Document of The World Bank

FOR OFFICIAL USE ONLY Public Disclosure Authorized ReportNo. 5438-BR

STAFF APPRAISAL REPORT Public Disclosure Authorized

BRAZIL

TECHNICAL ASSISTANCE AND PILOT RURAL WATER SUPPLY AND SANITATION PROJECT Public Disclosure Authorized

April 15, 1985 Public Disclosure Authorized Projects Department Latin America and the Caribbean Regional Office

This documenthas a restricteddistribution and may be used by recipients onlyin theperformance of their officialdutis. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCYEQUIVALENTS

Calendar 1984 March 20, 1985

Currency Unit = Cruzeiro (Cr$) US$1 = CrS1,952 US$1 = 4,007 Cr$1 = US$0.00051 Cr$l = US$0.00025

FISCAL YEAR

January 1 - December 31

ABBREVIATIONSAND ACRONYMS

ABES - Asociacao Brasileira de Engenbaria Sanitaria e Ambiental (Brazilian Association of Sanitary Engineering)

BNH - Banco Nacional da Habitacao (National Housing Bank)

CORSAN - Companhia Riograndensede Saneamento (State Water Company of )

FSESP - Fundacao Servicos de Saude Publica (Public Health Services Foundation

FUNDURBANO- Fundo Urbano (Urban Investment Fund of Rio Grande do Sul)

IPEA - Instituto de Planejamento Economico e Social (Institute of Economic and Social Planning)

MINTER - Ministerio do Interior (Ministry of Interior)

ORTN - Obrigacoes Reajustaveis do Tesoro Nacional (National Treasury Bond)

PAHO - Pan American Health Organization

PAPP - Programa de Apoio ao Pequeno Produtor (Small Farmer Program)

PIASS - Programa de Interiorizacaodas Acoes de Saude e Saneamento (Program for Community Health and Sanitation)

PLANASA - Plan Nacional de Saneamento (National Sanitation Plan)

PROSAN - Programa de Saneamento (Community Sanitation Program of Rio Grande do Sul) FOR OMCUL USE ONLY

SEPLAN - Secretaria de Planejamento da Presidencia da Republic.. (Presidential Planning Secretary)

SES - Secretaria de Saude (State Health Secretary - Rio Grande do Sul)

SUDENE - Superintendencia de Desenvolvimento do Nordeste (Northeast Regional Development Agency)

SURBAM - Superintendencia de Desenvolvimento Urbano e Administracao Municipal (Secretary of Interior, Regional Development and Public Works, Department of Urban Development and Municipal Administration of State of Rio Grande do Sul)

This document has a restriced distribution and may be used by recipientsonly in the performanceof their oflficialduties. Its contents may not otherwise be disclosedwithout World Bank authorization. BRAZIL

TECHNICAL ASSISTANCE AND PILOT RURAL WATER SUPPLY AND SANITATION PROJECT

STAFF APPRAISAL REPORT

TABLE OF CONTENTS

Page No.

LOAN AND PROJECT SUMMARY...... uiii-v

I. THE SECTOR ...... *...... ** ...... 1

Sector Development and Organization ...... I Level of Service ...... see... 2 Subsector Constraints...... 3 Government Strategy and the Bank's Role...... sees...... 4

IIo THE PROJECT ...... ses.. . * ...... 6

Background ...... 6 Project Objectives...b...je c ti..v...... e...... o.s.. 6 Project Executing Agencies...... o...... *. 7 Project Descriptions..,*. . .*.se...... * 7 Project Implementation.e...... 9 Selection and Design Criteria...... r...... 10 Project Cost, Financing and Recovery Plan ...... 11 Affordabilityo ...... , 13...... Prccurement and Disbursement...... 13 Status of Project Preparation...... 15 Benefits and Risks...... 15

III. AGREEMENTS REACHED AND RECO OMENDATIONS ... 16

LIST OF TABLES

2.1 Project Cost Estimates ...... 11 2.2 Project Financing Plan - ...... o...... 12 2.3 Project Cost by Procurement Method...... 14

This report is based on the findings of an appraisal mission which visited Brazil from November 26 to December 8, 1984. The mission was comprised of Messrs. Emilio Rodriguez, Engineer; William Roach, Financial Analyst; and Emmanuel Mbi, Economist. The mission was assisted by the Loan Officer, Ms. Carolin Crabbe. -ii-

Page No.

LIST OF ANNEXES

1. Bank Loans to Brazil for Water Supply and Sewerage ...... 18 2. Project Description ...... o...... *.. 19-20 3. Terms of Reference for the Development of Rural Water Supply and Sanitation Sector ...... 21-28 4. Tentative List of Communities ...... 29-34 5. Project Cost ...... 35-36 6. Project Implementation Schedule....*...... 37 7. Organization Charts for the National and Pilot Components... 38-39 8. BINH's Finances ...... --- 9...... , ^ 40-49 9. Cost Recovery in the Pilot Component...... 50-51 10. Loan Disbursement Schedule ...... 52 11. Monitoring Indicators.d l ...... ct o r 53 12. Selected Reference Documents and Data Available in Project File ...... 54-55

MAP

IBRD Map No. 16948 - Brazil - Water Supply and Sewerage Percent Service Levels by State 1983/1987 (iii)

BRAZIL

TECHNICAL ASSISTANCE AND PILOT RURAL WATER SUPPLY AND SANITATION PROJECT

Loan and Project Summary

Borrower: Federative Republic of Brazil.

Project Institute of Economic and Social Planning (IPEA) and the Executing Secretary of Interior, Regional Development, and Public Agencies: Works, Department of Urban Development and Municipal Administrationof the State of Rio Grande do Sul (SURBAM).

Amount: US$16.3 million equivalent.

Terms: Repayment in 15 years, including 3 years of grace, with interest at the Bank's standard variable rate.

Beneficiaries: The pilot component will benefit 200 low income communities consisting of about 146,000 people in the State of Rio Grande do Sul. The results of the studies undertaken through the national technical assistance component will benefit eventually the rural poor throughout Brazil and particularly in the less developed Northeast Region.

Relending For the national technical assistance component, the Terms: Borrower will make available the proceeds of the loan to IFEA on a grant basis. For the pilot component, the Borrower will make available the proceeds of the loan to the National Housing Bank (BNH) on the same terms as those of the loan. BNH will onlend them to the State of Rio Grande do Sul through SURBAM for 18 years including 3 years of grace at 7.5%. STJRBAM will enter into agreements with participating communities which will make an initial contribution to investments and repay a minimum of 30% of cost at 7.5% interest plus monetary correction for a term of 18 years.

Project The objective of the project is to assist the Government of Description: Brazil in establishing a policy for providing water supply and sanitation in rural areas, defining sector goals at the Federal and State levels, and institu:ional responsi- bilities. The national technlcal assistance component will finance (a) studies of the organization of the sector and the reordering of institutions, financial policies, includ- ing, a system of finance, tariffs and cost recovery; community promotion; and training requirements; (b) an inventory of technologies and technical standards; (c) the preparation of state investment plans; (d) special assist- ance to ten Northeast states for project preparation - iv -

including implementing community participation programs; and (e) equipment. The component will also finance special assistance to the emergency water works included in the Northeast's Small Farmer Program (PAPP) to be financed by proposed rural development projects. The pilot component will support the above objectives by testing and evaluating the delivery of services. It will finance water supply and sanitation in the State of Rio Grande do Sul including engineering and construction of about 200 community water systems, 10,000 individual sanitation units, 5,000 latrines, technical assistance, training and equipment. The experien- ces gained will serve as an input to preparing national oolicy.

Risks: The proposed project depends on the cooperation of three ministries in administering a large studies and technical assistance component. To some extent the risk associated with the large size will be minimized by retaining the Pan American Health Organization (PAHO) to undertake administra- tion and contracting. Nonetheless, continuationof coopera- tion by the ministries of the new administration which took office in March 1985 will be essential.

Estimated Project Costs:

Local Foreign Total …----US$ thousand----- National Technical Assistance Component Coordinating Unit 358.3 287.0 645.3 Studies 2,420.7 524.5 2,945.2 State Investment Plans 646.5 129.0 775.5 Project Preparation (Northeast States) 2,336.5 1,001.0 3,337.5 Equipment 350.0 150.0 500.0 PAPP Assistance 1X202.4 570.0 1,772.4

Subtotal 7,314.4 2,661.5 9,975.9

Pilot Component Coordinating Committee 352.5 100.0 452.5 Studies-Engineering/Training 721.4 409.0 1,130.4 Construction of Water Systems 6,836.3 2,930.0 9,766.3 Operation of Water Systems 350.0 150.0 500.0 Sanitary Units 2,394.3 1,026.0 3,420.3 Technical Assistance - 424.0 424.0 Equipment 171.6 73.5 245.1

Subtotal 10,826.1 5,112.5 15,938.6 -v-

Local Foreign Total …----US$ thousand------

Base Costs (12/84 Prices): 18,140.5 7,774.0 25,914.5 Physical Contingencies (5%) 907.0 388.7 1,295.7 Price Contingencies (7/85-6/88) 3,695.8 1,584.3 5,280.1

Total Project Cost 22,743.3 9,747.0 32,490.3 ==w======a =

Local Costs include about US$0.5 million equivalent of indirect taxes on industrial products.

Financing Plan: _ Local Foreign Total …----US$ million---

Bank 6.6 9.7 16.3 Government 2.4 - 2.4 BNH 5.6 - 5.6 States 8.2 - 8.2

TOTAL 22.8 9.7 32.5

Estimated Disbursements:

1986 1987 1988 1989 Bank Fiscal Year ------Us$ milion…

Annual 4.2 5.2 4.9 2.0 Cumulative 4.2 9.4 14.3 16.3

Rate of Return: N.A. PART I - THE SECTOR

Sector Development and Organization

1.01 In the past two decades, Brazil has greatly expanded its water supply and sewerage network, but services have been largely concentrated in urban areas, while rural arees, which would be addressed by the proposed project, have been neglected. In the 19609, the Federal Government assumed responsibility for the sector, which haa traditionally been managed, albeit inefficiently, by local administrations and municipalities. It created the i National Housing Bank (BNH) under the authority of the Ministry of Interior (MINTER) which assumed overall responsibility for the sector. Within this framework, State Water Companies (SWCs) were formed in all of Brazil's states, to plan and extend sector services. In 1971, BNH created a national sanitation plan, PLANASA, tlherein launching a major effort to improve water supplv and sanitation throughout Brazil. During the next ten years, an additional fifty million people received water supply and/or sewe.rage services, with sixty-five percent of Brazil's cities of over 5,000 inhabitants benefitting. Much has been achieved: investment planning at the state level has been strengthened, a national tariff system established and economies of scale introduced.

1.02 While responsibilicy for the urban water supply and sanitation sector is clearly defined, the same does not apply to rural areas. There are a number of federal and state agencies which provide services in Brazil but they form part of rural health programs aimed at extending medical services. For the most part, there is little coordination among the agen- cies, and institutional rivalry is prevalent. Moreover, investment plenning and funding are inadequate. Total expenditures for rural sanitation between 1978 and 1983 have averaged about US$14 million per year which is far below the minimum requirement estimated at US$180 aillion per year.

1.03 There are three main agencies involved in providing rural water and sanitation services. The first is BNH, which provides assistance to the SWCs through the small communities program it established in 1980. The program, part of PLANASA, finances water systems in comtmnities of less than 5,000 inhabitants. Systems are financed through a combination of grants (702) and loans. There are about 15 million people living in small communities of which 11.4 million are classified as urban. In Brazil, urban small communities are cla3sified as such if they are administrative centers, irrespective of their size or location. While BNH supports only those small communities which fall under the "urban" classification, in fact, a majority are rural in character.

1.04 The second major institjtion providing rural areas with water supply and sanitation is the Fundacao Servicos de Saude Publica (FSESP), established in 1947. FSESP, whose primary goal is to improve health, is a public agency whose manager is nominated by- the Minister of Health. -2-

It provides water and sanitation principally in rural areas, by extending Infrastructure and services mainly in regions of Brazil vith endemic diseases and where large government infrastructure projects are under- taken. About 1.100 of FSESP's 8,600 technical and administrative staff are assigned to its water and. sanitation works; other staft are assigned to epidemiology (particularly eradication of schistosomiasis and Chagas' disease), environment, training, general health and administrative functions. Most of FSESP's investments are grants, hut it charges adminis- tration fees for systems with houne connections.

1.05 Another program under the auspices of the Ministry of Health ls the Program for Community Health and Sanitation (PIASS). PlASS is an inter-ministerial program administered by a small aataff located In the Ministry of Health. The Program alms at Introducing basic, lntegrated health facilities--Includingwater supply and sewerage--in small communi- ties. The Program is undertaken through the States' Secretaries of Health.

