Afdb Portfolio in Egypt (September 2017)
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AFRICAN DEVELOPMENT BANK Public Disclosure Authorized Authorized Public Disclosure EGYPT SUSTAINABLE DEVELOPMENT OF ABU RAWASH WASTEWATER TREATMENT PLANT (ABU-RAWASH-WWTP) APPRAISAL REPORT Authorized Authoriezd Public Disclosure Authorized Public Disclosure RDGN/AHWS November 2017 TABLE OF CONTENTS I – STRATEGIC THRUST & RATIONALE ............................................................................ 1 1.1 Project linkages with country strategy and objectives ......................................................... 1 1.2. Rationale for Bank’s involvement ...................................................................................... 1 1.3. Donor coordination ............................................................................................................. 2 II – PROJECT DESCRIPTION ................................................................................................. 3 2.1. Project components ............................................................................................................. 3 2.2. Technical solution retained and other alternatives explored ............................................... 3 2.3. Project type ......................................................................................................................... 4 2.4. Project cost and financing arrangements ............................................................................ 4 2.5. Project’s target area and population .................................................................................... 5 2.8. Key performance indicators ............................................................................................ 7 III – PROJECT FEASIBILITY ................................................................................................. 7 3.1. Economic and financial performance ................................................................................. 7 3.2. Environmental and Social impacts ...................................................................................... 8 IV – IMPLEMENTATION ...................................................................................................... 10 4.1. Implementation arrangements ........................................................................................... 10 4.2. Monitoring ........................................................................................................................ 13 4.3. Governance ....................................................................................................................... 14 4.4. Sustainability..................................................................................................................... 14 4.5. Risk management .............................................................................................................. 15 4.6. Knowledge building .......................................................................................................... 15 V – LEGAL INSTRUMENTS AND AUTHORITY............................................................... 16 5.1. Legal instrument ............................................................................................................... 16 5.2. Conditions associated with Bank’s intervention ............................................................... 16 5.3. Compliance with Bank Policies ........................................................................................ 16 VI – RECOMMENDATION ................................................................................................... 16 Appendix I. Egypt’s Socio-Economic Indicators .......................................................................I Appendix II: AfDB Portfolio in Egypt (September 2017) ........................................................ II Appendix III: Key related projects financed by other development partners in the country ... IV Appendix IV. Map of the Project Area ..................................................................................... V Currency Equivalents As of October 2017 1 UA = 1.4133 USD 1 UA = 24.9531 EGP 1 USD = 17.65591 EGP Fiscal Year 1 July – 30 June Weights and Measures 1metric tonne = 2204 pounds (lbs) 1 kilogramme (kg) = 2.200 lbs 1 metre (m) = 3.28 feet (ft) 1 millimetre (mm) = 0.03937 inch (“) 1 kilometre (km) = 0.62 mile 1 hectare (ha) = 2.471 acres 1 feddan = 0.42 hectares Acronyms and Abbreviations ACCF Africa Climate Change Fund ADB African Development Bank AFD French Development Agency CAPW Construction Authority for Potable Water and Wastewater CPIA Country Policy and Institutional Assessment CSP Country Strategy Paper CSS Climate Safeguard System COEG Country Office Egypt DPG