plant typically consists of
• Primary treatment that includes pretreatment and sedimentation in a settlement tank or septic tank, • Secondary anaerobic treatment in ABRs and anaerobic filter, and • Tertiary treatment in planted gravel filter.
45. DEWATS have the following advantages:
• Compact, modular, and integrates with landscape • Low-cost and minimum O&M • Simple and easy to operate
46. It is proposed to pilot DEWATS at 10 locations each capable of serving 200 households. Considering five persons per household, water supply of 120 L per capita per day, and return wastewater flow of 80 percent of the water supplied, the expected flow from these households would be around 1 MLD that could be serviced by 10 DEWATS units of 0.1 MLD capacity each. The land required for each DEWATS will be about 425 m2.
47. Communal septic tanks. Households with unimproved toilets that cannot be connected to sewers and where space is a constraint for toilets improvement will be provided with communal septic tanks. Depending on the availability of space, the number of households that can be connected to a communal septic tank will be determined considering an emptying frequency of three years. The land required for the communal septic tank capable of serving 20 households with an emptying frequency of three years would be 60 m2 each. It is proposed to pilot this intervention at 10 locations.
48. Septage management. Households with containment systems that are accessible to emptying and are not connected to conventional sewers would require septage management, that is, emptying and treatment of septic tank content. Besides, communal septic tanks and DEWATS would also need to be provided with septage management systems.
49. Households normally connect toilets to septic tanks designed with adequate detention time to facilitate accumulation of 60 percent to 70 percent of the solids. The solids accumulate at the bottom of the septic tank, and these septic tanks need to be emptied at regular intervals, else the solids will fill the tank and eventually flow out from the tank. Regular emptying of the septic tanks not only prevents the
35 Settled sewers, as suggested in LICSIP, are best suited for households that have septic tanks and with low levels of water supply (< 50 L per capita per day). As solids are retained in the septic tanks, the solids free wastewater conveyed through shallow gravity sewers for further treatment. The solids retained in the septic tanks need to be emptied at regular intervals for treatment and disposal.
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overflow of solids but also helps in effective functioning of the septic tank. The sludge from the septic tank is emptied with a sludge emptying truck and taken for treatment and disposal.
50. The number of households that would require septage management is not expected to be more than 25,000 households (households with emptiable containment systems—23,000, households on DEWATS—2,000, and households connected to communal septic tanks—200). The exact number of households requiring septage management will become clear as and when areas that can be serviced through conventional, small-bore, and settled sewers are finalized.
51. Emptying. A mix of large and small septage emptying trucks will be procured to help with emptying. With the WSUP, DWASA has piloted privately operated fecal sludge emptying services in Dhaka. Operating under a tripartite agreement between DWASA, WSUP, and the private operator, the operator pays a monthly lease fee of BDT 15,000 to DWASA and is permitted to provide emptying services and collect charges for emptying (30 percent of customers need to be poor households) and dispose the emptied septage at designated DWASA sites. This model has been operating successfully, and discussion with the operator indicated that on an average, they service two households daily and there are plans to expand the business as the potential exists. While this model will be scaled up in the project to serve the Pagla areas, other options will also be explored.
52. The project will support procurement of the specialized and specially purposed vehicles to provide for emptying and transport of fecal sludge from households in areas that cannot be serviced through sewers. In this regard, an exception to the revised Country Financing Parameters for Bangladesh has been granted by the Bank to allow procurement of these specially purposed vehicles under the goods category.
53. Septage treatment. The emptied septage could be co-treated in the proposed STP. However, to not overload the plant, this will be limited to treatment of septage from 1,000 households. To facilitate co-treatment, it would be necessary to provide decanting stations (SPSs along the proposed sewer network to facilitate emptying).
54. For other households, septage treatment would be necessary. As septage is mostly water, dewatering through either a mechanized or nonmechanized system would be required. Nonmechanized dewatering system is adopted and operational in Kushtia, Khulna, and Faridpur of Bangladesh and is proposed in many other towns in Asia. The dried/dewatered sludge is co-composted before being used as a soil conditioner/fertilizer. Composting also helps deactivate/eliminate helminths, a cause for concern. The filtrate/liquid from the dewatering unit will be treated at the proposed STP at Pagla.