1.06 Other agencies involved in the sector Include regional develop- ment agencies managed bv the Federal Government, Rtich as the Northeast Regional Development Agency (SUDENE), thieWest Center Regional Development Agency (SUDECO), and the Amazon Basin Regional Development Agency (SUDAM). The regional development agencies provide grant financing to state agencies such as the SWCs. This financing Is provided conan ad-hoe basis, without appropriate technical assistance and follow-up of operations and mainte- nance. Specialized ttehnical agenctes, such as the Ruiral Engineering Conpany of Bahia (CERB) and the BraztlIan Association of Sanitarv Engineering (ABES) and the rural communities themselves are also Involved in the sector.

1.07 The pioneering work of thene agencies has provided a good know- ledge of the subsector, its growth possibilities and constraints. However, muhe needs to he done, particularlv through cle:arerdefinitton of organiza- tional responsibilitv. Institutional qtrengthening, finance and improved coordination.

Level of Service

1.08 As indicated above, although Brazil hni9 made great strides in the pnit two decades to expand itt water sutpplv nd newerage network. rural aru*as have received little attention In this respect. This Rap has widened ove-r thie past four years its; Brazil has shi fted its development focus to expaniding agr1cultural nuttput and prodietivitv In orrder to redroqs the finauncial si!uation nf the cotintrv. Sociallv-turiented prolects for rural areas have hoen deferred .and tintil thev are re!n%t.atetd waterhnr..e diseases wl1 V)Irnt I ltlu to tak a hi lgh to II in thv cruntrvside, particularIav among In!;ints whert tht mLrt;lf tv rate is 77/i .000) IIvo hbIrths.

L.0' In 19FHf, .iivit 1V. of Brazi I's ppti!at Ion nf 119 million lived In ru ral areass. .1-t: t ^I thn t- toal pf)pu':tt ion was ronInIeCtre to a public wator s-tm. I? ur .i:-.'.o 7*'. of th. p|.tziat ona had p!poed water but - 3 - only 3Z did in ruLral areas. In small communities (classified by atithori- ties as urhban hiut predominantilv rtiral, ahbot 30% of thte poplation was connectt-d tni pitbhlir wa.ter -';vtt'-lmsi. Abultit 43% of t-he. ritral population usres Water of qtiestionaibhl!' qiiai tv IrueII ri vrrs, streams. and tInprol-eetecd wells;. The sttituItionIwitli r-spe'rt 1to sanitarion; is less favorable'. Onlv 2S% of Brai l's total population wa3% connerted toe seweratt tivstvms. onlv 3S%Z of th.- popielat tfii 1Hving In tirtin cuflatittilft':i lhld s-werage, whilS I only 32Z of the ntnttl rIru . poptilat ion lead saniltattion fartllties. Ahbout 3t of the popul ation ii sinAil cnmmuni ties was eonnilected to stwerage s vsremn.

I. r1 The' IlveveI ot servire In the' Sr at.' of Rio ('rAndt dIn Sul, where the pilor eompoen t *I the prjectviI wi he' ext--t!red, Is compasrnbhl 'to the rest of Irai1zil. Abuts? 2.S million people *r 1'X2 of the totAl s4tate poppulation ot 7.8S mill1tnn live' In rurnl nre'as. Abotit 4X of Its riral pptulaution had I)tblihIrv-prvi'ledtl w.ater telir olii litmttsernuinleCt ItinS. *% t hrcuugh standpipes midltwells an'id9!Z rel1ie on tmprnti cted wells, rivers or sqprings. Sanita- tint. %ervirs lagged i tarthe'rhei -Iin!i witli niilv 2Z ot rural cotmtilitirses l iTikedto ra pahlic stewe-'age' sv,:te ni. s'; Ic tank!;cor cont1 rolled pit% . The re-r *isltns'dd:[ i: was r fInfilpen: si x rivers;, %t rean. nr lakes.* Rio Grande do Sn:l has abutindant stir!s;Ie' and 1:rotiidw.ittr rv!'g.tir-rs wviiili reent I v have been threatefl'I byv c-hlnica l run-ott and coiltami nation from waste elimilna- tio,l as the St.ite'r; ngrnul'ei-strrilbane has expanded. Ri1o Grand.edo Sul was selected as . 1plnt state br-cau.ei' f I t% Intere;t In the prnloet, its itlillty to prnvitde I unid , thel firt th:at It mirrors thie pToTble-m faced hv RrazIl as a whinle in thiS *;rrtor, and oiwinig, also to its ex.'cut'n capabil i- ties and Its strong c'oprfrative rncovement.

1. 11 From lQIMl tlhrourh 198/a the StAte Invecrted abotiut11;$3 million anntally In rural water sumpp'v .and sanitatinn. Me'st of this (84Z) has been prrovider!l hv hINIlthrouigh 1'I.ANASA'- small cIunnunities program and the State Water ComrpaTny n' His' Grandlt- dlo Stil (COPSAN). The balance of the Invrstuurnt has blern prnvided hr the State Stcretarv o f li-alth (SF.S) and Its Rutral Sanitation l'ro:-:r.nm (PIMlSAN) a.nd the Serret.rv of thr' interior and Public wori-c PROiAN, which rere-iv s I in.inring from FS!SP and h'lASS. constrticts sra;l water svstenes uad smail:ntioii units, andt providen education In h:ir i enr .

Sithscrlor Constrra1nts

I . I Thi , rrijert I C t hie iirt .: I-r1 bv the (:.'v# rnme't it lira;i I atid t he 1la.ik t- rr'.: f a .- +r'.ts iVe' pe l- ' tn provide ':.l t .r stjpli lv and(l*al altt inn in ruiaa nrea';. -In :jilt, r't;ahIij;!jitl g91r!, ; p'''! -I il:lC he rr:n han:perer bv the' f.irt tha' rr*;pnnst itv for tlit .- rcur ! *;httredl "v nt-veral vnlnl- trie-%. le:mling tn 1'lit.rall rivalrIrc, su rlI-r inv-stment prinr;ties, Inarlrutiarte :n.ind n,- . ati t' .h-. ri..- ! ., ia-1l.-ilI %truicture for under- t .4kin works . The ai:rnv i. s wilit-1clresenlt 1 vrov .df rjral water and s;alit- .athLntiare- fer :1' no.; part weak and do not coordinate theIr actfvities, with the -rsult that the trninsfr'r of technoioogv and the opportunity to tenefit fron ex;erience are lost. The fact that Investmentc in rtiral -4- water supply and sanitation are not programed and often are politically motivated, is another constraint to sector development. In addition, operatfon and maintenance of rural water and sanitation systems is not sustained; more often than not, the lack of attention and follow-up leads to systems betng abandoned. Technician training, cont recovery mechanisms and community participation programs are other areas:which have not been fnlly explnred. The project will a.isiazt thc Government's effortx to e2al with tht-s.eproblemN; throi.gh natlanwide studlea and a uilot rase to test method!;and their application, wirh the intention of providing a sound baNis lor estahitshing n poliev which wotIld have nn appropriate inatitu- t i ona 1 and fit nnne 1ialf rimework.

Governme-nt Strategy and rh.-BAnk's Role

1.13 Brazil hn3 made eonisiderable progress in extending water supply 4andsewerage terViceS to the urban population by restructuring and streng- rheniing sector Instittztions an1 creating PLANASA. The Bank lhas fostered this growth throtiglater) wattr supply and sewerage projects totalling 1INS1.07 billion (Autnex 1). Four nf the earlv projects have been completed, .11helt with Jelav:I. nnd some cont overrins, Anld are considered to have .ichtvcd 1nc.sttf thelr objectives.'/ In addition t.,expanding the water supplv and sewer.agt netwuurk, Bnnk-7nupported prolects have contrlbuted to -stablistilng a National Tarift la,w. standardizing the SWC's proce'duires. derentraliwAiipg MNtl's pri-p.iratitn and supervisioz' activities to regional " tI-%s:nd setting u1p , uinfforma.-counting 4v,L,'m for Lhe S1'Cs. During thc I9L8Qrc, the %t-atvgv liar t1he se.tor should loceus Rt ¢onsolidating neh1i-vements rhrouaglh a ftllow-up to the on--g!,ingWiiter 'u:p,iy and Scwerage S.ector Project (Ln-in 2249-4W). It shoilld aim at upgrading the level of ;.-rvictv in rural areas 1n order to immprove the standard of living and 1r.aith I.. n o.ntof the rountrv 's p}roorr rc:sdeu,itn. RtarRl areas are receiv1ii-ireu;vwrd pr4orircv n..t .,'lv becauie of poverty coniuierations but mwiinj, nlsa to -he Impor.ance of apg.ricultiraloutptut tc BrAzil's economic rvecv.vv. The Xortlieas:t Region weuld! figure pro'minently In a rural .tr.aterv In thic rer.rert, .n itR dte. lnpmetit 1 ags hehind all other are.aso.f Br.az i1

1.14 The Government Is : uw turr'ng Its atention to qtrengthening rural wAter and manitation .ctlvitvs* to eomwplevp-.-ne programs aimed at Inireasing produ

I.' Proi jct Performanee Atidit Reports for the. Sto hnuiln Water Supply and ?oe luation Lontrol Rrolect tirzportued 'v Loans 757-BR an,' 75!-9lR (Report N.0 '29, aCn!'-T5'.n4 t'"v Y'nas c.erals Water Suopiv ond Stweragre Prou'ert %tiunpir ed 'hv Loatn !O110Q-3RF'R-,rt Xn. 46h?, SEC.483-7U0). A PreC;et Cn I,,lon Doc.--rt f-,r the ;:.sn.d Geraic 1;ater upply ;.ru' Scwerage i'-'4ec!t ;urported h)v Loan !:r'Q-3Rha. been piepared ;nc no a,ld 1 rLnorw I -. .1 sag-2 technical expertise which would not otherwise be available. As a pilot endeavor, the project will test new technologies and approaches, including the recovery of costs and a community-supported system for operation and maintenance. Considerable research has been done on providing rural water and sanitation, but few developing countries have adopted a national policy. This project provides the vehicle for establishinggood procedures and promoting rational development of rural water and sanitation services in a large country- -6-

PART II - THE PROJECT Background

2.01 In 1983 the Government requested Bank assistance to develop the rural water supply and sanitation subsector. A Bank sector study, under- taken in early 1983 concluded that a technical assistance operation with a pilot component to test applications would be needed to define policies, strengthen institutionsand gain experience before undertaking a full-scale lending operation. The project supports this conclusion by including studies (national technical assistance component) and a test case for delivery of rural water and sanitation services in a southern state (pilot component). For regional balance, the project also includes support for emergency works in the less-developed Northeast. The project was appraised in November-December1984. Negotiations were held in Washington in March 1985. The Brazilian delegation was led by Dra. Stael Martins Baltar, Presidential Planning Secretariat.

Project Objectives

2.02 Although the Government has made noticeable strides in increasing agricultural production and productivity while at the same time improving the overall standard of living in rural areas, it has yet to develop a strategy for providing rural water supply and sanitation. The objectives of this project will be to assist the Government in -this undertaking, specifically focussing on:

(a) assisting the national and state Governments in defining rural water supply and sanitation sector objectives, policies and institutional responsibilities;

(b) assisting the state Governments in strengthening sector institu- tions;

Cc) supporting Government programs to develop and improve conditions in depressed areas of the Northeast region;

(d) testing and evaluating delivery of sector services through a pilot project;

(e) improving productivity and welfare throTughprovision of sanita- tion services (water supply, excreta disposal and sanitation- related home improvements) to rural inhabitants of Rio Grande do Sul;

(f) promoting community participation in the planning, execution, and operation and maintenance of water supply and sanitation ser- vices;

(g) promoting hygienic habits ' the population; and

(h) promoting the use of low-cost water and sanitation technology. -7-

Project Executing Agencies

2.03 IPEA was created in 1964 for the purpose of carrying out economic studies and assisting public entities on development. IPEA, an autonomous entity reporting to the Ministry of Planning, has about 1,100 employees, including 600 technicians. The Bank has had a positive experience with IPEA in the carrying out of studies under Loan 2347-BR (Export Credit Proj- ect) and Loan 2348-BR (Agricultural Export Project). IPEA's accounting system follows standard Brazilian Government requirements and is s&tisfac- tory. Currently, an audit is carried out by the Secretary of Internal Control (SECIN) and supervised by the National Accounting Tribunal.

2.04 SURBAM was created in 1975. Its principal responsibilitiesare to provide technical assistance and training to municipalities and assist in urban and regional planning. SURBAM has 84 employees, including 65 technicians and professionals. SURBAM has agreed to hire specialized consultants to assist in the administration of the project and would contract specialized services with CORSAN (water supplies), PROSAN (sanita- tion systems), and the University of Vale de Rio dos Sinos (community participation). SURBAM and the Urban Investment Fund of Rio Grande do Sul (FUNDUTRBANO)accounting follows standard Brazilian Government requirements, allows for separate project records, and is satisfactory. Currently, an audit is carried out by the State's Controller General. Organization charts are in Annex 7. Assurances were obtained during negotiations that:

(a) accounts and financial statements for IPEA, BNH, and the State of Rio Grande do Sul for eacb fiscal year, starting with fiscal year 1985, will be audited by external auditors satisfactory to the Bank and in accordance with generally accepted accounting prin- ciples; and

(b) by April 30 (IPEA and BNH) and June 30 (State of Rio Grande do Sul) of each subsequent year, certified copies of the audited financial statements and audit report will be submitted to the Bank.

