Provincial Towns Improvement Project

Completion Report

Project Number: 29282 Loan Number: 1725/2013 October 2008

Cambodia: Provincial Towns Improvement Project

CURRENCY EQUIVALENTS

Currency Unit – Riel (KR)

At Appraisal At Project Completion (31 October 1999) (31 March 2007) KR1.00 = $0.00025 $0.00024 $1.00 = KR3,950 KR4,155

ABBREVIATIONS

ADAF – Asia Development Assistance Facility ADB – Asian Development Bank CSHAP – Community Sanitation and Health Awareness Program EA – executing agency EIRR – economic internal rate of return FIRR – financial internal rate of return IDC – interest during construction MEF – Ministry of Economics and Finance MIME – Ministry of Industry, Mines and Energy MPWT – Ministry of Public Works and Transport NGO – nongovernment organization NRW – nonrevenue water O&M – operations and maintenance PCR – project completion report PIU – project implementation unit PMU – project management unit SSWTPU – Sihanoukville Sewerage and Wastewater Treatment Plant Unit WWTP – wastewater treatment plant

WEIGHTS AND MEASURES km – kilometer l – liter lpcd – liters per capita per day m3 – cubic meter m3/d – cubic meters per day

NOTES

(i) The fiscal year (FY) of the Government and its agencies ends on 31 December.

(ii) In this report, "$" refers to US dollars.

Vice President C. Lawrence Greenwood, Jr., Operations Group 2 Director General A. Thapan, Southeast Asia Department Director S. Lateef, Social Sectors Division, Southeast Asia Department

Team leader P. van Klaveren, Water Supply and Sanitation Specialist, Southeast Asia Department Team member D. Santos, Assistant Project Analyst, Southeast Asia Department

CONTENTS

Page

BASIC DATA i MAP vii I. PROJECT DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 2 A. Relevance of Design and Formulation 2 B. Project Outputs 3 C. Project Costs 5 D. Disbursements 7 E. Project Schedule 7 F. Implementation Arrangements 7 G. Conditions and Covenants 8 H. Consultant Recruitment and Procurement 8 I. Performance of Consultants, Contractors, and Suppliers 9 J. Performance of the Borrower and the Executing Agency 9 K. Performance of the Asian Development Bank 10 III. EVALUATION OF PERFORMANCE 10 A. Relevance 10 B. Effectiveness in Achieving Outcome 10 C. Efficiency in Achieving Outcome and Outputs 11 D. Preliminary Assessment of Sustainability 12 E. Impact 12 IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 13 A. Overall Assessment 13 B. Lessons 13 C. Recommendations 14 APPENDIXES 1 Project Framework 16 2 Data on Water Supply Operations 18 3 Appraised and Actual Project Costs 19 4 Financing Plan 20 5 Breakdown of Yearly Disbursements 21 6 Implementation Schedule 22 7 Status of Compliance with Loan Covenants 23 8 Consulting Services Inputs 28 9 Economic and Financial Sustainability Evaluation 29

BASIC DATA

A. Loan Identification

Original Loan

1. Country Cambodia 2. Loan Number 1725-CAM(SF) 3. Project Title Provincial Towns Improvement 4. Borrower Kingdom of Cambodia 5. Executing Agencies Ministry of Industry, Mines, and Energy Ministry of Public Works and Transport 6. Original Loan Amount SDR 14.533 million ($20 million equivalent) Net Loan Amount SDR 14.533 million ($20 million equivalent) 7. Project Completion Report Number PCR:CAM 1073

Supplementary Loan

1. Country Cambodia 2. Loan Number 2013-CAM(SF) 3. Project Title Provincial Towns Improvement 4. Borrower Kingdom of Cambodia 5. Executing Agencies Ministry of Industry, Mines, and Energy Ministry of Public Works and Transport 6. Original Amount of Loan SDR 4.546 million ($6.26 million equivalent) Net Loan Amount SDR 4.546 million ($6.26 million equivalent) 7. Project Completion Report Number PCR:CAM 1073

B. Loan Data

Loan 1725-CAM(SF) 1. Appraisal – Date Started 6 September 1999 – Date Completed 17 September 1999

2. Loan Negotiations – Date Started 17 November 1999 – Date Completed 18 November 1999

3. Date of Board Approval 17 December 1999

4. Date of Loan Agreement 2 February 2000

5. Date of Loan Effectiveness – In Loan Agreement 2 May 2000 – Actual 11 April 2000 – Number of Extensions 0

6. Closing Date – In Loan Agreement 31 December 2005 – Actual 12 December 2007 – Number of Extensions 2

7. Terms of Loan – Interest Rate 1.0% during the grace period

1.5% thereafter – Maturity (number of years) 32 – Grace Period (number of years) 8 8. Disbursements a. Dates Initial Disbursement Final Disbursement Time Interval 28 June 2000 17 July 2007 84.5 months

Effective Date Actual Closing Date Time Interval 11 April 2000 12 December 2007 92 months

b. Amount ($’million) Last Net Original Amount Undisbursed Category or Subloan Revised Amount Allocation a Disbursed Balance Allocation Available 01A Civil Works, Water Supply 7,962,600 9,157,984 9,167,012 8,984,332 182,680 01B Civil Works, Sihanoukville 4,121,700 5,019,355 5,019,355 5,019,354 1 Sewerage 01C Civil Works, Community 295,800 169,387 167,682 180,759 (13,077) Program Sanitation Works 02A Equipment, Water Supply 650,000 356,809 356,012 356,682 (670) 02B Equipment, Sihanoukville 350,000 505,163 499,959 504,606 (4,647) Sewerage 03A Consulting Services, 1,200,000 1,965,643 1,966,426 1,946,324 10,102 Water Supply 03B Consulting Services, 869,700 1,816,245 1,816,245 1,816,244 1 Sihanoukville Sewerage 03C Consulting Services, 250,000 0 0 0 0 Management Supportb 03D Consulting Services, 360,500 328,029 328,030 327,997 33 Community Program 03E Consulting Services, 489,900 38,961 38,690 38,790 (100) Resource Mobilization 04A Incremental Administration 660,500 776,053 766,719 792,899 (26,180) and Training (MIME) 04B Incremental Administration 459,600 410,182 410,015 410,074 (59) and Training (MPWT) 05 Interest Charge 569,700 458,580 458,580 458,580 0 06 Unallocated 1,760,000 0 0 0 0 99 Imprest Fund (20,825) (8,950) - (8,950) Totalc 20,000,000 20,981,564 20,985,775 20,836,641 149,134 a 27 June 2007 b Financed by ADAF c Totals differ due to varying SDR/$ exchange rate

9. Local Costs (Financed) - Amount ($) 2,651.160 - Percent of Local Costs 12.5 - Percent of Total Cost 5.8

iii

B. Loan Data

Loan 2013-CAM(SF) 1. Re-appraisal – Date Started 20 January 2003 – Date Completed 7 February 2003

2. Loan Negotiations – Date Started 8 September 2003 – Date Completed 9 September 2003

3. Date of Board Approval 28 October 2003

4. Date of Loan Agreement 18 December 2003

5. Date of Loan Effectiveness – In Loan Agreement 17 March 2004 – Actual 02 January 2004 – Number of Extensions 0

6. Closing Date – In Loan Agreement 30 June 2006 – Actual 17 May 2007 – Number of Extensions 2

7. Terms of Loan – Interest Rate 1% during the grace period 1.5% thereafter – Maturity (number of years) 32 – Grace Period (number of years) 8

8. Disbursements a. Dates Initial Disbursement Final Disbursement Time Interval 24 May 2004 17 May 2007 36 months

Effective Date Actual Closing Date Time Interval 02 January 2004 17 May 2007 40.5 months

b. Amount ($) Category or Subloan Last Net Original Revised Amount Amount Undisbursed Allocation Allocation Available Disbursed Balance

01A Water Supply 3,135,350 3,360,649 3,360,649 3,366,792 (6,143) 01B Sihanoukville Sewerage 3,124,650 3,338,443 3,338,443 3,332,300 6,143 Totala 6,260,000 6,699,092 6,699,092 6,699,092 0 a Totals differ due to varying SDR/$ exchange rate

C. Project Data

1. Project Cost ($‘million)

Cost Appraisal Estimate Actual

Foreign Exchange Cost 18.30 25.00 Local Currency Cost 8.00 21.13 Total 26.30 46.13

2. Financing Plan ($‘million)

Cost Appraisal Estimate Actual Implementation Costs Borrower Financed 6.30 18.39 ADB Financed 19.43 27.05 ADAF 0.00 0.23 Total 25.73 45.67 IDC Costs Borrower Financed 0.00 0.00 ADB Financed 0.57 0.46 ADAF 0.00 0.00 Total 26.30 46.13 ADB = Asian Development Bank, ADAF = Asia Development Assistance Facility, New Zealand, IDC = interest during construction.

3. Cost Breakdown by Project Component ($’million) Component Appraisal Estimate Actual A. Base Cost Part A: Community Sanitation Improvement 0.90 0.25 Part B: Provincial Towns Water Supply 10.75 16.37 Part C: Wastewater Management 5.55 22.51 Part D: Local Governance and Resource Mobilization 0.75 0.04 Part E: Implementation Assistance 3.84 6.50 Total Base Cost 21.80 45.67 B. Contingencies 3.94 0.00 C. Interest During Construction 0.57 0.46 Total Cost 26.30 46.13

4. Project Schedule Item Appraisal Estimate Actual Consulting services Contract Date Part A: CSHAP January 2001 June 2002 Part B: Water Supply October 2000 February 2001 Part C: Sihanoukville Sewerage System October 2000 February 2001 Completion of Engineering Designs Part B: Water Supply September 2001 June 2002 Part C: Sihanoukville Sewerage System September 2001 March 2002 Completion of Supervision Services Part A: CSHAP June 2005 June 2004

Part B: Water Supply June 2005 January 2007 Part C: Sihanoukville Sewerage System June 2005 March 2007 Civil Works Contract Date Part A: CSHAP July 2001 June 2002 Part B: Water Supply March 2002 April 2003 Part C: Sihanoukville Sewerage System June 2002 April 2003 Start of Works Part A: CSHAP July 2001 July 2002 Part B: Water Supply March 2002 May 2003 Part C: Sihanoukville Sewerage System June 2002 May 2003 Completion of Works Part A: CSHAP June 2004 June 2004 Part B: Water Supply March 2004 December 2006 Part C: Sihanoukville Sewerage System December 2004 March 2007 Equipment and Supplies First Procurement April 2000 December 2000 Last Procurement December 2002 February 2007 Completion of Equipment Installation June 2005 March 2007 Commissioning Part B: Water Supply June 2005 December 2006 Part C: Sihanoukville Sewerage System June 2005 December 2006 CSHAP = Community Sanitation and Health Awareness Program

5. Project Performance Report Ratings Ratings

Development Implementation Implementation Period Objectives Progress From 31 December 1999 to 31 December 2000 Satisfactory Satisfactory From 1 January 2001 to 31 December 2001 Satisfactory Satisfactory From 1 January 2002 to 31 March 2002 Highly Satisfactory Satisfactory From 1 April 2002 to 30 July 2006 Satisfactory Satisfactory From 1 August 2006 to 31 August 2006 Satisfactory Partly Satisfactory From 1 September 2006 to 30 September 2006 Partly Satisfactory Partly Satisfactory From 1 December 2006 to 31 March 2007 Satisfactory Satisfactory

D. Data on Asian Development Bank Missions No. of No. of Specialization Name of Mission Date Persons Person-Days of Membersa Fact-Finding 19 Apr-1 May 1999 3 39 a, b, d Appraisal 6-17 Sep 1999 9 108 a, b, c d, e, f, h Inception 24-28 Apr 2000 2 10 b, i Loan Review 1 23-27 Oct 2000 1 5 b Loan Review 2 14-18 May 2001 1 5 b Loan Review 3 5-9 Nov 2001 1 5 b Loan Review 4 18-22 Feb 2002 1 5 b Loan Review 5 9-13 Sep 2002 1 5 a Loan Reconnaissance 29 Jan-7Feb 2003 3 30 a, b, d Loan Review 6 1-10 Oct 2003 1 10 a Special Loan Administration 24-30 Jan 2004 1 6 a Loan Review 7 13-24 Sep 2004 1 12 a Loan Review 8 7-14 Mar 2005 1 8 b Loan Review 9 29 Aug-5 Sep 2005 1 8 b

No. of No. of Specialization Name of Mission Date Persons Person-Days of Membersa Loan Review 10 27-30 Nov 2005 1 4 b Loan Review 11 30 Mar-5 Apr 2006 1 7 b Special Loan Administration 3-7 Jun 2006 1 5 e Loan Review 12 20-22 Nov 2006 1 3 g Final Loan Review 13-21 Feb 2007 2 18 g, i Project Completion Review b 20-28 May 2008 3 27 b, g, i

Notes: a a - Engineer, b - Financial Analyst, c - Counsel, d - Economist, e – Urban Development Specialist, f – Programs Officer, g - Water Supply and Sanitation Specialist, h - Associate Operations Analyst, i – Assistant Project Analyst. b The project {program} completion report was prepared by Paul van Klaveren (Water Supply and Sanitation /Mission Leader); Damasa Santos (Assistant Project Analyst); and Agnes B. Palacio (Financial and Economic Analyst/Staff Consultant).