Component 4. Project Implementation and Management Support (Total cost US$20.94 million including contingencies US$0.25 million; IDA US$7.93 million; AIIB US$7.93 million; GoB US$5.08 million)
55. This component shall help DWASA establish a PMU that will be responsible for overall project management including procurement, FM, safeguards, gender gaps, public communication, and M&E and reporting. The component will support the strengthening of DWASA’s capacity in coordinating and executing project activities, including complying with the World Bank’s fiduciary procedures and safeguards. It will also contribute to the acquisition of equipment and the project team’s operating costs as well as (a) finance selected individual consultants, training, and consulting firms to ensure efficient project implementation, design review, and construction supervision by the implementing entity; (b)
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finance audits of the project’s internal processes; and (c) support sound environmental and social management of the project, including gender gap mitigation and social inclusion, and the preparation of safeguard documents and their monitoring.
Component 5. Contingent Emergency Response (Total cost US$0 million)
56. The objective of this component is to support the Government’s ability to respond effectively in the event of an emergency, following the procedures governed by paragraph 13 (disaster prevention and preparedness) in the World Bank IPF Policy. There is a significant risk that during the life of the project, the GoB may experience a disaster, which may result in a request to the World Bank to support mitigation, response, and recovery measures. This component will enable a rapid project restructuring including reallocation of funds and disbursements. Disbursements under the CERC will be contingent upon the fulfillment of the following conditions: (a) the GoB has determined that an eligible crisis or emergency has occurred; (b) the Ministry of Finance has prepared and adopted the Contingent Emergency Response Implementation Plan that is agreed with the World Bank; and (c) the MoLGRD&C has prepared, adopted, and disclosed safeguards instruments required according to the World Bank guidelines for all activities from the Contingent Emergency Response Implementation Plan for eligible financing under the CERC.
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ANNEX 3: ECONOMIC ANALYSIS
COUNTRY: Bangladesh Dhaka Sanitation Improvement Project
1. The DSIP will implement the first phase of the Sanitation Master Plan of Dhaka, which is intended to develop sanitation infrastructure in the Pagla catchment. The project will deliver safely managed sanitation in the catchment by installing STP, sewerage network, and alternative sanitation systems. Along with infrastructure investments, commercial and organizational strengthening are also proposed as project components. The STP will endeavor toward improving the quality of the wastewater discharged to rivers, canals, and water bodies, directly affecting water pollution in Dhaka City. Thus, improved wastewater management and safely managed sanitation services will help improve living conditions for the residents of Dhaka City. The project will reduce the overall vulnerability of urban residents to public health risks along with reducing the risks of serious environmental degradation and enhancing the development of human capital of the next generation.
2. The comprehensive sanitation infrastructure that the project intends to implement includes STP, sewerage network, and safely managed alternative sanitation systems in the Pagla catchment area. The construction of STP, sewer network, and trunk mains under Component 2 comprises nearly 90 percent of the total investment, and the economic analysis is based on this component. Though Components 1, 3, and 4 will deliver significant benefits of the project, they are not included in the economic analysis.
3. The literature on sanitation points to a number of public health benefits because of safely managed sanitation provision. According to the World Health Organization,36 26 percent of diarrheal incidents can be reduced by improved sanitation. The quantifiable benefits of improved sanitation from the implementation of Component 2 are estimated using a ‘with and without’ methodology. The relevant indicators were calculated from the Household Income and Expenditure Survey (2016) carried out by the Bangladesh Bureau of Statistics. The analysis attempts to estimate nonmonetary, financial, and economic costs of poor sanitation in comparison to the ‘with project’ scenario. In the economic analysis, apart from the averted treatment costs, the value of other benefits is computed by monetizing the averted cost of time loss, because of sickness and caregiving (only for children under five) due to illness and preventing the lost earnings due to absence from work of the sick adults and caregivers of sick children.