Project Description

2.05 The project consists of a national technical assistance component (US$13.0 million or 40% of the project cost) and a pilot component (US$19.5 million or 60% (Annex 2)).

2.06 The technical assistance component will consist of consulting services and equipment to develop a national rural sanitation plan which will include an institutional set-up and financial and technical policies. Terms of reference for studies and technical assistance under the proposed loan have been prepared (Annex 3). The national component will be executed through a coordinating unit established in IPEA and staffed with foreign and local consultants (120 man-months). The coordinating committee will be headed by IPEA and will include representatives of the Ministries of Interior and Health. -8-

2.07 The development of the national rural water supply and sanitation plan under the technical assistance component will include the following for each of the areas mentioned below:

(a) Institutions (i) Evaluation of the existing organizational structure; (ii) establishment of criteria to reorder the institu- tions; (iii) preparation of amendments of existing legislation; (iv) definition of inter-institutional coordination; and (v) identification of staff training needs;

(b) Finances (i) Preparation of firancial policies for investment and operation and maintenance of systems, tariffs, and funds recovery; (ii) recommendationson changes -ifnthe present organi- zation and assignment of responsibilitiesin sector financing and alternative flow of funds; (iii) definition of financial criteria for setting priorities; (iv) analysis of users' affordability, tariffs and other sources of financing and charges for services; and (v) identificationof staff training needs;

(c) Community promotion (i) Definition of alternatives for community participation in the preparation, construction, operation, and administration of the systems; (ii) analysis of community parti- cipation in other sectors; (iii) preparation of required legal arrangements; and (iv) required technical assistance and training;

(d) Human resources (i) Analysis of the different training programs in the sector; (ii) evaluation of the needs; and (iii) prepara- tion of a national training plan for the sector with emphasis in construction, operation and maintenance of systems and on the administration of services;

(e) Engineering (i) Inventory of technologies for rural water sup- ply; (ii) development of alternative technical standards for project design emphasizing low-cost technologies; (iii) defini- tion of institutional arrangementsfor project design, execution, and operation and maintenance; (iv) production of education materials; and (v) training needs; and

(f) Investment plan preparation (i) At the state level, diagnosis of sector services, and financial, institutional, and technical capac'ty; (ii) formulation of sector service targets and develop- ment of investment alternatives for the decade; and (iii) con- solidation of the state plans in a national plan.

The studies will be completed by end-1986 and will require 616 man-months of consultants, 372 man-months of support staff, and approximately 900 man-months of counterpart staff at the state level.

2.08 An important feature of the project is the special technical assistance to be provided to. the ten Northeast states. This assistance will complement emergency water supply works undertaken as part of the Small Farmer Program (PAPP). These works are being financed in part through three proposed projects, Northeast Rural Development I, II, -9- and III, to be presented to the Board in FY85 and FY86. The assistance will concentrate on the strengthening of the administration of the water supply program, the promotion of the communities, the establishment of cost recovery policies, and on completing agreements with the municipalitiesand communities to construct, operate, and maintain the systems. SUDENE will coordinate supervision to be provided under the Northeast Rural Development projects and this project. At the state level, a total of 264 man-months of consultants and 400 man-months of counterpart staff will be needed. Completion is expected by the end of 1987.

2.09 The ten Northeast States will also receive special assistance in the preparation of a full-scale rural water supply and sanitation invest- ment program. The preparation work will consist of socio-economicstudies, housing census and hydrogeological surveys, final designs, tariff studies, and promotion and legal contracts for approximately 600 communities, representing the first two-year investment of the program. Preparation assistance includes consulting services and equipment. It will be carried out in the period 1987-88 in order to take advantage of the recommendations from the studies (para. 2.07) and pilot program (para. 2.10). Agreement was reached during Loan negotiations on the submission by June 30, 1986, of terms of reference and a detailed schedule for the execution of this program. In addition, for the assistance for the emergency works described in para. 2.08 and for the preparation work mentioned above, individual agreements will be entered into with each Northeast state setting forth responsibilities for execution, funding, procurement, auditing and accounting.

2.10 The pilot component will be carried out in Rio Grande do Sul and will include: (a) project preparation and construction of 200 community water systems, 10,000 individual sanitary units, and 5,000 latrines; and (b) technical assistance, training, and equipment to organize state agen- cies in the delivery of sanitation services to the rural population.

Project Implementation

2.11 The Federal Government will be the Borrower. The national com- ponent will be executed through a coordinating unit established at IPEA. An Interministerial Committee comprised of the Ministries of Planning (SEPLAN), Health and Interior will provide guidance to the coordinating unit. This committee and the coordinating unit for project execution have been established. BNH will be responsible for overseeing the pilot opera- tion and through the InterministerialCommittee will convey the experiences and lessons from the pilot component to the technical assistance cor- ponent. SURBAM will be, in collaboration with beneficiary communities, responsible for planning and execution of the pilot component. The Bank has had considerableexperience with the national agencies and the State of Rio Grande do Sul and overall it has been a fruitful one. The project will be executed in the period July 1985 to June 1988 (Annex 6).

2.12 Under the national component, IPEA will sign contracts with con- sultants for studies and technical assistance, with the states for the pre- paration of state investment programs and with the Northeast states for the special technical assistance and project preparation facilities. Under the pilot component, SURBAM will contract various project activities with - 10 -

CORSAN, PROSAN, and the University of Vale de Rio dos Sinos. Agreement was reached during Loan negotiations that participating communities will sign a contract before construction of any subproject detailing the works to be carried out, the community's contribution to investment and responsibilitiesfor operation and maintenance, and the formula for setting tariffs. SURBAM will provide follow-up supervision and control of systems operation and maintenance and cost recovery. For technical matters SURBAM will receive assistance from CORSAN for water supply and PROSAN for sanit- ation. These two institutions are experienced and have qualified per- sonnel.

2.13 Draft contracts, a plan for project progress reporting, and moni- toring indicators have been prepared. Agreement was reached during Loan negotiations that an interim and final project evaluation will be carried out by December 31, 1986 and June 30, 1988, respectively, and that executing agencies will discuss with the Bank the findings and recommendations of the technical assistance and the plan for implementing the recommendations.

Selection and Design Criteria

2.14 The following selection criteria, which were agreed upon during Loan negotiations, will be applied to all communities participating under the pilot component: (a) populations of 200-2,000 inhabitants; (b) subprojects must represent the least-cost alternative for providing water services; (c) water supply subproject costs must have a per capita construction cost of less than US$120 at December 1984 prices; (d) studies demonstrating the availability of reliable and economic sources of water must be completed; and (e) a water supply and sanitation committee must be set up in each community to participate actively in the planning and construction of the system, and the future administration, operation, and maintenance, including the.commitment to recover costs (para. 2.20). A preliminary list of communities has been agreed with SURBAM (Annex 4). In addition to the selection criteria, the degree of cost recovery will be tied to the level and quality of services to be provided which will be negotiated and agreed upon between SURBAM and the community.

2.15 Water services provided through the project will be by house con- nections with the exception of services in low-density population areas where it is planned to install public standpipes. In most cases, ground- water sources will be used; water treatment, except for chlorination, will not be required. Sanitary units will comprise a detached shelter for a complete toilet, a septic tank, and an external tap for washing. Kitchen installations will be connected whenever possible. Sanitary units have an estimated cost of US$300 which will be 100% recovered. When people cannot afford these units, simple latrines will be provided free. Systems will be relatively sin-pleto operate and maintain. SURBAM will provide training to the communities for operation and routine maintenance and backup for major maintenance. CORSAN will regularly test water quality. The experience with the selection criteria and with execution of works will be incorporatedwith a view toward replicability into the technical assistance work under the national component. - I1 -

Project Cost, Financing and Recovery Plan

2.16 Project costs are detailed in Annex 5 and summarized in Table 2.1.

TABLE 2.1: Project Cost Estimates

Foreign Local Total X

…------US$ 000…

National Component 2661.5 7314.4 9975.9 39

Coordinating Unit 287.0 358.3 645.3 3 Studies 524.5 2420.7 2945.2 11 Investment Plan Preparation 129.0 646.5 775.5 3 PAPP Support 570.0 1202.4 1772.4 7 Project Preparation - Northeast states 1001.0 2336.5 3337.5 13 Equipment 150.0 350.0 500.0 2

Pilot Component 5112.5 10826.1 15938.6 61

Coordinating Committee 100.0 352.5 452.5 2 Studies - Engineering/ Training 409.0 721.4 1130.4 4 Water Systems - Construction 2930.0 6836.3 9766.3 37 Water Systems - Operation 150.0 350.0 500.0 2 Sanitary Units 1026.0 2394.3 3420.3 13 Technical Assistance 424.0 0 424.0 2 Equipment 73.5 171.6 245.1 1 Base Cost (Dec. 1984 prices) 7774.0 18140.5 25914.5 100 Physical Contingencies (5%) 388.7 907.0 1295.7 Price Contingencies 1584.3 3695.8 5280.1 (July 1985-June 1988)

Total Project Cost 9747.0 22743.3 32490.3

The total cost of the project excluding interest during construction is estimated at US$32.5 million equivalent. The foreign exchange component is estimated at US$9.7 million or 30% of the project cost. Costs are based on December 1984 prices and include physical contingencies of 5%. Price con- tingencies of US$5.3 million or 19X of 1984 project costs are based on estimated international inflation of 8% in 1985, and 9%, thereafter. The local component includes about US$0.5 million equivalent of indirect taxes on industrial products. Technical assistance and consultant costs are based on those of similar internationallyand locally recruited experts in Brazil. The cost includes 218 man-months of foreign consultants, 1,025 man-months of local consultants, 612 man-months of support staff, and 1,300 man-months of counterpart staff. Construction costs are based on unit costs developed by CORSAN and PROSAN during implementation of ongoing programs in the pilot project state. - 12 -

2.17 The project financing plan is presented in Table 2.2.

TABLE 2.2: Project Financing Plan (US$ Millions)

Counterpart

Federal Component Bank Govt. BNH States Total

National 8.5 2.4 0 2.1 13.0 Pilot 7.8 0 5.6 6.1 19.5 Total 16.3 2.4 5.6 8.2 32.5

% 50 7 18 25 100

The Bank Loan of US$16.3 million (50% of total project cost) will finance total foreign costs and US$6.6 million in local costs. This is in line with the usual participation for social projects in Brazil. The Federal Government, BNH, and the State of Rio Grande do Sul have agreed to finance the balance of US$16.2 million. Assurances were obtained during loan negotiatior.son the timely availability of counterpart funds from the Federal Government, BNH, and the State of Rio Grande do Sul. Under the national component, Bank financing will amount to US$8.5 million, and the Federal Government financing to US$2.4 million. The states will provide project-related services amounting to an equivalent of US$2.1 million. Under the pilot component, Bank financing will amount to US$7.8 million, BNH's share to US$5.6 million, and the State of Rio Grande do Sul's share to US$3.9 million. Initial community financing amounting to about US$1.2 million is included in the State financing. In addition, the State will provide project-related services amounting to an equivalent of US$2.2 million.

2.18 A special account for the project in the amount of US$1.5 million (estimated four months' disbursements) will be established in the Central Bank. The Federal Government will provide all funding for the national component which consists mainly of studies and technical assistance on a grant basis. Under the pilot operation, BNH will on-lend Bank funds and its counterpart financing to the State of Rio Grande do Sul. The State will provide the remaining balance. All funds under the pilot operation will be channeled through the State's FUNDURBANO.

2.19 The role of BNH in the project is three-fold: (a) it provides its own resources for the pilot project; (b) acts as a channel for Bank loan funds for the pilot component; and (c) participates in the coordinat- ing committee for the technical assistance component. BNH has been the Borrower for about US$1.0 billion in Bank loans for water supply and sewerage projects. BNH's present status is presented in Annex 8. - 13 -

2.20 Under the pilot component, cost recoverv mechanisms have been agreed (Annex 9). For water works, local communities benefitting from the project will be required to set charges at a level sufficient to cover operations and maintenance, equipment replacement, as well as a minimum 30% of investment costs including interest and monetary correction. These arrangements are satisfactory, compare favorably with similar projects and represent a major departure from full grant financing of the rural water sector in Brazil. Socio-economic studies satisfactory to the Bank will be undertaken by SURBAM to determine the communities' capacity to pay and the percentage will be increased depending upon the studies' results. Communi- ties will be actively promoted and will cover at least 10% of investment cost through initial contributions. These contributions will be a minimum of 2.5Z in cash payable before the initiation of works and 7.5% during the construction period in cash, labor or kind. The remaining 20% of the investment cost will be covered through tariffs and amortized over 18 years at 7.5% interest. The balance will be borne by the State government. For sanitary units, SURBAM will recover the full cost of the units under the same lending terms as those charged for water supply. SURBAM will administer repayments which will be deposited in FUNDURBANO.