I. PROJECT DESCRIPTION

1. Improvement of urban services, including water supply and related services in provincial towns, is closely linked to the objectives of other urban social development programs. In Cambodia the return of people to urban areas during the 1990s increased demands on urban infrastructure, which had deteriorated during the 1970s and 1980s due to war, ineffective management and lack of maintenance. Environmental and public health conditions in the towns deteriorated, with almost 20% of children dying before reaching the age of 5 years, and waterborne diseases accounting for about 30% of hospitalizations. In November 1999, the Asian Development Bank (ADB) approved the Provincial Towns Improvement Project.1 The Project aimed to support the Government’s development objectives that gave priority to human development and poverty reduction. On 28 October 2003, ADB approved a supplementary loan to cover a cost overrun arising from two major civil work contracts.2 The executing agency (EA) for the community sanitation and water supply components was the Ministry of Mines and Energy (MIME), and the EA for the wastewater treatment components was the Ministry of Public Works and Transport (MPWT). The design and monitoring framework is Appendix 1.

2. The purpose of the Project was to improve the quality of life and promote economic and social development in seven towns: Battambang, Kampot, Kompong Cham, Kompong Thom, Pursat, Sihanoukville, and Svay Rieng. These towns are the immediate markets, transportation depots and processing centers for agricultural products in the provinces. In order to achieve its purpose, the Project aimed to (i) improve urban services and the environment, including water supply and sanitation, in the project towns in a sustainable manner and thus contribute to poverty reduction; and (ii) assist the Government in developing policy and institutional reforms to decentralize urban functions to local governments.

3. The Project outputs were (i) improved provincial water supply in six project towns, benefiting about 350,000 people; (ii) improved wastewater management in Sihanoukville, benefiting about 150,000 people; (iii) community-based sanitation and awareness raising program, benefiting about 1,500 households; and (iv) improved local governance and resource mobilization through broader revenue base and better urban management skills in provincial and municipal governments.

4. The Project had five parts. Part A, the Community Sanitation and Health Awareness Program (CSHAP), covered improvements to sanitation conditions in poor communities in three project towns—Battambang, Kompong Cham and Sihanoukville—through community education and participation in subproject design, cost sharing, and operation and maintenance. Part B was to improve the water supply in Battambang, Kampot, Kompong Cham, Kompong Thom, Pursat and Svay Rieng by (i) constructing or rehabilitating water intake, production and treatment facilities; and (ii) replacing and extending the reticulation networks. Part C covered construction of a sewage collection network and treatment plant with a daily capacity of 5,700 cubic meters (m3) in Sihanoukville. Part D, local governance and resource mobilization, consisted of (i) a review of the legal and administrative structure of the provincial and municipal governments of Battambang, Kompong Cham and Sihanoukville; (ii) recommendations on legal and administrative structures for a model local government with fully decentralized authority for urban development and management; (iii) a review of current and potential revenue bases of local governments; and (iv) a comprehensive legal and institutional reform action plan to

1 ADB. 1999. Report and Recommendation of the President to the Board of Directors for a Proposed Sector Loan to the Kingdom of Cambodia for the Provincial Towns Improvement Project. Manila. 2 ADB. 2003. Report and Recommendation of the President to the Board of Directors for a Proposed Supplementary Loan to the Kingdom of Cambodia for the Provincial Towns Improvement Project. Manila (Loan 2013).

2 improve the financial positions of local governments. Part E (implementation assistance) covered the provision of (i) detailed engineering and construction supervision services, (ii) project management support, (iii) project administration equipment, and (v) training.

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

5. The Government stated in its first 5-year Socioeconomic Development Plan, 1996–2000, that the primary objectives of its development strategy were to reduce poverty and develop the country’s human resource base. The strategy emphasized a balanced approach to rural development, assistance to the urban poor, and the development of major urban growth poles. It placed high priority on improving the water supply and sanitation in urban centers. The Government’s long-term objectives for sanitation were to provide (i) access to environmental sanitation facilities and health education programs for its population, and (ii) wastewater treatment facilities in all provincial towns. The most important goals of Cambodia’s current National Strategic Development Plan 2006-2010, are poverty reduction and the achievement of Cambodia’s Millennium Development Goals (CMDGs). Providing water supply and sanitation has a high priority.

6. ADB’s strategy for the water supply and sanitation sector in Cambodia supported the Government’s development objective of reducing poverty and developing the country’s human resource base. It recognized the key sector constraints of scarce financial and human resources and weak institutional capacity. The thrusts of the ADB strategy were to (i) support the Government’s reform initiatives to create a legal, policy, and institutional framework conducive to sustainable development; (ii) emphasize institutional capacity building; and (iii) link assistance with cost-recovery potential and institutional capacities. Operationally, the strategy required (i) participation of beneficiaries, particularly women and local communities, in project planning, design and implementation, and operations and maintenance (O&M); (ii) the development and utilization of affordable and appropriate technologies; (iii) clearly defined O&M responsibilities and financing sources; and (iv) well-defined cost-recovery mechanisms that are affordable, equitable, and manageable. Crosscutting issues such as poverty reduction, women in development, and environmental protection remained central concerns of the strategy.

7. The project design was based on feasibility studies of six small towns and Sihanoukville, and incorporated stakeholder participation; socioeconomic, environmental and social assessments; demand analysis; and willingness-to-pay and affordability analyses. The Government and ADB agreed on the criteria for selecting subprojects3, the appraisal standards, and a framework for subproject approval.

8. Following the bidding of the civil works, it became clear that the investment costs were

3 The selection of the project towns took into consideration the geographic concentration of ADB’s previous assistance, the economic growth potential, the status of cost recovery, and institutional capabilities of the provincial towns. Four towns (Kampot, Kompong Cham, Sihanoukville and Svay Rieng) are in areas covered under ADB’s first Rural Infrastructure Improvement Project (Loan 1385-CAM). The three other towns (Battambang, Kompong Thom, and Pursat) are along the major national highways, to which ADB provided financial assistance (ADB. 1999. Report and Recommendation of the President on a Proposed Loan and technical Assistance Grant to the Kingdom of Cambodia for the Primary Roads Restoration Project. Manila). Battambang, located near the Cambodia- Thailand border and along national highway No.5, is the largest provincial town and has the potential to become the major trade center in northern Cambodia. The seaport and tourist resources in Sihanoukville make it the fastest growing town in the country. Kompong Cham is the capital town of what was traditionally the country’s richest province, and could become the major center of agro-industries.

3 underestimated during project appraisal. Given the Government’s fiscal constraints, ADB approved a supplementary loan to cover cost overruns caused by the following design changes: (i) construction of new rather than rehabilitation of existing water intake and treatment facilities; (ii) installation of generators rather than reliance on the grid to provide electrical power; (iii) an increased sewer pipe diameter because of changes in layout and incomplete topographical surveys; (iv) a change in the lining of wastewater ponds due to higher-than-expected groundwater levels and unstable soil conditions; and generally higher unit prices for pipe materials.

9. The design changes, and part of the cost overrun, could have been avoided if the project appraisal had included (i) sufficient stakeholder consultations, and (ii) complete geotechnical and topographical surveys.

B. Project Outputs

1. Improved Water Supply

10. The target was to improve the water supply in Battambang, Kampot, Kompong Cham, Kompong Thom, Pursat, and Svay Rieng through (i) construction or rehabilitation of the water production works, such as river intakes, deep wells, and treatment plants; and (ii) extension and rehabilitation of the reticulation networks. The reticulation extension included direct connections to individual consumers, as well as community water supply points for temporary settlers and poor households. The target at project appraisal was an improved water supply for 350,000 people, although the project documents did not provide a basis for this target.

11. The physical works were completed in December 2006 and taking-over certificates for both packages have been issued. The defect liability period of 12 months elapsed in December 2007.

Table 1: Water Supply Production, Coverage and Proportion of Nonrevenue Water in the Project Towns

Project town Population Production Beneficiaries Coveragea NRW Service (m3/day) (%) (%) Area Design Current Connections Persons (Persons) Battambang 152,940 9,200 7,425 7,895 38,235 25 35 Kampong Cham 40,842 8,000 3,000 3,338 22,463 55 20 Kampong Thom 27,397 5,760 1,379 1,683 7,945 29 26 Kompot 42,433 5,760 3,498 2,600 12,730 30 35 Pursat 25,926 5,760 2,138 2,503 12,185 47 29 Svay Rieng 21,500 1,504 912 1,097 5,375 25 25 Total/average 311,038 30,224 18,379 19,116 98,933 32 28 NRW = nonrevenue water, m3 = cubic meters a Coverage is the number of people connected as a percentage of the total population in the service area. Source: Ministry of Industry, Mines, and Energy.

12. Table 1 shows that the total constructed water supply production capacity is 30,224 m3/day, which is sufficient to provide about 250,000 people with safe water, assuming a per capita consumption rate of 120 liters/day. The maximum potential coverage is therefore 80% of the total population of 311,000. The number of people served at loan closing was about 80,000,

4 and coverage about 32%. Since loan closing the number of people served has increased by 25% to about 99,000, resulting in a coverage of 40%, or 50% of the maximum coverage level.

13. The Project did not include the provision of all required distribution pipes and house connections. These need to be financed through funds generated internally by the water companies. It is expected that the maximum coverage will be achieved by 2011.

14. The loan covenants include an overall nonrevenue water (NRW) target of 35%. Table 1 shows that the achieved average is 28%. Details of technical and financial operation of the water supply works are given in Appendix 2.

2. Improved Wastewater Management in Sihanoukville

15. The targets were to construct (i) a treatment plant in Sihanoukville with a capacity of 5,700 m3/day, and (ii) a sewage collection and transmission network, consisting of about 7 kilometers (km) of collector and trunk mains and 51 km of reticulation pipes for about 3,300 property connections. A specific trunk sewer was to be constructed to connect the local brewery.

16. The treatment plant and the collector system were completed on 3 October 2006, when the last of the taking-over certificates were issued by the consultant. Consultancy services to train the waster water treatment plant (WWTP) management staff were completed, and the maintenance and laboratory equipment supplied.

17. The current number of connections is 665, or about 20% of the targeted 3,300 property connections. Despite the public campaigns and promotions carried out by commune councils, the number of connections has not increased since the loan closing date. Despite the low number of connections and the consequent low influent quantity, the treatment efficiency is high and the effluent quality is within acceptable standards.4

18. People are expected to connect voluntarily to the system while being charged for the connection and the services.5 Apparently, only those people having acute wastewater discharge problems connected. It was also expected that the local brewery would connect to the system, but it has since built its own on-site treatment plant, and is now not willing to connect.6

3. A Community Sanitation and Health Awareness Program Implemented

19. The targets were to (i) educate communities on sanitation and health issues; and (ii) improve the sanitation conditions in the poor communities of Battambang, Kampong Cham, and Sihanoukville through community participation in project design, cost sharing, and O&M. The CSHAP was envisaged to benefit 1,500 households. Achievements include (i) founding of 15 sanitation committees, and (ii) construction of 1,503 household latrine sub-structures, and 75 public and school latrines.

4 Treatment involves a biological treatment process using a waste stabilization pond system, without added chemicals. Treatment efficiency does not depend on influent load. 5 Since the water supply system and the wastewater system cover different areas, sewerage connections cannot be made mandatory and paid for through the water supply system. 6 Cambrew, the major industry in the project area, is presently operating its own wastewater treatment facility, as required by the Government to alleviate identified adverse environmental impacts. It was projected to be part of Sihanoukville’s sewerage system during project appraisal.

20. Implementation of the program began in May 2002 and was completed in June 2004. The EA does not monitor the program, but the nongovernment organization that was recruited to implement the activity reports that most committees are no longer active; three committees in Kampong Cham have regular meetings, and some others try to continue the latrine program by contributing membership fees.

4. Improved Local Governance and Resource Mobilization

21. The targets were to (i) develop a legal and administrative model for local government with fully decentralized authority for urban development and management, including an outline of required reforms and an implementation timeframe; and (ii) expand the revenue resources of provincial and local governments to (a) cover, at a minimum, the O&M of urban infrastructure such as the water supply and sewerage works; and (b) improve the financial position of local governments.

22. The study on local government reform reviewed the legal and administrative structure of the provincial and municipal governments of Battambang, Kampong Cham, and Sihanoukville. Based on the review, recommendations were provided on the legal and administrative structures for a model local government with fully decentralized authority for urban development and management. This study was completed in June 2002, but was not implemented due to lack of government support. The target to develop a new legal and administrative government model was therefore not achieved.

23. Next the potential revenue bases of the provincial towns and municipalities were reviewed, and an immediate action plan recommended for the Municipality of Sihanoukville within the existing legal and institutional framework that would expand revenues to cover the anticipated O&M costs of the wastewater management system to be constructed under the Project.

24. Resources for the water supply works were mobilized. In 2007, MIME authorized increased water tariffs in the project towns, to (i) cover O&M costs, (ii) provide performance bonuses to the water company’s staff, and (iii) generate internal funds to extend the system. In 2007, all water companies were able to generate positive cash flows.

25. Achievements were more limited in the Municipality of Sihanoukville. The proposed management structure of the Sihanoukville sewerage and wastewater treatment plant unit (SSWTPU) as well as the fee structure and collection system were approved by MPWT and Ministry of Economics and Finance (MEF) on 17 November 2006. The governor announced the decision and a public campaign was initiated. However, the limited number of connections meant that the revenues generated were insufficient to cover the O&M costs of the treatment plant. The Government has consequently agreed to subsidize O&M from the central budget.7

C. Project Costs

26. At appraisal, the project cost was estimated at $26.3 million equivalent, comprising $18.3 million in foreign exchange costs and $8.0 million in local currency costs. The original ADB loan amount of $20.0 million equivalent, or 76% of the total costs, was to finance the foreign exchange costs of $18.3 million and $1.7 million in local costs. The Government and

7 MEF letter No. 5258, dated 25 August 2006, informing MPWT to include in its budget an amount equal to the anticipated shortfall in the event SSWTPU cannot generate sufficient revenue during its initial years of operation.