4. Because of the lack of proper data, it is not possible to assign monetary values on all the nonmonetary impacts of poor sanitation, for example, loss of dignity, lack of comfort due to unimproved sanitation, and cost of environmental degradation. Other nonmonetary costs consisting of longer-term financial impacts because of exposure to unclean environments (that is, less and fewer educated children, loss of working people due to premature death, or relevant morbidity) and nonfinancial implications (that is, value of loss of life and intangible impacts such as unpleasant and unclean environments) were not included in the analysis. Environmental benefits of reduced BOD in the river stream and water bodies because of the STP will be significant, but they were not included as benefits such as monetary values cannot be assigned appropriately. Another financial benefit that is not included in the estimation is the
36 Esrey, S. A., J. B. Potash, L. Roberts, and C. Shiff. 1991. “Effects of Improved Water Supply and Sanitation on Ascariasis, Diarrhea, Dracunculiasis, Hookworm Infection, Schistosomiasis, and Trachoma.” Bulletin of the World Health Organization 69 (5): 609–621.
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increase of land value, property, and rental prices because of improved sanitation in the community. Anecdotal evidence suggests the existence of these benefits; however, they were not included in the environmental assessment as relevant data are not available in Dhaka. Revenues generated from the sewer connections are considered as direct financial benefits. The analysis, however, would claim only 69 percent37 of the total benefits as a part of the project intervention and will include rehabilitation of the existing sewer network for which tariffs are already being collected.
5. For the sewer network infrastructure subcomponent, the benefit-cost framework calculated the economic rate of return and the NPV to determine the economic viability of the project. A sensitivity analysis is conducted based on various potential risks indicated in the Project Appraisal Document. The economic analysis will cover a project life of 30 years, and cash flow is discounted at 10 percent, which is the cost of capital.38 To calculate the NPV of the investment, the stream of financial cost was adjusted for impacts of taxes, subsidies, and externalities to arrive at the economic value, using an estimated Standard Conversion Factor. Throughout the analysis, the domestic price numéraire was used. All prices are expressed in constant values of the base year 2018.
Results: Cost-benefit Analysis
6. The project’s economic net benefit is significant at 10 percent discount rate, with a positive NPV for a period of 30 years and an EIRR of 15.6 percent. The base case scenario is presented in Table 3.1.
Table 3.1. Base Case Analysis at 10 Percent and 15 Percent Discount Rates Net Benefit Discount Rate NPV (US$, millions) 10% 183 15% 11 15.6% = EIRR 0
7. Sensitivity/risk analysis. The overall risk rating of the project is High, and this is attributed to (a) environmental and social, (b) institutional capacity for implementation and sustainability, (c) fiduciary, and (d) stakeholder involvement. The sensitivity analysis simulates the impact of all the indicated risks on the EIRR at 10 percent discount rate. Table 3.2 presents the affected EIRR at 10 percent discount rate for the high risks related to the project.
Table 3.2. Risk Analysis at 10 Percent Discount Rate NPV at 10% Impact on Risk Scenario Impact on Project (US$, EIRR (%) millions) 1. All the risks are successfully tackled Base case 15.6 183 2. Failure in technical design (a) Project life decreases to 25 years 14.3 109 (b) Project life decreases to 20 years 11.9 35
37 This proportion is the number of sewer connections made functional by the project to the total number of sewer connections in the ‘with project’ scenario. DWASA now has 84,078 sewer connections, 50 percent of which are functional. The project will install 50,000 new connections totaling 134,078 sewer connections in the ‘with project’ scenario. 38 Based on the data from World Bank Dhaka office and International Monetary Fund, the average interest rate for domestic public debt is 9.7 percent and that for foreign public debt is only 0.9 percent. On average, the cost of government borrowing is around 5 percent. For cash flow analysis in the base case, a very conservative 10 percent discount rate has been used.
