Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00005102
Public Disclosure Authorized
IMPLEMENTATION COMPLETION AND RESULTS REPORT ON A
LOAN
IN THE AMOUNT OF
US$42 MILLION
Public Disclosure Authorized TO THE
OBRAS SANITARIAS DEL ESTADO (OSE)
FOR THE
URUGUAY OSE SUSTAINABLE AND EFFICIENT PROJECT
June 30, 2020
Public Disclosure Authorized
Water Global Practice Latin America and the Caribbean Region
Public Disclosure Authorized
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
CURRENCY EQUIVALENTS (Exchange Rate Effective June 29, 2020)
Currency Unit = Uruguayan Pesos (UYU) UYU 42.058 = US$1 US$0.024 = UYU 1
FISCAL YEAR
July 1–June 30
Regional Vice President: J. Humberto Lopez Country Director: Jordan Schwartz Regional Director: Anna Wellenstein Practice Manager: Rita E. Cestti Task Team Leaders: Maria Catalina Ramírez, Elba Lydia Gaggero ICR Task Team Leader: Jean-Martin Brault ICR Main Contributor: Miguel Vargas-Ramirez
ABBREVIATIONS AND ACRONYMS
APL Adaptable Program Loan BMEI Business Management Efficiency Index CPF Country Partnership Framework DINAGUA Dirección Nacional de Aguas (National Water Directorate) DINAMA Dirección Nacional del Medio Ambiente (National Directorate for the Environment) DMC District of Measurement and Control EI Environmental Index EIRR Economic Internal Rate of Return ESCO Energy Service Company FIRR Financial Internal Rate of Return GGA Gerencia de Gestión Ambiental (Management Unit for Environmental Management) GPFE Gerencia de Programas con Financiamiento Externo (Management Unit for Programs with External Financing) IAD Internal Audit Department ICR Implementation Completion and Results Report ISR Implementation Status and Results Report IWA International Water Association MTR Midterm Review NPV Net Present Value NRW Non-Revenue Water OSE Administración de las Obras Sanitarias del Estado (National Water Supply and Sanitation Company) PAD Project Appraisal Document PDO Project Development Objective SFLAC Spanish Fund for Latin America and the Caribbean SOE State-Owned Enterprise UdelaR Universidad de la República Oriental del Uruguay (University of the Oriental Republic of Uruguay) UGA Unidad de Gestión Ambiental (Environmental Management Unit) URSEA Unidad Reguladora de Servicios de Energía y Agua (Energy and Water Services Regulatory Unit) WSS Water Supply and Sanitation WTP Water Treatment Plant WWTP Wastewater Treatment Plant
TABLE OF CONTENTS
DATA SHEET ...... ERROR! BOOKMARK NOT DEFINED. I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ...... 6 A. CONTEXT AT APPRAISAL ...... 6 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) ...... 10 II. OUTCOME ...... 12 A. RELEVANCE OF PDOs ...... 12 B. ACHIEVEMENT OF PDOs (EFFICACY) ...... 13 C. EFFICIENCY ...... 18 D. JUSTIFICATION OF OVERALL OUTCOME RATING ...... 19 E. OTHER OUTCOMES AND IMPACTS (IF ANY) ...... 20 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ...... 21 A. KEY FACTORS DURING PREPARATION ...... 21 B. KEY FACTORS DURING IMPLEMENTATION ...... 21 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 22 A. QUALITY OF MONITORING AND EVALUATION (M&E) ...... 22 C. BANK PERFORMANCE ...... 25 D. RISK TO DEVELOPMENT OUTCOME ...... 26 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ...... 28 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ...... 40 ANNEX 3. PROJECT COST BY COMPONENT ...... 42 ANNEX 4. EFFICIENCY ANALYSIS ...... 43 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 49 ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) ...... 53 ANNEX 7. BUSINESS MANAGEMENT EFFICIENCY INDEX (BMEI). ORIGINAL AND REFORMULATED INDICATORS...... 54 ANNEX 8. SUMMARY OF ACTIVITY CHANGES ...... 57 ANNEX 9. MAP ...... 58
The World Bank UY OSE Sustainable and Efficient (P118064)
DATA SHEET
BASIC INFORMATION
Product Information Project ID Project Name
P118064 UY OSE Sustainable and Efficient
Country Financing Instrument
Uruguay Investment Project Financing
Original EA Category Revised EA Category
Partial Assessment (B) Partial Assessment (B)
Organizations
Borrower Implementing Agency
Obras Sanitarias del Estado (OSE) Obras Sanitarias del Estado (OSE)
Project Development Objective (PDO)
Original PDO The Project Development Objective (PDO) is to increase the sustainability of OSE by improving the reliability and resilience of itswater supply and sanitation systems, enhancing its efficiency, and strengthening its management capacity
PDO as stated in the legal agreement The Project Development Objective (PDO) is to increase the sustainability of the Borrower by improving the reliability and resilience of its water supply and sanitation systems, enhancing its efficiency, and strengthening its management
Page 1 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
FINANCING
Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing
42,000,000 42,000,000 42,000,000 IBRD-81830 Total 42,000,000 42,000,000 42,000,000
Non-World Bank Financing 0 0 0 Borrower/Recipient 42,000,000 0 24,762,000 Total 42,000,000 0 24,762,000 Total Project Cost 84,000,000 42,000,000 66,762,000
KEY DATES
Approval Effectiveness MTR Review Original Closing Actual Closing 05-Jul-2012 07-Mar-2013 09-Nov-2015 28-Feb-2018 31-Dec-2019
RESTRUCTURING AND/OR ADDITIONAL FINANCING
Date(s) Amount Disbursed (US$M) Key Revisions 07-Sep-2016 13.09 Change in Results Framework Change in Components and Cost 19-Jul-2017 26.09 Change in Loan Closing Date(s) 19-Feb-2018 31.41 Change in Results Framework Change in Implementation Schedule
KEY RATINGS
Outcome Bank Performance M&E Quality Satisfactory Satisfactory Substantial
Page 2 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
RATINGS OF PROJECT PERFORMANCE IN ISRs
Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 17-Oct-2012 Satisfactory Satisfactory .29
02 08-Jul-2013 Satisfactory Satisfactory .45
03 14-Jan-2014 Satisfactory Satisfactory .95
04 17-Aug-2014 Satisfactory Satisfactory 2.87
05 20-Jan-2015 Satisfactory Moderately Satisfactory 4.73
06 23-Jul-2015 Moderately Satisfactory Moderately Satisfactory 6.49
07 25-Jan-2016 Moderately Satisfactory Moderately Satisfactory 8.97
08 30-Jun-2016 Moderately Satisfactory Moderately Satisfactory 11.59 Moderately 09 15-Dec-2016 Moderately Satisfactory 18.54 Unsatisfactory Moderately 10 16-May-2017 Moderately Satisfactory 18.54 Unsatisfactory 11 01-Aug-2017 Moderately Satisfactory Moderately Satisfactory 26.54
12 18-Jan-2018 Satisfactory Satisfactory 31.86
13 29-May-2018 Satisfactory Satisfactory 31.86
14 11-Dec-2018 Satisfactory Satisfactory 34.82
15 21-Jun-2019 Satisfactory Satisfactory 38.82
16 30-Dec-2019 Satisfactory Satisfactory 42.35
SECTORS AND THEMES
Sectors Major Sector/Sector (%)
Energy and Extractives 4 Other Energy and Extractives 4
Page 3 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
Water, Sanitation and Waste Management 96 Sanitation 7 Water Supply 66 Public Administration - Water, Sanitation and Waste 23 Management
Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Social Development and Protection 9
Social Protection 9
Social protection delivery systems 9
Urban and Rural Development 73
Urban Development 73
Urban Infrastructure and Service Delivery 73
Environment and Natural Resource Management 92
Climate change 74
Mitigation 74
Environmental Health and Pollution Management 9
Air quality management 3
Water Pollution 3
Soil Pollution 3
Water Resource Management 9
Water Institutions, Policies and Reform 9
ADM STAFF
Role At Approval At ICR
Regional Vice President: Hasan A. Tuluy J. Humberto Lopez
Country Director: Penelope J. Brook Jordan Z. Schwartz
Director: Ede Jorge Ijjasz-Vasquez Anna Wellenstein
Practice Manager: Wambui G. Gichuri Rita E. Cestti
Page 4 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
Task Team Leader(s): Carmen Rosa Yee-Batista Jean-Martin Brault
ICR Contributing Author: Miguel Vargas-Ramirez
Page 5 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES
A. CONTEXT AT APPRAISAL
Context
1. At the time of project approval, Uruguay was experiencing favorable economic growth with positive outlooks. Over the 2002–2012 decade, Uruguay experienced strong growth rates. In 2011, Uruguay’s growth rate reached about 6 percent, and economists estimated that the annual growth was to stay at around 4 percent for the remainder of the decade. Uruguay was and still is renowned in Latin America for its high literacy rate, its large urban middle class, advanced education and security systems, high coverage and quality of public services, and relatively even income distribution. In April 2012, Standard and Poor’s had raised Uruguay’s credit rating to investment grade.
2. The water supply and sanitation (WSS) sector’s legal and institutional framework in Uruguay improved considerably during 2002–2012. Beyond the transformation of the National Water Supply and Sanitation Company (Administración de las Obras Sanitarias del Estado, OSE), significant achievements in the Uruguayan water sector included the creation of a Water Law; water quality regulations of the Energy and Water Services Regulatory Unit (Unidad Reguladora de Servicios de Energía y Agua, URSEA); guidelines for the National Plan for Integrated Water Resource Management; and regional integrated water resource management committees in the Laguna del Sauce and the Uruguay River. OSE had played, and continues to play, a key role in the consolidation of the sector by providing its technical expertise in the policy debate and complying with the new regulations.
3. The World Bank has played a pivotal role in the transformation of the water sector in Uruguay. Through its relationship with OSE, dating back to 1988, the World Bank has seen the national company transition from a slow-moving public utility to a well-performing utility, as highlighted by OSE’s jump in investment levels. From 2003 to 2007, OSE was investing an average of US$23 million per year, increasing from 2008 to 2016 to an average of US$89 million per year. While early World Bank projects focused on improving OSE’s infrastructure to expand coverage and enhance service, the previous OSE Modernization and Systems Rehabilitation Adaptable Program Loan (APL) Phase 2 (IBRD Ln. 7475-UY) built on the progress made in earlier projects but shifted the focus from infrastructure rehabilitation to modernization. It focused on improving OSE’s transparency, accountability, attention to clients, and efficiency and on establishing an active non-revenue water (NRW) reduction program, an Environmental Management Unit (Unidad de Gestión Ambiental, UGA), and a modern commercial operative system.
4. Despite the progress made, OSE still faced challenges. These included (a) the need to improve the resilience and reliability of its infrastructure, as well as its capacity to plan for risks to meet current and future WSS needs, which was illustrated by the operational challenges faced by OSE’s systems because of floods and droughts, particularly in the city of Durazno which suffered from repeated flooding events over the course of the 2000 decade and (b) low operational efficiency, as illustrated by its high levels of NRW and of energy consumption. While some progress had been made in recovering large volumes of water in the systems targeted by the APL Phase 2 Project, the water loss reduction approach based on the District of Measurement and Control (DMC), originally established in Artigas, needed to be expanded to other cities. In addition, with electricity costs accounting for 13 percent of its total operating
Page 6 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
costs, OSE needed to improve upon its energy consumption levels of 0.69 kWh per m3, compared with similar systems operating around 0.4–0.5 kWh per m3.
5. To address these challenges, OSE developed its 2012–2017 Strategic Plan. The plan focused on the following three pillars: (a) Investing in Reliable Infrastructure, (b) Improving Operational and Commercial Efficiency, and (c) Strengthening Utility Management, and the project was to play a key role in helping OSE advance its implementation. Project design was aligned with the Strategic Plan as reflected in the Theory of Change section.
Theory of Change (Results Chain)
6. As the original Project Appraisal Document (PAD) did not include a Theory of Change, it was thus reconstructed based on the description of the components and subcomponents and is presented in figure 1. The Theory of Change is anchored around three sub-objectives as the means to achieve the Project Development Objective (PDO) of increasing OSE’s sustainability, namely (a) improving reliability and resilience of WSS systems, (b) enhancing efficiency, and (c) strengthening management capacity.