Development Partners Group EA Executing Agency EIB European Investment Bank EPC Engineering, Procurement, and Construction ESIA Environmental and Social Impact Assessment EU European Union CFRA Country Fiduciary Risk Assessment GCF Green Climate Fund GCWW Giza Company for Water and Wastewater GIZ German Agency for International Cooperation GoE Government of Egypt HCWW Holding Company for Water and Wastewater FM Financial Management IsDB Islamic Development Bank KfW (German Bank for International Development Financing) KFAED Kuwait Fund for Arab Economic Development M&E Monitoring and Evaluation MHUUC Ministry of Housing, Utilities, and Urban Communities MoIIC Ministry of Investment and International Cooperation MIC TAF Middle Income Countries Technical Assistance Fund MWRI Ministry of Water Resources and Irrigation NCB National Competitive Bidding NWRP National Water Resources Plan O&M Operation & Maintenance PCN Project Concept Note PCR Project Completion Report PIT Project Implementation Team PRCA Procurement Risks and Capacity Assessment PPP Public Private Partnership PSC Project Steering Committee UA Units of Account USD United States Dollar WSS Water, Wastewater and Sanitation WB The World Bank WWTP Wastewater Treatment Plant VFM Value for Money i Loan Information Client’s information BORROWER : The Arab Republic of Egypt EXECUTING AGENCY : Construction Authority for Potable Water and Wastewater (CAPW) Financing plan Source Amount (USD) Instrument ADB 100.00 million Loan AGTF 50.00 million Loan Government* 237.44 million Counterpart TOTAL COST 387.44 million *Government of Egypt contribution is in EGP. ADB and AGTF key financing information Loan Currency United States Dollar (USD) Loan Type Fully Flexible Loan Tenor TBD (Up to 25 years inclusive of Grace Period) Grace period TBD (Up to 8 years) Average Loan Maturity* TBD (function of the amortization profile) Repayments Consecutive quarterly payments after grace period Interest Rate Base Rate +Funding Cost Margin+ Lending Margin + Maturity Premium This Interest Rate will be floored to zero Base Rate Floating Base Rate ( 6 Month LIBOR) A free option to fix the Base Rate is available Funding Cost Margin The Bank funding cost margin as determined each 1st January and 1st July and applied to the Base Rate each 1st February, 1st May, 1st august and 1st November Lending Margin 80 basis points (0.8%) Maturity Premium - 0% if Average Loan Maturity <= 12.75 years - 0,10% if 12.75< Average Loan Maturity <=15 - 0,20% if Average Loan Maturity >15 years Front-end fees 0.25% of the loan amount payable at latest at signature of the loan agreement Commitment fees 0.25% of the undisbursed amount. Commitment fees start accruing 60 days after signature of the loan agreement and are payable on Payment dates Option to convert the Base Rate** In addition to the free option to fix the floating Base Rate, the borrower may reconvert the fix rate to floating or re-fix it on part or full-disbursed amount. Transaction fees are payable Option to cap or collar the Base The borrower may cap or set both cap and floor on the Base Rate to be applied on part or full Rate** disbursed amount Transaction fees are payable Option to convert loan The borrower may convert the loan currency for both undisbursed or disbursed amounts in full currency**(Only for ADB loan) or part to another approved lending currency of the Bank Transaction fees are payable EIRR, NPV (base case) 29.9%, EGP 19,336 million at 10% Timeframe - Main Milestones (expected) Concept Note approval October, 2017 Project approval December, 2017 Effectiveness March, 2018 Completion December, 2021 Closing Date December, 2022 ii Project Summary Project Overview: The Sustainable Development of Abu Rawash Wastewater Treatment Plant (ARWWTP) aims to protect the environment and water resources from pollution and to reduce health risks due to discharge of untreated wastewater to the drains and canals and enhance water re-use. The project is aligned to Egypt’s Sustainable Development Strategy: 2030 Vision, its current five-year Macroeconomic Framework and Strategy (MFS FY14/15-FY18/19), and the Cabinet’s comprehensive reform program. It is also in line with the Bank’s High Fives Agenda and the Bank’s Ten Year Strategy through development of critical infrastructure and contribution to green growth, focusing mainly on improving quality of life of people and Feed Africa. The project cost is estimated at USD 387.4 million to be financed by ADB (USD100 million), AGTF (USD50 million), and the Government of Egypt (USD237.4 million). It will be implemented in four years. The main outcomes of the project are a) upgrade or improve the quality of existing primary treatment system of 1.2 million m3 per day to include secondary treatment, and b) increase or expand the treatment plant’s capacity from 1.2