Affordability

2.21 Tariffs and structures will be based on socio-economic studies to determinc local ability to pay. Average monthly water charges per connec- tion (US$2.16) satisfy tariff law requirements under PLANASA, which provide that minimum monthly charges should not exceed 35% of one Readjust- able National Treasury Bond (ORTN - US$2.27). Based on the average tariffs about 80% of the benefitted families will be able to afford the services. For the remaining 20Z,minimum tariffs will be charged or in sorae cases service standards will be lowered. A monthly charge of US$2.53 is estimated to fully recover the costs of sanitary units. This is reasonable as acquisition of units is elective. Those who are unable to pay, but willing to provide labor, would receive latrines on a grant basis.

Procurement and Disbursement

2.22 Procurement under the Project will be carried out following Bank guidelines. All contracts for equipment and materials exceeding US$100,000 and for civil works exceeding US$500,000will be awarded on the basis of international competitive bidding. Equipment and materials will be grouped to obtain packages in excess of US$100,000 with the exception of an agregate of US$200,000 under the technical assistance component and US$500,000 under the pilot component that will be contracted under local procurement. During negotiations, the parties agreed to a purchase program for the pilot component that will be updated annually. Under these assump- tions, approximately US$11.0 million or 34% of project expenses would be awarded under ICB. The nature of the civil works precludes the efficient packaging of services to be bid. Works will be carried out in more than 200 communities by different executing entities, and with the active participation of the communities. These works, amounting to approximately US$7.9 million or 24% of the project cost, will be carried out by small - 14 - local contractors and force account. Local procurement procedures ensure adequate competition and are consistent with Bank procurement guidelines.

2.23 Technical assistance and consultants' services, amcunting to US$10.7 million or 33% of total project cost, will be procured in accord- ance with Bank's Guidelines for the Use of Consultants. To ease the admin- istrative burden on IPEA and the coordinating unit for the technical assistance component, a master contract with PAHO for consultants' services under terms and conditions satisfactory to the Bank will be awarded.

2.24 Project costs by procurement method are presented in Table 2.3.

TABLE 2.3: Project Cost by Procurement Method a/ (US$ millions)

Project Element Procurement Method Total ICB LCB Other N.A. Cost

Equipment and Materials 11.0 0.7 0 0 11.7 (4.1) (0.1) 0 0 (4.2) Civil Works 0 5.7 0 0 5.7 0 (2.0) 0 0 (2.0) Consultants 0 0 10.7 b/ 0 10.7 0 0 (10.1) 0 (10.1) Counterpart Salaries 0 0 0 4.4 4.4

Total 11.0 6.4 10. 7 4.4 32.5 (4.1) (2.1) (10.1) 0 (16.3) a! Figures in parenthesis are the respective amounts financed by the Bank. b/ US$8.2 million will be under a master contract with PAHO.

Prior Bank review of socio-economicand feasibility reports, community con- tracts, and prequalification, bidding documents, awards, and contracts, will be required for equipment, materials, and civil works to be procured under ICB. SURBAM and IPEA will maintain all relevant documentation for local procurement of goods and services. Bank missions will carry out an ex-post review by sampling. IPEA and SURBAM will prepare master contracts for consultant services; contracts and consultants' qualificationswill be satisfactory to the Bank.

2.25 The Bank will disburse as follows: 37% for materials and equip- ment; and 95% for consulting services under the technical assistance com- ponent; and 58% of BNH's disbursements to SURBAM under the pilot com- ponent. Loan disbursements will be made against statements of expenditures prepared by IPEA for the technical assistance component and SURBAM for the pilot component. The detailed documentation will be retained by IPEA and SURBAM for inspection during supervision missions. Disbursements will be completed by June 30, 1989 (Annex 10). Disbursement under a group of ongoing water supply loans in Brazil (1656-BR, 1823-BR, and 1850-BR) - 15 - indicates that disbursement profiles are about two years shorter than the standard Bank disbursement profile of eight years. The proposed disburse- ment period (4 years) takes into account the technical assistance aspects of the project, the disbursement experience per above, the Government high priority to the Northeast and the ongoing negotiations of the consulting services master contract.

Status of Project Preparation

2.26 Project preparation conforms to the proposed implementation schedule. Under the technical assistance component, the administrative support unit has been set up and staffed. Final terms of reference for main project activities are completed with the exception of tCose for project preparation in the Northeast which would be ready by June 30, 1986. Model master contracts for consultants' hiring, project monitoring indicators, and plans for progress reporting were agreed during Loan negotiations. Under the pilot component, SURBAM has established and staffed the executing unit; presented a detailed cost recuperation proposal; submitted monitoring indicators, plans for progress reporting (Annex 11), and all relevant model contracts. SURBAM will present all contracts formalizing project execution including transfers of funds and ten contracts with communities for the execution, repayment, and operation and maintenance of water supply and sanitation works together with socio-economic studies, subproject final designs and costs prior to Loan effectiveness.

Benefits and Risks

2.27 Due to the nature of the project, benefits cannot be quantified reliably; therefore, a rate of return has not been calculated. The current disorganization in the rural water supply and sanitation sector has resulted in low investment efficiency and low levels of public water supply services. Past Government investment has not been properly maintained leading to the abandonment or major disrepair of many systems. Onlv 3% of the rural population had public water supply services in 1980 and adequate sanitation levels were even lower. The situation is further aggravated by the drought in the Northeast where alternatives to public supplies are not available. A modest goal of 50% coverage for rural public water supplv in the decade would require an investment of about US$2.0 billion. Based on past performance, the goal is highly unrealistic if major changes are not introduced in the sector. Improvements in sector efficiency would also likely result in substantial savings in investment to achieve 50% cover- age. The project will attempt to bring about these changes by providing a reorganization of the sector, a strengthening of sector institutions, and sound Financial planning and policies. The results will be improved project preparation, efficient investment and funds recovery, better oper- ations and maintenance, and broader and better sector services.

2.28 An estimated 106,000 persons will benefit from the water supply component of the Rio Grande do Sul pilot project, and the service coverage through house connections in rural areas will more than double to 10% by 1988. About 40,000 persons will benefit from the sanitation component of - 16 - the pilot project. The health, environmental and social improvemcntswhich have not been quantified will generate additional benefits.

2.29 Data from the 1980 cenRus, updated In 1983, show that in Brazil as a whole, 88% of the rural populatlon earns less chan two minimum sala- ries, below the paverty level of three minimum salaries.2/ Sixtv-tlx percent earn less than one minimum salary. In the Northeast Region, the poverty level Is higher. Because of the nature of the project (studies, consulting services, etc.), the direct Impact on the poverty group can only be established for the pilot state. The development of coherent policies and a long-term program for provision of water to the rural population will represent a significant step In improving the quality of life of rural residents, most of whom are poor. In the pilot statc, census data show that 80% of families in the commtinitiestentatively included in the project (Annex 4) enrn below two minimum salaries, and 88X fall below the poverty line of three minimum salartes. As plans are to provide full water service coverage in each eligible community, the project wiJl thtis have a very significant impact on the poor. It is also estimated that on a cost basis, the poor will he the beneficiaries of about 78% of the costs of the water supply and sanitation physical works.

2.30 The project depends on the cooperation of three ministries in administering a large studies and technical assistance component. To some cxtent the risk associated with the size will be minimized bv retaining PAHO to undertake administration and contracting. Nonetheless. continuation of cooperation by the ministries of the new administration, which took office in March 1985, will be essential.

PART III - AGREEMENTS REACHED AND RECOMMENDATIONS

J.01 NDuringnegotiations, assurances were obtained that:

(a) accounts and financial statements for IPEA, BNH, and the State of Rio Grande do Sul for each fiscal year will be audited by external auditors (para. 2.04);

(b) detailed plan and terms of reference for Northeast investment preparation will he submitted by June 30, 1986 (para. 2.09);

2/ On an anntial basis the three minimun salarv threshold corresponds approximatelv to one-third of the national per capita income. - 17 -

(c) SURBAM and communities will sign a contract, detailing community participation in the construction. financing and operation and maintenance of the systems, before construction of any aubproject (para. 2.12);

(d) semi-annual progress reports will be submitted to the Bank (para. 2.13);

(e) Interim and final evaluation of project components vill be performed (para. 2.13);

(f) study and technical aumistance findings and recommendationswill be d1sriunsedwith the Bnnk (parm. 2.13);

(g) all subprojects will meet agreed uipon selection criteria (para. 2.14);

(h) timely provision of counterpart funds by the Federal Government, BNH and the State of Rio Grande do Sul wtil be made (para. 2.17);

Ci) tariffs vill be charged to the communitier to cover operations and maintenance, and a minimum 30% of Investment cost of water supplv svstems and 100%of sanitary units (para 2.21); and

(j) purchases will be made In accordance with an agreed-upon program to be updated annually (para. 2.22).

3.02 As a condition of Loan effectiveness:

(a) all contracts formalizing project execution arrangements includ- ing transfers of funds will be submitted (para. 2.26); and

(b) ten contracts between SURBAM and communities along with final designs and costs will be submitted (para 2.26).

3.03 Wtth the above assurance", agreements and condittons, the prnject would be suitable for a Bank loan of USS16.3 million to be repaid over 15 years, which Ineludes three years of grace. - 1HA-

5Am~~

lW3ICAL A.SIJqtQf ANDPllOD tiAR tlJYY ANDS%AWAiGIN F lT

aw.k Lnmi to HrazlI for WItwr Sugulv aid SmFarr

March 11111

Year ramiMi. AmKnit/ Ih*'Wr 1twpX. h.r.ntw COmntu (IISS MlJIljam) _ rA___ nt 1.ikaw.mt _

Potsct wxrcraafully ac lt1d. 172 Th7-l .1 Ctar Uuter aS Pa1I hnter diatvhacttl 1 P1o.1ct pwtforim o it tvwert GzqAw and .torqjr (S'AVC/SAU.) (PPNR)dated Awprl 4, 1910.

Project macuufully aml..teS. 1Q71 7%R-wR j'.* tlC1ty Watrr cw lhado _tl4p onlIe.tim 10alml Ion PARWdat d Apul 4. 19Hn. Ftnal QuWwv ai diopnal (IlflW/SAWUiP) lomi mrt takaud from tS15$ 1d11lm.

Prx),Ject srfafully todtta. I 19t- lltl-W lb,n i2W Wauer msIwv Im triuWr In HU 1(i Project a'qlettlon Wrt (Pat) thr Stato n, uinwIkradi dated .hta tO. 19t1.

Q?.1, lly-w 41n.n NM Uhter nuppiv ml a,r ' I n am innI mwctwrfutlyv cupletd. thP State of 2TWm Ge-raLA Pit dantd 1w 1R, 1%R.

I 117I1 1 I5-Ik I 10.01 NM Ie .'walStion ad 71 -OR Ibuplt, uiVw efforts to ditpuAl In tlr cltv of Sm r*fonrmlate prnject, lrmliAn Pailo mitIe" amt . titu ogugl lition tucme of f inwidal

I 79 26Ih-lR I(.n NM l ter amspplvamd aewraw IR) 1' PrIect nw anrU a.utttod ad In thu State. of 1AhIA, ohiectiwa .tIuld be attained by 3Wra. AMi PefnwMjm "d-19R5.

I gm1 I PC-t- I in.n In WAter mupply mid wrW In 101) q2 Project n,w 1n= camedttAd and thr states rrflarm. Fstta nhlectfwe nhild 1h attairnd bw Catarina. mu Rlo (rndr dn i-190V.

ttI] I(-ftm I1.t) NM Third 'trw (.rai. Wate.r MDl tlpdatd pmroject rnxitto t tdule %LwlY ad SarMp to hpi. pal in faid-1985 to attain proket objectlwa by enl1911h.

tllqml1 7HtR lttn.ll II Ittltatt IWt r IJv aid 55 ) Project tvvnr nlwly. Srqt Proiect In thr State. A moqlete revitqi It sd_h1wi of Amminm, Galas. M. Giumi In add-I 5. do SL. Para, 'Parajbh thr Fwdrral ntXtrtct.

I'iW ZZ&A'.-U II.,. 1 2W Wmter %twIv,ym Xer 11 IDPrlct ewnation proamdiw Crtar Lnmn. ImTr rapidlv thin forcatad.