6 local communities were to finance $6.3 million in counterpart funds. The Borrower also obtained a grant of $0.23 million from New Zealand through its Asia Development Assistance Facility (ADAF) for initial project management support. After significant cost overruns in the water supply and sewerage components, the Government requested a supplementary loan to enable it to complete the project facilities. On 28 October 2003, ADB approved a supplementary loan of $6.26 million equivalent to finance 76% of the additional project cost of $8.24 million.

27. At completion, the actual cost of the Project was $46.15 million equivalent, comprising $24.85 million in foreign exchange and $21.3 million in local currency (including $11.34 million for the land for the Sihanoukville WWTP). ADB financed $24.88 million in foreign exchange, including a service charge of $0.46 million, and $2.65 million in local currency cost. ADAF financed a total of $0.23 million, and the Government and local communities financed $18.38 million of the local costs of $21.12 million. The estimated and actual project costs are given in Appendix 3, and the financing plan at appraisal and at completion in Appendix 4.

28. The bids for Part B (the water supply component for six towns) and part C (the wastewater management system in Sihanoukville) were substantially higher than the cost estimates. The cost estimate for Part B was $10.8 million, while the lowest bid price, net of contingencies, was $14.4 million. For Part C the cost estimate was $5.6 million and the lowest bid price net of contingencies was $9.5 million.

29. The cost overrun in Part B was due to technical reasons: (i) deep wells had to be constructed in Svay Rieng to ensure the required yield; (ii) two of the water treatment plant sites had poor soil conditions that were not noted at time of appraisal, and soil improvement and foundation works had to be carried out. The quantity of rock to be excavated at one site was substantially greater than estimated at appraisal, while additional piling was required at another site; (iii) the anticipated extension of the power grids had not taken place, requiring the installation of generators to provide power for the treatment works; and (iv) the rerouting of and additional number of pipelines required more pipeline river crossings, which were not budgeted for at appraisal.

30. The cost overrun in Part C resulted from (i) failure to note at appraisal the high groundwater table throughout the Sihanoukville area, which caused increased unit costs for pipe installation and forced expensive remedial works, such as a reinforced concrete lining for WWTP ponds; (ii) failure to note at appraisal the poor soils at the WWTP site which required excavation and removal of loose sand and backfill by suitable material; (iii) a creek flowing through the WWTP site, which had to be rerouted; (iv) the need to elevate the WWTP ponds to allow gravity flow into the surface stream and avoid tidal backflows; (v) the level topography, which required larger trunk sewers and collector sewers, in order to accommodate the projected project sewage gravity flows; and (vi) underestimation of sewage pipe lengths by 100%.

31. In addition, at the time of bidding the unit cost of pipeline construction was over 50% higher than at appraisal.

32. The actual cost of consulting services was $3.91 million, against the estimate of $3.12 million, as the extended construction time required additional supervision services.

D. Disbursements

33. The combined loan proceeds available at completion equaled $27.68 million equivalent, against the total disbursements of $27.53 million (including interest charges of $0.46 million).

The remaining $0.149 million was cancelled on 12 December 2007 when the loan account was closed.

34. Contract awards were $27.07 million or 98.3% of the total loan amount. Loan proceeds were disbursed in accordance with ADB’s Loan Disbursement Handbook. Disbursements were slow during the first year of implementation but significantly improved during the second year, when the consultants were fielded. At the Borrower’s request, loan proceeds under the original loan were reallocated to accommodate increases in civil works and consulting services. No reallocation was necessary under the supplementary loan. The imprest account was opened with the National Bank of Cambodia and was maintained and operated satisfactorily. Payments under major civil works contracts and consulting services were through direct payment.

35. Both MIME and MPWT provided the required local counterpart funds ($6.95 million equivalent compared to $6.10 million projected at appraisal). Local communities provided contributions in kind amounting to $0.07 million equivalent. The actual quarterly disbursements for both loans are in Appendix 5.

E. Project Schedule

36. The closing date of the original loan was 31 December 2005, and that of the supplementary loan 30 June 2006. It took longer than expected to recruit the consultants and this delay, in combination with further construction delays, resulted in both loan closing dates being extended to 30 September 2006. A second extension of 6 months was granted to further improve human capacity and supply O&M equipment for the WWTP. The final loan closing date was 31 March 2007. The projected and actual implementation schedule is in Appendix 6.

F. Implementation Arrangements

37. The implementation arrangements were generally satisfactory, and carried out as envisaged at appraisal. Originally MIME was the EA for Part B and a portion of Part E, while MPWT was the EA for Parts A, C and D and a portion of Part E. MIME and MPWT each set up a project management unit (PMU) with qualified staff acceptable to ADB. On 6 June 2000, ADB approved a minor change in implementation arrangements, transferring all of Part A implementation to MIME.

38. For the water supply component, each of the provincial or municipal governments in the project towns set up a project implementation unit (PIU). To coordinate the project activities in Battambang and Kompong Cham, where there were no municipal governments, the provincial governments set up urban management committees. These committees were responsible for: (i) coordinating implementation of the Project in the provincial towns; (ii) jointly approving the engineering designs with MIME, including resettlement or relocation arrangements; (iii) supervising the progress and quality of construction; and (iv) mobilizing local financial resources for O&M of the project components.

39. For the wastewater component, a PIU was established in Sihanoukville to oversee the day-to-day implementation and coordination with the Municipality of Sihanoukville (specifically the Governor’s office), and liaise with the residents affected by the construction of the system. The PIU was particularly helpful in identifying qualified staff for the SSWTPU.

G. Conditions and Covenants

40. The status of compliance with loan covenants is given in Appendix 7. Compliance with loan covenants is satisfactory. Of the 23 key covenants, only four had partial compliance:

(i) Water Supply Tariffs. (LA Schedule 6, paragraph 3 & Supplementary LA Schedule 4, paragraph 8). The water tariffs in all project towns have been increased over the last years, but do not cover the full cost of investment and operations. MIME intends to increase the tariffs gradually to cover depreciation and provide return on investment; (ii) Water Collection and Financial Ratios. (LA Schedule 6, paragraph 12). Water meters have been installed at all connections, the disconnection policy has been implemented, and leakage detection programs are operational. The NRW levels are on target, but the collection ratios are lower than the target of 95%, and the rate of return on assets is lower than 2%. Based on a 15-year plan developed with the assistance of MIME, the tariffs, collection ratio and rate of return will gradually be increased. (iii) Mobilization of Local Financial Resources for WWTP. (Supplementary LA Schedule 4, paragraph 6). A tariff schedule was established and put into operation, but full cost recovery will not be achieved due to the low connection rate.

H. Consultant Recruitment and Procurement

41. Consultant recruitment followed ADB’s Guidelines on the Use of Consultants. Procedures acceptable to ADB were adopted for the short-listing of specialized consultant firms; the selection of individual consultants, and the selection and recruitment of consultants. All contract variations were executed with prior ADB approval. Details of consulting services inputs are given in Appendix 8.

42. Parts A and B. The appraisal called for 184 person-months of consulting inputs (56 for international and 128 for national consultants). At project completion, the consultants had provided 349 person-months of consulting inputs (78 from international and 271 from national consultants). This increase was caused by the increased scope and slow progress of the civil works.

43. Parts C and D. The appraisal called for 84 person-months for international consultants and for 102 person-months for national consultants. The final input provided was 79 person- months of international consultants and 207 person-months of national consultants. The international consultant’s inputs were reduced following the reduction in scope of the local governance and resource mobilization component. The national consultants’ input was increased to cover the design work and supervision for the additional civil works.

44. Part E. Procurement was in accordance with the ADB’s Guidelines for Procurement. Civil works procurement comprised two packages each for the water supply and wastewater components. Procurement was carried out using international competitive bidding. In line with the supplementary loan agreement, the two additional packages were awarded directly to the winning bidders of the original contracts.

45. Other than the higher-than-expected bid prices for the original works, and the consequent requirement to request additional loan funds, procurement of works and goods did not encounter any major problems or delays.

I. Performance of Consultants, Contractors, and Suppliers

46. The performance of the consultants was satisfactory. Effective working relationships with PMU and other involved agencies were established.

47. For the water supply component, the performance of the contractor, which was a joint venture between an international contractor and a national contractor, was unsatisfactory. The contractor (i) delayed the commencement of the works, (ii) had limited equipment and qualified staff for the project, (iii) faced difficulties in ensuring that the constructed work was in accordance with the contract requirements, and (iv) was late in submitting payment certificates.

48. For the wastewater component, the performance of the civil works contractor was satisfactory. The contractor was a joint venture between an international contractor and a national contractor. The quality of the civil works was good, although internal squabbling over various matters by the partners often had to be dealt with by the consultant in order to ensure timely workflow. Though some time delays were caused by late procurement of materials and a delay by the contractor in starting construction, the most significant delays were not the fault of the contractor, but were due instead to slow implementation of resettlement programs, and the addition of extra work, e.g., the access road and bridge.

49. The performance of suppliers was satisfactory. The suppliers delivered good quality vehicles, office equipment and furniture, a sewer pump truck, jetting machine and laboratory equipment.

J. Performance of the Borrower and the Executing Agency

50. Overall, the performance of the Borrower and EAs was satisfactory. The PMUs were established in February 2000 and were effective in coordinating the project components. The PIUs were established in April 2000.

51. The PIU for the wastewater component was effective in representing MPWT in the discussions with the Municipality of Sihanoukville, and in consultations with the residents affected by the construction activities. The PIU was particularly effective in identifying suitable management staff for the SSWTPU.

52. The PMU and PIUs adopted double-entry accrual-based accounting systems as recommended by the consultants. Project accounting activities by the PIUs were not as well- organized and controlled as at the PMU level, despite the existence of dedicated accounting staff in each PIU. Payments to the contractors and consultants were generally late, causing cash flow problems for all parties contracted by the Borrower and EAs.

K. Performance of the Asian Development Bank

53. The overall performance of ADB was satisfactory. During project implementation from February 2000 to March 2007, ADB fielded 21 missions to evaluate the progress of policy reforms and project implementation. The missions were effective in resolving implementation issues and in processing the supplementary loan. ADB’s responses to requests and inquiries from the PMUs were timely.

III. EVALUATION OF PERFORMANCE

A. Relevance

54. The overall rating is relevant. The Project is rated highly relevant in achieving the Government’s overall strategy for poverty reduction. The rectangular strategy8, the national poverty reduction strategy9 and the CMDGs10 place high priority on the provision of water supply and sanitation.

55. The Project could have been more relevant if more consultations and more thorough geotechnical and topographical surveys had been carried out during the design phase. This could have avoided design changes and additional loan financing, and the consequent project implementation delays.

B. Effectiveness in Achieving Outcome

56. The project is rated less effective. The project objectives or outcome at the time of appraisal were (i) improved sustainable urban services and environment in the project towns, (ii) contribution to poverty reduction, and (iii) provision of assistance to the Government to develop policy and institutional reform to decentralize urban functions to local governments. No measurable performance indicators were provided.

57. The outcome was to be achieved through: (i) implementation of the CSHAP; (ii) improvements to provincial water supplies; (iii) improved wastewater management in Sihanoukville; and (iv) improvements to local governments and local resources.

58. At the time of loan closing the CSHAP was fully implemented. The water supply works and wastewater works were constructed but the number of people served was lower than projected. Recommendations on the decentralization of local government authority for urban development and management were formulated but not implemented.

C. Efficiency in Achieving Outcome and Outputs

59. The project is considered to be efficient. Economic efficiency was analyzed based on the social and economic benefits that accrued from upgrading and rehabilitating water supply systems in the six subproject towns.11 A reevaluation of economic internal rates of return (EIRR) at project completion shows the EIRR for each subproject town exceeds the standard opportunity cost of capital of 12% (Table 2); in each case the EIRR is below that calculated at appraisal due to project cost increases and implementation delays.

8 Royal Government of Cambodia. 2004. The Rectangular Strategy for Growth, Employment, Equity, and Efficiency (2004–2008). Phnom Penh. 9 Council for Social Development. 2002. National Poverty Reduction Strategy (2003–2005). Phnom Penh (safe water and sanitation, para. 4.3.4, p. 98). 10 Ministry of Planning. 2003. Cambodian Millennium Development Goals. Phnom Penh (targets 7.10 and 7.12). 11 The benefits of the Project included (i) the significant reduction in NRW from 50% to less than 30%; (ii) the reduction in the cost of purchasing and treating water from alternative sources; and (iii) the resource cost savings from the construction and maintenance of storage facilities and time savings associated with water collection.

Table 2: Comparative Economic Internal Rates Of Return for Subproject Towns Subproject Town Project Appraisal Reappraisala Project Completion (%) (%) (%) Battambang 15.6 17.1 13.3 Kampot 25.0 23.9 13.8 Kompong Cham 34.6 22.7 16.1 Kompong Thom 16.6 15.5 12.1 Pursat 20.2 15.4 14.9 Svay Rieng 15.9 14.7 12.2 a Reappraisal was carried out for the supplementary Loan 2013: Provincial Towns Improvement Project. Source: Asian Development Bank.

60. The subprojects are starting to generate positive cash flows from their operations as a result of the increase in the water tariff. A re-computation of the financial internal rate of return (FIRR) of each subproject shows the FIRR exceeds the weighted average cost of capital of 5% in each case, but is generally lower than the FIRR estimated during project appraisal and reappraisal (Table 3). The FIRR ranges from 5.3% in Svay Rieng to 7.5% in Kampot. Appendix 9 presents more detailed analyses for the water supply systems.

Table 3: Comparative Financial Internal Rates of Return for Subproject Towns Subproject Town Project Appraisal Reappraisala Project Completion (%) (%) (%) Battambang 6.6 6.7 5.4 Kampot 4.5 3.3 7.5 Kompong Cham 9.5 7.8 6.7 Kompong Thom 4.4 7.9 5.4 Pursat 5.5 5.8 5.5 Svay Rieng 4.2 6.0 5.3 a Reappraisal was carried out for supplementary Loan 2013: Provincial Towns Improvement Project. Source: Asian Development Bank.

