Appraisal of Kingston Sewerage I

ReportNo 615a-JM Appraisalof KingstonSewerage I and Water SupplyProject FiLECopy

Public Disclosure Authorized Jamaica June11, 1975 RegionalProjects Department Latin America and the CaribbeanRegional Office Not for PublicUse Public Disclosure Authorized Public Disclosure Authorized

Public Disclosure Authorized Document of the InternationalBank for Reconstructionand Development InternationalDevelopment Association

Thisreport wasprepared for officialuse only by the BankGroup It maynot be pubished,quoted or cited without BankGroup authorization The Bank Group does not acceptresponsibility for the accuracyor completenessof the report CURRENCYEQUIVALENTS

Currency Unit - Jamaican Dollar (J$) US$1 - J$ 0.909 US$1 million - J$ 909,000 J$ - US$1.10 J$ million - US$ 1.1 million

ABBREVIATIONS

Commission - The Water Commission Kingston,Jamaica

NWA , - National Water Authority CorporateArea - Kingston and St. Andrew Parishes PAHO - Pan American Health Organization Gallon - Imperial Gallon (1 gallon = 4.5 liters or 1.2 US gallons) Mgd - million gallons per day (1 mgd = 4.544 cubic me+ers/day) god - gallons per capita per day (1 ged = 4.54 liters/day) Mg - million gallons IDB - Inter-AmericanDevelopment Bank MPUCT - Ministry of Public Utilities, Communications and Transpoxt MNR - Ministry of Mining and Natural Resources NDA - National DevelopmentAgency

FISCAL YEAR

April 1 - March 31 i.e. fiscal year 1976 = year ending March 31, 1976 JAMAICA

APPRAISAL OF

KINGSTON SEWERAGE I AND WATER SUPPLY PROJECT

KINGSTON WATER COMMISSION

TABLE OF CONTENTS

SUMMARY AND CONCLUSIONS ...... i - ii

I. INTRODUCTION ...... 1

II. THE SECTOR ...... 2

III. THE PROJECT ...... 4

Existing Facilities ...... 4 The Proposed Project...... 5. Amount of Proposed Loan ...... 6 Procurement ...... 7 Disbursement ...... 7 Project Supervisionand Administration...... 7

IV. JUSTIFICATION ...... 9

Demand ...... 9 Contamination...... 9 Project Selection ...... 9 Return on Investment ...... 10

V. THE BORROWER ...... 12

Organization ...... 12 Management ...... 12 Reorganizationand Training ...... 13 Financial Position ...... 13

VI. FINANCES.13 FinancialPerformance .13 Past Finances.14 Tariffs.14 FinancingPlan .15 Future Finances .16 Reducing Water Losses .16

This report was prepared by Mr. J. Freedman (Engineer),Mr. C. Fernandez (FNA) with assistancefrom Mr. C. Todd (FNA) and Mr. E. Pogson (FNA). TABLE OF CONTENTS (Cont'd)

VII. RECOMMENDATIONS ...... 17

A. That the Commission ...... 17 B. That the Jamaican Government ...... 18

ANNEXES

No.

1. The Project

I. Existing Facilities of the Water Commission II. Description of the Project

2. Cost Estimate

1. Sewerage 2. Water Supply 3. Studies and Miscellaneous

3. Investment Schedule

4. Cumulative Quarterly Investments and Disbursements

5. Incremental Rate of Return

6. Approximate Water Costs and Income Distribution

7. Assumptions for Financial Projections

8. Consolidated Income Statement

9. Consolidated Sources and Application of Funds

10. Balance Statement

11. .Water Tariffs

12. Asset Codes and Depreciation Rates

13. Monitoring Indicators TABLE OF CONTENTS (Cont'd)

LIST OF CHARTS

Proposed Organization Chart IBRD No. 9226 Water Supply Data and Projections IBRD No. 9225 Water and Sewer Connections Chart 3 Water Consumption and Water Revenues Chart 4 Activity Schedule IBRD No. 9328(R)

LIST OF MAPS

Location of Project - Water Supply IBRD No. 11301 Location of Project - Sewerage IBRD No. 11302 (R) JAMAICA

