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World Bank Document Document of The World Bank Public Disclosure Authorized Report No: 23040-LE Public Disclosure Authorized PROJECT APPRAISAL DOCUMENT ONA PROPOSED LOAN IN THE AMOUNT OF US$43.53 MILLION TO THE LEBANESE REPUBLIC Public Disclosure Authorized FOR A BA'ALBECK WATER AND WASTEWATER PROJECT May 6, 2002 Finance, Private Sector and Infrastructure Group Middle East and North Africa Region Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective ) Currency Unit = Lebanese Pound or Lyre Libanaise (LL) LL 1.00 = US$0.000664 US$1 = LL 1,500 FISCAL YEAR January I -- December 31 ABREVIATIONS AND ACRONYMS BHWIA = Ba'albeck Hermel Water and MOEW = Ministry of Energy and Water Irrigation Authority BNC = Baa'lbeck/Nabi-Chit area MOF = Ministry of Finance BRWIA = Beka'a Regional Water and NCB = National Competitive Bidding Irrigation Authority BWWP = Ba'albeck Water and Wastewater NGO = Non-Governmental Project Organization CAS = Country Assistance Strategy NPV = Net Present Value CDR = Council for Development and O&M = Operation and Maintenance Reconstruction CPPR = Country Portfolio Performance PAD = Project Appraisal Document Review CWA = Chamsine Water Authority PFS = Project Financial Statements EA = Environmental Assessment PMR = Project Management Report EMP = Environmental Management Plan RFP = Request for Proposal ERR = Economic Rate of Retum SA = Special Account ERRP = Emergency Rehabilitation and SC = Service Contract(s) Reconstruction Project FM = Financial Management SOE = Statement of Expenditures FMR = Financial Monitoring Reports SRMC = Short-run Marginal Cost GOL = Govemment of Lebanon TA = Technical Assistance IBRD = Intemational Bank for TOR = Terms of Reference Reconstruction and Development ICB = Intemational Competitive Bidding TSU = Technical Support Unit ISA = Intemational Standards on Auditing UFW = Un-accounted for Water LACI = Loan Administration Change VAT = Value Added Tax Initiative LAP = Land Acquisition Plan WA = Water Authorities LRMC = Long-run Marginal Cost WHO = World Health Organization MC = Management Contract / Management ZWA = Zahle Water Authority Contractor Vice President: Jean-Louis Sarbib Country Director: Joseph Saba Sector Director: Emmanuel Forestier Sector Manager Fran,oise Clottes Task Team Leader: Mohanmmed Benouahi LEBANESE REPUBLIC BA'ALBECK WATER AND WASTEWATER PROJECT CONTENTS A. Project Development Objective Page 1. Project development objective ................................................................ 2 2. Key performance indicators ................................................................ 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project ....... ...... 2 2. Main sector issues and Government strategy . ....................................................... 3 3. Sector issues to be addressed by the project and strategic choices .......... ..................... 3 C. Project Description Summary 1. Project components ................................................................ 4 2. Key policy and institutional reforms supported by the project 4 3. Benefits and target population . ................................................................. 4 4. Institutional and implementation arrangements . .................................................... 5 D. Project Rationale 1. Project alternatives considered and reasons for rejection ............... ........................... 9 2. Major related projects financed by the Bank and other development agencies ....... .......... 10 3. Lessons learned and reflected in the project design ................... ............................. 11 4. Indications of borrower commitment and ownership ................. ............................. 11 5. Value added of Bank support in this project . ......................................................... 11 E. Summary Project Analysis 1. Economic ................................................................. 12 2. Financial ................................................................. 12 3. Technical ................................................................. 19 4. Institutional ................................................................. 19 5. Environmental ................................................................. 20 6. Social ................................................................. 24 7. Safeguard Policies ................................................................. 26 F. Sustainability and Risks 1. Sustainability ................................................................. 29 2. Critical risks ................................................................. 29 3. Possible controversial aspects . ................................................................. 