7. Objective 1: Improving reliability and resilience of WSS systems. To improve reliability and resilience, the project aimed to add redundancy (→ resilience) to the water intake in Montevideo’s Aguas Corrientes water treatment system, allowing for routine maintenance to be performed to shield it against unexpected failures, while maintaining a high level of service to households (→ reliability). In the cities of Durazno and Treinta y Tres, the project financed the rehabilitation of water treatment plants (WTPs) which were built above the flood plain, proofing them against the existing flood risks (→ resilience) and ensuring that they can continue to operate effectively, irrespective of whether or not the flooding risks materialize (→ reliability). Resilience of sanitation systems was to be achieved through nonstructural measures, including studies to improve sludge and asset management in wastewater treatment plants (WWTPs), as well as increasing OSE’s operational capacity through the targeted training of OSE’s Sanitation Unit staff.
8. Objective 2: Enhancing OSE’s efficiency. OSE’s efficiency was to be enhanced through the implementation of its energy efficiency and NRW Reduction Programs, generating energy, water, and cost savings while continuing to provide the same level of services with reduced inputs. The project explicitly included indicators on water and energy recovered at the PDO level.
9. Objective 3: Strengthening OSE’s management capacity. OSE’s management capacity was to be improved by developing a long-term, strategic plan that thoroughly analyzes and mitigates potential risks. Specific management instruments such as plans, programs, assessments, trainings, and maps were the expected outputs of this component, and the application of these instruments to OSE’s operations was to produce the desired outcome. The achievement of this objective was to be measured by the Business Management Efficiency Index (BMEI) capturing such management gains and verified by the corresponding levels reached by OSE. The BMEI is a corporate scorecard which was developed by the World Bank Team and OSE.
Page 7 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
Figure 1. Theory of Change
Page 8 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
Project Development Objectives (PDOs)
10. The PDO is to increase the sustainability of OSE by improving the reliability and resilience of its water supply and sanitation systems, enhancing its efficiency, and strengthening its management capacity. The PDO was not changed during project implementation.
Key Expected Outcomes and Outcome Indicators
11. The PDO indicators at approval were as follows: (a) piped household water connections that are benefiting from rehabilitation works undertaken by the project, (b) NRW recovered by reducing real (physical) and apparent (commercial) water losses, (c) energy saved in the systems where the Project is being implemented, and (d) reach satisfactory level in the Business Management Efficiency Index (BMEI). See Annex 7 for details on the BMEI.
Components
12. The project had four components, detailed in the following paragraphs.
13. Component 1: Investing in Reliable Water Supply Infrastructure (US$22.20 million). This component financed the construction, expansion, and rehabilitation of water facilities to increase the reliability of the water supply system by reducing the likelihood of system failures that could result in water interruptions. This component was divided into two subcomponents, namely (a) construction of new water intake structure and improvements to the electrical system of the finished water pump station of the Aguas Corrientes WTP and (b) construction of two WTPs in the cities of Durazno and Treinta y Tres.
14. Component 2: Managing Water and Energy More Efficiently (US$37.50 million). This component focused on optimizing water and energy efficiency to increase OSE’s sustainability. The project financed activities to support OSE’s NRW and Energy Management Programs. Water and energy were brought together under this component because of the synergies between the two sectors. This subcomponent aimed at preventing, reducing, and controlling real and apparent water losses; as well as strengthening OSE’s Energy Management Program.
15. Component 3: Preparing for the Future: Management, Planning and Risk (US$11.10 million). This component financed management, planning, and risk assessment activities to improve OSE’s social reach, environmental management, and economic efficiency, including (a) enhancing the efficiency, efficacy, and transparency of OSE’s management; (b) developing a long-term, strategic plan that thoroughly analyzes and mitigates potential risks and strengthens OSE’s risk management capacity in day- to-day operations; and (c) strengthening OSE’s environmental and sanitation areas and supporting its participation in water source protection activities.
16. Component 4: Knowledge Sharing and Project Management Activities (US$2.00 million). This component financed project management, supervision and engineering activities, and carrying out of external and internal dissemination of the project’s results and major accomplishments, including knowledge-sharing activities.
Page 9 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE)
Revised PDOs, PDO Indicators, and Outcome Targets
17. The PDO indicators were reformulated, methodology was refined, baselines were corrected, and associated targets were changed accordingly during project restructurings.
18. The first revision of the PDO indicators took place during the midterm review (MTR) in November 2015, and the revised indicators were reflected formally as part of the first project restructuring in September 2016. The proposed changes aimed at (a) reflecting indicator targets that are congruent with the ongoing implementation progress, (b) considering the use of a better methodology to more accurately calculate energy savings and non-revenue reduction volumes, (c) correcting baselines, and (d) adjusting the formulation and definition of some of the indicators. Specifically, the proposed changes to the project’s Results Framework included the following:
(a) Revision of the formulation of the PDO indicator ‘NRW recovered by reducing real (physical) and apparent (commercial) water losses’ to ‘Cumulative volume of non-revenue water recovered under the project (m3)’, which is defined as the sum of the water recovered each year for each of the systems supported under OSE’s NRW Reduction Program.
(b) Revision of the calculation methodology for the PDO indicator ‘Reach satisfactory level in the Business Management Efficiency Index (BMEI)’ to adjust it based on implementation experience. As indicated in Annex 7, 20 sub-indicators were removed from the index computation while another 15 sub-indicators were added.
(c) Revision of the calculation methodology and hence the baseline and target of the PDO indicator ‘Energy saved in the systems where the Project is being implemented’. As a result, the target value was adjusted from 37,983 MWh to 13,640 MWh.
19. Under the third project restructuring in 2018, further modifications were brought to the indicators related to the reduction of NRW in attended systems (liters per connection per day). This included (a) revising the end target for the Montevideo system to reflect the drop of activities in two lots, (b) dropping the indicator for the Las Piedras-La Paz system to reflect the lack of impact in La Paz, and (c) modifying the indicator in the Rivera and Salto systems to reflect the expected impact in those systems.
20. Additionally, as part of the third project restructuring, the end targets for ‘Cumulative volume of NRW recovered under the project (m3)’ and ‘Energy saved in the systems where the Project is being implemented (MWh/year)’ were modified to reflect the extension on the closing date made under the second restructuring, and thus, additional gains on those indicators.
Revised Components
21. During the MTR in November 2015 the borrower and the World Bank agreed on a series of modifications to the project that were formalized as part of the first project restructuring, namely: (a) increasing the allocation of Component 1 from US$22.2 million to US$33.1 million because all signed contract values were higher than initially planned, (b) dropping the acquisition of monitoring equipment
Page 10 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
and software under Subcomponent 2.2 related to long- and short-term energy conservation measures, and (c) reducing the scope of Component 3, as detailed in the following paragraph.
22. In reducing the scope of Component 3, the following adjustments were made:
(d) Under Subcomponent 3.1 on Corporate Management, the establishment of a knowledge and innovation management model was dropped from the project but it was replaced by capacity-building activities on ozonation for algae control and removal.
(e) Under Subcomponent 3.2 on Risk Management and Planning, the development of risk maps, carrying out a climate vulnerability assessment, and the development of contingency plans were instead implemented as part of the water safety plans (WSPs), developed for each drinking water plant.
(f) Under Subcomponent 3.3, the development of a comprehensive strategic wastewater plan was dropped from the project, because new priorities (the protection of the Rio Santa Lucia watershed) had emerged which were straining OSE’s Sanitation Unit and its budget, resulting in the postponement of many studies and consultancies. Nevertheless, some of the activities initially considered under the PAD were developed with OSE’s internal resources, including initiatives already being carried out by OSEs Sanitation Unit.
(g) Under the same Subcomponent 3.3, the establishment of a water quality and quantity monitoring program and the implementation of a hydraulic and water quality management program for the Laguna del Sauce watershed were dropped from the project’s scope because they were being developed by the National Water Directorate (Dirección Nacional de Aguas, DINAGUA), in collaboration with OSE.
23. A summary of all activity changes made during the first, second and third restructurings is presented in Annex 8.
Other Changes
24. The second restructuring extended the project closing date from February 28, 2018, to December 31, 2019. This extension was justified by procurement delays associated with budget uncertainty and bidding process complaints. The proposed extension of the closing date was calculated on the basis of the actual time line to complete the three ongoing contracts: the WTP in Treinta y Tres expected to be completed by June 2019, the NRW reduction contract in Montevideo expected to be completed by December 2019, and the NRW reduction contract in Rivera expected to be completed by October 2019.
Page 11 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
Rationale for Changes and Their Implication on the Original Theory of Change
25. The implication on the original Theory of Change of the reduction of Component 3 was twofold. First, it limited and/or delayed OSE’s plans to incorporate risk analysis in long-term strategic planning. Second, it limited the ambition of its wastewater management transformation. However, it is important to highlight that at the time of the first restructuring, the company had put in place a monitoring system for wastewater and was implementing quality standards (ISO 9000)1 in the central (Montevideo) and regional monitoring laboratories, as well as a training program targeting operative staff to strengthen operational capacity in WWTPs (up to date, more than 17 workshops have been delivered and 350 staff trained under that program).
26. The dropping or replacement of the BMEI key indicators related to “operative knowledge and innovation management area (the area has policies, strategies, and processes defined and implemented), implementation of strategic planning process software, information tools, incorporation on risk management to OSE’s operation including climate vulnerability, and undertaking of internal surveys to know the opinion of employees on the performance of the company and on the project in particular” showed a lessened emphasis on activities conducive to strengthening management. However, as compared to the rest of the outputs delivered under Component 3, this change could be considered as a minor shortcoming.
II. OUTCOME
A. RELEVANCE OF PDOs
Assessment of Relevance of PDOs and Rating Rating of Relevance: High
27. The relevance of the PDO is assessed using the Country Partnership Framework (CPF) for the Oriental Republic of Uruguay for the period FY16–FY20 at the end of the project (Report No. 97063-UY).
28. OSE’s higher-level objective is to ensure its economic, environmental, and social sustainability. This objective was consistent with OSE’s 2010–2015 five-year strategic plan and two of the four pillars of the previous CPF for the Oriental Republic of Uruguay 2010–2015 (Report No. 55863-UY), namely (a) improvement of competitiveness and infrastructure and (b) environmental protection, mitigation of climate change effects, and strengthening family agriculture. OSE sought the World Bank’s support for this project because of the World Bank’s expertise on green growth issues, and the World Bank’s Green Growth Cluster is one of the many resources that the project utilized to provide OSE with the latest, cutting-edge knowledge on relevant issues.
29. The current CPF refers to the then current economic regional deceleration and the challenges that could threaten continued progress toward poverty reduction and shared prosperity for the country. Given that Uruguay’s small and open economy is vulnerable to a variety of external shocks, there was a need for heightened attention to strengthen its resilience over the medium term. This would be done with greater
1 ISO = International Organization of Standardization.
Page 12 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
attention to the natural resource base, especially water and soil, in the face of climate change to support continued growth and ensure good global citizenship.
30. In particular, the current CPF is organized around three strategic pillars: building resilience to shocks, rebalancing the social compact, and integrating into global value chains. Pillar I focuses on building resilience to economic and weather vulnerabilities, whose first objective is to increase the efficiency of public investment and strengthen management of selected state-owned enterprises (SOEs).
31. Additionally, the CPF promotes private sector finance for infrastructure, which has been leveraged only to a very limited extent in Uruguay, and the Energy Service Companies (ESCOs) initiative for energy efficiency detailed in section II.B contribute to this dimension. Therefore, given that the current CPF is based on resilience, green infrastructure, improving public investment, and strengthening management of SOEs, the relevance of the PDO is rated ‘High’.
32. The current coronavirus crisis highlights the importance of providing access to the population to clean water for handwashing. OSE is a national utility providing services to both rural and urban dwellers, and whose role in supporting prevention efforts is clear. Counting on a ‘sustainable’ and ‘efficient’ OSE to provide a continuous water service is key to facing the coronavirus pandemic, and the project thus remains relevant at the time the Implementation Completion and Results Report (ICR) was written.
33. Based on the relevance of the objective at the end of the project, as well as at the current conjuncture during ICR writing, the rating is ‘High’.
B. ACHIEVEMENT OF PDOs (EFFICACY)
Assessment of Achievement of Each Objective/Outcome Rating on Efficacy: Substantial
34. The PDO is to be measured for the results achieved to increase OSE’s sustainability, and was divided into three sub-objectives, as defined in the PDO, namely (a) improving reliability and resilience of water supply and sanitation systems, (b) enhancing OSE’s efficiency, and (c) strengthening OSE’s management capacity. The assessment of each objective is presented and detailed in the following paragraphs. It is important to note that a split evaluation was considered but not undertaken, given that there was no change in the objectives and that the changes in the PDO indicators were made primarily to improve their formulation, definition, and methodology. In addition, even if the split rating exercise had been conducted, the results of the outcome assessments would have been the same as the outcome ratings presented in the following paragraphs.