61. The construction of a reticulated sewerage system with stabilization ponds is the least- cost technology appropriate for Sihanoukville, considering the relatively low land cost. Furthermore, the technology requires low capital costs and minimum operational skills, and has low O&M requirements. The targeted number of connections and the subsequent environmental benefits and cash revenue levels have not been achieved, resulting in a negative EIRR and FIRR.

62. The wastewater treatment component is inefficient, because people did not feel the need to connect. It is assumed that the impact of improved access to safe water for six towns is higher than the impact of improved sewage treatment in one town, so the overall rating is efficient.

D. Preliminary Assessment of Sustainability

63. The Project is likely to be sustainable. Both the water supply systems and the wastewater facility are sustainable technically. The utilities that are operating and maintaining the facilities were sufficiently trained by the Project and other programs. Since the wastewater facility consists only of civil works, and the operation does not depend on mechanical equipment, the O&M is simple. The water supply facilities require more advanced maintenance and operational skills. The operational staff of all water supply systems continue to benefit from the training provided by the Japan International Cooperation Agency. The water supply companies have active leak detection programs and provide their staff with performance-based bonuses.

64. The water supply companies all had positive cash flows at the end of 2007. However, no appropriations are made for depreciation. The companies were able to extend their distribution systems with financing from internally generated funds and customers’ contributions. MIME provides assistance to the water companies by developing long-term cash flow forecasts, proposing tariff schedules and training.

65. The wastewater facility is not sustainable financially because it generates very little income. The annual operating expenses are about $25,000 and are currently funded by the Government. The current policy is that people who voluntarily connect to the system are considered beneficiaries who must pay for the services. Consequently, the number of connections is limited to people that see a direct benefit—such as reduced flooding of property due to overflowing latrines— and is not likely to increase. The connection of the brewery will not take place because it has constructed its own WWTP. Until the number of connections to the WWTP increases and a sustainable revenue system is in place, the WWTP is less likely to be financially sustainable.

E. Impact

66. Environmental Impact. The Project will improve the environment through better management of water and sanitation. The Project had no significant adverse environment impacts. The negative environmental impacts during project implementation were minor and temporary, as foreseen during appraisal. Proper environmental management plans were designed specifying mitigating measures that included traffic rerouting, phasing of construction works, and appropriate design and construction methods including guidelines for groundwater protection measures.

67. Socioeconomic Impact. The Project will improve people’s health by providing safe water supply and sanitation, and ensure equitable access to these services by limiting the cost for the poor who had no access to safe water before the Project. In general, the Project has positive socioeconomic impacts, including increased access to improved water supply and sanitation, contributing to a reduction in water-related diseases; and increased hygiene awareness and more hygienic practices, resulting in improved health and quality of life for the communities. However, the social impact has been only moderate because the connections are still being established, and the number of beneficiaries is below target.

68. Land Acquisition and Resettlement Impact. Land acquisition and compensation was required for the water supply and wastewater component. Short resettlement action plans12 were prepared in accordance with ADB’s Policy on Involuntary Resettlement. The Resettlement Unit of the Ministry of Economics and Finance (MEF-RU) confirmed that all affected persons were compensated.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

69. The Project as a whole is rated successful. Both the water supply and wastewater components are relevant, less effective and efficient. The water supply component is likely to be

12 Short resettlement action plans were prepared by MIME and MPWT and approved by ADB in April 2003 and March 2006, respectively.

13 sustainable because a revenue collection system is in place and, through support from MIME, the water supply companies are able to increase their tariffs and the number of connections. The sewerage and wastewater elements are less likely to be financially sustainable, because there is no proper revenue collection system and the number of connections is low. Nevertheless, the overall Project is rated likely to be sustainable.

B. Lessons

70. Resource limitations at the design stage may lead to incomplete designs and construction cost overruns and delays. The cost overrun was due to technical design faults, caused mainly by incomplete soil investigations. This demonstrates the need for qualified consultants that are given sufficient time to carry out field investigations and prepare sound designs. Also, thorough initial stakeholder consultations could have avoided the need for design changes later in the Project.

71. Government restructuring requires government support and participation. The consultant’s recommendations on the legal and institutional reforms required for decentralized urban development and management, and the associated model to generate revenues for its operation and management, were never implemented. The recommendations encountered resistance from the Government, and the Project did not include any triggers or incentives to encourage their implementation.

72. The cost recovery of wastewater services should be reconsidered. The assumption that people will voluntarily connect to a central wastewater disposal system with the understanding they will be charged for it is not realistic, unless there is a direct benefit. The revenues of a central wastewater treatment plant should be paid by those who benefit—either directly (e.g., through improved health) or indirectly (e.g., through increased tourism)—from the plant. Resource mobilization approaches should focus on formulating the benefits, identifying the beneficiaries, developing the charging mechanism, and implementing a comprehensive connection program.

73. A thorough review of bids is essential. The contractor for the water supply works was unwilling to complete the works following the consultant’s requirements, purportedly because he was losing money on the works. This demonstrates the need to review contractors’ bids carefully and assess how realistic the proposed unit prices are in relation to the prevailing market prices.

74. Timely payments should be made to both contractors and consultants. Delayed payment leads to cash flow problems and unwillingness by contractors and consultants to complete their tasks on time.

C. Recommendations

1. Project-Related

75. Contractor’s bids and consultants’ resources. The construction of the water supply works was delayed by one year. In addition to the design changes, the contractor’s unwillingness to complete the works was a major contributor, and was complicated by the Government’s payment arrears to the contractor. The Government claimed penalty charges for late delivery, which were countered by the contractor’s claims for interest on outstanding

14 payments. The issue was finally resolved by the intervention of an international contract and dispute settlement specialist, recruited under the consultant’s contract.

76. A careful evaluation of the contractor’s bids and assessment of the unit costs must be carried out prior to award of the contract. When unit prices are unrealistically low, the bid should be rejected, or strong guarantees obtained from the bidder to assure satisfactory and timely completion. Invoices must be paid on time to avoid possible counterclaims.

77. Sufficient resources have to be allocated for supervision of works, preferably led by an international expert with strong knowledge of the relevant contract conditions. National consultants often find themselves disadvantaged when dealing with international contractors.

78. Financial Sustainability of the Sewerage and Wastewater Treatment Unit. A similar system to the Sihanoukville WWTP is currently being built in Seam Reap, 13 where ADB promotes a different approach to generating revenues: the beneficiaries are those who benefit from the cleaner environment and increased tourist income resulting from the WWTP. The connections to the WWTP will be made free of charge to achieve maximum benefits from the plant. User fees are best charged through a real estate tax system or in combination with water bills. Since Cambodia does not have a real estate tax system and water supply coverage is limited, other approaches need to be considered. In the meantime, hotels and other commercial businesses may be charged through their annual business license renewal. Discussion regarding charges is ongoing between the municipal government, MPWT and ADB.

79. Project implementation arrangements. The Project included two different project components implemented by different EAs. This led to some communication difficulties, and complicated the assessment of the Project. This approach should only be used when there is a benefit to combining the various components, in terms of achieving the planned outcome. Furthermore, the study of local governance should have been placed under the Ministry of Interior, which could have implemented the findings and recommendations more effectively.

80. Financial management capacity. The financial processes and management capacity of PIUs, PMUs and ministries should be reviewed and strengthened to ensure efficient financial control and accounting systems, and timely payment of invoices.

2. General

81. Design and Monitoring Framework Performance Targets. Although the design and monitoring framework did provide specific performance indicators for the planned outcome and outputs, the Project documents failed to explain the basis for these indicators. Therefore, the failure to achieve these outputs cannot be evaluated and explained. Design and monitoring frameworks should list the quantified performance parameters and the project documents should clearly show how these parameters have been derived.

82. Triggers and Incentives Should Be Part of Change Management. Projects should include triggers and incentives for governments to accept and implement recommendations for institutional and legal changes.

13 ADB. 2002. Report and Recommendation of the President to the Board of Directors on Proposed Loans to the Kingdom of Cambodia, Lao People’s Democratic Republic, and Socialist Republic of Viet Nam for the Greater Mekong Subregion: Mekong Tourism Development Project. Manila.

83. Improving Executing Agency Capacity. ADB should provide assistance to improve the administrative and financial management skills of local staff, specifically for reduction in NRW and improvements in collection efficiency and financial operating ratios.

16 Appendix 1

PROJECT FRAMEWORK

Design Summary Performance Project Monitoring Assumptions Indicators/Targets Mechanisms I. Sector Goal

Improve the quality of life in Cleaner urban environment, Central and local government Continued political stability project towns better health, greater statistical reports productivity, higher income, Continued economic and lower medical expenses growth

Promote economic and More investment in the Government statistics, studies Continued confidence of social development in project towns, higher or reports of bilateral and foreign and domestic project towns employment rate, higher multilateral agencies and investors fiscal revenues, and more nongovernment organizations social development (NGOs) Further improvement in programs legal and policy environment II. Project Objectives

Improve urban services and Complete project Project progress reports, loan Continued improvement in environment in the project components by 2005, review missions, monitoring governance, and in the towns in a sustainable benefiting about 500,000 and evaluation indicators, and capacity of concerned manner and contribute to people; generate adequate project completion report. institutions poverty reduction operation and maintenance (O&M) funds

Assist the government in Improve resource Project progress reports, loan Legal and institutional developing policy and mobilization of local review mission, and project actions by the Government institutional reforms to governments; develop completion report are timely, enforcement of decentralize urban functions institutional capacity for local local revenue collection is to local governments. urban development and effective management III. Components/ Outputs

Improve the provincial water Upgrade river intakes, Project progress report, loan Recruitment of consultants supply treatment plants, and review missions, and project by the project executing reticulation networks; completion report agencies is timely provide O&M training, spare parts, and maintenance equipment; construct office and laboratories (350,000 beneficiaries).

Improve wastewater Install interceptor and Project progress report, loan Counterpart funds management in sewerage network, and review missions, and project available Sihanoukville. construct a sewage completion report treatment plant with a capacity of 5,700 cubic meters that serves 150,000 beneficiaries.

Implement the Community Conducting environmental Project progress reports, loan Coordination of the Sanitation and Health sanitation education and review missions, and project consultants and central Awareness Program installing low-cost latrines or completion report and provincial (CSHAP) tertiary sewers for the urban governments is effective poor with assistance of NGOs in Battambang, Staff in executing and Kompong Cham, and implementing agencies are Sihanoukville (1,500 competent and effective. households)

Appendix 1 17

Design Summary Performance Project Monitoring Assumptions Indicators/Targets Mechanisms Improve local governance Expand revenue sources of Project progress reports, loan Government remains and resource mobilization provincial and municipal review missions, and project willing to implement and governments to be able to at completion report enforce the revenue least cover O&M expenses; expansion develop core skills for urban recommendations. management in selected project towns.

Provide project Assistance provided in Project progress reports, loan Consultants recruited early implementation assistance engineering design, review missions, and project in accordance with the construction supervision, completion report appraisal schedule community development, local governance, municipal finance, accounting and auditing, training

IV. Activities

Select consultants Consulting Services $4.36 million

Establish project office and Engineering design and $3.14 million accounts. construction supervision

For Physical Construction: For CSHAP: CSHAP $0.34 million

Engineering design Develop detailed program Local governance and $0.56 million resource mobilization

Prequalification Engage an NGO TV & radio campaigns $0.32 million

Bidding Community development Civil Works $18.93 million

Awarding contracts Education campaign Water supply $12.05 million

Construction supervision Project design and costing Sewage treatment $6.45 million

Commissioning inspection Contract preparation and CSHAP $0.43 million and training awarding

Reporting Construction supervision Equipment $1.16 million

Commissioning inspection Equipment for local $0.20 million Reporting governance and resource mobilization For Local Governance and Resource Mobilization Other equipment $0.96 million

Situation assessment

Recommendation Incremental administration $1.30 million Implementation and training

Training Interest during construction $0.57 million Reporting

Total: $26.32 million

18 Appendix 2

DATA ON WATER SUPPLY OPERATIONS

Kompong Kampong Battambang Kompot Pursat Svay Rieng Item Cham Thom Population of Service Area 152,940 40,842 27,397 42,433 25,926 21,500 Average Annual Household Income (KR) 0 - 12,000 - 0 0 Minimum Wage Rate (KR/day) 0 5,000 10,000 - 0 0 Number of Connections 7,895 3,338 1,683 2,600 2,503 1,097 Domestic 7,647 3,209 1,589 2,546 2,437 1,075 Government 68 31 71 21 44 22 Commercial 180 98 23 33 18 - Industrial - - - - 4 - Ave. No. of Persons per Domestic Connection 5 7 5 5 5 5 Total Served Population 38,235 22,463 7,945 12,730 12,185 5,375 Service Coverage (%) 25% 55% 29% 30% 47% 25% Capacity of Treatment Plant (m3/day) 5,400 5,760 5,760 5,760 5,760 5,760 Capacity of Storage (m3) 1,314 - 320 - 2,000 400 Annual Production (m3) 2,719,824 1,096,795 503,444 1,276,621 780,522 332,968 Average Daily Production (m3/day) 7,452 3,000 1,379 - 2,138 912 Annual Billed Water (m3) 1,760,388 876,387 373,217 831,088 554,866 248,332 Unaccounted Water (m3) 959,436 220,408 130,227 445,533 225,656 84,636 Unaccounted Water (%) 35% 20% 26% 35% 29% 25% Water Availability (hrs/day) 19 24 24 - 24 24 Per Capita Consumption (liters/capita/day) 126 107 129 179 125 127 Average Tariff (KR/m3) 1,500 862 1,300 1,400 1,300 900-1200 Domestic - - - - - Government ------Commercial ------Industrial ------Public Selling Point ------Connection Fee (KR/connection) 200,000 - 369,000 336,985 370,000 50 Meter Rental (KR/month/connection) - - - - - 1,200 Number of staff 40 30 24 26 21 19 Revenue 2,910,370 757,127 639,893 1,084,980 798,819 273,875 Water Sales 2,660,580 738,133 494,257 1,053,000 721,326 223,499 Domestic - - 336,493 - 605,285 - Government - - 83,365 - 87,681 - Commercial - - 74,399 - 19,865 - New Connection - - 89,486 8,060 46,864 - Meter Rental - - - - 10,053 49,875 Other Income 249,790 18,994 56,150 23,920 20,576 501 Operating Costs 2,294,840 552,065 557,231 849,860 682,497 219,443 Personnel 248,460 134,469 78,964 108,480 52,016 8,082 Electricity 1,258,760 313,621 218,101 505,960 414,698 142,530 Chemicals 260,000 - 43,828 43,950 85,509 - Supplies/Materials 341,570 - 164,036 - 90,716 - Others 173,770 96,173 52,303 191,470 39,557 68,832 Depreciation 12,280 7,802 - - - - Loan Repayment ------Net Income/Loss 615,530 205,062 82,662 235,120 116,323 54,432 Source: Ministry of Industry, Mines and Energy.