-"Ptal: 1.071.3 - 19 -

ANNEX 2 Page 1

BRAZIL

TECHNICAL ASSISTANCE AND PILOT RURAL WATER SUPPLY AND SANITATION PROJECT

Project Description

National Component a) Sector studies. Includes work to be carried out in the following areas:

(i) institutions. Evaluation of the existing organizational struc- ture, establishment of criteria to reorder the institutions, elaboration of amendments for existing legislation, definition of inter-institutional coordination, and identification of staff training needs;

(ii) finances. Preparation of financial policies for investment and operation of systems, tariffs, and funds recovery. Recommenda- tions on changes in the present organization and assignment of responsibilities in sector financing and on alternative flow of funds. Definition of financial criteria for setting priorities. Analysis of users' affordability. Recommendationson tariffs and other sources of financing and charges for services. Staff training needs;

(iii) community promotion. Definition of alternatives for community participation in the preparation, construction, operation, and administration of the systems. Analysis of community participa- tion in other sectors. Required legal arrangements. Required technical assistance and training;

(iv) human resources. AnalyLis of the different training programs in the sector, evaluation of the needs and, preparation of a national training plan for the rural sanitation subsector with emphasis in constructionoperation and maintenance of systems and on the administrationof services;

(v) engineering. Inventory of technologies for rural water supply. Develop alt-:rnative technical standards for project design including water quality emphasizing low-cost technologies. Definition of institutional arrangements for project design, exe- cution, and operation and maintenance. Production of education materials and assessment of training needs; - 20 -

ANNEX 2 Page 2 b) Investment plan preparation. At the state level, diagnosis of sector services (at community level), and financial, institutional, and tech- nical capacity. Formulation of sector service targets and development of investment alternatives for the decade. Consolidation of the state plans in a national plan; c) PAPP's support. Reinforce the administrdtion of the program at central and state level. Promote pilot experiences in project administration at municipal and community level. Establish cost recovery and tariff procedures and financial management structure. Promote community par- ticipation in the preparation, execution, and operation and maintenance of systems. Community education and training of operators and administrators. Technical assistance on engineering with emphasis in appropriate technology and definition of least cost alternatives; d) Project preparation facilities for the Northeast states. In each of the ten states, approximately 60 subprojects will be prepared. Prepa- ration works include community education and promotion, legal arrange- ments, hydrogeological surveys, engineering designs, socio-economic surveys, including tariff studies, and plans for systems' operation and administration. The project also includes required equipment. Detailed project description would be ready by June 30, 1986; and e) Equipmeit. Required for the coordinating unit and central consulting group which includes office equipment and vehicles.

Pilot component a) Studies and engineering. Approximately 200 subprojects will be prepared. Preparation works include community education and promotion, legal arrangements, water source surveys, engineering designs, socio-economic surveys, including tariff stuaies, and plans for systems' operation and administration; b) Water systems. Construction or expansion of about 200 water systems comprising: a drilled well, pumping equipment, chlorination facili- ties, water transmission, storage taak and distributionnetwork includ- ing house connections. Operation and maintenance for two years. Spare parts and tools for operation;

c) Sanitary units. Production and installation of 10,000 individual excreta disposal systems comprising: a detached shelter, toilet, lava- tory and shower, and a septic tank. Connection of this installation with kitchens. 5000 latrines; d) Technical Assistance and Training. Consultant services to SURBAM, and on-the-job training for staff working in project execution; and e) Equipment. Office equipment and vehicles. Sludge pumps. - 21 -

ANNEX 3 Page 1 BRAZIL

TECHNICAL ASSISTANCE AND PILOT WATER SUPPLY AND SANITATION PROJECT

Terms of Reference for the Development of Rural Water Supply and Sanitation Sector

Institutional Aspects

Activities should include:

1. evaluate t.e existing organizational structure of the water supply and sanitation sector at federal, state and municipal levels. Analysis of past performance of institutions participat- ing in operational, financial and technical sector activities;

2. set up criteria and alternatives for sector reorganization,for a division of responsibilitiesof sector institutions at the levels and areas mentioned in Section 1;

3. prepare legal instruments to amend existing legislation, paying special attention to the overlapping of sector responsibilities or activities;

4. define inter-institutional coordination and channels of com- munication; and

5. assess training needs and design human resources training programs for the decade with special emphasis in managing and planning.

Financial Aspects

Activities should include:

1. review existing financial policies of the water and sanitation sector at federal, state and municipal levels. The review includes past and projected investment, operation and maintenance costs, tariffs, sector financing and return on investment. Develop alternative financial policies and prepare recommend- ations for the interministerialcommittee;

2. review the existing financial organization of the sector, and the responsibility of the various sector agencies. Propose altern- atives for assigning responsibilitiesfor the execution, coordin- ation, supervision and control of sector finances. Activities should be coordinated with the consulting group responsible for the institutional aspects; - 22 -

ANNEX 3 Page 2

3. review of the sector flow of funds and terms and conditions of funding at federal, state and municipal levels. Recommend alternatives in accordance with the financial system proposed in 2 above;

4. review financial criteria for sector investment priorities for water supply, sanitation, and health education in rural communi- ties and develop financial criteria for future investments;

5. define the different components of the operation and maintenance costs for water supply and sanitation systems and their sources of financing;

6. review existing depreciation and amortization criteria and propose indices;

7. assess affordability of services to users and develop altern- atives for community financial participation. This activity should be especially coordinated with the consulting group working on the community participation area;

8. review existing sources of financing and recommend alternatives for financing at federal and state levels as well as external participation;

9. review tariff levels and structure at municipal, state, and regional levels and propose alternativeswhich should provide for progressivity and cross-subsidization between different income population brackets;

10. define sources and uses of funds for the states and national sector investment programs;

11. assist states in the preparation of state programs;

12. review the adequacy of state and national programs in using efficiently and equitably the available funding; and

13. evaluate training needs and coordinate required programs with the consulting group studying human resources.

Because of the need to complement ongoing projects,special emphasis should be given to activities in the Northeast states.

Community participation

Activities should include:

1. review community participation in the construction,operation and maintenance and administration of rural water supply and - 23 -

ANNEX 3 Page 3

sanitation ongoing programs. Define models for community part- icipation and develop policies and strategies for future pro- grams;

2. review community participation in past and ongoing infrastructure projects (power, solid wastes, etc.) as well as experiences in other Latin American countries;

3. define legal arrangements and documents required to support the alternatives proposed;

4. assess affordability by the beneficiaries at regional and state levels in coordination with the consulting groups working on financial aspects;

5. define the assistance required to organize the communities and prepare a schedule for the implementation of this assistance in coordination with the consulting group in charge of human resources;

6. design the participation of the communities in the different stages of project preparation, execution, operation, maintenance and administration of services;

7. design assistance required to train staff responsible for the implementationof the programs at the state and community levels;

8. design assistance to be provided to PAPP;

9. execute the program designed in 8 above;

10. assist the states in formulating the state sector investment plans;

11. evaluate regularly the pilot program in the state of Rio Grande do Sul and transfer experiences to other states;

12. evaluate past and ongoing programs in health education in Brazil and propose policies and strategies;

13. design assistance required to promote health education. This should be coordinated with the consulting group working in human resources;

14. design assistance on health education programs for PAPP;

15. execute technical assistance in 14 above; and

16. assist states in planning health education programs. - 24 -

ANNEX 3 Page 4

Human Resources

Activities should include:

1. identification of institutions providing training in the water supply and sanitation sector, assess past and ongoing programs, review costs and identify sources of financing. Review the role of state universities of the private sector, and international organizations in the training sector. Special attention should be given to the coordination with other consulting groups working in other areas; and

2. elaborate a proposal for a national training program for the rural water supply and sanitation sector. Attention should be given to the coordination and efficient use of the existing training resources. Training should cover project preparation and execution, community promotion, operation and maintenance of systems, and administration.

The annual training program should cover the decade and should be prepared in coordinationwith the other consulting groups working in other areas. The program should take into account the state proposals and the existing training institutions. Visits to works or on-the-job training may be arranged with any sector institution if the institutions have experience in the subject to be studied.

A great deal of the training required for rural water supply and sanitation programs should be in operation and maintenance of small water supply systems, in small excreta disposal systems, and/or housing con- nections and improvements. Emphasis will be given to train medium level staff.

Special coordination should be provided with consulting groups working with engineering aspects and with community promotion, in order to design minimum cost systems using the minimum standard of quality to provide acceptable services and taking into account community participation in the construction, operation and administration of the systems.

In supporting the states, action should be concentrated in assistance from central levels through consultants to state staff and to their supervision.

In order to coordinate training actions and to avoid overlapping of efforts, the training program should propose an institution to manage and control the program at the federal level. - 25 -

ANNEX 3 Page 5

When providing assistance to the states in developing state trainingprograms, priority should be given to states under PAPP. It is importantto providestaff involvedwith that NE programwith well designed visitsand short courses.

The pilot programto be carried out in Rio Grandedo Sul should be monitored to gain experiencesthat may be replicatedin the national program. When studying the institutionsworking in sector training emphasisshould be given to levelsof renumerationin the sectorand to the preparationof a job gradingexercise.

The group shouldassist the states in the preparationof training programsincluded in the states'investment plans.

EngineeringAspects

Activitiesshould include: a. Water Supply

1. gather and analyze existingbibliography on execution,operation and administrationof ruralwater systems;

2. gatherinformation on materialsand equipmentsuitable to be used in rural water systems;

3. review design standards taking into account reliability of services, labor available in rural.areas, and materials and equipmentsuitable for rural systems;

4. reviewstandards of qualityfor water;

5. review standard designs for water suppliesused by the federal and regionalinstitutions;

6. promotemeetings to discussnew availabletechnologies for small water systems;

7. study possibilitiesfor coordinationbetween state institutions and state universitiesfor research;

8. working togetherwith the Ministry of Health to develop hygiene educationmaterials related to water supplies;

9. promote developmentof new materials and equipmentdirected to decreasecosts; - 26 -

ANNEX 3 Page 6

10. support PAPP;

11. assist the states in preparing the state investment plans, with special emphasis on the Northeast states;

12. monitor the pilot program in Rio Grande do Sul and evaluate experiences; and

13. participete in the preparation of the national investment prog;am. b. Excreta Disr*sal

1. gather and revi!w existing bibliography;

2. study ongoing programs in the country and experiences of international organizations;

3. study the adaptability of sanitary installations with habits of the target population;

4. study the use of low cost alternative materials produced at local levels;

5. develop techniques to: (i) reduce investment and operating costs; (ii) optimize the acceptability of installation by users; (iii) increase community participation in project execution and systems maintenance; (iv) extend the useful life of installations; and (v) provide services that may be upgraded gradually;

6. support PAPP;

7. assist states in preparing state investment plans;

8. monitor the pilot project in Rio Grande do Sul and evaluate experiences; and

9. participate in the preparation of the national plan.

States' Investment Plans Preparation

Activities should include:

1. Analyze and evaluate rural water supply and sanitation sector (identificationof communities and existing services);

2. promote coordinationbetween state and local level institutions; - 27 -

ANNEX 3 Page 7

3. evaluate existing capacities at the state level on human resour- ces, materials, technology, and financial resources to determine required technical assistance;

4. define intermediate and final goals for the decade in the states and analyze of available projects;

5. coordinate water supply and sanitation sector activities with agriculture, health, etc;

6. define required institutional strengthening of the executing agencies including management, administration, finances, and human resources to be able to assume the proposed responsibili- ties;

7. define required technical support from coordinating units at central level; and

8. define contractual arrangements between federal, state and regional institutions.

Components of the State Plan

1. Summary

2. Background

3. State planning

3.a. State data

3.b. Legislation

4. Diagnosis

4.a. Analysis of rural water supply and sanitation sector

4.b. water resources

4.c. service coverages in water supply and excreta disposal

4.d. institutionalarrangements for execution of projects, administrationand operation and maintenance of systems.

5. State plan

6. Policies - 28 -

ANNEX3 Page 8

7. Objectives

8. Goals

9. Strategy 10. Institutionalarrangements 11. Investmentplan for water supply,excreta disposal and hygieneeducation.

11.a. commercial aspects

11.b. operatingexpenses

1 1.c. depreciation ll.d. tariffs

ll.e. financingplan

ll.f. debt service

l1.g. financialprojections

The centralorganization will consistof a group of specialists to cover five macro regions.

Specialemphasis should be given to statesunder PAPP.