Objective 1: Improving reliability and resilience of water supply and sanitation systems
35. Reliability and resilience of water supply systems. To measure the achievement of this objective of improving the reliability and resilience of OSE’s water supply systems, the PDO indicator of ‘Piped household water connections that are benefiting from rehabilitation works undertaken by the project’ was used. The target number of connections equivalent to the number of beneficiaries, 433,900 people, was fully achieved. To further assess the specific improvements in reliability and resilience of the water
Page 13 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
and sanitation system, the activities associated with this objective were evaluated, as per the Theory of Change.
36. First, the enhanced water intake at the Aguas Corrientes WTP in Montevideo was designed to increase redundancy by allowing for preventive features to be incorporated into the existing system, ultimately contributing to improving system resilience and reliability. Before the project, regular maintenance of the water intake channels meant rationing of water for residents in the capital city, and the newly built infrastructure now allows for preventive or unscheduled maintenance to take place while maintaining the same level of service. The old motors were replaced with energy-efficient ones, some of them installed as a backup to maintain service in case of engine failure or required maintenance.
37. Second, both WTPs in Durazno and Treinta y Tres were rebuilt to protect them against periodic floods. Service levels in these two cities can now be continuously maintained despite the recurrent high levels of the rivers. Additional flood protection works were also part of the designs of these plants, proofing the systems so that they can be resistant to these known risks. It can therefore be concluded that service provision is more ‘reliable’ because it is not interrupted frequently during the flood season, and the system is more ‘resilient’ to withstand external shocks. In fact, in a satisfaction survey conducted by OSE between April 2018 and November 2019, after the two WTPs had been rebuilt, consumers expressed their satisfaction with the continuity of the service, with 97 percent satisfied in Durazno and 89 percent in Treinta y Tres, despite the two cities being subject to two of the most significant adverse events in 2019, namely the January and June 2019 floods,2 and considering that precipitation in the two departments of Durazno and Treinta y Tres in 2019 was above the historical average.3
38. In addition, 19 WSPs were developed with support from the project. These plans contained risk management activities including assessments on the water supply cycle from source to consumer, contributing to a more reliable quality of drinking water in the face of a changing climate, as well as increasing the targeted communities’ resilience to droughts and floods.
39. Reliability and resilience of sanitation systems. Assessing the improvement of the reliability and resilience of OSE’s wastewater system relies on the evaluation of the nonstructural measures proposed under the project, namely the environmental and sanitation activities under Component 3. Although the amount allocated to these activities was less than for the water activities, these nonstructural measures have the potential to generate a wider impact on OSE’s future operations, and two activities developed under Component 3 exemplify this impact. The first one concerns the development of an asset management model/cadaster and software to improve the maintenance of water and wastewater electromechanical assets. These tools were first tested successfully in the Litoral Sur region (incorporating the departments of Colonia, Soriano, Flores, and San José), and later expanded to cover the Noreste region (incorporating the departments of Cerro Largo, Rivera, and Tacuarembó); the Ciudad de la Costa WWTP (Canelones department); and the Lascano, La Paloma, and Rocha localities (Rocha department). The second activity is a research and development initiative with the University of the Republic that resulted in developing both a prototype for biosolid drying and a process for biosolid agricultural application for fodder crops. Such a prototype incorporating new biosolid reuse standards developed under the project
2 See: https://www.gub.uy/sistema-nacional-emergencias/comunicacion/noticias/eventos-adversos-significativos-ocurridos- uruguay-entre-anos-2015–2019. 3 Uruguay’s Agricultural Research Institute (INIA): http://www.inia.uy/gras/Clima/Precipitaci%C3%B3n-nacional/Mapas-de- precipitaci%C3%B3n-acumulada.
Page 14 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
is to be included in the technical design of eight new WWTPs in Santa Lucia, Florida, San Carlos, Libertad, Paysandú, Colonia, Fray Bentos, and Mercedes.
40. Maintenance of equipment in WWTPs, as well as the high costs associated with transporting large sludge volumes resulting from the biological treatment processes constitute technical challenges that have important implications on the reliability of sanitation systems. By matching the demand for fodder for livestock (as meat export is one of the main economic activities in Uruguay) with the supply of nutrient- rich biosolids from WWTPs, OSE would be able to reduce transport costs associated with sludge disposal. Although a specific analysis comparing sludge transport and disposal costs with the additional operational and capital costs associated with the sludge treatment processes needed to produce these biosolids was not performed, it is likely, given the high transport costs, that OSE’s sanitation operations are generating cost savings which can be reinvested in improving efficiency and reliability. Several pilots were carried out to assess the feasibility of reusing sludge and a summary of these is presented in Annex 5.
41. Similarly, the expansion of the electromechanical assets inventory and the development of an equipment maintenance protocol and software will allow OSE to better identify and concentrate maintenance and replacement needs for critical assets and allow for work orders to be routed efficiently. This will likely contribute to extending the useful life of equipment and ensuring reliable wastewater treatment services. The asset control program thus supports the reliability of wastewater systems by ensuring that equipment is valued, registered, and replaced on time to have uninterrupted services. As these pilot actions have been tested during the project and are ready to be expanded nationwide, the project is likely to have made an important impact on building reliability and resilience of wastewater systems in Uruguay.
Objective 2: Enhancing OSE’s efficiency
42. Enhancing OSE’s efficiency as reflected in the Theory of Change was focused on recovering NRW and generating energy savings. The project exceeded the reformulated target PDO indicators for ‘Cumulative volume of non-revenue water recovered under the project’ and ‘Energy saved in the systems where the Project is being implemented’ with 109 percent and 126 percent achievement, respectively. Similarly, the reduction of NRW and the intermediate indicators for water recovered in the system (as amended to correct for baseline under the newer calculation methodology) were also achieved in Montevideo (163 percent), Las Piedras (156 percent), Rivera (134 percent), and Salto (148 percent). The NRW activities in Mercedes, Paysandú, and in the La Paz subsystem were dropped from the project due to implementation delays but were later financed with OSE’s own funds. It is worth noting that the overall reductions of water and energy were achieved despite reducing the number of abovementioned NRW activities.
43. Other indicators associated with energy reduction such as ‘Number of electric motors installed and in operation at Aguas Corrientes’ and ‘Quantity of equipment (pumps, motors, and electrical systems) replaced and in operation outside Aguas Corrientes’ were also fully achieved.
44. Additionally, OSE has started a project to implement a quality control system according to ISO 9001 in the process of requesting and installing a new water connection to keep water losses to a minimum. OSE has an NRW reduction training program for all staff, with annual courses on NRW for technical, commercial, and operational areas. From 2013 to 2019, more than 60 NRW reduction training
Page 15 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
events were held, reaching over 1,500 staff. These trainings were key to consolidate a cultural change in the approach for managing NRW. OSE used to manage water systems as a mesh network, based mostly on empirical knowledge of some key points in the network. The project helped to consolidate the use of DMCs, a best-practice approach promoted by the World Bank and the International Water Association (IWA).
45. The most important achievement is perhaps the institutional anchoring of OSE’s energy efficiency in its operations, through its Energy Policy Plan which was updated in 2012. From a corporate strategic point of view, this plan was a contribution to the Uruguay 2005–2030 Energy Policy, aiming to “achieve energy independence in the framework of regional integration, with economic and environmentally sustainable policies for a productive country with social justice.” The plan aims to maintain OSE’s high service standards at the lowest costs through efficient use of energy and includes actions for energy facility diagnostics, enhancement of climate control, efficient lighting, solar micro-generation for rural and semi-urban areas, hydraulic turbo generation, and wind farms.
46. An additional contribution of the Energy Policy Plan is the promotion of ESCOs. Under these schemes, specialized energy companies are given concessions of parts of OSE’s service areas to replace equipment and undertake energy savings measures. The energy savings are then shared between OSE and the ESCO. These performance contracts with private partners were able to generate energy efficiency gains for 230,598 water connections and 92,575 sanitation connections (equivalent to 32 percent and 33 percent of total water and sanitation connections in the interior respectively). Two of these six-month contracts in the Litoral Sur and Noreste regions represented savings for OSE of US$188,148 and US$279,380, respectively. OSE’s Energy Plan was awarded the 2014 National Award for Energy Efficiency by the Ministry of Industry, Energy, and Mining (Ministerio de Industria, Energía y Minería) and obtained the first place in the public sector category.
Objective 3: Strengthening OSE’s management capacity
47. Strengthening OSE’s management capacity was to be achieved by implementing selected activities under Component 3, including (a) enhancing the efficiency, efficacy, and transparency of OSE’s management; (b) developing a long-term strategic plan that thoroughly analyzes and mitigates potential risks and strengthening OSE’s risk management capacity in day-to-day operations; and (c) strengthening OSE’s environmental and sanitation areas and supporting their role in the development of WSPs. WSPs include an assessment of the watershed from which a given system draws its raw water, water quality risk mitigation measures and management plans for normal and contingency events that could jeopardize the water delivered in each sub-system, as well as watershed monitoring activities. The latter include the identification of water users, information on the watershed’s geology and geomorphology, soil type and productive uses, groundwater use and potential sources of contamination. WSPs also emphasized teamwork and continuous communication between OSE’s water laboratory staff, technical, commercial, quality control and operative divisions, as well as with Departmental units. Component 3 was reduced to 17 percent of its initial PAD allocation from US$5.55 million to US$0.96 million.
48. The achievement of ‘Excellent’ for the BMEI at the end of the project despite the drastic reduction on resources allocated can be explained for three reasons: (a) there was not a specific allocation per line within the index, (b) many lines from the index refer to adoption of particular ‘good’ practices or
Page 16 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
institutional work to be developed by staff at no additional cost to OSE, and (c) the reformulation of the BMEI during the first restructuring to align lines with expected areas of investments.
49. Several activities at the closing of the project contributed to strengthening OSE’s management capacity. These activities include the environmental sustainability activities related to strengthening the Environmental Management Unit (Gerencia de Gestión Ambiental, GGA), as well as the development of OSE’s Energy Plan. Despite the large reduction on resources dedicated to this sub-objective, the project was able to reach the BMEI target of ‘Excellent’, above the planned target of ‘Satisfactory’. The outputs contributing to this index are listed as in Table 1.
Table 1. Selected Outputs Contributing to Strengthen OSE’s Management 1. OSE Logistics model 2. Ten OSE areas use software for quality management 3. Internal communication unit created with defined and applied policies, strategies, and processes 4. Strategic planning process applied 5. Indicators Book published regularly 6. OSE Asset Management Plan applied to one region for water supply and wastewater collection and treatment electromechanical equipment 7. Six Water Security Plans created including Manual, Management checklist, and Risk Matrix. 8. OSE Management Plan with full compliance 9. OSE participation in Laguna del Sauce Monitoring
50. Unlike many World Bank projects that rely on outside consultants for the implementation of the project, through semi-independent implementation units, the decision for this project—and the previous projects with OSE—was to rely on OSE’s staff for carrying out and be fully responsible for the implementation of the project. This approach, compounded with decades of World Bank support to OSE, has resulted in a stronger institution able to improve itself and take on new challenges.
51. Building on progress made during the previous operation, OSE consolidated a sound structure for environmental management and institutionalized the theme within the organization. The UGA was upgraded to the GGA in mid-2013 through the Board of Directors Resolution 1416/13. The GGA, formed with 10 qualified professionals, is now applying the instruments and procedures developed under the project to all of OSE’s operations. In addition, OSE’s long-term vision for environmental management was formalized through the approval of a company-wide Environmental Policy (approved by the General Management on February 8, 2013).
52. Other activities associated with environmental sustainability have contributed to strengthening OSE’s management capacity, two of which are worth mentioning here. One is the strengthening of the GGA, where the development of policies, processes, and procedures for environmental control of OSE’s projects and works, are contributing to mitigate OSE’s environmental impacts. Additionally, the GGA performed regular environmental audits on the works, reviewed environmental reports submitted by contractors, and implemented a program for works risk reduction and contingency management. On the knowledge side, the GGA led the Environmental Management Program for Potabilization Sludge and Effluent Treatment, with interesting results in the areas or biosolid management and reuse.
Page 17 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
53. The implementation of the NRW reduction activities also provided an opportunity for institutional strengthening. The implementation of these activities was to be implemented exclusively by private companies hired by OSE, but this generated serious opposition from the union. After negotiations with union members, the OSE management decided to split the implementation of the NRW Reduction Program between the union and the private providers, an arrangement which proved to be beneficial to OSE: the NRW reduction know-how generated under this arrangement became the new norm within the company and the NRW reduction methodology can now be applied nationwide outside the pilot areas, with both OSE and private provider personnel.