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NPV at 10% Impact on Risk Scenario Impact on Project (US$, EIRR (%) millions) 3. Weak institutional capacity for 20% increase in capital cost 13.3 128 implementation/stakeholders risks 4. Failed fiduciary 20% increase in O&M costs 14.9 166 20% reduction in benefits 12.8 88 5. Scenario 2(a), 3, and 4 occur Project life decreases to 25 years 9.3 –20 simultaneously 20% increase in total cost and 20% reduction in benefits
8. The failure in technical design may result in less durable constructions by the project, which in turn will reduce the project life. If this risk is realized, the project will deliver 14.3 percent and 11.9 percent EIRR for the reduced project life of 25 years and 20 years, respectively. The stakeholder’s risk and the risk in ‘Institutional Capacity for Implementation’ may result in delayed implementation, leading to a higher capital cost. A 20 percent increase in CAPEX will reduce the EIRR from 15.6 percent to 13.3 percent. Fiduciary weaknesses can lead to corruption that may result in increased O&M costs and/or a reduction in revenues. A 20 percent rise in O&M cost will decrease the EIRR from 15.6 percent to 14.9 percent and a 20 percent reduced benefit will lessen the EIRR to 12.8 percent. In an extreme situation where all the abovementioned risks are realized simultaneously, the project will result in an EIRR of 9.3 percent, making the project economically nonviable. Therefore, the economic viability of the project vastly depends on tackling the risks identified during the appraisal. Subsequent supervision activities should focus on reducing the abovementioned risks to ensure that the project remains economically viable.
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ANNEX 4: FINANCIAL ANALYSIS
COUNTRY: Bangladesh Dhaka Sanitation Improvement Project
A. Financial Analysis of DWASA
1. The approach to this financial analysis followed a traditional methodology to ensure the overall financial sustainability of DWASA from a consolidated perspective, inclusive of the implementation of the DSIP. The financial aspects of the project and all other programmed investments are combined into a consolidated financial presentation projected through 2030. The financial analysis of the project is meaningful because the DSIP proposes to essentially replace an existing treatment facility and network that are no longer operational but where subscribers are already paying a sewerage surcharge. The test for financial sustainability of DWASA is measured on whether the operations result in positive annual cash flows throughout the projected period. The consolidated approach is particularly important because DWASA’s tariffs do not fully recover all costs of the enterprise as is the case with a great majority of water utilities in the developing world; while DWASA has been able to cover its O&M costs, it still requires significant assistance from the Government for capital expenditure. An integrated financial model was developed to assess the financial implications of the various policy options for tariff revisions, operating performance, phasing of investments, development of reasonable and achievable financing plans, and other factors that may affect the financial sustainability of DWASA.
B. Operating Performance
2. For water supply, domestic, community, and LIC customers are charged BDT 11.02 per m3 (US$0.14 per m3), whereas commercial, industrial, and government customers pay BDT 35.28 per m3 (US$0.44 per m3). More than 97 percent of the connections are metered, but customers are charged on a single-consumption slab, that is, one tariff for any amount of consumption. Water supply tariffs earn DWASA BDT 8,883 million (US$111 million) as revenue39 (DWASA 2017–2018). DWASA levies sewerage charges from a holding with a physical connection and also from properties that are not connected but located within 100 feet of a sewer line. Thus, sewerage connections number more than 84,000 in DWASA records (2018), and these properties yield BDT 3,079 million (US$38.5 million) revenue annually (2017– 2018). The tariff for sewerage is the same rate as that of water supply, that is, BDT 11.02 per m3 and BDT 35.28 per m3 of water consumption; for example, a property with water and sewer connection pays double the water bill.
3. In recent years, DWASA has improved performance in several operational parameters, notably in NRW that declined from 29.6 percent in 2012 to 21.3 percent in 2017, or an overall decrease of 28.0 percent. Water customer connections have increased from 311,100 in 2012 to 371,767 in 2017 and 382,272 in 2018, or a cumulative increase of 23 percent. The total billed operating revenue, inclusive of water and sewerage subscribers, outpaced this performance with a 78 percent increase over the same period. This is because of increased tariff and number of water connections.