National Investment Program Activitiesshould include:

1. evaluationof state plans (objectives),impact on development, nationalpolicies, implementation schedule, required capabilities and costs;

2. consolidationof state plans in a NationalRural Water Supplyand SanitationPlan for the decade;and

3. preparationof two national seminarson sector planning. The first will discussthe proposedplan features. The secondwill be carriedout in the final stages of plan preparationand will be directedto informauthorities of the proposedplan. - 29 -

ANNEX 4 Page I

BRAZIL

TSCHNICAL ASSISTANCE AND PILOT RURAL YATER SUPPLY AND SANITATION PROJECT

Tentative List of Communities

Municipality Community 1980 Population

Alegrete Passo Novo 852 Bom Jesus S.Jose dos Ausentes 715 Cachoeira 441 Arco Verde 169 Catuipe Inhacora 995 Cotipora Cotipora 882 Guapore .'92 Massombara :103 Lajeado Boqueirao do Loao i85 Conventos 311 Marques de Sousa 532 S.Clara do Sul 514 Vila Progresso 680 Vila Cancelao 621 Rlozinho 1.317 St. Maria 459 S.Antonio da Patrulha Palmeira 779 Sao Gabriel Santa Clara 1.012 Sao Sebastiao do Cai S.Jose Hortencio 977 Capela Santana 3.504 Sao Valentim Vila Alegre 1.524 Lajeado Pilao 189 Alpestre Esq. Gaucha 212 Farinhas 231 Sta. Izabel do Sul 543 Pedreiras 146 Barracao Espigao Alto 262 Boa Vista do Burica Vila Cacador 184 Bom Jesus' Sto Inacio 384 Bom Principio Sao Vendelino 1.799 Ivai 105 Braga Pedro Garcia 340 - 30 -

ANNEX 4 Page 2

BRAZIL

TECHNICAL ASSISTANCE AND PILOT RURAL WATER SUPPLY AND SANITATION PROJECT

Tentative List of Communities

Municipality Community 1980 Population

Cacequl Umbu 308 Paraiso do Sul 235 Rincao da Porta 473 Tres Vendas 408 Caicara Ipoacu 250 Camaqua Banhado do Colegio 500 Pachera 311 Vila Turva 253 Santo Antonio 312 Casca Santo Antonio 218 Cerro Largo Linha Cacador 184 Chapada Bol Preto 2(7 Esquina Gaucha 179 Dois Irmaos Santa Maria 712 Torquato Severo 350 Erexim Quatro Irmaos 219 Arco Iris 297 Farroupilha Nova Milano 264 S.Jose Herval 176 Osvaldo Cruz 148 Castelinha 214 Vista Alegre 511 Taquarassu 706 Gaurama Aurea 567 Centenaria 120 Gravatai Morungava 530 Guaira Sertao Santana 417 Eldorado 109 R.Pedras Brancas 1.955 D.Retiro do Guaiba 449 291 IJui Chorao 165 Independencia Esq. Buel 216 - 31 -

ANNEX 4 Page 3

BRAZIL

TECHNICAL ASSISTANCE AND PILOT RURAL WATER SUPPLY AND SANITATION PROJECT

Tentative List of Communities

Municipality Community 1980 Population

Irai Vila Dorotea 189 Vila Goroto 239 Itaqui Borore 108 Sete Lagoas 241 Nova Esperanca 701 567 Clemente Argolo 214 Andre da Rocha 236 Lajeado Canudos 204 Fao 204 Ibare 260 Linha Xisto 225 Pinhalzinho 143 Tres Municipios 207 Marau Vila Maria 545 Camargo 460 Vila Suzana 198 Pinhalzinho 216 Miraguai Tronquelra 245 Montenegro 452 Harmonia 494 423 Rio das Indios 147 Nova Petropolis Picada Cafe 731 Pinhal Alto 242 Osorio 305 Passinhos 365 Pinheirinho 228 Basilio da Gama 552 Parore Santa Cristina 465 Campos Vicente 547 190 - 32 -

ANNEX4 Page 4

BRAZIL

TECHNICAL ASSISTANCE AND PILOT RURAL WATER SUPPLY AND SANITATION PROJECT

Tentative List of Communities

Municipality Community 1980 Population

Planalto Sao Gabriel 502 Santa Cruz 202 Sao Luiz 207 Rio Grande Taim 266 Rincao del Rei 609 Bexiga 400 Albardao 180 Xavier 181 Rio Pardinho 426 Formosa 387 Erveiros 217 Santa Maria Dilermo de Aguiar 545 D-Outros Balnearlos 1.895 Sao Martinho 239 Arroio do So 244 Santa Rosa Esquina Candeia 207 Santiago Florida 16. 407 Tupanduba 258 Sto. Antonio da Patrulha Entrepeladdo 156 Sta. Antonia das Missoes Sao Jose 207 Tiradentes 216 Sao Bor1a 250 Carruchos 435 S.Francisco de Paula Rincao dos Xroeff 208 Tainhas 203 Cazuza Ferreira 369 Sao Gabriel Tiaraju 221 Sao Jeronimc. Barao do Triunfo 268 Sao Jose do Norte Bojuru 327 Estreito 151 B.5a Sec. da Barra 1.260 Capivaras 819 - 33 - ANNEX4 Page 5

BRAZIL

TECHNICALASSISTANCE AND PILOT RURAL WATERSUPPLY AND SANITATION PROJECT

Tentative List of Communities

Municipality Community 1980 Population

Sao Jose do Ouro Tupanci 272 Sao Sepe Vila Nova 611 Vila Block 470 Mormaco 233 Bela Vista 215 Vila CCosta 198 Tapejara Charrua Baixa 276 Padilha 400 Rincao Sao Jose 340 Barra da Guarita 988 Torres Tres Forquilhas 310 Gloria 205 Rua Nova 265 Tres Passos Tiradentes 350 Triunfo Passo Liaso 187 Tupancireta Jarl 340 Vagaria Sao Manoel 721 Venancio Aires Mariante 559 Carlos Gomes 314 Viahao Aguas Claras 547 Viatiba 187 Taibate 338 Carlos Barbosa Arroio Canoss 197 Curro Largo Santo Antonio 200 Constantina 289 Estrela Xingu 174 Garibaldi Cel.Pilar 200 Garibaldi Daltro Filho 284 Garibaldi Linha 27 da B.Vista 205 Ejui Cel. Barros 155 Nonoai Trindade 729 Nova Brescia 200 Palmeira das Missoes Jaboticaba 616 953 - 34 -

ANNEX4 Page 6

BRAZIL

TECHNICALASSISTANCE AND PILOT RURAL WATERSUPPLY AND SANITATION PROJECT

Tentative List of Communities

Municipality Community 1980 Population

Salvador do Sul Barao 552 Poco das Antas 344 Santa Cruz do Dul 534 Santo Angelo S.Miguel das Miss. 609 Santo Augusto Sao Valerio 697 Sao Marcos Pedras Brancas 300 Soledade Ibirapuita 698 Tenente Portela 553 Tres de Maio Alegria 722 Tres de Maio Progresso 260 Tucunduva Pratos 777 Truguaiana Barra do Quarai 949 Truguaiana Sao Marcos 481 Camaqua Santa Rita Sul 934 Berto Cirio 1,000 Canoas Santa Rita 969 Canoas California 300 Mato Perso 200 Frederico Westphalen Pinheirinho 300 Garibaldi Tamandare 295 Osorio Capivari 630 Rio Grande Ilha dos Marinheors 1,348 Rio Pardo Capivarita 778 Rio Pardo Passo do Sobraddo 752 Sto.Ant.da Patrulba Caraa 1,080 Sao Gabriel Vacacai 822 Sao Nicolau Pirapo 400 Ararica 1,010 Sapiranga Picada Hartz 1,605 Taquari Vila 648 Teutonia Canabarro 2,742 Torres Morrinhos 497 Tres Cahoerias 1,660 Vacaria Vila Ipe 961 - 35 - ANNEX 5 Table 1

BRAZIL

TECHNICAL ASSISTANCE AND PILOT RURAL WATER SUPPLY AND SANITATION PROJECT

Project Cost

Projected Annual Investments (US$ 000)

Total 1985 1986 1987 1988

National Component 9975.9 370.0 2400.0 3450.0 3755.9

Coordinating Unit 645.3 100.0 210.0 220.0 115.3 Studies 2945.2 100.0 890.0 1000.0 955.2 Investment Plan Preparation 775.5 0 0 427.6 347.9 PAPP Support . 1772.4 170.0 800.0 802.4 0 Project Preparation - Northeast states 3337.5 0 0 1000.0 2337.5 Equipment 500.0 0 500.0 0 0

Pilot Component 15938.6 1795.0 7420.0 6206.7 516.9

Coordinating Committee 452.5 75.0 150.0 150.0 77.5 Studies/Designs 1930.4 20.0 700.0 200.0 30.4 Water Systems - Construction 9766.3 1300.0 4450.0 4016.3 0 Water Systems - Operation 500.0 0 0 125.0 375.0 Sanitary Units 3420.3 0 1900.0 1520.3 0 Technical Assistance 424.0 70.0 170.0 150.0 34.0 Equipment 245.1 150.0 50.0 45.1 0 25914.5 2165.0 9820.0 9656.7 4272.8 Physical Contingencies (5%) 1295.7 108.3 491.0 482.8 213.6 December 1984 Project Cost 27210.2 2273.3 10311.0 10139.5 4486.4

Price Contingencies 5280.1 90.9 1326.0 2333.8 1529.4

Total Project Cost 32490.3 2364.2 11637.0 12473.3 6015.8 in= X _ = w " " _ _ _ "" l u s s w f s = B s - 36 -

AiN 5 Tihbe 2

DOL ASSISE! AMDPIWr RRALWa1 Sa AND 5fATIN ERDM

Proect Cos

National CampoomtCcmaulcmt costs

Forelg coat Iocal Cost 9uort Cost Total aost ?mndt llSS'0OD NtI US$'000K imtbo LSWS'000 N mt UB$'000

Qrlzlat hlgiit 30 195.0 90 363.0 - 0 12D 558.0 btitiAul Aspects 6 39.0 78 218.4 72 72.0 156 329.4 Flvzioes/Fry 12 78.0 126 352.8 - 114.0 252 544.8 tmity Participtic 0 0 85 238.0 24 24.0 109 262.0 -aiig 0 0 72 201.6 48 48.0 120 249.6 hiwfag 9 585 % 268.8 66 66.0 171 393.3 Tnwstit FU. 12 78.0 120 336.0 48 48.0 180 462.0 PARPTadmtcal asistam 60 390.0 2D4 571.2 - 0 264 961.2 Prepqatian fir Invntory nNIbrtheat stati 0 0 0 0 0 0 0 0 129 838.5 871 2549.8 372 372.0 1372 3760.3 BRAZIL TECHNICALASSISTANCE AND PILOT RURAL WATER SUPPLY PROJECT ProJectImpenmentallon Schedule

bo _ 195ss_ 1986 17 1911 COMPONENTa.FTER 1 2 3 4 11 2 3 4 1 2 3 4 1 2 3 4

PILOTR.G. DO SUL _ 11.Pwqect Supervision cd .h_ Assistonce& Trning - -

2. Community Roorntion - - -

3. Studies.Designs. Controcts -

4. WaterSupply Systems - 6 SanitaryUnlns

NAIIONA 1. ProjectSupenrvssort & TechnicalAssistance------

2 SectorStudis _ = =- = = =

3. InestmentPlans Preporation - _ - _ 4. PAPPSupport _ _ _ 5. Rooc PreparationNE

PROJECTEVALUATION

Wld Bank-27291 0% - 38 - ANNEX7 Page 1

BRAZIL TECHNICALASSISTANCE AND PILOTRURAL WATER SUPPLY PROJECT OrgonkaztbonChart tor NationadComponent

ffA intaffr*mmiaiom"Mite

| I~~~~~~~~~~~~~~~ I

Wo4lIdDonk-27292 - 39 - AM= 7 Pa-ge 2

BRAZIL TECHNICALASSISTANCE AND PILOTRURAL WATER SUPPLY PROJECT Organization Chart for Pilot Component

Int.h Op.

9IJRSM

CoordhO I

=mt MnTcd Adv.Un-t & AwMaants &Vport Staff

,11 11111 B11

WorldBank-27293 - 40 - ANNEX 8 Page 1

BRAZIL

TECHNICAL ASSISTANCE AND PILOT RURAL

WATER SUPPLY AND SANITATION PROJECT

BNH's Finances

General

1. BNH is a Government-owned bank, established in 1964. BNH is administrativelyand financially independent and reports to the Ministry of Interior. Its lending activities are concentrated in low-cost housing urban development and sanitation. It also acts as the guarantor of the Brazilian savings and loan system.

2. The Bank through its Water Supply and Sewerage and Urban Divi- sions has signed loan agreements with BNH in the amount of US$1,130 mlllion. As of December 31, 1984, the Bank had disbursed NS$667 million, and BNH had repaid US$122 million, leaving a principal balauiceoutstanding with the World Bank of US$545 million and an undisbursed balance of US$463 million.

3. BNH annually prepares and updates a three-year budget and lending program, which is submitted to the Federal Government for approval. Begin- ning in 1982, the Federal Government has placed limits on BNH's lending as part of its adjustment program. Sectoral and regional loan allocations are determined by the Government's public investment policy; sector demand and absorptive capacity; undisbursed funds under existing contracts; limits on indebtedness;and BNH's profitability.