54. OSE’s financial capacity to manage both its day-to-day operations and the implementation of this project is also proof that OSE’s overall sustainability objective has been achieved. Its issuance of corporate bonds (see Section E. Mobilizing Private Sector Financing) is a ‘market’ indicator to show that OSE is financially viable to sustain its business. The corporate governance, long-term planning, and excellent management practices have been directly supported by this project (as part of a series of projects) and have given the corporate bond investors the confidence to participate in the SOE’s long-term financing.
Justification of Overall Efficacy Rating
55. The significant achievement of the three sub-objectives, and OSE’s improved financial and viability and environmental sustainability, point to the high likelihood of OSE’s increased sustainability. The reliability and resilience of both OSE’s WSS systems were achieved through structural and nonstructural activities. Furthermore, the ongoing Water Global Practice’s Utilities of the Future Initiative indicates that WSPs, energy efficiency measures, NRW reduction, and reuse of biosolids as part of the circular economy, all constitute good practices to build resilience and reliability at the water utility level. Efficiency enhancement was successful through reduction in NRW and energy used. To a lesser extent when compared to its intended scope at the project onset, management was also improved. Modest achievement on OSE’s management which resulted from its drastic reduction in scope is compensated by higher-than-expected achievements on other sub-objectives. Overall contributions to OSE’s sustainability come from the environmental side (environmental control and audit and watershed environmental monitoring as part of the WSP approach). Given the equal weighting across sub-objectives, the overall efficacy of the project is rated Substantial.
C. EFFICIENCY
Assessment of Efficiency and Rating Rating on Efficiency: Substantial
56. An economic and financial analysis was carried out to evaluate the economic value of the investments implemented under this project. The time horizon of the project was 2012–2043 and the discount rate was 10 percent. The analysis comprised the following three categories: (a) water reliability improvements in the systems of Montevideo, Durazno, and Treinta y Tres; (b) the NRW program in Montevideo, Rivera, and Salto; and (c) the energy efficiency management program.
57. The net benefit for each category was estimated as the difference between the incremental benefits and incremental costs of the two scenarios. In the case of NRW, several scenarios were analyzed, some included the ex post changes in the number of connections due to their impact on the calculation
Page 18 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
of losses. The costs and benefits were forecasted during the lifetime of the project, which was assumed to be 30 years. Costs and benefits are expressed at constant prices (June 2011). The overall results of the economic evaluation for the overall project at completion were a net present value (NPV) of US$102.2 million and an economic internal rate of return (EIRR) of 44.4 percent, compared with an NPV of US$151.3 million and an economic EIRR of 34.9 percent at appraisal. The financial evaluation showed that for the overall project at completion an NPV of US$108 million and a financial internal rate of return (FIRR) of 47.9 percent, compared with an NPV of US$144.6 million and a FIRR of 29.0 percent at appraisal. Annex 4 provides further detail on the methodology used and a comparison of the results of the evaluations performed at completion and at appraisal.
58. Despite the lower investment levels (20 percent lower in current values, 44 percent lower concerning their present value), the delay in the availability of the new facilities, and the lower results than expected, the overall project yielded positive results. In terms of the present value of net benefit, financial and economic results achieved 75 percent and 68 percent of those expected, respectively. In terms of the current value, investments were 56 percent of those forecasted. Better results could be explained by the modification in the investment mix that benefited those with the greatest impact, and the alteration in the relationship between the inflow of investment and its recoupment. The determinant factor was the results for the NRW of Montevideo - Las Piedras. Whereas this subproject accounted for 24 percent of the financial benefit at appraisal, at completion it accounted for 65 percent (in economic terms: at appraisal 31 percent and at completion 67 percent). Overall, the project achieved higher results than at appraisal for both FIRR and EIRR with 48 percent and 44 percent, respectively.
59. Both exogenous and endogenous factors affected the administrative and operational efficiency of the project:
(a) The modification of scope and amount of investment mostly affected the NRW Program but benefited the Reliability Improvement Program with higher investments than at appraisal. These modifications stemmed, among other exogenous factors, from a dispute with the union.
(b) Changes in the investment schedule had a great impact on the availability of new plants, which affected the Reliability Improvement Program.
(c) Other exogenous factors affected the NRW and the Energy Efficiency Programs such as the alteration of the baseline from the conditions at appraisal and a different evolution of the number of water connections as forecasted.
60. Based on the high EIRRs, the efficiency rating for the project is rated Substantial.
D. JUSTIFICATION OF OVERALL OUTCOME RATING Overall Rating: Satisfactory
61. Based on a High rating for relevance, a Substantial rating for efficacy, and the Substantial rating for efficiency, the overall project outcome is rated Satisfactory.
Page 19 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
E. OTHER OUTCOMES AND IMPACTS (IF ANY)
Gender
62. The World Bank’s Water Global Practice launched a global study focused on women in WSS utilities, and OSE was invited by the World Bank Team to complete a questionnaire and share evidence on the participation of women among utility staff, including in leadership and management positions. Results indicated that OSE is among the top performers in the region in that regard, having increased the percentage of women working in the company from 21 percent in 2007 to 32 percent in 2019. Among some of the measures taken are the following: (a) the adoption of a Gender Equality Model, a tool developed to help companies incorporate gender equality in their organizational management processes; (b) the creation of a protocol for handling sexual harassment cases; (c) the design and implementation of a series of workshops to sensitize employees on gender issues, including sexual harassment; and (d) the training of the legal department on addressing sexual harassment and discrimination at work. While the project did not directly contribute to these results, it is expected that these and other practices will be shared by OSE to other public utilities in the region and across regions that are exploring efforts in increasing their share of women employees, as well as incorporating and improving gender practices.
Institutional Strengthening
63. Institutional strengthening was part of the project by design and its results are described in the efficacy section.
Mobilizing Private Sector Financing
64. In 2017, OSE launched a bond program to raise financing from the domestic capital market, and successfully issued 22-year bonds worth US$32 million. These bonds have been placed with Uruguayan insurance companies/pension funds (Administradora de Fondos de Ahorro Previsional, AFAPs) and are issued by a trust (fideicomiso), and due to OSE’s favorable BBB+ investment grade credit rating, the bonds were fully subscribed without needing the support of development finance institutions. A year later, in April 2018, OSE’s credit rating improved to A- and on May 23, 2019, OSE issued two new series of bonds worth close to US$30 million. The funds that OSE raised from bond financing have reduced the utility’s borrowing costs and improved its debt profile with regard to foreign exchange risk and loan tenure, giving OSE flexibility in executing its investment plans for 2017–2020. A detailed report was prepared for this operation and considered a success. OSE is now considering the issuing of bonds without the need for a trust.4
65. While the project did not include specific activities geared towards this bond program, the World Bank’s multifaceted support to the water sector and OSE over the years supported the utility in strengthening its physical infrastructure, its efficiency and its management practices. These efforts, including those included in this project, significantly contributed to improving OSE’s financial performance and creditworthiness. This in turn enabled the utility to obtain private sector financing through this local currency bond series on Uruguay’s capital markets.
4 https://www.worldbank.org/en/about/partners/brief/uruguay-strengthening-creditworthiness-of-water-sanitation-sector
Page 20 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
Poverty Reduction and Shared Prosperity
66. The NRW Reduction Program included low-income households, where irregular connections to the network were most likely to be found. By reducing the number of low-income households that had intermittent or unreliable water access, the project contributed to improved health outcomes which could lead to poverty reduction, although data on the economic impact on the low-income households were not available at the time of the ICR.
III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME
A. KEY FACTORS DURING PREPARATION
67. Long-standing partnership with the utility influenced the innovation- and climate-focused project design. As mentioned earlier, the World Bank has a long-standing tradition of working with OSE. The initial discussions about a follow-on project centered around the construction of two WWTPs in Salto and Paysandú and a Spanish Fund for Latin America and the Caribbean (SFLAC) grant for US$450,000 had been obtained to support the preparation of such a project. However, the project preparation underwent a change from a wastewater management focus to a new climate change focus. This change was to reflect (a) the national commitment to the climate change agenda, (b) the alignment with Latin America and the Caribbean regional priorities, and (c) a strong interest from the client. During the preparation, the World Bank concluded that this focus was useful to reflect client interest and to orient World Bank support toward innovative/challenging areas for OSE (an objective which is appropriate given the long and successful partnership developed between OSE and the World Bank through previous operations). The SFLAC Trust Fund was therefore restructured to reflect the new project focus.
68. The environmental aspects were central for this project. One legal covenant of the project was the maintenance of an Environmental Unit, and the project also included a subcomponent to enhance OSE’s ability to operate in an environmentally sustainable manner. This subcomponent aimed at strengthening OSE’s environmental and sanitation areas and supporting its participation in water source protection activities.
B. KEY FACTORS DURING IMPLEMENTATION
69. The MTR at the end of 2015 coincided with a complex financial situation of OSE as the Government decided to freeze OSE’s tariff which resulted in a drastic reduction in investment levels. This led to suspension of the procurement process, including those already awarded. The suspended contracts and acquisitions included those of the NRW reduction activities in Montevideo and Rivera, as well as the purchase of pumps, other equipment, and micro-meters. This resulted in the adjustment of targets and indicators for NRW reduction and energy efficiency, an increase in the amount allocated to Component 1, as well as a reduction on the scope of Component 3, eliminating some sub-activities associated with logistics, asset management, and environmental sustainability.
70. With the emission of additional OSE debt obligations and debt restructuring, OSE’s financial flows increased and the activities that had been put on hold were restarted. This situation was reverted in 2017 due to modification in the debt profiles, increase in OSE’s revenues, and extension of the project closing
Page 21 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
date for 22 months. This restructuring included the redefinition of targets to reflect the new implementation schedule and the delayed start of NRW activities in Mercedes and Paysandú and two bidding lots in Montevideo that would not have been completed before the original project closing date.
IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME
A. QUALITY OF MONITORING AND EVALUATION (M&E)
M&E Design
71. An important distinction is made to evaluate the M&E design for the project itself, containing the key indicators selected to keep track of the project progress, and the M&E design for OSE in general. Both are interrelated, as the OSE M&E provides information to the project M&E, but the assessment at the ICR stage focuses on the M&E system at the project level and explains how OSE’s M&E system affected the M&E of the project. M&E design is thus divided into (a) data collection arrangements and (b) relevance of the selected indicators.
72. Regarding design of data collection, an implementation unit was formed within OSE to carry out project activities (Office of Project Management). It was temporary in nature and had the responsibility to consolidate the information from other units, perform quality control, and aggregate and transmit the information to the World Bank. Data generation, quality control, and monitoring responsibilities remained with each specialized unit, which were the water (Potable Water Unit), energy efficiency and technology (Information Management Unit), or the wastewater unit.
73. In relation to PDO indicators, those chosen to reflect energy savings were appropriate. However, the other indicators had some shortcomings. The indicator chosen for reliability and resilience (Piped household water connections that are benefiting from rehabilitation works undertaken by the project) only had an indirect relation to the more encompassing concept of the system that is able to withstand external shocks. The indicators for the project investments and activities made to increase sanitation system reliability and resilience were only found in the BMEI, but they were later removed during project restructuring. Also, the project did not include financial sustainability indicators expressed as working ratio or other common indicators usually chosen as proxies in water utilities for overall sustainability. The NRW indicator had to be reformulated during project restructuring to better reflect what was intended under the project scope.
74. The BMEI was created by OSE and the World Bank team to monitor the progress of the main institutional objectives under Component 3. The BMEI was based on the public services rating system developed by the IWA but adapted to OSE’s work program and objectives. The relative weight of each activity is reflected on the points allocated. The rating system is ‘Low’ for 0–39 points, ‘Moderate’ for 40– 59 points, ‘Satisfactory’ for 60–79 points and ‘Excellent’ for 80 points to 100.
75. In summary, quality of the M&E Design is assessed Moderate given the shortcomings in the appropriateness of the selected indicators to assess the PDOs.
Page 22 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
M&E Implementation
76. Each unit at OSE maintains its set of indicators and an M&E system that feed into the managerial system. Indeed, the calculation of the BMEI relies heavily on indicators reported from each unit.
77. The implementation unit needed, however, to make ad hoc data requests to other units to report on the project’s indicators consolidated in the Results Framework. This led to some delays or asynchronous presentation of the information. Indeed, a quick review of the lag between information available at the time of missions as reported in the 15 Implementation Status and Results Reports (ISRs) showed an average lag of 151 days.