Appendix 3 19

APPRAISED AND ACTUAL PROJECT COSTS ($ million)

At Appraisal At Re-appraisal At Completion Foreign Local Total Foreign Local Total Foreign Local Total Component Exchange Currencya Cost Exchange Currency Cost Exchange Currency Cost A. Base Cost Part A: CSHAP Community Sanitation Improvement International consultant 0.17 0.00 0.17 0.17 0.00 0.17 0.00 0.00 0.00 Domestic consultants 0.00 0.10 0.10 0.00 0.10 0.10 0.00 0.22 0.22 Sanitation facilities 0.00 0.36 0.36 0.00 0.36 0.36 0.03 0.22 0.25 TV and Radio Campaign 0.02 0.25 0.27 0.02 0.25 0.27 0.00 0.10 0.10 Subtotal 0.19 0.71 0.90 0.19 0.71 0.90 0.03 0.54 0.57 Part B: Provincial Towns Water Supply Battambang 2.36 0.68 3.04 2.92 0.89 3.81 3.00 1.05 4.05 Kampot 1.11 0.35 1.46 1.97 0.63 2.60 1.78 0.99 2.77 Kompong Cham 1.32 0.30 1.62 1.46 0.36 1.82 1.77 0.62 2.39 Kompong Thom 0.99 0.22 1.21 1.63 0.38 2.01 1.60 0.56 2.16 Pursatb 1.45 0.39 1.84 1.94 0.53 2.47 2.05 0.71 2.76 Svay Rieng 1.24 0.34 1.58 1.55 0.50 2.05 1.44 0.80 2.24 Subtotal 8.47 2.28 10.75 11.47 3.29 14.76 11.64 4.73 16.37 Part C: Wastewater Management Land 11.34 11.34 Sihanoukville Sewerage System 3.17 2.39 5.56 5.50 4.11 9.61 7.83 3.34 11.17 Subtotal 3.17 2.39 5.56 5.50 4.11 9.61 7.83 14.68 22.51 Part D: LGRM Subtotal 0.69 0.06 0.75 0.54 0.06 0.60 0.00 0.04 0.04 Part E: Implementation Assistance Consulting Services 2.1 0.4 2.48 2.29 0.83 3.12 3.87 0.04 3.91 Equipment 0.2 0.1 0.27 0.35 0.05 0.40 0.83 0.03 0.86 Incremental Administration 0.23 0.80 1.03 0.30 0.98 1.28 0.20 1.13 1.33 Training 0.00 0.06 0.06 0.00 0.06 0.06 0.00 0.10 0.10 Subtotal 2.51 1.33 3.84 2.94 1.92 4.86 4.90 1.31 6.21 Total Base Cost 15.03 6.77 21.80 20.64 10.09 30.73 24.39 21.30 45.69 B. Contingencies 0.00 0.00 Physical Contingenciesa 1.53 0.68 2.21 1.21 0.61 1.82 0.00 0.00 0.00 Price Contingencies 1.22 0.53 1.75 1.15 0.30 1.45 0.00 0.00 0.00 C. Interest During Construction 0.57 0.00 0.57 0.57 0.00 0.57 0.46 0.00 0.46 Total 18.35 7.98 26.33 23.57 11.00 34.57 24.85 21.30 46.15 CSHAP = Community Sanitation and Health Awareness Program, LGRM = local governance and resource mobilization. Note: Totals may not add up due to rounding off. aPhysical contingency: 5% for civil works contracts for part B and 10% for part C under the revised cost estimates. bActual local cost for Pursat includes cost of land of $9,700. Source: Asian Development Bank's LFIS and EAs' project accounts.

4 Appendix

FINANCING PLAN ($ million)

At Appraisal At Re-appraisal At Completion SOURCE Foreign Local Total Foreign Local Total Foreign Local Total Exchange Currency Costs Percent Exchange Currency Costs Percent Exchange Currency Costs Percent

ADB 18.30 1.70 20.00 75.9 23.43 2.62 26.05 75.4 24.87 2.65 27.52 59.66 ADAF 0.00 0.00 0.00 0.0 0.13 0.10 0.23 0.7 0.13 0.10 0.23 0.06 Government 0.00 6.10 6.10 23.4 0.00 8.08 8.08 23.4 0.00 18.31 18.31 39.75 Local Communities 0.00 0.20 0.20 0.7 0.00 0.20 0.20 0.5 0.00 0.07 0.07 0.03

Total 18.30 8.00 26.30 100.0 23.56 11.00 34.56 100.0 25.00 21.13 46.13 100 ADB = Asian Development Bank, ADAF = Asian Development Assistance Facility. Source: Asain Development Bank.

Appendix 5 21

BREAKDOWN OF YEARLY DISBURSEMENTS ($ million)

Loan 1725 a Loan 2013 b Year Quarter Amount Cumulative Amount Cumulative Total

2000 II 0.720 0.720 0 0 0.720 III 0.000 0.720 0 0 0.000 IV 0.003 0.723 0 0 0.003

2001 I 0.452 1.175 0 0 0.452 II 0.342 1.517 0 0 0.342 III 0.317 1.834 0 0 0.317 IV 0.465 2.299 0 0 0.465

2002 I 0.101 2.400 0 0 0.101 II 0.213 2.613 0 0 0.213 III 0.586 3.199 0 0 0.586 IV 0.158 3.357 0 0 0.158

2003 I 0.167 3.524 0 0 0.167 II 1.397 4.921 0 0 1.397 III 0.192 5.113 0 0 0.192 IV 0.305 5.418 0 0 0.305

2004 I 1.073 6.491 0.000 0.000 1.073 II 1.082 7.573 0.341 0.341 1.423 III 0.713 8.286 0.334 0.675 1.047 IV 1.954 10.240 0.072 0.747 2.026

2005 I 0.805 11.045 0.310 1.057 1.115 II 2.960 14.005 1.575 2.632 4.535 III 1.109 15.114 0.769 3.401 1.878 IV 1.103 16.217 0.909 4.310 2.012

2006 I 0.654 16.871 0.571 4.881 1.225 II 0.877 17.748 0.798 5.679 1.675 III 0.386 18.134 0.208 5.887 0.594 IV 0.392 18.526 0.269 6.156 0.661

2007 I 0.911 19.437 0.355 6.511 1.266 II 1.232 20.669 0.187 6.698 1.419 III 0.256 20.925 0.000 6.698 0.256 IV (0.092) 20.833 0.000 6.698 (0.092) Total 20.833 6.698 27.531 a b ADB. 1999. Report and Recommendation of the President to the Board of Directors for a Proposed Loan to the Kingdomof Cambodia for the Provincial Towns Improvement Project. Manila. Source: Asian Development Bank.

IMPLEMENTATION SCHEDULE Appendix 6 Appendix

Component Activity 1999 2000 2001 2002 2003 2004 2005 2006 2007

A. Community Sanitation and Health Awareness

Community-Based Sanitation Improvement NGO/National Consultant

Program Preparation

Program Implementation Sihanoukville and Battambang Kompong Cham

Television and Radio Campaign Program Preparation

Program Airing

B. Provincial Water Supply

Design & Contract Documentation

Prequalify Contractors

Tender

Procurement and Construction Package 1 (Battambang, Kompong Cham, Kompong Thom, and Pursat) Package 2 ( Kampot and Svay Rieng)

C. Wastewater Management

Design & Contract Documentation

Prequalify Contractors

Tender

Procurement and Construction Alternate 2 Alternate 3

D. Local Governance and Resource Mobilization

Initial Legal and Institutional Study

Establish Legal Framework for Wastewater Agency Establish User Fee Pilot Town Implementation (Wastewater Agency Operation)

E. Implementation Assistance

Recruit Consultants

Consulting Services Part B: Water Supply Part C: Sewerage System Procurement of Equipment & Materials

NGO - nongovernment organization.

Legend Planned Actual Source: Asian Development Bank.

Appendix 7 23

STATUS OF COMPLIANCE WITH LOAN COVENANTS COVENANT REFERENCE IN STATUS OF LOAN AGREEMENT COMPLIANCE

PARTICULAR COVENANTS

A. Accounts and Audit

1. The Borrower shall maintain, or cause to (Loan Agreement, Complied with. be maintained, records and accounts adequate to Section 4.06, Preparation of a project identify the goods and services and other items of paragraph [a]) accounting system based expenditure financed out of the proceeds of the on sound accounting Loan to disclose the use thereof in the Project, to principles was completed record the progress of the Project (including the cost under the ISSP in thereof) and to reflect, in accordance with September 2000. Training consistently maintained sound accounting principles, of PMU and PIU staff in the operations and financial conditions of the operation of the project agencies of the Borrower responsible for the accounting system was carrying out of the Project and operation of the completed in September Project facilities, or any part thereof. 2000.

(Loan Agreement, Complied with. 2. The Borrower shall (i) maintain, or cause to Section 4.06, be maintained, separate accounts for the Project; (ii) paragraph [b]) have such accounts and related financial statements audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to the Bank; (iii) furnish to the Bank, as soon as available but in any event not later than 12 months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditor’s opinion on the use of the Loan proceeds and compliance with the covenants of the Loan Agreement as well as on the use of the procedures for imprest account and statement of expenditures), all in the English language; and (iv) furnish to the Bank such other information concerning such accounts and financial statements and the audit thereof as the Bank shall from time to time reasonably request

B. Quarterly Progress Reports (Loan Agreement, Complied with. 3. Without limiting the generality of Section Section 4.07, 4.07, paragraph (a), the Borrower shall furnish, or paragraph [b[) cause to be furnished, to the Bank quarterly reports on the carrying out of the Project and on the operation and management of the Project facilities.

24 Appendix 7

COVENANT REFERENCE IN STATUS OF LOAN AGREEMENT COMPLIANCE

C. Project Completion Report (PCR)

4. Promptly after physical completion of the (Loan Agreement, Complied with. Project, but in any event not later than three (3) Section 4.07, months thereafter or such later date as may be paragraph [c]) agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, in such form and in such detail as the Bank shall reasonably request, on the execution, and initial operation of the Project, including its cost, the performance by the Borrower of its obligations under the Loan Agreement and the accomplishment of the purposes of the Loan.

EXECUTION OF PROJECT

5. MIME and MPWT shall maintain their (Loan Agreement, Complied with. respective Project Management Units (PMUs) with Schedule 6, paragraph qualified staff acceptable to the Bank. The Borrower 1) shall cause MIME to ensure that the local governments in Battambang, Kampot, Kompong Cham, Kompong Thom, Pursat, and Svay Rieng each establishes a Project implementation unit (PIU by 31 March 2000. The Borrower shall cause MPWT to ensure that the Municipality of Sihanoukville establishes a PIU by 31 March 2000.

6. The Borrower shall cause MIME to ensure (Loan Agreement, Complied with. that each of the local governments of Battambang Schedule 6, paragraph and Kompong Cham establishes an Urban 2) Management Committee (UMC) by 31 March 2000. Each UMC shall be chaired by the governor or vice governor in charge of public works and water supply, and shall be comprised of officials from the Department of Public Works and Transport, Department of Economy and Finance, Department of Industry, Mines and Energy, and other departments as may be deemed necessary by the local governments.

Appendix 7 25

COVENANT REFERENCE IN STATUS OF LOAN AGREEMENT COMPLIANCE

PROJECT IMPLEMENTATION A. Water Tariff

7. Except as otherwise agreed by the Bank, (Loan Agreement, Partially complied with. the Borrower shall cause MIME and the local Schedule 6, paragraph Water tariffs in all project governments of the Project towns, other than 3) towns have been increased Sihanoukville, to ensure that prior to 30 June 2000 in 2007, to cover O&M and the water tariff shall be adjusted initially to cover at provide cash for small least the cost of O&M of the waterworks, and investments and subsequently adjusted prior to Project completion to performance bonuses. cover the full cost of operations including O&M, depreciation and taxes while earning a minimum Tariffs will be increased return on investment of 2 percent per annum. further to cover depreciation and provide return on investment

8. The Borrower shall ensure that MIME shall (Supplementary Loan Partially complied with. have increased water tariffs on an annual basis Agreement, Schedule Tariffs have been between 1 January 2004 and 31 December 2006 in 4, paragraph 8). increased, but not to full the Project towns in order to achieve full cost cost recovery level. recovery of O&M and depreciation for the Project facilities by no later than 31 December 2006.