30 G. Main Condition 1. Condition of Disbursement .................................. ............................... 30 2. Condition of Effectiveness ................................................................. 30 H. Readiness for Implementation . .......................................................... 30 I. Compliance with Bank Policies . .......................................................... 30 Annexes Annex 1: Project Design Summary ............................................................... 31 Annex 2: Detailed Project Description . ............................................................... 33 Annex 3: Estimated Project Costs ......................... ...................................... 38 Annex 4: Cost Benefit Analysis Summary ............................................................... 41 Annex 5: Financial Summary .................... ........................................... 57 Annex (5a): Tariff Policy and Structure .71 Annex 6: Procurement and Disbursement Arrangements .76 Annex 6(a): Financial Management .98 Annex 7: Project Processing Schedule .1............................................................... 1 Annex 8: Documents in the Project File ............................................................... 112 Annex 9: Statement of Loans and Credits ............................................................... 113 Annex 10: Country at a Glance .................... ........................................... 114 Annex 11: Guidelines for the Preparation of Tender Documentation for a Service Contract(s) ....... 116 Annex 12: Institutional and Implementation Arrangement (Organigram) ........... ..................... 119 Annex 13: Technical Support Unit .......................... ..................................... 120 Annex 14: Key Performance Indicators . ............................................................... 121 Annex 15: Training to the Water Authorities - Ba'albeck, Zahle, and Chamsine ........ ................ 122 Annex 16: Environmental Assessment . ............................................................... 124 MAP(S) Map of Lebanon (IBRD No. 24699) Map of Caza Ba'albeck Map of Ba'albeck and Nabi Chit Area LEBANESE REPUBLIC LB-BA'ALBECK WATER AND WASTEWATER PROJECT Project Appraisal Document Middle East and North Africa Region Finance, Private Sector and Infrastructure Group Date: May 6, 2002 Team Leader: Mohammed Benouahi Country Director: Joseph Saba Sector Director: Emmanuel Forestier Project ID: P074042 Sector(s): WY - Other Water Supply & Sanitation Lending Instrument: Specific Investment Loan (SIL) Theme(s): Water Poverty Targeted Intervention: Y Project Financing Data [XI Loan [ I Credit Il Grant I I Guarantee I I Other: For Loans/Credits/Others: Amount (US$m): US$43.53 million Proposed Terms (IBRD): Fixed-Spread Loan (FSL) Grace Period (years): 7 Years to Maturity: 13 Commitment fee: 0.85% and 0.75% Front-end fee on Bank loan: 1% -MqPb(Ua MU'(U BORROWER 2.77 3.3333 IB3RD 20.52 22.58 43.1 Total: 23.29 25.91 49.2 Borrower: LEBANESE REPUBLIC Responsible agency: CDR/BHWIA Contact Person: Mr. Jamal A.R. Itani Tel: 961-1-981431 Fax: 961-1-981252 Email: [email protected] Estimated disbursements ( Bank FY/US$m): Annual 12.98 20.93 3.63 3.43 2.56 Cumulative 12.98 33.91 37.54 40.97 43.53 Project implementation period: Five (5) years Expected effectiveness date: January 1, 2003 Expected closing date: December 31, 2007 OCSPAD FP- R. MI 2D A. Project Development Objective 1. Project development objective: (see Annex 1) The major development objectives of the proposed Ba'albeck Water and Wastewater Project-BWWP (the project) include: (a) developing and strengthening the capacity of the Ba'albeck Hermel Water and Irrigation Authority (BHWIA) and the Zahle and Chamsine Water Authorities (ZWA and CWA); (b) improving the access of the customers of the BHWIA to satisfactory water supply and wastewater services; (c) involving the private sector in the operation and maintenance (O&M) of the water and wastewater facilities; and (d) rationalizing the use of water through the introduction of water meters. 2. Key performance indicators: (see Annex 1 and 14) These include: (a) Population coverage and access to water supply (96%) and wastewater services (67%) by end of project implementation. (b) Number of water supply (24,000 subscriptions) and wastewater connections (12,000 subscriptions) to be installed by end of project implementation. (c) Reduction in Un-accounted For Water (UFW) from currently estimated 50% to 30% by end of project implementation. B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (See Annex 1) Document number: R97-256 Date of latest CAS discussion: 12/04/97 The earlier CAS emphasizes the following
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