M&E Utilization
78. OSE is a data-driven institution. Its core operation and policy making depends heavily on the collection, analysis, and monitoring of the data and indexes being reported by each unit periodically, and the implementation of the project was not an exception. The project made use of the M&E system and has been able to update and amend project indicators and target objectives based on the system.
79. Beyond the project, OSE relies heavily on objectives, indicators, and targets to manage its operations. In the recently complete Action Plan for 2020, OSE uses distinctive strategic plans per unit, with responsible, scope, target, start and end date, indicating the unit’s contribution to the overall OSE Strategic Plan. The preparation of those plans, many of which relied on project information enhanced accountability and clarified internal roles and responsibilities, and their data publication contributed to project transparency.
Justification of Overall Rating of Quality of M&E
80. The overall rating for the quality of M&E is Substantial, based on (a) a Moderate rating for the project M&E design, but a high usage of relevant indicators during project implementation, (b) high marks for the project’s approach to monitoring the project’s institutional aspects (management improvement) using a clear set of indicators defined from the onset of the project; and (c) the utilization of the project’s M&E and indicators to feed into the corporate indicators as well as to monitor progress and introduce remedial actions when needed.
B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE
81. Environmental. No adverse impacts or issues that were not previously identified as of potential occurrence appeared during project implementation; moderate to low risks and potential impacts associated with the different physical interventions were successfully managed with the safeguard instruments developed for the project. As a result of the performance of the GGA and proper application of safeguard instruments, the project environmental compliance was consistently rated Satisfactory through project implementation.
82. The project not only maintained an excellent record in terms of safeguards compliance but also provided support to the consolidation of OSE’s Management Unit for Environmental Management and the institutionalization of the theme within the organization, as explained earlier. By the end of the
Page 23 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
project, the corporate Environmental Index (EI) surpassed the ‘satisfactory’ expected target with an ‘excellent’ level of environmental performance.
83. Social impacts and implementation. As part of the social assessment, the World Bank reviewed the main civil works during the preparation and found that no involuntary resettlement, land acquisition, or easements were to be required. However, because of the nature and design of the project (the zone of impact is mostly known but the location of some of water pumps, water mains, and other related equipment will be determined during project implementation), the precise sitting alignments could not be determined during preparation. Given the possibility that some involuntary resettlement could have taken place once the final engineering designs were completed, OSE, prepared an Involuntary Resettlement Policy Framework to guide the resettlement process, but this was never required.
84. Financial management. The project’s overall financial management system is rated Satisfactory. The Externally Financed Programs Department (Gerencia de Programas con Financiamiento Externo, GPFE) maintained an integrated financial information system (SAP) as well as a specific accounting and management information system (SAPI) which was maintained for accounting, financial reporting, and project reporting purposes throughout implementation. All the required financial reports were provided on time for the established reporting periods. The required audit reports with unqualified audit opinions have been submitted to the World Bank. General financial management issues included slow implementation, lack of counterpart funds during the early stages of the project, and contract payments. The noncompliance issues were rectified by SPSUs, as requested, and issues related to counterpart funding were addressed through project restructuring. The financial audits were done by the private qualified firms selected competitively.
85. In terms of internal control and internal audits, the Internal Audit Office (Auditoria Interna de la Nación) is usually responsible for internal audits of the central administration, decentralized entities, and SOEs. It depends functionally and financially on the Ministry of Economy and Finance (Ministerio de Economía y Finanzas). However, OSE has an Internal Audit Department (IAD) that reports to the Board of Directors, and it has technical autonomy and access to financial records. The IAD periodically prepared an annual audit plan and progress reports against the plan.
86. Procurement. The overall project procurement performance was rated Satisfactory. The procurement process, under the responsibility of the GPFE has complied with World Bank procurement rules and procedures, even though minor deviations were identified and rectified during the project implementation period. OSE with the World Bank’s support and supervision, undertook the preparation of the complex bidding documents for the NRW interventions, where a careful balance of risks between the contractor and the employee was to be carefully reflected in the bidding process. The GPFE already had experience with implementing World Bank projects, namely APL1 (P063383) and APL2 (P101432), and was familiar with standard bidding documents and processes. For its procurement processes, the project implementation group relied on the support of specialized technical staff that demonstrated a capacity for providing inputs and quality control for the project procurement activities in a satisfactory manner, including contract management.
Page 24 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
C. BANK PERFORMANCE
Quality at Entry
87. The World Bank team incorporated relevant lessons from previous projects with OSE in the design of this operation and ensured that the objectives were fully aligned with the issues highlighted in strategic documents, namely the CPF 2010–2015, most notably adapting to the climate change agenda. Indeed, the project design capitalized and built on the issues of corporate governance, strategic planning, and sustainable services that were outcomes from the previous World Bank-financed OSE Modernization and Systems Rehabilitation Project (P101432).
88. The project’s design was also flexible to allow for the incorporation of structural (water, NRW, and energy efficiency) and nonstructural (sanitation, environmental protection, and watershed management) measures to respond to an increasingly stringent performance benchmark for the World Bank to intervene in high-income countries such as Uruguay which calls for an innovative and transformative agenda rather than infrastructure financing. Moreover, the team showed ambition in the sense that it exhorted OSE to push its boundaries beyond its institutional mandate, to include watershed quality control and biosolids regulation.
89. The World Bank ensured that a team of specialists was mobilized to address all relevant project aspects, including technical aspects (NRW and energy efficiency), and social and environmental specialists through the SFLAC which also contributed to the shift to climate and innovation. The mobilization of additional resources through the SFLAC allowed for extra in-time support to prepare critical inputs for the project, such as energy efficiency and management of biosolids, NRW, and WSPs.
Quality of Supervision
90. The World Bank team provided timely advice to the counterparts to address both technical issues and contract execution during implementation. Advice from the World Bank team also included guiding and supporting OSE on incorporating new ways of doing things, such as adopting a new NRW reduction methodology which focused on macro-metered areas with pressure zones rather than the traditional approach relying on metering and pipe replacement. Further, the team encouraged OSE to consider a watershed approach in the WSPs.
91. Fifteen missions were held over the course of project implementation, which included the participation of several specialists, as described in Table 2. Fiduciary and safeguards teams were based in Buenos Aires (a mere 30 min-flight away from Montevideo) and this facilitated regular visits beyond the usual biannual supervision missions. In addition, an NRW Specialist participated in the first four missions, providing targeted technical support to OSE. Project ratings in the ISRs were candid. The Aide Memoires described the issues encountered in sufficient detail, and recommendations to address issues were agreed upon with the implementing agencies. Urgent issues were promptly brought to the attention of management.
92. The World Bank further conducted regular supervision missions with frequent field visits to construction sites. The project changed task team leaders only once, ensuring consistency in and continuity of the project’s approach. The World Bank’s multidisciplinary teams, many of whom stayed for
Page 25 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
the entire project (with skills in financial management, procurement, institutional development, economics, project evaluation, and just-in-time technical expertise) reviewed all relevant documents before, during, and after supervision missions. It is worth noting that the environmental specialist who participated in the preparation of the project and whose role was pivotal for achieving OSE environmental strengthening, became the co-task team leader few months after project effectiveness, and ensured that institutional memory was present during the entire implementation period.
Table 2. Number of missions attended per Specialists. Specialist Number of missions attended Water and Sanitation 15 Environmental 14 Social 11 NRW 4 Procurement 4 Financial Management 3
93. The World Bank team provided OSE staff with diverse and continuous training opportunities, including study tours to visit Guayaquil and Brazil to learn about their experiences. Such training opportunities informed OSE of policies and implementation strategies regarding service provision, particularly on NRW and energy efficiency.
94. The World Bank conducted an MTR in November 2015, followed by a restructuring in September 2016, which identified the adjustments needed for the project to achieve its objectives including reallocation of resources among component and reduction of some noncritical activities.
Justification of Overall Rating of World Bank Performance
95. Based on the quality of the World Bank’s performance at entry and at supervision as described, the overall rating of the World Bank’s performance is Satisfactory.
D. RISK TO DEVELOPMENT OUTCOME
96. Risk to development outcome is assessed by classifying the various risks into categories such as technical, financial, social, economic, environment, or ownership. Technically the infrastructure built, as well as the nonstructural measures, were implemented following international technical standards, and are thus are likely to benefit from full asset lives. Financially, OSE proved to be prudent in managing its cashflows by delaying and/or restructuring some of their project activities to avoid negative financial impacts. This situation was later reversed with the issuing of bonds which contributed and continues to contribute to improving OSE’s financial sustainability. Socially, the outcomes are benefitting OSE’s clients across the whole country. Economically, OSE, as a public company, has demonstrated prudent economic investment, and for this project, the economic result attests to this managerial characteristic. The project reduced the environmental risks because of the strengthened environmental regulation of works and programs, environmental audits, and emphasis on pollution control. This project was developed and
Page 26 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
restructured with full ownership of the utility, and furthermore, was fully implemented by OSE’s public officials with minimal support from external consultants.
97. In summary, the Risk to Development outcome is considered low to negligible because (a) OSE is capable of maintaining the outcomes achieved by the project without support from external consultants, (b) OSE has demonstrated its commitment to continue the project approach and activities by financing the activities that could not be financed under the project, with its own funds, and (c) OSE has an Action Plan to use its own funds to carry on the implementation and expansion of the approaches used under the project in energy efficiency, NRW reduction, environmental management and control, and so on.
V. LESSONS AND RECOMMENDATIONS
98. Innovation and global knowledge, even if small in funding, can have a transformational impact on a utility in a high-income/middle-income country. World Bank support is sought by countries which have access to several financing sources, not only for its funding, but more importantly for its global knowledge and expertise. The promotion of nonstructural measures through highly technical and specialized support combined with its global reach, provide the World Bank with an advantageous position to facilitate the adoption of innovative approaches by utilities in high- and middle-income countries. This was the case for the nonstructural measures related to WSPs, biosolid management, and ozonation, which had an important impact on OSE’s approach to deal with future challenges, despite limited associated fund allocations.
99. Lasting institutional transformations of water utilities require a series of projects approach. Public utilities are typically constrained by labor and procurement legislation which may slow the pace of utility transformation and limit its depth and incentives to embark on such a path. Institutional changes thus need to be ingrained in public staff so that they can be replicated within and across their units and have long-lasting impacts. In addition, continuous investment in training and exposure for many years are needed to ensure staff develop the interest and capacity to undertake the proposed changes.
100. ‘Maximizing Financing for Development’ grows on solid institutional governance. Perhaps as a corollary to the previous lesson, the transformation of OSE into an institution with a clear mission, vision, strategic planning, and data-based decision-making ability with appropriate performance indicators and clear governance was facilitated by a continuous engagement and series of projects. This transformation has allowed OSE to attract new private partners (such as in the case of ESCOs and the use of performance- based contracts for NRW reduction) and diversify its sources of financing beyond transfers and tariffs.
101. Adaptive design and timely restructurings allow for improved and more relevant outputs. Although in retrospect, the number of activities proposed originally under Component 3 may have seemed too many, this large menu allowed OSE and the World Bank to test which ones would best resonate with the institution and its management in the medium and long term. When working in complex systems, such as the case of an institutional transformation, it is difficult to envisage which initiatives will prosper. Having a large list of options which can be revised and adapted with project restructurings thus seems to be an appropriate strategy to match project activities with (evolving) client demands and expectations. .
Page 27 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS
A. RESULTS INDICATORS
A.1 PDO Indicators
Objective/Outcome: To increase the sustainability of OSE Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Piped household water Number 0.00 433900.00 433900.00 433900.00 connections that are benefiting from rehabilitation 05-Jul-2012 29-Dec-2017 31-Dec-2019 31-Dec-2019 works undertaken by the project
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Cumulative volume of non- Cubic 0.00 48760000.00 81900000.00 89290000.00 revenue water recovered Meter(m3) under the project (m3) 05-Jul-2012 29-Dec-2017 31-Dec-2019 31-Dec-2019
Page 28 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
Comments (achievements against targets): Original indicator was Non-revenue water recovered by reducing real (physical) and apparent (commercial) water losses.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Energy saved in the systems MWh/year 0.00 37983.00 20780.00 26250.00 where the Project is being implemented 05-Jul-2012 29-Dec-2017 31-Dec-2019 31-Dec-2019
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Reach satisfactory level in the Text Low Satisfactory Satisfactory Excellent Business Management Efficiency Index (BMEI) 05-Jul-2012 29-Dec-2017 31-Dec-2019 31-Dec-2019
Comments (achievements against targets): BMEI is a corporate scorecard that the Project team formulated specifically for OSE that was reformulated after MTR restructuring on September 2016.