B. Cost Recovery Public Awareness Campaign

9. Except as otherwise agreed by the Bank, (Loan Agreement, Complied with - late. the Borrower shall cause MIME and MPWT to Schedule 6, paragraph ensure that the local governments of the Project 4) towns, with assistance from the consultants, conduct a public awareness campaign on cost recovery prior to 31 December 2000.

C. Classification of Municipal Assets

10. Except as otherwise agreed by the Bank, (Loan Agreement, No longer relevant; the the Borrower shall cause MPWT and the Schedule 6, paragraph. 5) Mission (Sep 2004) was Municipality of Sihanoukville to ensure that the informed that under the sewage treatment system constructed under the new government Project shall be classified as “municipal assets” by regulations (July 2004), applying to the Ministry of Economy and Finance assets will be automatically and the Ministry of Interior for such classification owned by the local prior to 31 December 2000. Except as otherwise governments if these are agreed by the Bank, the Borrower shall approve the constructed in local areas application by 31 December 2001. and for the benefit of local peoples.

26 Appendix 7

COVENANT REFERENCE IN STATUS OF LOAN AGREEMENT COMPLIANCE

11. Prior to 30 June 2004 the Borrower shall (Supplementary Loan Complied with. ensure that the Municipality of Sihanoukville has the Agreement, Schedule Outline of Action Plan for authority to administer the Sihanoukville waste water 4, paragraph 8) Establishment of Legal management system and collect fees from the Wastewater Management beneficiaries of the wastewater treatment system. entity was prepared. The Borrower shall ensure that the Municipality of Sihanoukville establishes an earmarked account into The Government of which all funds collected from the use of the Cambodia agreed to give Sihanoukville waste water management system two years trail to SSWTPU shall be deposited and all funds so collected shall be operate under used solely for the Sihanoukville waste water Sihanoukville Department management system. The Borrower shall ensure of Public Works and that any shortfall between the revenues received as Transport with support of result of managing the wastewater system and the MEF for the financial wastewater system’s O&M expense shall be met shortage from the Municipality of Sihanoukville budget.

12. The Borrower, by no later than two (2) (Supplemental Loan Complied with - late years after the Effective Date, shall make a decision Agreement, Schedule The Cambodian with regard to establishing a state owned 4, para. 5) government agreed to 2 autonomous enterprise to manage the Sihanoukville years trail of the agency wastewater management system, taking into operating under account, among other things, the sustainability of Sihanoukville Department such an enterprise.. of Public Works and Transport with the authorization of collecting fees and use for O&M expense of the system. Any shortfall arising will be supported by MEF. The agency will become autonomous enterprise after 2 years sustainable operation.

D. Mobilization of Local Financial Resource and Other Assistance

13. The Borrower shall ensure that the (Loan Agreement, Partly complied with. Municipality of Sihanoukville (i) prepares, prior to 30 Schedule 6, paragraph The organizational chart June 2001, a time-bound action plan acceptable to 6) and staff appointment of the Bank for mobilizing local financial resources; and the wastewater (ii) implements such action plan upon receiving management division was approval from the Council of Ministers. Except as approved by Minister of otherwise agreed by the Bank, the Borrower shall MPWT on 30 December ensure that the funds collected through these 2004 and 3 February 2005, measures are deposited in a special O&M account respectively; and used only for the O&M of the sewage treatment MEF signed on 17 Nov facilities. The special O&M account shall be subject 2006 the Inter-ministerial to auditing under the Project. declaration (Prakas) on the connection and user fees. Special O&M account has been set up.

Appendix 7 27

COVENANT REFERENCE IN STATUS OF LOAN AGREEMENT COMPLIANCE

14. The Borrower shall ensure that, prior to 31 (Supplementary Loan Partially complied with. December 2004, the MPWT and the Municipality of Agreement, Schedule 4, Tariff schedule established Sihanoukville shall have approved a wastewater paragraph 6). and put into operation. tariff schedule to be put into effect upon However, full cost recovery commissioning of the wastewater system en which will not be achieved due to tariffs shall be annually increased during the period low connection rate. 2006 through 2009 so as to achieve full cost recovery of O&M and depreciation for the Project facilities by no later than 31 December 2009.

15. Prior to 31 December 2004 the Borrower (Supplementary Loan Complied with - late shall ensure that MPWT and the Municipality of Agreement, Schedule 4, Sihanoukville implement a connection fee schedule, paragraph 7). to be agreed upon with the Bank, for the Project facilities in Sihanoukville, and that the fee schedule provides cross subsidies from industrial and commercial beneficiaries to low income households.

28 Appendix 8

CONSULTING SERVICES INPUTS

At Appraisal Actual Scope Person-Months Person-Months International Local Total International Local Total Project Management Support (MIME & MPWT) Project Management Specialist 8 8 - - Financial Accounting Specialist 8 8 - - Subtotal 16 16 - - Parts A and B (MIME) Team Leader/Water Supply Expert 38 21.83 21.83 Design Engineer (Water Treatment) 9 5.00 5.00 Team Leader/Construction Supervision 29.30 29.30 Team Leader/Contract Expert 2.51 2.51 Water Supply Design Engineer 30 30 61.03 61.03 Structural Engineer 2.00 2.00 Electrical and Mechanical Engineer 4 4 1.40 3.00 4.40 Construction Engineers (2 to 4) 72 72 182.50 182.50 Surveyors/Drafters 22 22 21.97 21.97 Community Sanitation Specialist 9 9 9.07 9.07 Subtotal 56 128 184 71.11 268.50 339.61 Parts C, and D (MPWT) Team Leader/Environmental Engineer 32 9.00 9.00 Chief Resident Engineer - 48.07 48.07 Wastewater Treatment Specialist 4 3.86 2.00 5.86 Geotechnical Engineer 1 2 1.00 2.00 3.00 Institutional Specialist 3 2 5.00 16.00 21.00 Institutional Devt and Capacity Building 2.00 Legal Expert 2 4 3.0 4.00 7.00 Municipal Tax Specialist 6 - - Municipal Cadastral Expert 4 4 2.60 2.26 4.86 Property Evaluation Expert 4 2.00 - 2.00 Resource Mobilization Specialist 4.00 - 4.00 Civil/Environmental Design Engineer 12 37.20 37.20 Resettlement Specialists 0.23 0.83 1.06 BME Specialist 4.00 Structural Engineer 1 5.00 5.00 Construction Engineers (from 2 to 3) 36 86.37 86.37 Accounting/Finance 6 19.30 19.30 Sociologist 2 5.00 5.00 Surveyors/drafters 15 21.00 21.00 Subtotal 56 84 140 78.76 206.96 285.72 Total 128 212 340 149.87 475.46 625.33 BME = benefit monitoring and evaluation, MIME = Ministry of Industry, Mines and Energy, MPWT = Ministry of Public works and Transport. Source: Asian Development Bank.

Appendix 9 29

ECONOMIC AND FINANCIAL EVALUATION

A. General

1. Economic analyses were undertaken for the proposed improvements in the water supply systems in six subproject towns during appraisal in 1999. A reevaluation was done in 2003 due to significant cost increases and the subsequent required supplementary loan. For the project completion review, the economic internal rate of return (EIRRs) for each subproject was recalculated using current data. The methodology applied for the reevaluation was similar to that undertaken at appraisal and follows Asian Development Bank's (ADB’s) guidelines for financial and economic analysis, as well as its framework for appraising urban development projects.1

2. Similarly, the financial internal rate of return (FIRRs), one of the major indicators of financial viability, was reevaluated for each subproject, with a focus on assessing the financial sustainability of the operations of the six water supply systems at project completion. This was done in accordance with the appropriate ADB guidelines.2 The project cost, water tariff level, operating cost, revenue, and financing plan of each subproject were updated, based on the financial reports gathered during the project completion review mission.

B. Major Assumptions

3. The methodology and assumptions used for the economic and financial evaluation of the subprojects generally followed those used in the feasibility studies for those subprojects. The quantifiable economic benefits from improved water supply include non-incremental water consumption, valued at the current average price of water; and incremental water consumption, valued at the average demand price of water per cubic meter. Costs and benefits were measured at border price equivalent values, using domestic price numeraire, and were expressed in 2008 constant prices in Cambodian riels. The project life of each component was assumed to be 30 years with no salvage value assumed thereafter. The economic opportunity cost of capital (EOCC) was assumed to be 12%, while the weighted average cost of capital (WACC) was set at 5%.

4. The assessment of past financial performance was based on the financial statements provided by the six subproject towns for 2004 to 2007. Projected income statements and cash flows were calculated to assess the future financial performance

C. Economic Analysis

5. The economic costs of capital works are computed from the actual disbursements for the Project during the implementation period with the following adjustments: (i) taxes, duties and subsidies are excluded; (ii) tradable input is valued at the domestic price numeraire using a shadow exchange rate factor of 1.11; (iii) unskilled labor is subjected to a shadow price of 0.65 of the market price to reflect the level of underemployment of unskilled labor in the country; and (iv) land is valued at the market price, which is considered to best reflect its opportunity cost. It is further assumed that the economic life of the project will be 30 years (2002 to 2031), after which all project assets are assigned a zero salvage value.

1 ADB. 2005. Financial Management and Analysis of Projects. Manila; ADB. 1997. Guidelines for the Economic Analysis of Projects. Manila; ADB. 1994. Framework for the Economic and Financial Appraisal of Urban Development Sector Projects. Manila. 2 ADB. 2002. Guidelines for the Financial Governance and Management of Investment Projects Financed by ADB. Manila.

30 Appendix 9

6. The appraisal report showed that all households including those with piped connections in the six subproject towns used a variety of sources of water throughout the year because of limited supply from the existing systems. The construction of the subprojects will remove the water supply limitations and enable more households to be connected with reliable and stable piped water supply.

7. Apart from society obtaining water at a lower cost under the Project, which by itself will induce more water consumption, the Project is also likely to result in greater quantities of water being used per capita (incremental water). The benefit of the additional water available is equivalent to the willingness to pay for an improved water supply as reflected in the water tariffs and connection charges.

The EIRRs in the five project towns varied as follows: (i) at appraisal, the EIRRs were estimated to range from 15.6% to 34.6%; (ii) during reappraisal, from 14.7% to 23.9%; and (iii) as recalculated for the project completion review, from 12.1% to 16.1% (Table A9.1).The recalculated EIRRs are lower than those estimated at appraisal primarily because of the increased project costs, and decreased water consumption and number of service connections.

Table A9.1: Comparative Economic Internal Rates of Return for Subproject Towns

Subproject Towns Project Appraisal (%) Reappraisal (%) Project Completion (%) Battambang 15.6 17.1 13.3 Kampot 25.0 23.9 13.8 Kompong Cham 34.6 22.7 16.1 Kompong Thom 16.6 15.5 12.1 Pursat 20.2 15.4 14.9 Svay Rieng 15.9 14.7 12.2 Source: Asian Development Bank.

D. Financial Analysis

8. Financial analysis establishes the financial status of the individual subproject system. Financial projections were undertaken for each subproject town on a stand-alone basis. The subproject towns prepare annual income statements and balance sheets together with their annual budget requirements. Depreciation is provided for in the accounts of two of the subprojects (Battambang and Kompong Cham).

9. Actual capital costs were incorporated in the analyses based on actual project disbursements incurred from 2002 to 2004. The actual operating and maintenance expenses from 2004 to 2007 were provided by each of the project towns. Operations and maintenance costs include expenses for personnel, electricity, chemicals, administration and other operating expenses. Electricity expenses include the costs of electricity directly required for the production of water. Expenses for electricity and chemicals are assumed to increase in direct proportion to the increase in the volume of water produced, plus an annual inflation factor.

10. The number of personnel varies between 5 and 17 employees per 1,000 connections. Battambang appears to be the most cost efficient at 5 staff per 1,000 connections; KampongThom (14 staff/1000 connections) and Svay Rieng (17 staff/1,000 connections) have the highest staff to connections ratios.

11. Service coverage of the six subproject towns varies as follows: 25% population coverage in Battambang and Svay Rieng; 29% in Kompong Thom; 30% in Kompot; 47% in Pursat; and 55% in

Appendix 9 31

Kompong Cham. Water is reportedly available 24 hours/day except in Battambang, where service is limited to an average of 19 hours/day. This is a significant improvement from the availability prior to completion of the subprojects (4 to 7 hours/day).

12. The proportion of nonrevenue water (NRW) has likewise improved significantly following completion of the Project. NRW decreased in most of the subproject towns: Battambang, from 45% to 35%; Kompong Cham, from 44% to 20%; Kompong Thom, from 35% to 26%; Kompot, from 52 % to 35%; and in Svay Rieng, from 36% to 25%. The only increase was in Pursat (NRW increased from 24% to 29%).

13. The FIRRs for the subproject towns are summarized in Table 1. All six subprojects were found to be still financially viable, with FIRRs (ranging from 5.3% to 7.5%) all above the WACC.

Table A9.2: Comparative FIRR Results for Subproject Towns

Subproject Towns Project Appraisal (%) Reappraisal (%) Project Completion (%) Battambang 6.6 6.7 5.4 Kampot 4.5 3.3 7.5 Kompong Cham 9.5 7.8 6.7 Kompong Thom 4.4 7.9 5.4 Pursat 5.5 5.8 5.5 Svay Rieng 4.2 6.0 5.3 Source: Asian Development Bank.

E. Affordability Analysis

14. Revisions in water tariffs during 2006 and 2007 have significantly increased the monthly water bills of domestic users. Water tariffs typically account for 3.2% to 4.7% of average monthly household income, and thus fall within the acceptable rate of 5% of household income. The sole exception is Kompot, where the tariff equals 6.2% of monthly income. The higher rate in Kompot is apparently due to a higher tariff and higher per capita consumption. Details are presented in Table A9.3.

