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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