39 Audited Financial Statements of DWASA (2017–2018).
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Table 4.1. DWASA Operating Performance Highlights (as of year-end June 30 for each reporting year) Parameters 2012 2013 2014 2015 2016 2017 Water production capacity (MLD) 2,180 2,420 2,420 2,420 2,420 2,428 Annual water production (Mm3) 723.5 737.5 789.2 826.3 851.6 883.6 System losses (%) 29.61 26.66 26.58 25.58 23.22 21.33 Estimated consumption (Mm3) 509.3 540.9 579.4 614.8 653.9 695.2 Number of water connections 311.1 325.8 334.4 350.8 361.1 371.8 (thousands) Annual consumption/connection (m3) 1,637 1,660 1,733 1,753 1,811 1,870 Billed revenue water (BDT, millions) 4,284 4,919 5,382 5,815 6,526 7,865 Billed revenue sewerage (BDT, millions) 1,642 1,924 2,084 2,189 2,383 2,768 Billed operating revenue (BDT, millions) 5,972 6,891 7,517 8,066 8,917 10,633 Average tariff (per m3) as provided 9.08 9.54 10.11 10.23 10.20 12.04 Average tariff (per m3) as calculated 8.41 9.09 9.29 9.46 9.98 11.31
4. The OCCR was derived at just over 1.3 (OR of 0.75) during the last six years but declined over time from a high of 1.47 (OR of 0.68) in 2012 to 1.33 (OR of 0.75) in 2017. However, the total operating expenses have outpaced the operating revenue by almost doubling over the six-year period. The operating revenue has grown only 78 percent over the same period. The result is that the contribution margin also declined steadily from 41.8 percent in 2012 to 31 percent in 2017. An 11 percentage point difference equates to a loss of BDT 1.3 billion to the bottom line for 2017. The steady downturn in the contribution margin over the years can be because of several factors, especially given that consumption per connection has increased over the same period. These include the following:
• Annual tariff increases are not keeping up with inflation, affecting DWASA’s operating costs. • While DWASA should be commended for the steady decline in NRW over the six-year period, such reductions are not effectively reducing pumping costs. • The collection ratio during 2013–2016 has improved from 2012 but has not surpassed 95 percent. For the reporting year 2017, the ratio dropped to 91.4 percent. • DWASA has not made the proper provisions for bad debts. By the end of FY16, the balance for the provision for bad debts amounted to only BDT 277 million; given the continuing increase in the receivables balance, the annual provisioning should be much more than the current BDT 25 million of provisioning taken each year. • CAPEX expansion. During the six-year period between 2012 and 2017, fixed assets increased by 44 percent by adding to the plant US$365 million equivalent. A review of DWASA’s planned CAPEX investment for 2018–2022 shows a significant expansion of its plant and equipment totaling BDT 116.6 billion, or an equivalent of US$1.5 billion, including the proposed DSIP.
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Table 4.2. DWASA Capital Investment Program 5-year Investment Program (BDT, millions) 2018 2019 2020 2021 2022 Saidabad water treatment plant Phase 3 (450 MLD) 400 200 700 1,500 — Dhaka Water Supply Network Improvement Project 1,137 4,487 5,500 4,200 — Padma water treatment plant (450 MLD) 8,636 7,613 — — — Well field construction project (47 wells) 1,549 966 — — — Dhaka Environmentally Sustainable Water Supply Project 4,200 5,252 8,410 4,846 — Development of LIC 270 200 — — — DSIP (World Bank) 20 300 5,624 3,956 7,316 Interim Water Supply Project 2,000 2,000 Dasherkandi STP 670 4,400 9,000 11,200 4,000 Land acquisition and excavation of canals 3,500 2,572 Total CAPEX program 18,882 28,918 31,806 25,702 11,316 In US$, millions 236 361 398 321 141
5. If the CAPEX program could be implemented more gradually, it would reduce the complications for determining the adequacy of the consumer tariff and reduce the amount of oversizing in the near future.