Table A9.3: Affordability of Water Tariffs to Domestic Users

Battambang Kompong Kompong Kompot Pursat Svay Rieng Cham Thom Average number of persons 5 7 5 5 5 5 per connection Per capita consumption 126 107 129 179 125 127 (lpcd) Average monthly water 18.9 22.5 19.4 26.8 18.7 19.0 consumption per connection (m3/month) Average tariff (KR/m3) 1,500 862 1,300 1,400 1,300 1,200 Average monthly water bill 28,382 19,349 25,096 37,561 24,328 22,800 per connection (KR/month) Average household income 602,000 602,000 602,000 602,000 602,000 602,000 (KR/month) Percentage of monthly 4.7 3.2 4.2 6.2 4.0 3.8 household income Source: Asian Development Bank.

Table A9.4: Battambang Economic Analysis

(KR million) 9 Appendix Economic Cost Water Consumed Gross Benefits Year Investment Non- Non- Net Benefit O&M Total Incremental Incremental Total Cost Incremental Incremental

2002 5,265 5,265 (5,265.00) 2003 5,265 5,265 (5,265.00) 2004 1,073 1,073 - 758,965 - 1,063 1,063 (10.29) 2005 1,200 1,200 86,926 758,965 122 1,063 1,184 (15.32) 2006 763 763 406,805 758,965 570 1,063 1,632 868.68 2007 2,295 2,295 1,001,423 758,965 1,502 1,138 2,641 345.74 2008 2,295 2,295 1,101,565 758,965 1,652 1,138 2,791 495.96 2009 2,295 2,295 1,211,722 758,965 1,818 1,138 2,956 661.19 2010 2,295 2,295 1,332,894 758,965 1,999 1,138 3,138 842.95 2011 2,295 2,295 1,466,183 758,965 2,199 1,138 3,338 1,042.88 2012 2,295 2,295 1,612,802 758,965 2,419 1,138 3,558 1,262.81 2013 2,295 2,295 1,774,082 758,965 2,661 1,138 3,800 1,504.73 2014 2,295 2,295 1,951,490 758,965 2,927 1,138 4,066 1,770.84 2015 2,295 2,295 2,146,639 758,965 3,220 1,138 4,358 2,063.57 2016 2,295 2,295 2,361,303 758,965 3,542 1,138 4,680 2,385.56 2017 2,295 2,295 2,597,433 758,965 3,896 1,138 5,035 2,739.76 2018 2,295 2,295 2,857,177 758,965 4,286 1,138 5,424 3,129.37 2019 2,295 2,295 3,142,894 758,965 4,714 1,138 5,853 3,557.95 2020 2,295 2,295 3,457,184 758,965 5,186 1,138 6,324 4,029.38 2021 2,295 2,295 3,802,902 758,965 5,704 1,138 6,843 4,547.96 2022 2,295 2,295 4,183,192 758,965 6,275 1,138 7,413 5,118.40 2023 2,295 2,295 4,601,512 758,965 6,902 1,138 8,041 5,745.87 2024 2,295 2,295 5,061,663 758,965 7,592 1,138 8,731 6,436.10 2025 2,295 2,295 5,567,829 758,965 8,352 1,138 9,490 7,195.35 2026 2,295 2,295 6,124,612 758,965 9,187 1,138 10,325 8,030.53 2027 2,295 2,295 6,737,073 758,965 10,106 1,138 11,244 8,949.22 2028 2,295 2,295 7,410,780 758,965 11,116 1,138 12,255 9,959.78 2029 2,295 2,295 8,151,859 758,965 12,228 1,138 13,366 11,071.40 2030 2,295 2,295 8,967,044 758,965 13,451 1,138 14,589 12,294.17 2031 2,295 2,295 9,863,749 758,965 14,796 1,138 15,934 13,639.23 Economic Internal Rate of Return (EIRR) 13.3% O&M = operation and maintenance. Source: Asian Development Bank.

Table A9.5: Kompong Cham Economic Analysis (KR million) Economic Cost Water Consumed Gross Benefits Year Investment Non- Non- Net Benefit O&M Total Incremental Incremental Total Cost Incremental Incremental 2002 3,107 3,107 (3,107.00) 2003 3,107 3,107 (3,107.00) 2004 268 268 - 348,226 - 192 192 (75.98) 2005 273 273 9,030 348,226 5 192 196 (76.80) 2006 325 325 151,411 348,226 111 256 367 42.64 2007 552 552 528,161 348,226 455 300 755 203.38 2008 552 552 607,385 348,226 524 300 824 271.67 2009 552 552 698,493 348,226 602 300 902 350.21 2010 552 552 803,267 348,226 692 300 993 440.52 2011 552 552 923,757 348,226 796 300 1,096 544.38 2012 552 552 1,062,320 348,226 916 300 1,216 663.83 2013 552 552 1,221,668 348,226 1,053 300 1,353 801.18 2014 552 552 1,404,919 348,226 1,211 300 1,511 959.15 2015 552 552 1,615,657 348,226 1,393 300 1,693 1,140.80 2016 552 552 1,858,005 348,226 1,602 300 1,902 1,349.71 2017 552 552 2,136,706 348,226 1,842 300 2,142 1,589.95 2018 552 552 2,457,212 348,226 2,118 300 2,418 1,866.22 2019 552 552 2,825,793 348,226 2,436 300 2,736 2,183.94 2020 552 552 3,249,662 348,226 2,801 300 3,101 2,549.31 2021 552 552 3,737,112 348,226 3,221 300 3,522 2,969.50 2022 552 552 4,297,679 348,226 3,705 300 4,005 3,452.70 2023 552 552 4,942,330 348,226 4,260 300 4,560 4,008.39 2024 552 552 5,683,680 348,226 4,899 300 5,200 4,647.44

2025 552 552 6,536,232 348,226 5,634 300 5,934 5,382.34 9 Appendix 2026 552 552 7,516,667 348,226 6,479 300 6,780 6,227.47 2027 552 552 8,644,167 348,226 7,451 300 7,751 7,199.38 2028 552 552 9,940,792 348,226 8,569 300 8,869 8,317.07 2029 552 552 11,431,911 348,226 9,854 300 10,154 9,602.41 33 2030 552 552 13,146,697 348,226 11,332 300 11,633 11,080.56 2031 552 552 15,118,702 348,226 13,032 300 13,332 12,780.43

Economic Internal Rate of Return (EIRR) 13.6% O&M = operation and maintenance. Source: Asian Development Bank.

Table A9.6: Kompong Thom Economic Analysis

(KR million) 9 Appendix Economic Cost Water Consumed Gross Benefits Year Investment Non- Non- Net Benefit O&M Total Incremental Incremental Total Cost Incremental Incremental

2002 2,795 2,795 (2,795.00) 2003 2,795 2,795 (2,795.00) 2004 183 183 - 181,534 - 182 182 (1.95) 2005 269 269 15,452 181,534 15 182 197 (71.87) 2006 358 358 126,515 181,534 139 200 339 (19.57) 2007 557 557 191,683 181,534 249 236 485 (72.05) 2008 557 557 226,186 181,534 294 236 530 (27.19) 2009 557 557 266,899 181,534 347 236 583 25.73 2010 557 557 314,941 181,534 409 236 645 88.19 2011 557 557 371,631 181,534 483 236 719 161.88 2012 557 557 438,524 181,534 570 236 806 248.84 2013 557 557 517,459 181,534 673 236 909 351.46 2014 557 557 610,601 181,534 794 236 1,030 472.54 2015 557 557 720,509 181,534 937 236 1,173 615.43 2016 557 557 850,201 181,534 1,105 236 1,341 784.02 2017 557 557 1,003,237 181,534 1,304 236 1,540 982.97 2018 557 557 1,183,820 181,534 1,539 236 1,775 1,217.73 2019 557 557 1,396,908 181,534 1,816 236 2,052 1,494.74 2020 557 557 1,648,351 181,534 2,143 236 2,379 1,821.62 2021 557 557 1,945,054 181,534 2,529 236 2,765 2,207.33 2022 557 557 2,295,164 181,534 2,984 236 3,220 2,662.48 2023 557 557 2,708,293 181,534 3,521 236 3,757 3,199.54 2024 557 557 3,195,786 181,534 4,155 236 4,391 3,833.29 2025 557 557 3,771,028 181,534 4,902 236 5,138 4,581.10 2026 557 557 4,449,813 181,534 5,785 236 6,021 5,463.52 2027 557 557 5,250,779 181,534 6,826 236 7,062 6,504.78 2028 557 557 6,195,919 181,534 8,055 236 8,291 7,733.46 2029 557 557 7,311,185 181,534 9,505 236 9,741 9,183.30 2030 557 557 8,627,198 181,534 11,215 236 11,451 10,894.12 2031 557 557 10,180,094 181,534 13,234 236 13,470 12,912.89

Economic Internal Rate of Return (EIRR) 12.1% O&M = operation and maintenance. Source: Asian Development Bank.

Table A9.7: Kompot Economic Analysis (KR million) Economic Cost Water Consumed Gross Benefits Year Investment Non- Non- Net Benefit O&M Total Incremental Incremental Total Cost Incremental Incremental 2002 3,575 3,575 (3,575.00) 2003 3,575 3,575 (3,575.00) 2004 770 770 - 595,851 - 715 715 (55.02) 2005 770 770 - 595,851 - 715 715 (55.02) 2006 831 831 31,070 595,851 37 715 752 (78.75) 2007 850 850 235,237 595,851 329 834 1,164 313.66 2008 850 850 277,580 595,851 389 834 1,223 372.94 2009 850 850 327,544 595,851 459 834 1,293 442.89 2010 850 850 386,502 595,851 541 834 1,375 525.43 2011 850 850 456,072 595,851 639 834 1,473 622.83 2012 850 850 538,165 595,851 753 834 1,588 737.76 2013 850 850 635,035 595,851 889 834 1,723 873.38 2014 850 850 749,341 595,851 1,049 834 1,883 1,033.41 2015 850 850 884,223 595,851 1,238 834 2,072 1,222.24 2016 850 850 1,043,383 595,851 1,461 834 2,295 1,445.07 2017 850 850 1,231,192 595,851 1,724 834 2,558 1,708.00 2018 850 850 1,452,806 595,851 2,034 834 2,868 2,018.26 2019 850 850 1,714,311 595,851 2,400 834 3,234 2,384.37 2020 850 850 2,022,887 595,851 2,832 834 3,666 2,816.37 2021 850 850 2,387,007 595,851 3,342 834 4,176 3,326.14 2022 850 850 2,816,669 595,851 3,943 834 4,778 3,927.67 2023 850 850 3,323,669 595,851 4,653 834 5,487 4,637.47 2024 850 850 3,921,929 595,851 5,491 834 6,325 5,475.03

2025 850 850 4,627,877 595,851 6,479 834 7,313 6,463.36 9 Appendix 2026 850 850 5,460,894 595,851 7,645 834 8,479 7,629.58 2027 850 850 6,443,855 595,851 9,021 834 9,856 9,005.73 2028 850 850 7,603,749 595,851 10,645 834 11,479 10,629.58 2029 850 850 8,972,424 595,851 12,561 834 13,396 12,545.73 35 2030 850 850 10,587,460 595,851 14,822 834 15,657 14,806.78 2031 850 850 12,493,203 595,851 17,490 834 18,325 17,474.82

Economic Internal Rate of Return (EIRR) 13.8% O&M = operation and maintenance. Source: Asian Development Bank.

Table A9:8: Pursat Economic Analysis 9 Appendix (KR million) Economic Cost Water Consumed Gross Benefits Year Investment Non- Non- Net Benefit O&M Total Incremental Incremental Total Cost Incremental Incremental 2002 3,588 3,588 (3,588.00) 2003 3,588 3,588 (3,588.00) 2004 168 168 - 184,746 - 148 148 (20.36) 2005 209 209 35,229 184,746 28 148 176 (32.84) 2006 332 332 106,920 184,746 139 240 379 47.45 2007 682 682 370,120 184,746 481 240 721 38.83 2008 682 682 436,742 184,746 568 240 808 125.44 2009 682 682 515,355 184,746 670 240 910 227.63 2010 682 682 608,119 184,746 791 240 1,031 348.23 2011 682 682 717,580 184,746 933 240 1,173 490.53 2012 682 682 846,745 184,746 1,101 240 1,341 658.44 2013 682 682 999,159 184,746 1,299 240 1,539 856.58 2014 682 682 1,179,008 184,746 1,533 240 1,773 1,090.38 2015 682 682 1,391,229 184,746 1,809 240 2,049 1,366.27 2016 682 682 1,641,650 184,746 2,134 240 2,374 1,691.82 2017 682 682 1,937,147 184,746 2,518 240 2,758 2,075.96 2018 682 682 2,285,834 184,746 2,972 240 3,212 2,529.26 2019 682 682 2,697,284 184,746 3,506 240 3,747 3,064.14 2020 682 682 3,182,795 184,746 4,138 240 4,378 3,695.31 2021 682 682 3,755,698 184,746 4,882 240 5,123 4,440.08 2022 682 682 4,431,724 184,746 5,761 240 6,001 5,318.91 2023 682 682 5,229,434 184,746 6,798 240 7,038 6,355.94 2024 682 682 6,170,732 184,746 8,022 240 8,262 7,579.62 2025 682 682 7,281,464 184,746 9,466 240 9,706 9,023.58 2026 682 682 8,592,127 184,746 11,170 240 11,410 10,727.44 2027 682 682 10,138,710 184,746 13,180 240 13,420 12,738.00 2028 682 682 11,963,678 184,746 15,553 240 15,793 15,110.45 2029 682 682 14,117,140 184,746 18,352 240 18,592 17,909.95 2030 682 682 16,658,225 184,746 21,656 240 21,896 21,213.37 2031 682 682 19,656,705 184,746 25,554 240 25,794 25,111.39

Economic Internal Rate of Return (EIRR) 14.9% O&M = operation and maintenance. Source: Asian Development Bank.