4. BNH's accounting records are computerizedand reliable. Standard financial statements, following generally-accepted accounting principles, are produced in a timely manner. BNH's accounts are audited annually by a large, respected Brazilian external auditing firm. The firm issued an unqualified opinion on BNH's 1983 financial statements. Almost all of BNH's assets and liabilities are denominated in UPCs. The UPC is a Brazilian monetary unit adjusted quarterly in accordance with the percent- age increase granted to national treasury bonds. The value of the UPC is approximately US$6.50. In four of the past six years (1978-83), correction of the UPC lagged considerably behind inflation. The lagging was particu- larly acute in 1979-80. During 1984, the Government maintained a policy of adjusting the UPC with inflation. The principal result of the lagging UPC has been a net transfer of resources from depositors in the Employees Indemnity Fund (para. 5) to BNH loan beneficiaries. - 41 -

ANNEX 8 Page 2

Past and Present Finances

5. BNH's principal sources of new funds are deposits in the FGTS. The FGTS ia financed by an 8% payroll contribution from all employees covered by labor legislation. Pa.ticipants in the FGTS may withdraw their contributions when unemployed or for house purchase or retirement. FGTS performance is highly sensitive to Brazil's macro-economic performance.

6. Summary BNVHfinancial statements are presented in Attachments 1 and 2. BNH continued to expand its operations during 1980-82, although at lower growth rates than those achieved in the 1970s. The loan portfolio increased from UPC 923 million at year-end 1979 to UPC 1,605 million at year-end 1982, an average annual increase of 20% (6Z in real terms). Total assets increased 17Z p.a. (3% in real terms) over the same period. New lending peaked at UPC 324 million annually in 1981 and 1982. New lending was fueled principally by the 15% annual growth (2% in real terms) in the FGTS from UPC 826 million at year-end 1979 to UPC 1,275 million at year-end 1982. Yearly internal cash generation from operations averaged UPC 36 million during 1980-82, down from the UPC 42 million generated in 1979. Cash operating receipts during 1980-82 grew at about 132 p.a. (5% negative growth in real terms), while operating and financial expenses increased 45% p.a. (21% in real terms). Interest receipts were affected by the lagging of the UPC behind inflation, slightly lower portfolio yields and longer grace periods reflecting BNH's decision to direct its lending operations to poorer regions and lower ranges of the housing market. Higher administra- tive expenses resulted from BNH's decentralization of operations and the lagging of the UPC while higher financial costs were attributed to a more highly leveraged debt/equity structure (8.3:1 in 1979 to 11.7:1 in 1982) and a more costly mix of liabilities.

7. BNH's financial performance deteriorated sharply beginning in 1983 as a result of the continuing recession in Brazil and Government adjustment policies.

a. FGTS

Net receipts of the FGTS fell precipitously (53%) in 1983 to UPC 70 million from the historic high of UPC 150 million achieved in 1982. Net FGTS receipts dropped another UPC 14 million (20%) to UPC 57 million in 1984, although the situation appears to have stabilized in the fourth quar- ter. Increases in unemployment eroded the FGTS contribution base and led to major withdrawals from the fund. Government wage policy resulted in lower real wages, a further erosion of the FGTS contribution base and greater use of the fund to service home mortgages. FGTS gross deposits fell UPC 63 million (16%) from 1982 to 1984. FGTS withdrawals as a per- centage of gross deposits increased from 61% in 1982 to 82% in 1984. - 42 -

ANNEX 8 Page 3

b. Loan Portfolio Performance

The continuing recession and restrictive Government wage policy also adversely affected BNH's return (principal and interest payments) on its loan portfolio. Principal and interest payments dropped slightly from UPC 160 million in 1982 to UPC 158 million in 1984; however, the percentage of payments to the average outstanding loan portfolio dropped from 11% in 1982 to 9% in 1984. Loan delinquencies increased forcing a major renegotiation of payment terms in June 1984 between BNH and its borrowers. The renegotiations covered all of BNH's operations, and almost 50% of the value of the BNH loan portfolio has been renegotiated. Despite several BNH measures in 1983 and early 1984 to ease the financial burden at the final borrower level, delinquencies remained high. As of August 1984, 22% of mortgage holders in the BNH housing system (including the savings and loan associations) were behind in their payments by more than three months. Historically, delinquencies in the BNH housing system have run at about 7%. As mentioned above, BNH acts as guarantor of the savings and loan system. Based on deposits, the savings and loan system is approximately 2.3 times bigger than ENH. Major mortgage foreclosure proceedings were not instituted. I-stead, the Federal Government together with BNH developed a package of financial incentives in September 1984 (Decree 2164) to address the high delinquencies in the housing system and ease the financial burden of the final borrowers. The Decree provides for past due mortgage payments to be reclassified as current; a one-year sliding scale of reduced monthly payments depending on timing and amount of house purchase; and tying mortgage payments more closely to the timing and amount of salary increases. Larger financial incentives are provided to mortgage holders who purchased houses in 1981 and later, as mortgage holders who purchased houses before 1981 benefited from the large UPC correction lag in 1979 and 1980. Costs are to be borne by the Federal Government, through the annual issuance of UPC 15 million in bonds over a ten-year period; financial intermediaries;new home purchasers; and BNH.

c. Savings and Loan Systems

BNH acts as the central banker and guarantor of the savings and loan system. It administers the insurance and liquidity funds of the sys- tem. A major shakeout occurred in the savings and loan system in 1983-84. High delinquency rates and sluggish growth in passbook savings (due in part to negative real returns and illiquidity of accounts) coupled with peak beginning of the quarter savings withdrawals led to liquidity and insolvency problems in the system. BNH intervened and is presiding over the liquidation of eight savings and loan associations that failed during the last two years. BNH also drew heavily on funds to maintain the sys- tem's liquidity. Net BNH resources used to cover the system's needs amounted to UPC 24 million in 1983-84, which is in sharp contrast to BNH's net increase in funds of UPC 27 million from the savings and loan system in 1982. The Government has adopted policies and incentives to hold and attract passbook deposits. These savings now provide a positive real rate - 43 -

ANNEX 8 Page 4 of return and are more liquid. The interest Is also tax exempt. Passbook savings grew at slightly under 8% during the year ending September 30, 1984. BNH established a new major source of low interest, long-term funds in 1984. The new fund (FAHBRE), created by deposits from the savings and loan associations, is designed to assist BNH's low-cost housing program. FAHBRE deposits totalled UPC 50 million in 1984.

d. Liquidity

BNH experienced liquidity problems in 1983, particularly at the beginning of each quarter, when becausc.of the quarterly monetary correc- tion of FGTS and passbook savings dep,sits, withdrawals peaked, creating a heavy demand on BNH's resources. BNH was able to meet this demand without resorting to direct Government assistance. In response, BNH curtailed its lending (para. 7f) and relied on its portfolio of Government bonds, its main source of liquid funds. Government bonds held by BNH moved sharply downward during the first eight months of 1983, from a high of UPC 70 million at year-end 1982 to a bottoming-out at UPC 17 million in August 1983. Since then, BNH's liquid position has shown a sustained improvement; its portfolio of Government bonds increased to UPC 88 million in October 1984. Government policies providing incentives to passbook savings and limiting public sector investments eased BNH's liquidity requirements.

e. Financial Position

BNH's total assets at June 30, 1984, were UPC 2,009 million. Tbe loan portfolio amounted to UPC 1,795 million or 89% of total assets at June 30, 1984. Loans are backed by state and municipal Government and financial institutions guarantees and mortgages. The allowance for doubtful loans was UPC 55 million (3.1% of the loan portfolio) composed of loan install- ments past due more than 90 days (UPC 18 million) and loans in liquidation (UPC 37 million). The allowance for doubtful accounts includes the effect of BNH renegotiations with its borrowers. BNH. following Brazilian accounting practices, does not present a balance sheet category for non- performing loans as required in the United States. BNH's equity (UPC 131 million) was 7Z of its loan portfolio at June 30, 1984. The FGTS amounted to UPC 1,409 million, or 70% of BNH's total liabilities and equity at June 30, 1984. Other elements of BNH's capital structure at June 30, 1984, included housing and savings and loan systems deposits (UPC 163 million, 8% of liabilities and equity) and outstanding loans payable (UPC 112 million, 6Z of liabilities and eauity). World Bank loans payable amounted to UPC 74 million or 4% of BNH's liabilities and equity at June 30, 1984. BNH's annual average loan portfolio yield during 1982-84 was 5.3%, while its annual financial expense on average liabilities and equity was slightly below 4.0Z.

f. Lending

The reduction in total sources of funds available to BNH, the decrease in effective housing demand, the need to improve liquidity and the - 44 -

ANNEX 8 Page 5

Government's limits on public sector investments combined to severely curtail BNH lending in 1983-84. New lending operations declined UPC 48 million (15%) from UPC 325 million in 1982 to UPC 277 million in 1983. New lending in 1984 was UPC 170 million, a 39% reduction from the 1983 level. BNH lending has been increasingly targeted at the poorer North and North- east regions, social interest housing and sanitation. During 1979-83, 65% of net FGTS deposits were capLured in the more prosperous Southeast region while only 50% of these resources were applied in the Southeast. During the same period, 16% of net FGTS deposits were captured in the North and Northeast regions, while 27% of these resources were applied in these regions. Almost 50% of BNH's 1984 lending program was targeted at social interest housing and 25% in the sanitation sector.

Future Finances

8. BNH projects an improving financial performance beginning in 1985 based on the following key assumptions: (a) continued growth in the economy (5% p.a. incr, c in GNP with reduction ln unemployment reflecting directly on FGTS receipts); (b) improvement in return on its loan portfolio (prin- cipal and interest payments) reflecting BNH and Federal Government measures taken in 1984 (loan portfolio renegotiations and Decree 2164-para. 7(b)); Cc) increased effective housing demand and depletion of accumulated housing stock; (d) stabilization of the savings and loan system with no new inter- ventions; (e) continued attractivenessof passbook ravings; and (f) relaxa- tion of government wage policy.

9. BNH forecasts a modest improvement in 1985 with more favorable performanicein 1986 and 1987, especially in the growth of FGTS deposits and loan portfolio returns. New lending is projected at UPC 260 million in 1987, below the UPC 298 million achieved in 1980.

10. The whole BNH system is financially fragile on both the assets and liabilities sides. The realizable market value of its assets may be, at present, less than the liabilities --both because there is no market for urban infrastructure and because the prices of housing and other real estate are currently depressed, sometimes below the value of the mortgages financed through the system. The liabilities of the system are vulnerable to deposit runs, which could be provoked by higher effective interest rates on alternative financial instruments and fears of possible deindexation. The savings and loan system, where large amounts of passbook savings are concentrated in relatively few accounts which could be shifted quickly to alternative investments, is particularly vulnerable. In addition, a new recession could lead both to slower growth of FGTS inflows and passbook savings deposits as well as to increased withdrawals by individuals seeking to compensate for their falling incomes. While it is unlikely that the Government would per&!,'these events to come about, since the impact could affect the entire financial system, any additional large scale bailouts could affect the credibility of the mortgage system. - 45 -

ANNEX 8 Page 6

I1. This financial fragility of the BNH system places major con- straints on the conduct of monetary policy. It is also one of many factors which now converge to favor a continuation of Brazil's economic recovery. To continue the recovery and achieve a sustainable rate of growth will require a reasonably favorable international economic envirco,ment,success- ful completion of economic stabilization, continued realignment of economic incentives, and major improvements in public sector management. Over the longer term, the stability and efficiency of the BNH system is best pro- moted by encouraging its integration into a liberalized national financial system in the context of broader financial sector reform. In the meantime, for the reasons cited above, BNH's financial projections would be affected by a downturn in Brazil's macroeconomic performance and/or Government measures affecting wages, savings, and interest rates. It also remains to be seen if loan renegotiation and Decree 2164 measures are sufficient to cut loan delinquencies to levels assumed by BNH. BNH's financial perform- ance will be monitored during Bank supervlsion missions, and the Bank will Beek to strengthen BNH as part of a broader effort to support financial sector reform. - 46 - AN£X3 8 Attachment 1

8AZIL

TECHNICALASSISTANCE AND PILOT RURALWATER SUPPLY AND SAITATION PYCJECT

Cash Flow Sctatemintc for Year. Ktded llecember 31 (urc 000) I/

Actual Zetirnted Pr*l.cted by on 1980 1981l 192 1983 198. 1915 2986 1987

Operatntl Ruceipt. Intevret Ince_ 55,354 bO,68R 69,1b1 70.325 69,019 79,060 84,500 90,0S0 ServiceChrgem 31,313 5,H63 4,357 4.391 3,350 2,870 bo000 8,000 Other Incom 5 ,ID 7.370 H.472 8R345 9.310 4.060 10.386 10.9l6 Total Receipts 64L647 73;921 81,990 63,n61 81,879 86,590 101,08b 109,036 operatinjt Eupens.. Administratlive Expenme 11,746 15.522 24,713 21,163 20,384 21,790 24,480 27,400 Ftnanclsl Cxpenme. 5,833 s.5,0 12,008 16.933 18,810 22,260 25,200 206900 other 7,485 20.694 10.323 9.964 5.4118 4,530 4,166 3,942 Total Cxpen.ev 25.064 41.721 47,046 48,060 44.882 48.588 53.846 56.242 Internal C-ah from Operations 39.583 32,:00 34,944 35,001 36,997 38,002 47,240 50,794