C. Assessment of Future Financial Performance
6. The financial statements were projected for 2018–2030, based on constant cost and revenue assumptions. It was further assumed that the GoB will continue to assume the financial obligations of loan servicing as it currently does. Projections show that DWASA may be in a difficult situation from a presentation perspective as the current assets come on line and the new fixed assets start depreciating. Once the current investments are fully operational, the depreciation expense will balloon to almost BDT 5.1 billion in 2022, almost doubling from BDT 2.6 billion in 2020.
7. Most planned CAPEX investments will not materially increase revenues throughout the projected period. The continued net losses in the projected period will have a profound effect on the financial ratios, namely, returns on revenue, assets, and equity. All three ratios will likely turn negative starting in 2020. After 2022, DWASA must pay close attention to likely increases in O&M expenses associated with the planned CAPEX program as they could seriously jeopardize cash flow beginning in 2023. Such heavy losses on the income statement combined with positive cash flows are highly unusual. Despite the extremely poor results on the income side, DWASA will have sufficient cash flow over the projected period to sustain its future financial obligations, although this is not in any way a favorable financial picture.
D. Tariff Adequacy
8. While tariffs need to recover costs, it is also important to ensure that the tariff can be justified in that consumers only pay a tariff that is commensurate with the actual services being provided—not for excessive inefficiencies or on an irrational basis. The difference between cost recovery tariffs and justified tariffs is that in the latter, the tariff is calculated under performance standards that affect costs, working capital management, and collections. In other words, the approach determines the tariff that consumers should legitimately pay for the service they receive. The analysis shows that DWASA should carry out a tariff rationalization with an assessment of justifiable tariff adjustments to ensure tariff adequacy. The
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adjustment process should then be utilized rigidly for ensuing rate increases. An initial assessment was carried out to determine DWASA’s justified tariff and compared it to the current average tariff charged to consumers. The analysis assumes that a justified tariff should fall between an OCCR of 1.5 (OR of 0.67) and 2.0 (OR of 0.50) that should raise returns like comparable well-performing utilities such as the MWC and BWA.
Table 4.3. Summary of Current Tariff to Justified Tariffs
Current Tariff Benchmarks Justified Tariff Indicator Constant at Year Constant at Year 2022 Bangkok 2022 Metro. BDT/m3 US$/m3 cu/m3 US$/m3 cu/m3 US$/m3 Waterw Manila orks Water Average Tariff (per m3) 12.64 0.156 16.28 0.201 21.72 0.268 Authorit y Cash from Operations (BDT 960 7,259 12,508 millions) OCCR 1.17 1.50 2.00 1.56 2.13
OR 0.85 0.67 0.50 0.64 0.47
Return on Assets −1.20% 0.60% 3.10% 10.70% 9.90%
Return on Revenues −18.50% 7.60% 27.60% 36.50% 35.70%
9. In the case of DWASA, the justified tariff was calculated in constant terms for 2022, the year in which most of the current capital projects will become operational. The current tariff yields negative returns both on assets and on revenues and an OCCR of 1.1 (OR 0.85). For DWASA to achieve a 1.5 OCCR (OR 0.67), the average tariff should be set at BDT 16.28 per m3, while BDT 21.72 per m3 will be needed to achieve a 2.00 OCCR (OR 0.50) like the MWC’s performance. The justified tariff should fall between these two points. As Table 4.3 shows, even with the higher tariff that equates to an OCCR of 2.00 (OR 0.50), DWASA still falls short of the benchmark returns of both the MWC and BWA. The most startling difference is in the return on assets, clearly indicating an overextended CAPEX program.
10. Given the difficulty in understanding the sewerage component of DWASA’s revenue, especially whether many paying customers are receiving service, this calculation simply assumed that sewerage billings are justified but with the caveat that this should be investigated further. At the minimum, the Government should consider an upward tariff adjustment by DWASA, of approximately 10 percent to BDT 13.90 per m3 net of cost increases, which under the current debt-servicing conditions will eliminate the net losses in the first four years of the projection period and reduce them in subsequent years. With this adjustment, DWASA will still not be able to adequately service all debt but will be able to maintain some profit over its operations and increase cash flow for repaying the principal only on the sizable debt burden.