Page 29 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
A.2 Intermediate Results Indicators
Component: Component 1: Investing in Reliable Water Supply Infrastructure.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of people that are Number 0.00 1860000.00 1860000.00 1860000.00 benefiting from rehabilitation works 05-Jul-2012 29-Dec-2017 31-Dec-2019 31-Dec-2019 undertaken by the Project
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion New water intake point at Number 0.00 15000.00 15000.00 15000.00 the Aguas Corrientes plant constructed and in operation 05-Jul-2012 29-Dec-2017 31-Dec-2019 31-Dec-2019 (m3/h)
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Durazno and Treinta y Tres Number 0.00 1200.00 1150.00 1150.00
Page 30 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
water treatment plants 05-Jul-2012 29-Dec-2017 31-Dec-2019 31-Dec-2019 reconstructed and in operation (m3/h)
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of electric motors Number 0.00 10.00 10.00 10.00 installed and in operation at Aguas Corrientes 05-Jul-2012 29-Dec-2017 31-Dec-2019 31-Dec-2019
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of equipment Number 0.00 250.00 51.00 51.00 (pumps, motors and electrical systems) replaced 13-Jun-2012 29-Dec-2017 31-Dec-2019 31-Dec-2019 and in operation outside Aguas Corrientes Water
Comments (achievements against targets):
Page 31 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
Component: Component 2: Managing Water and Energy More Efficiently.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Development of an Energy Text No Program Published Program Ready Management Program 05-Jul-2012 31-Dec-2015 31-Dec-2019
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Reduction of non revenue Number 799.00 635.00 736.00 696.00 water in the Montevideo system 05-Jul-2012 29-Dec-2017 31-Dec-2019 31-Dec-2019 (liters/connection/day)
Comments (achievements against targets): Results and final target only include one of the three lots that was initially planned. This change meant that the new indicator explicitly took into account authorized water consumptions that are not billed, therefore, indicator baselines and targets needed to be adjusted.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion
Page 32 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
Reduction of non revenue Number 668.00 386.00 483.00 420.00 water in the Rivera system (liters/connection/day) 05-Jul-2012 29-Dec-2017 31-Dec-2019 31-Dec-2019
Comments (achievements against targets): This change meant that the new indicator explicitly took into account authorized water consumptions that are not billed, therefore, indicator baselines and targets needed to be adjusted.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Reduction of non revenue Number 579.00 396.00 483.00 418.00 water in the Salto system (liters/connection/day) 05-Jul-2012 29-Dec-2017 31-Dec-2020 31-Dec-2019
Comments (achievements against targets): This change meant that the new indicator explicitly took into account authorized water consumptions that are not billed, therefore, indicator baselines and targets needed to be adjusted.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Reduction of non revenue Number 703.00 400.00 555.00 391.00
Page 33 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
water in Las Piedras system 05-Jul-2012 29-Dec-2017 31-Dec-2019 31-Dec-2019 (liters/connection/day)
Comments (achievements against targets): This change meant that the new indicator explicitly took into account authorized water consumptions that are not billed, therefore, indicator baselines and targets needed to be adjusted.
Component: Component 3: Preparing for the Future: Management, Planning and Risk.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Asset Management Plan for Text No Asset management Phase 2 Asset 100% electromechanical operational Program Operational equipament implemented in one pilot region 05-Jul-2012 30-Dec-2016 31-Dec-2019 31-Dec-2019
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Water Security Plans (PSA) Number 0.00 18.00 19.00
07-Sep-2016 31-Dec-2019 31-Dec-2019
Page 34 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Reach "Satisfactory" level in Text Low Satisfactory Satisfactory Excellent the Environmental Index (EI) 05-Jul-2012 29-Dec-2017 31-Dec-2019 31-Dec-2019
Comments (achievements against targets):
Component: Component 4: Knowledge Sharing and Project Management Activities.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of south-south Number 0.00 5.00 10.00 12.00 knowledge exchange activities 05-Jul-2012 29-Dec-2017 31-Dec-2019 31-Dec-2019
Comments (achievements against targets):
Page 35 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
B. KEY OUTPUTS BY COMPONENT
Objective/Outcome 1: Improving the reliability and resilience of OSE’s water supply systems 1. Piped household water connections that are benefiting from Outcome Indicators rehabilitation works undertaken by the Project
1. Number of people that are benefiting from rehabilitation works undertaken by the Project 2. New water intake point at the Aguas Corrientes plant constructed and in operation (m3/h) Intermediate Results Indicators 3. Number of electric motors installed and in operation at Aguas Corrientes 4. Number of equipment (pumps, motors and electrical systems) replaced and in operation outside Aguas Corrientes Water 1. Increase of water intake capacity, increase raw water pumping capacity and increase storage capacity at Aguas Corrientes Water Treatment Plant Key Outputs by Component 2. New water treatment Plant at Durazno with 700 m3/h capacity (linked to the achievement of the Objective/Outcome 1) 3. New water treatment Plant at Treinta y Tres with 450 m3/h capacity
Objective/Outcome 2: Improving the reliability and resilience of sanitation systems 1. N/A Outcome Indicators
1. N/A Intermediate Results Indicators
Page 36 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
1. OSE Asset Management Plan applied to one region on the area or electro-mechanic equipment for collection and treatment of wastewater 2. Short-term sludge Management Program (Programa de Gestión de Residuos a Corto Plazo) pilot studies on: • Co-management of water and wastewater treatment plants • Brick building using sludge • Aluminum sulfate recovery Key Outputs by Component • Wastewater sludge composting (Maldonado and (linked to the achievement of the Objective/Outcome 2) Canelones WWTP) • Wastewater sludge for soil improvement • Wastewater sludge as fodder soil fertilizer 3. Strategic Plan for the integral management of sludge for water and wastewater treatments (Plan Estratégico para la Gestión Integral de los Residuos de Potabilización y Tratamiento de Efluentes): 4. 32 training events on environmental issues, monitoring, control, wastewater treatments, effluent control, and so on.
Objective/Outcome 3 : Enhancing OSE’s efficiency
1. Non-revenue water recovered by reducing real (physical) and apparent (commercial) water losses 2. Cumulative volume of non-revenue water recovered under the Outcome Indicators project (m3) 3. energy saved in the systems where the Project is being implemented 1. Development of an Energy Management Program Intermediate Results Indicators 2. Reduction of non revenue water in the Montevideo system (liters/connection/day)
Page 37 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
3. Reduction of non revenue water in the Rivera system (liters/connection/day) 4. Reduction of non revenue water in the Salto system (liters/connection/day) 5. Reduction of non revenue water in Las Piedras system (liters/connection/day) 1. Energy Management Plan updated in 2016 2. 103 liters/connection/day reduced in Montevideo system Key Outputs by Component 3. 248 liters/connection/day reduced in Rivera system (linked to the achievement of the Objective/Outcome 3) 4. 161 liters/connection/day reduced in the Salto system 4. 446 liters/connection/day reduced in La Piedras system
Objective/Outcome 4: Strengthening OSE’s management capacity (Preparing for the Future: Management, Planning and Risk.)
1. Reach the “satisfactory” level in the Business Management Outcome Indicators Efficiency Index (BMEI). 1. Asset Management Plan for electromechanical equipment implemented in one pilot region Intermediate Results Indicators 2. Water Safety Plans 3. Reach "Satisfactory" level in the Environmental Index (EI) 1. OSE Logistics model 2. Ten OSE areas use software for quality management 3. Internal communication unit created with defined and applied policies, strategies and processes Key Outputs by Component 4. Strategic planning process applied (linked to the achievement of the Objective/Outcome 4) 5. Indicators Book published regularly 6. OSE Asset Management Plan applied to one region on the area or electro-mechanic equipment for water supply, and collection and treatment of wastewater
Page 38 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
7. Six Water Security Plans created including Manual, Management checklist and Risk Matrix. 8. OSE Management Plan with full compliance 9. OSE participation on Laguna del Sauce Monitoring
Outcome 5: Knowledge Sharing and Project Management Activities.
1. Number of south-south knowledge exchange activities Outcome Indicators
Intermediate Results Indicators Key Outputs by Component 1. 12 South-to-South exchanges (linked to the achievement of the Objective/Outcome 2)
Page 39 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION
A. TASK TEAM MEMBERS
Name Role Preparation Carmen Rosa Yee-Batista Task Team Leader(s)
Julio Sanjines Gonzales Procurement Specialist(s)
Daniel Chalupowicz Financial Management Specialist
Carmen Rosa Yee-Batista Social Specialist
Claudia Nin Counsel
Claudia Nin Team Member
Graciela Dora Broda Counsel
Graciela Dora Broda Team Member
Ricardo Schusterman Social Specialist
Elba Lydia Gaggero Environmental Specialist
Geraldine Garcia Medina Counsel/ Team Member
Supervision Maria Catalina Ramirez, Elba Lydia Gaggero Task Team Leader(s) Martin Ariel Sabbatella Procurement Specialist(s) Luz Maria Meyer Financial Management Specialist Francis V. Fragano Environmental Specialist Claudia Nin Procurement Team Santiago Scialabba Social Specialist Maria Florencia Liporaci Team Member Maria Emilia Sparks Procurement Team Maria Elizabeth Grandio Procurement Team
Page 40 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
ICR Jean-Martin Brault Task Team Leader(s) Maite Capandeguy ICR Contributor Horacio Seillant ICR Contributor
B. STAFF TIME AND COST
Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY10 2.800 24,131.30 FY11 13.396 82,211.17 FY12 58.898 346,407.99 FY13 0 3,759.54
Total 75.09 456,510.00
Supervision/ICR FY13 16.645 145,329.18 FY14 11.563 108,866.51 FY15 23.346 126,942.07 FY16 21.735 84,246.33 FY17 18.255 53,481.03 FY18 21.348 82,133.72 FY19 11.459 46,049.85 FY20 21.229 111,277.99 Total 145.58 758,326.68
Page 41 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
ANNEX 3. PROJECT COST BY COMPONENT
Actual at Project Amount at Approval Percentage of Approval Components Closing (US$, (US$, millions) (%) millions) Component 1: Investing in Reliable Water Supply 11.10 19.375 174.55 Infrastructure. Component 2: Managing Water and Energy More 18.75 21.022 112.11 Efficiently. Component 3: Preparing for the Future: Management, 5.55 0.953 17.17 Planning and Risk. Component 4: Knowledge Sharing and Project 1.00 0.650 65.00 Management Activities. Contingencies 5.49 0.000 0.00 Front-End Fees 0.11 0.110 100.00 Total 42.00 42.000 100.00%
Note: This table does not include Bank non-financing.
Page 42 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
ANNEX 4. EFFICIENCY ANALYSIS
ECONOMIC AND FINANCIAL ANALYSIS
Introduction
1. This Annex summarizes the ex post economic and financial analysis of the Project, which was based on information collected from OSE including the ICR report prepared by OSE.
Methodology and Analysis
2. This analysis used the same model as the analysis at appraisal. The ex-ante model projects the economic and financial inflow for each subcomponent throughout the 2012-2043 period. These projections were based on assumptions related to the development of: (a) population and number of connections (based on the 2004 census); (b) macroeconomic (estimated from 2011 data); and (c) costs, consumption, production, billing and other data on the operation of OSE (projected from 2010 data).
3. To analyze this project, the above-indicated variables were divided into exogenous and endogenous (concerning the project). The former are those indicated in (a), (b), and partially (c). For these variables, the projected values at appraisal were used to avoid result changes due to price variation, population growth, or other variables external to the project. Endogenous variables are those affected by the availability of infrastructure, and the amount and period of investment.
4. This evaluation was carried out for the following categories: (i) Water Reliability Program in the Montevideo, Durazno, and Treinta y Tres systems; (ii) Non-Revenue Water Program in Montevideo, Rivera, and Salto; and (iii) Energy Efficiency Program. The related costs of project management and strengthening OSE's institutional capacity were included proportionally in each of the previous categories. The Energy Efficiency Program only considers the savings achieved outside Montevideo; the savings for the Montevideo System were included in the water reliability improvement component and those related to the NRW in this component.
5. For each category two scenarios were built: with and without Project. The with-project scenario includes the proposed investment program and its targets. The without-project scenario forecasts the situation as it is now. The net benefit for each category was estimated as the difference between the incremental benefits and incremental costs of the two scenarios. In the case of NRW, several scenarios were analyzed, some included the ex post changes in the number of connections due to their impact on the calculation of losses. The costs and benefits were forecasted during the lifetime of the project, which was assumed to be 30 years. Costs and benefits are expressed at constant prices (June 2011). The discount rate used for the evaluation was 10 percent, a proxy for the opportunity cost of capital.