Table A9:8: Pursat Economic Analysis (KR million) Economic Cost Water Consumed Gross Benefits Year Investment Non- Non- Net Benefit O&M Total Incremental Incremental Total Cost Incremental Incremental 2002 3,588 3,588 (3,588.00) 2003 3,588 3,588 (3,588.00) 2004 168 168 - 184,746 - 148 148 (20.36) 2005 209 209 35,229 184,746 28 148 176 (32.84) 2006 332 332 106,920 184,746 139 240 379 47.45 2007 682 682 370,120 184,746 481 240 721 38.83 2008 682 682 436,742 184,746 568 240 808 125.44 2009 682 682 515,355 184,746 670 240 910 227.63 2010 682 682 608,119 184,746 791 240 1,031 348.23 2011 682 682 717,580 184,746 933 240 1,173 490.53 2012 682 682 846,745 184,746 1,101 240 1,341 658.44 2013 682 682 999,159 184,746 1,299 240 1,539 856.58 2014 682 682 1,179,008 184,746 1,533 240 1,773 1,090.38 2015 682 682 1,391,229 184,746 1,809 240 2,049 1,366.27 2016 682 682 1,641,650 184,746 2,134 240 2,374 1,691.82 2017 682 682 1,937,147 184,746 2,518 240 2,758 2,075.96 2018 682 682 2,285,834 184,746 2,972 240 3,212 2,529.26 2019 682 682 2,697,284 184,746 3,506 240 3,747 3,064.14 2020 682 682 3,182,795 184,746 4,138 240 4,378 3,695.31 2021 682 682 3,755,698 184,746 4,882 240 5,123 4,440.08 2022 682 682 4,431,724 184,746 5,761 240 6,001 5,318.91 2023 682 682 5,229,434 184,746 6,798 240 7,038 6,355.94 2024 682 682 6,170,732 184,746 8,022 240 8,262 7,579.62

2025 682 682 7,281,464 184,746 9,466 240 9,706 9,023.58 9 Appendix 2026 682 682 8,592,127 184,746 11,170 240 11,410 10,727.44 2027 682 682 10,138,710 184,746 13,180 240 13,420 12,738.00 2028 682 682 11,963,678 184,746 15,553 240 15,793 15,110.45

2029 682 682 14,117,140 184,746 18,352 240 18,592 17,909.95 37 2030 682 682 16,658,225 184,746 21,656 240 21,896 21,213.37 2031 682 682 19,656,705 184,746 25,554 240 25,794 25,111.39

Economic Internal Rate of Return (EIRR) 14.9% O&M = operation and maintenance. Source: Asian Development Bank.

38 Appendix 9

Table A9.10: Battambang Financial Analysis (KR million) Financial Cost Financial Year Investment Net Revenue O&M Total Revenue Cost 2002 8,100.00 8,100.00 (8,100.00) 2003 8,100.00 8,100.00 (8,100.00) 2004 1,072.84 1,072.84 1,077 3.99 2005 1,199.57 1,199.57 1,217 17.78 2006 763.40 763.40 1,603 839.99 2007 2,294.84 2,294.84 2,661 365.74 2008 2,363.69 2,363.69 2,794 429.92 2009 2,434.60 2,434.60 2,933 498.69 2010 2,507.63 2,507.63 3,080 572.32 2011 2,582.86 2,582.86 3,234 651.09 2012 2,660.35 2,660.35 3,396 735.30 2013 2,740.16 2,740.16 3,565 825.27 2014 2,822.36 2,822.36 3,744 921.34 2015 2,907.03 2,907.03 3,931 1,023.85 2016 2,994.25 2,994.25 4,127 1,133.19 2017 3,084.07 3,084.07 4,334 1,249.73 2018 3,176.60 3,176.60 4,550 1,373.90 2019 3,271.89 3,271.89 4,778 1,506.13 2020 3,370.05 3,370.05 5,017 1,646.87 2021 3,471.15 3,471.15 5,268 1,796.62 2022 3,575.29 3,575.29 5,531 1,955.87 2023 3,682.54 3,682.54 5,808 2,125.17 2024 3,793.02 3,793.02 6,098 2,305.08 2025 3,906.81 3,906.81 6,403 2,496.19 2026 4,024.02 4,024.02 6,723 2,699.14 2027 4,144.74 4,144.74 7,059 2,914.57 2028 4,269.08 4,269.08 7,412 3,143.20 2029 4,397.15 4,397.15 7,783 3,385.74 2030 4,529.07 4,529.07 8,172 3,642.97 2031 4,664.94 4,664.94 8,581 3,915.70

Financial Economic Internal Rate of Return (FIRR) 5.4% O&M = operation and maintenance. Source: Asian Development Bank.

Appendix 9 39

Table A9.11: Kompong Cham Financial Analysis (KR million) Financial Cost Financial Year Investment Net Revenue O&M Total Revenue Cost 2002 4,780.00 4,780.00 (4,780.00) 2003 4,780.00 4,780.00 (4,780.00) 2004 267.50 267.50 315 47.94 2005 273.29 273.29 271 (2.31) 2006 324.59 324.59 371 46.78 2007 552.07 552.07 757 205.06 2008 568.63 568.63 818 249.07 2009 585.69 585.69 883 297.43 2010 603.26 603.26 954 350.51 2011 621.35 621.35 1,030 408.71 2012 639.99 639.99 1,112 472.47 2013 659.19 659.19 1,201 542.27 2014 678.97 678.97 1,298 618.61 2015 699.34 699.34 1,401 702.05 2016 720.32 720.32 1,514 793.18 2017 741.93 741.93 1,635 892.65 2018 764.19 764.19 1,765 1,001.16 2019 787.11 787.11 1,907 1,119.46 2020 810.73 810.73 2,059 1,248.37 2021 835.05 835.05 2,224 1,388.78 2022 860.10 860.10 2,402 1,541.64 2023 885.90 885.90 2,594 1,707.97 2024 912.48 912.48 2,801 1,888.90 2025 939.85 939.85 3,025 2,085.64 2026 968.05 968.05 3,268 2,299.48 2027 997.09 997.09 3,529 2,531.85 2028 1,027.00 1,027.00 3,811 2,784.25 2029 1,057.81 1,057.81 4,116 3,058.34 2030 1,089.55 1,089.55 4,445 3,355.89 2031 1,122.23 1,122.23 4,801 3,678.84

Financial Economic Internal Rate of Return (FIRR) 6.7% O&M = operation and maintenance. Source: Asian Development Bank.

40 Appendix 9

Table A9.12: Kompong Thom Financial Analysis (KR million) Financial Cost Financial Year Investment Net Revenue O&M Total Revenue Cost 2002 4,300.00 4,300.00 (4,300.00) 2003 4,300.00 4,300.00 (4,300.00) 2004 183.48 183.48 192 8.99 2005 268.85 268.85 216 (53.13) 2006 358.43 358.43 360 1.94 2007 557.23 557.23 640 82.66 2008 573.95 573.95 691 117.14 2009 591.17 591.17 746 155.20 2010 608.90 608.90 806 197.18 2011 627.17 627.17 871 243.40 2012 645.98 645.98 940 294.23 2013 665.36 665.36 1,015 350.07 2014 685.32 685.32 1,097 411.34 2015 705.88 705.88 1,184 478.51 2016 727.06 727.06 1,279 552.09 2017 748.87 748.87 1,381 632.61 2018 771.34 771.34 1,492 720.66 2019 794.48 794.48 1,611 816.88 2020 818.31 818.31 1,740 921.95 2021 842.86 842.86 1,879 1,036.63 2022 868.15 868.15 2,030 1,161.70 2023 894.19 894.19 2,192 1,298.04 2024 921.02 921.02 2,368 1,446.60 2025 948.65 948.65 2,557 1,608.37 2026 977.11 977.11 2,762 1,784.48 2027 1,006.42 1,006.42 2,983 1,976.09 2028 1,036.61 1,036.61 3,221 2,184.50 2029 1,067.71 1,067.71 3,479 2,411.09 2030 1,099.74 1,099.74 3,757 2,657.36 2031 1,132.74 1,132.74 4,058 2,924.94

Financial Economic Internal Rate of Return (FIRR) 5.4% O&M = operation and maintenance. Source: Asian Development Bank.

Appendix 9 41

Table A9.13: Pursat Financial Analysis (KR million) Financial Cost Financial Year Investment Net Revenue O&M Total Revenue Cost 2002 5,520.00 5,520.00 (5,520.00) 2003 5,520.00 5,520.00 (5,520.00) 2004 168.16 168.16 162 (6.40) 2005 208.82 208.82 193 (16.24) 2006 331.72 331.72 308 (23.96) 2007 682.50 682.50 799 116.32 2008 702.97 702.97 863 159.75 2009 724.06 724.06 932 207.68 2010 745.78 745.78 1,006 260.50 2011 768.16 768.16 1,087 318.63 2012 791.20 791.20 1,174 382.53 2013 814.94 814.94 1,268 452.69 2014 839.38 839.38 1,369 529.65 2015 864.57 864.57 1,479 613.99 2016 890.50 890.50 1,597 706.34 2017 917.22 917.22 1,725 807.37 2018 944.73 944.73 1,863 917.82 2019 973.08 973.08 2,012 1,038.49 2020 1,002.27 1,002.27 2,172 1,170.22 2021 1,032.34 1,032.34 2,346 1,313.95 2022 1,063.31 1,063.31 2,534 1,470.68 2023 1,095.21 1,095.21 2,737 1,641.50 2024 1,128.06 1,128.06 2,956 1,827.58 2025 1,161.90 1,161.90 3,192 2,030.19 2026 1,196.76 1,196.76 3,447 2,250.70 2027 1,232.66 1,232.66 3,723 2,490.60 2028 1,269.64 1,269.64 4,021 2,751.48 2029 1,307.73 1,307.73 4,343 3,035.08 2030 1,346.97 1,346.97 4,690 3,343.27 2031 1,387.37 1,387.37 5,065 3,678.08

Financial Economic Internal Rate of Return (FIRR) 5.4% O&M = operation and maintenance. Source: Asian Development Bank.

42 Appendix 9

Table 9A.14: Kompot Financial Analysis (KR million) Financial Cost Financial Year Investment Net Revenue O&M Total Revenue Cost 2002 5,500.00 5,500.00 (5,500.00) 2003 5,500.00 5,500.00 (5,500.00) 2004 770.04 770.04 759 (11.46) 2005 770.04 770.04 759 (11.46) 2006 831.06 831.06 816 (15.47) 2007 849.86 849.86 1,085 235.12 2008 875.36 875.36 1,172 296.42 2009 901.62 901.62 1,266 363.90 2010 928.66 928.66 1,367 438.10 2011 956.52 956.52 1,476 519.58 2012 985.22 985.22 1,594 608.97 2013 1,014.78 1,014.78 1,722 706.95 2014 1,045.22 1,045.22 1,859 814.24 2015 1,076.58 1,076.58 2,008 931.65 2016 1,108.87 1,108.87 2,169 1,060.01 2017 1,142.14 1,142.14 2,342 1,200.25 2018 1,176.40 1,176.40 2,530 1,353.38 2019 1,211.70 1,211.70 2,732 1,520.47 2020 1,248.05 1,248.05 2,951 1,702.69 2021 1,285.49 1,285.49 3,187 1,901.31 2022 1,324.05 1,324.05 3,442 2,117.69 2023 1,363.78 1,363.78 3,717 2,353.30 2024 1,404.69 1,404.69 4,014 2,609.76 2025 1,446.83 1,446.83 4,336 2,888.77 2026 1,490.23 1,490.23 4,682 3,192.21 2027 1,534.94 1,534.94 5,057 3,522.10 2028 1,580.99 1,580.99 5,462 3,880.62 2029 1,628.42 1,628.42 5,899 4,270.12 2030 1,677.27 1,677.27 6,370 4,693.15 2031 1,727.59 1,727.59 6,880 5,152.46

Financial Economic Internal Rate of Return (FIRR) 7.5% O&M = operation and maintenance. Source: Asian Development Bank.

Appendix 9 43

Table A9.15: Svay Rieng Financial Analysis (KR million) Financial Cost Financial Year Investment Net Revenue O&M Total Revenue Cost 2002 4,500.00 4,500.00 (4,500.00) 2003 4,500.00 4,500.00 (4,500.00) 2004 65.12 65.12 51 (13.90) 2005 74.90 74.90 56 (18.45) 2006 128.44 128.44 71 (57.67) 2007 219.44 219.44 274 54.43 2008 226.03 226.03 307 80.71 2009 232.81 232.81 344 110.74 2010 239.79 239.79 385 144.98 2011 246.98 246.98 431 183.96 2012 254.39 254.39 483 228.27 2013 262.03 262.03 541 278.55 2014 269.89 269.89 605 335.56 2015 277.98 277.98 678 400.12 2016 286.32 286.32 759 473.15 2017 294.91 294.91 851 555.70 2018 303.76 303.76 953 648.93 2019 312.87 312.87 1,067 754.14 2020 322.26 322.26 1,195 872.79 2021 331.93 331.93 1,338 1,006.53 2022 341.88 341.88 1,499 1,157.19 2023 352.14 352.14 1,679 1,326.82 2024 362.71 362.71 1,880 1,517.73 2025 373.59 373.59 2,106 1,732.50 2026 384.79 384.79 2,359 1,974.02 2027 396.34 396.34 2,642 2,245.54 2028 408.23 408.23 2,959 2,550.67 2029 420.48 420.48 3,314 2,893.49 2030 433.09 433.09 3,712 3,278.56 2031 446.08 446.08 4,157 3,710.96

Financial Economic Internal Rate of Return (FIRR) 5.3% O&M = operation and maintenance. Source: Asian Development Bank.