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E. Other Recommendations for Financial Strengthening
11. Based on the World Bank’s financial assessment, the following additional aspects are recommended for DWASA’s financial strengthening:
(a) Concerted efforts to reduce past-due accounts through a thorough analysis of the receivables ageing to identify customers who are seriously past due. This can be followed by a more aggressive stance on writing off bad debts. (b) An assessment of the actuarial balance of the Employee Pension Fund to determine the required annual contributions that need to be made to the fund. The Pension Fund account should be reclassified as a nonoperating expense to ensure integrity for the calculation of the OCCR. (c) Operational data and statistical information need to be improved and operational and financial statistics need to be reconciled with the formal audited financial reports. (d) The GoB should develop a more predictable mechanism for the allocation of grant and loan funds such that the debt service loan requests are determined through a predetermined formula. (e) A long-term financial planning model needs to be embraced.
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ANNEX 5: RESULTS CHAIN
COUNTRY: Bangladesh Dhaka Sanitation Improvement Project
1. Table 5.1 provides the results chain for achieving the PDO. A combination of infrastructure, institutional and financial strengthening, and improved customer orientation and accountability is likely to lead to sanitation services provision in select areas and institutional capacity of DWASA for managing sanitation, thereby increasing Dhaka’s resilience to climate change-related floods and cyclones.
Table 5.1. Results for the DSIP PDO. To increase access to safely managed sanitation services in select areas of Dhaka City and to improve DWASA’s efficiency in sanitation service delivery.
Activities Intermediate Outputs Outcomes Strengthening DWASA’s capacity to deliver • Organizational structures and Improved performance by services: units established for capital DWASA in connecting the • Sanitation directorate and units set creation, operations unconnected, tariff setting, user up (with new structure, dedicated management, and services charge collection, financial personnel, operating procedures) delivery performance, and grievance • Capacity building for improved • A tariff framework established redress supervision and frontline services and approved to address delivery CAPEX and OPEX associated • M&E systems established with sanitation services • FM strengthened • Tariff framework rationalized and approved • Gender and inclusion mainstreamed • Climate change training Governance improvements and citizens’ • Mechanisms for citizens’ Increase in the proportion of participation: participation established and households expressing • Connection improvement strategy engagement with city satisfaction over service implemented stakeholders commenced provision and accountability; • CS&CEP prepared and rolled out • Improved customer orientation Third-party citizens’ report card and strengthened frontline surveys and social audits reveal service delivery of WSS realized improved services and • DWASA’s GRM strengthened to responsiveness. respond to expanded sanitation services • A coordination mechanism between DCCs and DWASA developed and established. Also, compliance and enforcement/regulatory actions finalized with the DoE
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Activities Intermediate Outputs Outcomes Investments in sanitation infrastructure: • Number of households and Increase in number of • Connecting households to sewer properties connected to the households with safely networks—old connections sewer network increases managed sanitation rehabilitated and new connections • Trunk mains constructed to added successfully carry sewage from Sewage treated according to • Preventing on-site structures existing and new sewer Bangladesh environmental discharging into drains networks standards • Eastern and Western Trunk Main • Increased volume of • Pagla STP wastewater treated at Pagla Reduction in untreated sewage STP released into water bodies and open areas, leading to reduced pollution Investments in alternative sanitation • Alternative sanitation Increase in number of solutions: innovations promoted households with access to • Safely managed emptying and • Private sector emptying and safely managed sanitation treatment pilots demonstrated transport business models • Private sector businesses demonstrated Reduction in untreated septage operationalized in demonstration • DEWATS and septage released into water bodies and areas treatment pilots demonstrated open areas, leading to reduced pollution
Demonstration leads to scaling up of alternative sanitation solutions
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