6. The analysis at completion or ex-post maintained both the discount rate (10 percent) and the horizon in the projections (2043) to calculate the NPV, although the inflow of estimated benefit started five years later (2020) than forecasted at appraisal (2015). This delay was contemplated in the projections’ horizon to avoid conservative results. However, for this project, adding five more years to the inflow showed insignificant internal rate of return (IRR) variation.
Page 43 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
7. Investments for this project were 20 percent lower than those planned at appraisal (Table 4.1). However, in terms of present value, investments at completion were 44 percent lower than at appraisal. The greatest fall was in the NRW Program, whereas the Reliability Improvement Program showed an increase of 10 percent.
Table 4.1. Investments (in million US$) Appraisal Completion Components (According to PAD) (Actual) 1. Reliability improvement Montevideo System 10.85 15.09 Durazno 14.09 13.95 Treinta y Tres 6.34 6.60 Total reliability improvement 31.28 35.65
2. Non-revenue water Program Montevideo-Las Piedras 30.46 16.35 Mercedes 1.75 0.00 Paysandú 4.73 0.00 Rivera 5.95 7.26 Salto 4.73 4.96 Non-revenue water Program 47.62 28.57 3. Energy Efficiency 5.21 2.73 Total Project 84.11 66.94
Economic and Financial Analysis at Appraisal
8. Economic and financial results at appraisal were 35 percent and 29 percent, respectively. Table 4.2 and Table 4.3 show the economic and financial results at appraisal, respectively. The values for the Treinta y Tres Plant have been modified from the version showed in the PAD due to an error in the evaluation model.
Table 4.2. Economic Results at Appraisal - Updated PAD Version Costs Present Value Incremental Inflows (Investment Benefit Net Benefit IRR (%) and Operating) 1. Reliability improvement Montevideo System -44.944 6.863 51.807 70.0 Durazno 1.808 4.022 2.214 13.4 Treinta y Tres -1.303 3.683 4.986 22.1 Total reliability improvement -44.439 14.568 59.007 39.9
2. Non-revenue water Program Montevideo-Las Piedras 21.886 68.635 46.750 29.4 Mercedes 1.251 5.338 4.087 37.1
Page 44 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
Costs Present Value Incremental Inflows (Investment Benefit Net Benefit IRR (%) and Operating) Paysandú 3.679 13.655 9.976 35.0 Rivera 4.388 15.330 10.941 32.4 Salto 2.836 12.659 9.823 32.0 Total NRW 34.040 115.617 81.577 30.9 3. Energy Efficiency -9.135 1.603 10.738 52.4 Total Project -19.533 131.788 151.321 34.9
Table 4.3. Financial Results at Appraisal – Updated PAD Version Costs Present Value Incremental Inflows (Investment Benefit Net benefit IRR (%) and Operating) 1. Reliability improvement Montevideo System -60.710 5.973 66.684 68.6 Durazno 2.442 2.758 316 10.4 Treinta y Tres -1.759 2.386 4.146 18.0 Total reliability improvement -60.028 11.118 71.146 37.6
2. Non-revenue water Program Montevideo-Las Piedras 33.498 68.141 34.643 21.7 Mercedes 1.747 5.316 3.568 29.1 Paysandú 5.138 13.596 8.458 27.1 Rivera 6.215 15.277 9.062 25.0 Salto 4.902 12.617 7.715 25.6 Non-revenue water Program 51.501 114.947 63.446 23.3 3. Energy Efficiency -10.048 - 10.048 40.9 Total Project -18.576 126.065 144.640 29.0
Economic and Financial Analysis at Completion
9. Economic and financial IRRs at completion were higher than at appraisal. 10. Table 4.4 and Table 4.5 show the IRR for the economic and financial analysis were 44 percent and 48 percent, respectively. Although investments were smaller, changes in the investment mix benefited those with the greatest impact and partly explained the better returns rate.
Page 45 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
Table 4.4. Economic Analysis at Completion Costs (Investment Present Value Incremental Inflows Benefit Net Benefit IRR (%) and Operating) 1. Reliability improvement Montevideo System -24.296 4.671 28.967 56.2 Durazno 1.400 2.553 1.153 12.9 Treinta y Tres -156 2.429 2.585 17.6 Total reliability improvement -23.052 9.653 32.705 35.2
2. Non-revenue water Program Montevideo-Las Piedras 16.636 85.422 68.786 129.1 Mercedes — — — 0.0 Paysandú — — — 0.0 Rivera 4.532 2.520 -2.012 0.3 Salto 2.235 5.980 3.744 41.8 Non-revenue water Program 21.960 101.141 79.182 250.4 3. Energy Efficiency 1.105 160 -945 5.6 Total Project 1.456 103.734 102.278 44.4
Table 4.5. Financial Analysis at Completion Costs Costs Present Value Incremental Inflows (Investment Benefit Net benefit IRR (%) and Operating) 1. Reliability improvement Montevideo System -32.819 3.891 36.710 55.1 Durazno 1.892 1.749 -142 9.7 Treinta y Tres -211 1.574 1.785 14.2 Total reliability improvement -31.139 7.214 38.353 32.8
2. Non-revenue water Program Montevideo-Las Piedras 14.695 85.419 70.723 113.0 Mercedes - - - 0.0 Paysandú - - - 0.0 Rivera 5.741 2.503 -3.238 -10.7 Salto 3.347 5.942 2.594 40.9 Non-revenue water Program 23.784 93.863 70.080 79.9 3. Energy Efficiency 433 - -433 6.9 Total Project -6.922 101.078 108.000 47.9
Page 46 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
11. The Reliability Improvement Program showed the Montevideo system, and the Durazno and Treinta y Tres plants were lower at completion, both in financial and economic terms. However, except for the Durazno plant, they all showed an IRR above 10 percent. The determining factor of this component was that in the without-project situation, a considerable increase in operating costs was expected (5 percent in Montevideo, 15 percent in the other two plants).
12. In the case of the Energy Efficiency Program, both the economic and the financial ex-post analysis, presented an IRR lower than 10 percent (but higher than the discount rate of 6 percent recommended by the Bank5). The main reason was the minor reduction in energy consumption. Although the investments at completion were lower, their reduction was not enough to compensate for the loss of benefit caused by the lower reduction in energy consumption. Energy savings were smaller than expected: a total reduction of 12 percent was expected but the total result was 3.14 percent (Table 4.6).
Table 4.6. Energy Savings
System Ex-Ante Ex Post MWh per year % Savings MWh per year % Savings Montevideo System 13.992 12.00 5.927 4.31 Outside Montevideo 13.269 12.00 1.910 1.71 Total 27.261 12.00 7.837 3.14
13. Overall, the NRW Program showed higher IRR at completion than expected. However, this program was affected not only by its scope reduction but also by the modest achievements in reducing losses (Table 4.7). These were not only the consequence of optimistic objectives but also the underestimation of losses at appraisal. This was particularly observed in Rivera, where there was a significant reduction in losses, but only part of them could be attributed to the project. The analysis of each Program and subproject showed that the benefit obtained from the NRW program in Montevideo - Las Piedras was of main importance. Whereas this subproject accounted for 31 percent of the economic benefit at appraisal, at completion accounted for 67 percent (in financial terms: 24 percent at appraisal, 65 percent at completion).
Table 4.7. Reduction of Water Losses
Expected Obtained Deviation (Lt/connection/day) Apparent Real Apparent Real Apparent Real Montevideo-Las Piedras 33 61 17 40 -16 -21 Mercedes 44 83 0 0 -44 -83 Paysandú 63 117 0 0 -63 -117 Rivera 96 181 22 52 -74 -129 Salto 47 118 26 78 -21 -40
5 See: Discounting Costs and Benefits in Economic Analysis of World Bank Projects, OPSPQ, 2016.
Page 47 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
Conclusion
14. Despite the lower investments, the delay in the availability of the new facilities, and the lower results than expected, the overall project yielded positive results. In terms of the present value of net benefit, financial and economic results achieved 75 percent and 68 percent of those expected, respectively. In terms of current value, investments were 56 percent of those forecasted. Better results could be explained by the modification in the investment mix that benefited those with the greatest impact, and the alteration in the relationship between the inflow of investment and its recoupment. The determinant factor was the results for the NRW of Montevideo - Las Piedras. Whereas this subproject accounted for 24 percent of the financial benefit at appraisal, at completion accounted for 65 percent (in economic terms: at appraisal 31 percent, at completion 67 percent). Overall, the project achieved higher results for both financial and economic returns (48 percent and 44 percent respectively).
Administrative and Operational Efficiency
15. Both exogenous and endogenous factors impacted the administrative and operational efficiency of the project: (a) the modification of scope and amount of investment affected mostly the Non-revenue Water Program but benefited the Reliability Improvement Program with higher investments than at appraisal. These modifications stemmed, among other exogenous factors, from a dispute with the union; (b) changes in the investment schedule had a great impact on the availability of new plants, which affected the Improving Reliability Program; and (c) other exogenous factors affected the NRW and the Energy Efficiency Programs such as the alteration of the baseline from the conditions at appraisal and a different evolution of the number of water connections as forecasted.
Page 48 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS
1. A close dialogue was established with OSE throughout the preparation of this ICR, allowing the World Bank team to continually include their feedback, as needed. In addition, a draft ICR was sent to OSE followed by a virtual workshop during which the main results achieved, ratings and lessons learned were discussed. Feedback received during this workshop was incorporated into this ICR.
2. OSE’s own project completion report was received and analyzed, as part of the ICR process, and it included the following sections: (i) evolution of the strategic context and impacts on execution; (ii) description of the project; (iii) use of resources; (iv) objectives and result framework; (v) final results; (vi) achievements of the project; and (vii) lessons learned. All in all, the information presented is coherent and compatible with the results presented in this ICR. However, for some of the components financed, various points presented in OSE’s report are worth mentioning.
3. Component 1: Investing in Reliable Water Supply Infrastructure
• The operating capacity for Aguas Corrientes was increased to enhance the resilience of water systems. However, according to the water demand projections made at the start of the operation, by 2035 there would have been a deficit of water if no actions had been taken.
• The new WTPs in Durazno and Treinta y Tres were inaugurated in November 2017 and December 2019, respectively. Their new location presents a higher elevation, guaranteeing accessibility from other points even in situations of river rising.
4. Component 2: Managing Water and Energy More Efficiently
• The greatest challenge in reducing NRW in Salto, Las Piedras-La Paz and Montevideo was the approach to reducing irregular connections in informal settlements (slums).
• The work carried out in Montevideo has considerably improved the supply of water in that city. It reduced water-deficit conditions, usually observed during the summer months.
5. Component 3: Preparing for the Future. Several pilots were carried out to assess the feasibility of sludge reuse taking into account the current regulations. As a result, relevant information was gathered on the different alternatives for its reuse. The main results are presented in the following table.