Sources Internal Cash from Operatlon. 39,583 32,200 34.944 35.001 36,997 38,002 47,240 530794 FCTS Dposit. (Groim) -- --- 3s6b116 3b6,710 322,700 338,440 382,000 420,000 VCTSWlthMrawls - - (235.954) (29A.368) (266.0721 (271 .905) (282.000) (300.000) FCTS Depocts (st) 120.203 135,913 150,162 70.342 56628 66.535 100,0oo 120,000 Other Deposlts (22,988) 50,039 23,6b1 29,145 50,734 27,590 29,000 21,W00 Loan Principel Repay_nwts K9,371 100,459 90.971 110,167 68,771 91,413 103,500 110,450 loan. 2.694 5,205 17.850 17,523 22.497 22.700 22.000 22,000 Covernent Transferu 0 0 7.080 12.202 9.893 11,875 24,000 25.000 Other 71.918 60.948 7.572 10.854 17 767 22.}10 26.514 28.514 Total Sources 300.751 390.764 332.;74 285,234 283,287 20,427 352,254 377.755

Applications Debt Servier 510 964 2,141 3.110 9.852 12,850 15,460 17,100 Treasury fond. 3,222 63,104 287 (8,787) 59,440 9,254 39.000 46,000 riNSOCIAL 0 0 0 0 3,221 7,380 5.500 S.500 other 926 938 549 0,834 30,798 21,567 41,494 48.158 N1v Loans 298.302 324.529 324.942 276.997 169.746 222.346 250.000 M260.=o Total Applications 302,900 389;535 327,919 280,154 273,287 273,397 351,434 376,753

Change In Cash (2,199) 1.229 4,355 5,080 8,000 7,030 800 1,000

I/ lUpCwUSsb.5 BRAZIL

TECHNICALASSISTANCE AND PILOT RURALWATER SUPPLY AND SANITATIONPROJECT

Summary Balance Sheets as of December 31 (UPC 000) 1/

Actual Estimated Projected by BNH 1980 1981 i982 1983 1984 1985 1986 1987

Loans Receivable 1,141,400 1,385,900 1,604,700 1,774,700 1,855,000 1,929,300 2,073,700 2,221,700 Other Assets 105,200 120.600 151.500 184,300 187.800 168.800 189.800 227.400 Total Assets 1,246,600 1,506,500 1,756,200 1,959,000 2,042,800 2,098,100 2,263,500 2,449,100

FGTS Deposits 978,400 1,137 ,OpOO 1,274,900 1,363,600 1,439,300 1,508,100 1,608,200 1,728,200 Other Liabilities 147.600 237.800 343,200 451,000 469,300 464,900 519,500 574,000 Total Liabilities 1,126,000 1,374,500 1,618,100 1,814,600 1,908,600 1,973,000 2,127,700 2,302,200 Capitaland Reserves 120,600 131,700 138,100 144,400 134,200 125,100 135,800 146,900 Total Liabilities and Equity 1,246,600 1,506,500 1,756,200 1,959,000 2,042,800 2,098,100 2,263,500 2,449,100

I/ IUPCICUS$6.5 1

- - 48- PAninEa BRAZIL Attachient 3

TECE1ICAL ASSISTANCE AND PILOT RmRALwATER SupPLY

ANDAN F&TSORJC

UPC millions N,t Deposita 30

1982

to

JAN FEV MAR - ADA MAI -JUN - JUL- "£0 LT OUT NOV DEl

30 -

20

1983 to 0l - .~ -

JAN FEV mAR AR MAI JUN JUL AGO SET OUT NOV DEZ

30

20

1984 io____

I~~~~~~~~~~~~~~~~~~~~~ 0 n BRAZIL

TECHNICAL ASSISTANCE AND PILOT RURALWATER SUPPLY AND SANITATION PROJECT

Passbook Savings Met Deposits

UPC millions

50

.- - - nr- _- _ _1 _4 -- -

L.J~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~'

______i

"orS 98 - 50 -

ANNEX9 Page 1

BRAZIL

TECHNICALASSISTANCE AND PILOT RURAL WATERSUPPLY AND SANITATION PROJECT

Cost Recovery in the Pilot Component

1. Tariff levels and structures in communities served by the project will be based on financial needs and socio-economicstudies determining the inhabitants' capacity to pay.

2. Water tariffs will provide revenues sufficient to cover:

(a) operating and routine maintenace costs;

(b) replacements or extraordinary repairs of major systems com- ponents; and

(c) debt service taking into account the initial community contribu- tion and ability to pay, such that a minimum 30% of system

investment - cost is recovered (18 years amortization at 7.5% interest, plus monetary correction). The initial contributions will be a minimum of 2.5% in cash payable before the initiation of works and 7.5Z during the construction period in cash, labor or kind.

3. Water systems will not be metered; therefore, a system of pro- gressive tariffs based on fixtures in each house will be used to set monthly charges.

4. Tariff levels will .be reviewed annually by SURBAM and will be adjusted during the year to allow for adjustments due to inflation.

5. Full cost will be recovered for the individual sanitary units under the project. The cost will be recovered during 18 years at 7.5% interest plus monetary correction.

6. Minimum average water tariffs for a typical system (350 population with 70 connections and 1000 m3 monthly production) are as follows: - 51 -

ANNEX 9 Page 2

Monthly Operating and Maintenance Costs

Operation 1/2 month labor Cr 54000 Energy Cr 33.75/m3 33750 Maintenance Electrical 5133 Maintenance Network 11681 Chemicals 2490 Quality Control 14000 Cr 121054 or USS 80.32

Cost/Connection/Month US$ 1.15 Capital Recovery 1.01 Minimum Average Monthly Charge US$ 2.16 - 52 -

ANNEXI0

BRAZIL

TECHNICALASSISTANCE AND PILOT RURALWATER SUPPLY AND SANITATION PROJECT

Loan Disbursement Schedule

Quarterly Cumulative Disbursement Bank Fiscal Year Disbursement ------and Quarter Ending (USS million) (US$ million) Z of Total

FY1986

September 30, 1985 1.5 1/ 1.5 9.2 December ,1, 1985 0.5 2.0 12.3 March 31, 1986 1.1 3.1 19.0 June 30, 1986 1.1 4.2 25.8

FY1987

September 30, 1986 1.2 5.4 33.1 December 31, 1986 1.2 6.6 40.9 March 31, 1987 1.4 8.0 49.1 June 30, 1987 1.4 9.4 57.7

FY1988

September 30, 1987 1.5 10.9 A6.9 December 31, 1987 1.4 12.3 75.5 March 31, 1988 1.0 13.3 81.6 June 30, 1988 1.0 14.3 87.7

FY1989

September 30, 1988 0.6 14.9 91.4 December 31, 1988 0.6 15.5 95.1 March 31, 1989 0.5 16.0 98.2 June 30, 1989 0.3 16.3 100.0

1/ US$1.5 million disbursement for Special Account; recovery assumed in FY89. - 53 - ANNEXI I Patge 1

BRAZIL

TECHNICALASSISTANCE AND PILOT RURAL

WATERSUPPLY AND SANITATIONPROJECT

Monitoring Indicators

National Component

1. Activities under 'Sector Studies" and 'PAPP Support" would be monitored through a critical path study.

2. Monitoring of project preparation for the NE would be through number of communities with socio-economicand engineering studies completed and draft contracts ready, based on ternm ofreference to be submitted by June 30, 1986.

Year Semester Pilot Component Total 85/2nd 86/1st 86/2nd 87/1st 87/2nd

1. Number of water systems completed 203 33 45 45 40 40

2. Number of house connections installed 25,000 4,000 5,500 5,500 5,000 5,000

3. Installed production capacity m3 /day 20,000 3,200 4,400 4,400 4,000 4,000

4. Kilometersof distributionnetwork built 875 140 190 190 170 185

5. Populationserved 106,000 17,000 23,000 23,000 21,000 22,000

6. Number of sanitary units 10,000 - 2,800 2,800 2,200 2,200

7. Number of latrines 5,000 - 500 1,500 1,500 1,500

8. Number of persons trained: a) operators, 406 - 80 100 100 126

b) administrators 406 - 80 100 100 126

9. Number of community contracts signed 203 63 70 70 - - - 54 -

ANNEX 12 Page 1

BRAZIL

TECHNICAL ASSISTANCE AND PILOT RURAL

WATER SUPPLY AND SANITATION PROJECT

Selected Reference Documents and Data Available in Project File

A. Selected Reports and Studies Related to the Sector

1. BRAZIL: Study of Selected Water and Wastes Sector Issues Rural Water Supply and Sanitation, IBRD No. 4583-BR, 8/12/83 (two volumes).

2. BRAZIL: Water Supply and Sewerage Sector Project, IBRD No 4229-BR, 2/28/83.

3. Project Completion Report for Loan 1309-BR, IBRD, 5/18/1984.

4. BRAZIL: Water Supply and Sewerage - a case study, Paulo Cezar Pinto, ABES, October 1984.

5. Proposed Northeast Rural Development Project - Rural Water Supply Components, Back-to-Office Report, 12/1/83.

6. Saneamento Basico en Areas de Esquisotossomose,1983/84, Ministerio da Saude, no date.

7. Saneamento como Atividade dos Servicos Basicos de Saude,, Anais do lo. Seminario, Realizado em Natal, RN de 15 a 18 de Junho de 1932.

B. Selected Reports and Studies Related to the Project

1. Projeto Nordeste: PAPP--Recursos Hidricos: Sintese do Subcomponente *Abastecimentoda Agua e Melhorias Sanitarias de Pequenas Comunida- des-, Regiao Mineira do Nordeste, SUDENE, Novembro 1984.

2. PAPP -- Abastecimento de Agua para Comunidades Rurais, SUDENE, no date.

3. Programa Nacional de Saneamento Basico Rural-Termos de Referencia, Inter-institutionalWorking Group, SEPLAN, 11/23/84. - 55 -

ANNEX 12 Page 2

4. Populacao, Numero de Com"sidades e Investimentos para o Programa Nacional, W. Sanches, 12/6/84.

5. Coordinacao de Componentes de Assistencia Tecnica (PAPP), S. Braga, 12/6/84.

6. Proyecto de Saneamiento Rural--Mision de Preparacion, -Componente Nacional, J. Mora, 5/84.

7. Relacionadas con a Participacao das Comunidades, --Comentarios e Termos de Referencia, U. Sanches, 12/6/84.

8. Projeto Piloto de Agua e Saneamento Rural--Estado do Rio Grande do Sul, A. Dianderas, 12/6/84.

9. Brasil-Estado do RGS, Projeto Piloto de Agua y Saneamento Rural-- Mision de Identificacion,J. Mora, 2/84.

10. Projeto de Saneamento Rural, CORSAN, PROSAN and the University of Rios Sinos, May 1984.

11. Relatorio Anual das Atividades do IPEA, Exercicio de 1983, IPEA, 4/26/84.

C. Working Papers and Workshpets

1. Project Preparation Working Papers, Inter-institutionalProject Preparation Team, SEPLAN, November 1984 (in two volumes).

2. Projeto Nordeste: Custos de Capacitacao dos Diversos Segmentos do Projeto Nordeste por Estado, SUDENE, 11/26/84.

3. Socio-EconomicWorksheets by Municipality, State of Rio Grande do Sul.

4. Information System on Mortality, FSESP/SES State of Rio Grande do Sul. VENEZUELA f

;I_--, @\GUYANA

COLOMBIA i i

rS~~~~~OAM v-XY 't.,.

: 1t

A M A Z 0 N A S ( r~~~~l ACC E ]

P E R U \RONDONlA

00 * -*_._ f-i,

, ..~~~~~~~~~~~~~~~~~~C 'ater Supply BOLIVIA

Sewage PARA(

- - Stats Boundaries Internotional Boundaries

ARGENTIr

-3D

. .~~~~~~~~~0 ' I.I I . iii'i. WATER SUPPLY AND SEWERAGE PERCENT SERVICE LEVELS BY STATE 1983/1987 SURINAME \GUYANA ./FRENCH (GUIANA

RORAIMA

\> J< M APAM.A

' / I \~/

J A /A

-AI.A :l L.RAND[

)_ , * ~~~~'.r.....

_ A .4.,

( . . 4' ;,E / l \ - . W~ ! * 1.M:l ;;RANDE~~~~~'A%

BOLIVIA ... . .

!~ ~ ~ ~ . ;-s .- , -...

I~~~~~~~~~~~~JS.-PARAGUAY~ _

ARGENTINA 1 ml

)URUGUAY~