Table 5.1. Results of Pilot to Assess Feasibility of Sludge Reuse Objective Activities Results Location and year (a) Brick construction (a) 80:20 (20% sludge weight) Sludge from the Laguna Assess the using 20 to 50 % sludge bricks were the most del Cisne WTP, feasibility of using (weight) of dewatered similar to common bricks. Canelones. 2013-2014. sludge for the 1 sludge; Compressive strength: 2.1 Tests were carried out at manufacture of (b) addition of sludge to N/mm2 (According to ASTMC the Engineering School of construction different types of C62, compressive strength shall the Universidad de la bricks ceramics not be smaller than 8.6 República Oriental del
Page 49 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
Objective Activities Results Location and year N/mm2) Uruguay (UdelaR). (b) Water absorption: 2.1 N/mm2
65-68% of Al recovery. Assess the Settled sludge was feasibility of Next steps: Jar tests should be obtained from the Melo The percentage of obtaining a carried out, after determining WTP, Cerro Largo, and 2 aluminum (Al) recovery coagulant its Al content, and compared dewatered sludge from was assessed solution from with commercially purchased the Laguna del Sauce sludge aluminum sulfate in similar WTP, Maldonado. doses. (a) Sanitation was not (a) Maldonado WWTP. achieved. 38% degradation of Initial composition: 41% organic matter (stabilization), Sludge from the pruning material, 24% (40% is recommended) Canelones and WWTP Sludge, 16% According to the standards of Maldonado WWTPs. Evaluate the sludge from the sugar Dirección Nacional del Medio Tests were carried out in stabilizing and industry, 9% sludge Ambiente (National Directorate TRESOR (Tratamiento de 3 sanitizing effect from the oil industry, for the Environment), could be Residuos Orgánicos), an of composting inoculum. used as soil fertilizer. organic waste treatment sludge plant operated by the (b) Canelones WWTP. (b) Sanitation was not Municipality of Initial composition: 67% achieved. 28% degradation of Montevideo, 2014-2015. pruning material, 33% organic matter. According to WWTP sludge. DINAMA standards, could be used as soil fertilizer. (a) Sludge was applied (a) Assess the (a) (i), (ii) and (iii) had positive in the following rates (t feasibility of effects, increasing biomass bs/ha): (i) fresh sludge, applying different production 2.7 to 8.3; (ii) limed types of sludge as sludge, 4.3 to 13.3; and soil fertilizers for (b) There were no negative (iii) composted sludge biomass effects on the microbiological 9.5 to 24.7 production activity of the soil. Limed
sludge showed an important (b) Sludge rate was (b) Assess the acid neutralization in low-pH Sludge from undefined applied as in (a) to two impact of sludge soils WWTP. Tests were types of soil: (i) light- 4 addition to carried out by the School textured with low pH; different types of (c) Dicotyledons showed of Agronomy of the and (iii) heavy soil with soils greater absorption than UdelaR. high base saturation grasses except for Hg that was and high pH (c) Assess not detected. Heavy metals (Cr,
application rates Ni, Zn, and to a lesser extent Cd (c) The absorption of of sludge based and Pb) increased in plant Hg, As, Pb, Cr, Cd, Cu, on heavy metal tissues due to the use of Zn, Ni Fe, and Mn, was absorption by sludge. However, values were assessed in grass and plants below standards for human dicotyledons, applying and animal hazards. high rates of sludge or
Page 50 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
Objective Activities Results Location and year repeated application of moderate rates Assess the Sludge was applied in production of the following rates (t The use of sludge showed pasture for bs/ha): (i) 3.5; (ii) 10.9; higher pasture production than Sludge from Melo WWTP. animal and (iii) 1.9. Pasture mineral fertilizers and Tests performed by 5 consumption production was significantly higher Arlisol S.A. during 2015- using sludge assessed (kg/ha) and concentration of available P. 2017. compared to available phosphorus No drawbacks were found. mineral fertilizers (P) in soils (ppm) Both sites showed positive Assess the results regarding its fertilizing feasibility of full- Sludge from Melo and Monitoring of nutrients power and the physical scale application Florida WWTPs. Tests 6 and pollutants in sludge, characteristics of soil. No of sludge as soil performed during 2016- soils, and plant tissue. evidence of accumulation of fertilizer in Melo 2019. heavy metals in soil or plant and Florida tissue was found. Detect, quantify, Enterovirus concentration was Detection and viability Sludge from Canelones and characterize below the detection limit of the 7 of Enterovirus in fresh WWTP. Tests were Enterovirus in method applied. Slimed sludge and limed sludge. performed during 2017. sludge showed no Enterovirus viability
6. Lessons learned. OSE´s completion report included several lessons learned collected throughout the project.
• On project design, Two lessons were included: (i) a higher level of maturity for activities to be included in the project scope is required to minimize discrepancies between the allocated budget for an activity and its actual cost. This was the case for the new water intake for Aguas Corrientes, which had an allocated budget of 2 million dollars and ended up costing 9 million. This was also true for several of the management improvement activities, where scope had to ultimately be reduced since the implementation plans involved figures much higher than those foreseen during the design phase of the operation; and (ii) focus on fewer key activities. This loan included a large number of activities making it difficult to manage them simultaneously and increasing the probability of having budget and time limitations. In addition, OSE does not have the capacity to simultaneously carry out a large number of management improvement activities due to its history and organizational culture as an engineering company focused on production. In the design of future operations, efforts should be focused on fewer key activities, those with the highest level of maturity and support from senior management, so that they have the necessary support to be carried out;
• Regarding financial aspects, OSE highlighted the positive implementation of the pari-passu. This instrument significantly simplified loan management, which otherwise, with the large number of planned activities, would have required an innumerable number of requests for modifications to the table of uses and sources, as well as transpositions.
Page 51 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
• On the implementation of NRW activities: (i) the tender methodology to carry out the NRW works has given good results, managing to achieve the proposed objectives in the vast majority of cases and proving to be a fundamental tool to carry out the proposed changes; (ii) the need for applied technology for data management, optimizing the operation of networks requires technical knowledge and an adequate Master Plan for the design of systems and the use of models. As NRW work takes place, it is necessary to have information technology systems that make it possible to take advantage of the vast volume of data generated; and (iii) ensuring human and technological resources to preserve the achieved results. To prevent, control and reduce the levels of losses in the supply systems, it is necessary to maintain a certain level of investment over time, as well as trained personnel with the appropriate technological tools to carry out control and monitoring activities.
Page 52 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
ANNEX 6. SUPPORTING DOCUMENTS (IF ANY)
• Project Concept Note and Decision Meeting
• Project Appraisal Document, Report No. 66809-UY
• Aide Mémoire of Implementation Support Missions 2012–2019
• Implementation Status and Results Reports (series 1 through 16) October 2012–December 2019
• Restructuring Paper, Report No: RES24490, September 07, 2016
• Restructuring Paper, Report No: RES27940, July 17, 2017
• Restructuring Paper, Report No: RES29604, February 19, 2018
• Country Partnership Framework for the Republic of Uruguay 2010-2015 (Report No. 55863-UY)
• Country Partnership Framework for the Oriental Republic of Uruguay for the period FY16-FY20, Report No. 97063-UY
• Informe Semestral, Primer Semestre 2019, OSE, Proyecto OSE Sustentable y Eficiente, préstamo BIRF 8183
• Informe de Avance de Obras, Informe Final, OSE, Proyecto OSE Sustentable y Eficiente, préstamo BIRF 8183, March 2020
• Informe de Cierre, Gestión Ambiental, OSE, Proyecto OSE Sustentable y Eficiente, préstamo BIRF 8183, March 2020
• Borrador de Informe Final Cierre, OSE, Proyecto OSE Sustentable y Eficiente, préstamo BIRF 8183, March 2020
Page 53 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
Annex 7. Business Management Efficiency Index (BMEI). Original and reformulated indicators.
Maximum Best Practices Reformulated Points (PAD) 1. OSE has implemented a logistics management model (level one, storage facility established, adequate equipment, operative) 6 6 1a. OSE has a logistics management model 3 3 1b. OSE implemented level 1 of the center of the storage center 3 2 [1c]. OSE implements the logistics management model in two pilot regions, consolidating 55% of the model maturity implementation 1 2. OSE implements a quality management system software in 5 certified areas 6 10 2a. OSE implements the quality management software in one certified area 3 3 2b. OSE implements the quality management software in three certified areas 1 1 2c. OSE implements the quality management software in five certified areas 2 2 [2d]. OSE implements the quality management software in 10 areas with quality management systems implemented 4 3. OSE has an operative knowledge and innovation management area (the area has policies, strategies and processes defined and implemented) 4 0 3a. OSE has an area for knowledge and innovation management 1 3b.The knowledge and innovation management area has policies, strategies and processes defined and implemented 1 3c. The knowledge and innovation management area is operative 2 4. OSE has an operative area for internal communications (the area has policies, strategies and processes defined and implemented) 4 4 4.a OSE has an operational area for internal communications 1 1 4.b The area of internal communications has policies, strategies and processes defined and implemented 1 1 4.c The internal communications area is operative 2 2 5.OSE's annual budget is aligned with the medium-term strategic plan (design and implement strategic planning process, implement a software that integrates the planning process with the process of budget and control) 8 16 5a. Design and implement the medium-term strategic plan 4 4 5b. Implement software that integrates the strategic planning process with that of budget and control 4 [5b] Review mission statement, vision and values 2 [5c] Prepare a Strengths, Weaknesses, Opportunities and Threats (SWOT) 3 [5d] Definition and follow up of short and medium term, objectives and goals 3 [5e] Implement the strategic plan as a control management tool 4
Page 54 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
Maximum Best Practices Reformulated Points (PAD) 6.OSE consolidates corporate information in an integrated information system that is utilized systematically in all areas of the organization 6 6 6a. Continue the practice of producing a book of development indicators 2 2 6b. Corporate information is defined 2 2 6c. Implement an information tool, create a data base and collect statistics on use 2 [6c] Define a corporate information system that collects OSE information in an integrated and uniform manner, and implement a pilot plan for such system 2 7. OSE has an Asset Management Plan and implements the plan in one area of the company 10 10 7a. OSE has an asset management model 5 5 7b. OSE has implemented an asset management model in one area of the company 5 5 8. OSE strategically plans for the long term. 8 [8] OSE incorporates risk management into its operations and develops water safety plans 10 8a. Review of the mission and vision statements and a strategic analysis (including risk management) of the company 3 8b. A monitoring system with quantitative and qualitative goals 3 8c. Elaboration of a decision tree with strategic lines of action 2 [8a.] Climate vulnerability risk assessment is included in the water safety plans 1 [8b.] Water safety plans elaborated for six areas, which include water safety plan manual, management files and risks matrix 4 [8c.] Water safety plans elaborated for eighteen areas, which include water safety plan manual, management files and risks matrix 5 9. OSE incorporates risk management it its daily operations, conducts a climate vulnerability risk analysis and develops water safety plans 10 9a. A climate vulnerability risk assessment exists 4 9b. Water Safety Plans created for six areas 4 9c. Water Safety Plans follow the requirements of URSEA 2 10. OSE has and complies with an environmental management plan (in accordance with the environmental indicators) 12 [9]. OSE has and complies with an environmental management plan (in accordance with the environmental indicators –EI 20 10a. OSE reaches a value equal or higher than 4 in the EI 4 10b. OSE reaches a value equal or higher than 12 in the EI 4 10c. OSE reaches a value equal or higher than 24 of the EA 4 9a. OSE reaches a value equal or higher than 6 in the EI 4 9b. OSE reaches a value equal or higher than 30 in the EI 8 9c. OSE reaches a value equal or higher than 40 of the EA 8 11. OSE actively participates in national watershed programs. 8 [10]. OSE actively participates in monitoring and protection programs in Laguna del Sauce 8
Page 55 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
Maximum Best Practices Reformulated Points (PAD) 11a. Implement a water quality and quantity monitoring program in the Laguna del Sauce 3 11b. Develop hydraulic models and a management plan for the Laguna de Sauce 3 11c. Strengthen the quantity and quality monitoring program in the watershed 2 [10a]. Participates in quality and quantity water monitoring in Laguna del Sauce (Comité de Cuenca de Laguna del Sauce y Consejo del Río de la Plata) 4 [10b]. Carries out a quality monitoring program in the Laguna del Sauce basin 4 12. OSE has and utilizes a sanitation management plan 8 12a. Plan elaborated 4 12b. Strengthen operations and maintenance (capacity building) 4 13. [11.] Experiences are shared internally 4 4 13a. Number of workshops 2 2 13b. Number of employees 2 2 14. [12.] OSE conducts South-South activities in the region once a year 4 4 15. [13.] Surveys 2 2 15a. [13a.] OSE maintains awareness of clients' views on WSS services [conducting bimonthly surveys] 1 2 15c. OSE conducts internal surveys to know the opinion of employees on the performance of the company and on the project in particular 1 Total 100 100
Page 56 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
ANNEX 8. SUMMARY OF ACTIVITY CHANGES
PAD Restructuring Final Component/Subcomponent Change Allocation 1st 2nd 3rd Allocation Component 1: Investing in Reliable Water Increased cost US$11 X US$19.3 Supply Infrastructure. allocation million million Component 2: Managing Water and Energy More Efficiently US$18.7 US$21 million million Subcomponent 2.1: Non-Revenue Water Reduction Mercedes system Dropped X Montevideo system Dropped two of X three lots La Paz system Dropped X Paysandú system Dropped X Component 3: Preparing for the Future: Reduced cost US$5.55 X US$0.95 Management, Planning and Risk. allocation million million Subcomponent 3.1 on Corporate Management Establishment of a knowledge and Dropped X innovation management model Capacity-building activities on ozone Introduced as X technologies for algae removal new activity Subcomponent 3.2 on Risk Management and Planning Activities of development of risk maps, Implemented as X carrying out a climate vulnerability part of WSPs for assessment, and the development of each WTP contingency plans Subcomponent 3.3 on Environmental Sustainability Development of a comprehensive strategic Dropped X wastewater plan Water quality and quantity monitoring Dropped X program Implementation of a hydraulic and water Dropped X quality management program at Laguna del Sauce watershed Component 4: Knowledge Sharing and Reduced cost US$1.0 X US$0.65 Project Management Activities allocation million million
Page 57 of 58
The World Bank UY OSE Sustainable and Efficient (P118064)
ANNEX 9. MAP
Page 58 of 58