KINGSTON SEWERAGE I AND WATER SUPPLY PROJECT

KINGSTON WATER COMMISSION

SUMMARY AND CONCLUSIONS i. This report covers the appraisalof a US$30.0 million (US$33.3 million includinginterest during construction)equivalent sewerage and water supply project for the Kingston - St. Andrew area in Jamaica with a population in excess of 650 thousand inhabitants. Kingston is the seat of Jamaica's central government, the financial center as well as a secondary arrival point for tourists, the island's second export earner. A Bank loan of US$15.0 million is proposed, covering the foreign exchange cost of the Project and interest during constructionon the Bank loan (US$2.5 million). ii. This would be the second loan to the Water Commissionwhich is a semi-autonomousstatutory organizationwith responsibilities for water and sewer services in the Kingston Metropolitan area. The first loan was made in 1969 and the works, although behind schedule, are 95% complete. The first loan was for the provision of water supply and water distribution facilities. The proposed second loan would have four parts: (a) sewerage collection and treatment--thelargest component; (b) additionalwater supply and distribution facilities;(c) studies to aid the choice of the next major water supply scheme; and (d) technical assistance designed to strengthen the Commission's management ability. iii. The sewerage portion covers two priority needs of a master sewerage scheme. The first need is to provide a sewerage service to districts where the present inadequatesystem is a health hazard and is contaminatingground- water supplies. The second need is to allow the removal of a building mora- torium to permit the constructionof high-rise apartments, providing construction work which will give some relief to the high unemploymentand providing housing in a central area. iv. The water supply portion of the project covers: additional wells with a capacity of about 11.0 Mgd to provide the population with an adequate water supply during the dry season and until the next water supply project is completed; studies for stabilizing the Hermitage Dam and determining the next source of water to be developed for the Kingston area; and improvement in the distribution networks to conserve water and facilitate its control.

v. Pipe and accessories, pumps, and electrical well equipment would be procured through internationalcompetitive bidding in accordancewith the Bank's guidelines. For the civil works, contractswould be awarded on the basis of competitive bidding advertised locally and in accordance with local procedures, which are satisfactory to the Bank. For the drilling of wells, contractswould be negotiatedwith qualified local contractorswho have adequate personnel, equipment,and working capital and successfulexperience in similar sized wells. The type and size of these well drilling contractsare such that - ii --

competitivebidding would not be appropriate. Retroactive financingof up to US$300,000 is recommendedto cover the costs of foreign expendituresfor the drilling of wells and studies that might be incurred after December 1, 1974. vi. The Project is the least cost alternativefor providing essential sewage facilities and for guaranteeing the populacewith an adequatewater supply. The economic rate of return is 11%. vii. The financialperformance of the Commissionwould improve, operating costs would be reduced, a real rate of return of 4% on the value of the assets would be achieved during FY 1980 (from -3.5% during FY 1975), and the accounts receivablewould be reduced. The Commissionwould provide 32% of the capital investmentprogram between financialyears 1976-1979. It would also strengthen its administrationand carry out a personnel training program. viii. Provided the conditionslisted in Chapter 7 are met, the Project is suitable for a Bank loan of US$15.0 million equivalentfor a term of 25 years, includinga 4 year grace period. I. INTRODUCTION

1.01 The Water Commissionof Kingston,Jamaica has requestedthe Bank to help finance a second project to further improve and expand the water supply system, to constructa first stage of the sanitary sewage system, to determinethe next stage of the water supply and study alternativesewage disposal methods for the Kingston metropolitanarea. The loan would be guaranteed by the Government of Jamaica. The Project is estimatedto cost US$33.3 million including interest during constructionand a loan of US$15.0 million equivalentis proposed.

1.02 The objectivesof the Project are to satisfy the water demand during 1976-80while long-termsources of water are being studied and developed, begin work on the Kingston master sewer plan, and further improve the organization and management of the Water Commission.

1.03 The Water Commissionis presently completinga previous project, the Rio Cobre Scheme, with a capacity of 12.5 Mgd partiallyfinanced with a Bank loan made in April 1969, 1/ which was designed to meet the averagewater demand to about 1976. The executionof this scheme has taken longer than anticipateddue to constructiondifficulties, labor problems and long delivery times for equipment. The final completiondate is now August 1975.

1.04 Kingston suffers from droughts in the summer months when the water flow from surface sources diminishesconsiderably. In 1973 rationingwas necessary through October. Although the Rio Cobre scheme was in partial operation,rationing and restrictionswere necessary in 1974 and 1975. At the Bank's urging, the Commission engaged a consultantin 1972 to evaluate the possibilityof developing groundwatersources. The consultant'sreport concluded that an additional 13.5 Mgd could be obtained. The report recommended a four year program of drilling, testing and development. In 1973, the Bank retained a consultanthydrologist who examined this report and agreed with the overall concepts. The proposed project includes two new well-fields with a capacity of 10 Mgd and improvementsto an existing source which will give a further 1 Mgd.

1.05 To satisfy water demands of Kingston and its adjacent areas after 1980, the Commission is considering developing the Blue Mountain rivers by either a northern or southern route, and the Wag Water River. The northern route schleme for the Blue Mountain supply is in a prefeasibility study level. The Wag Water Scheme is presented as a desk study by the Commission's consultants and is also at aa prefeasibilitystage. The Blue Mountain Scheme, southern route is the only long range scheme; it is the most advanced study and is ready for soil investigation and detailed engineering. It could be developed in stages to ultimatelyyield 100 Mgd. The first stage would require approximatelyfive years for design and constructionand would supply 13.5 - 21 Mgd by gravity. The project provides for a review of these schemes to determineand select the next scheme for development.

1/ See PU report TO-694a of April 9, 1969 and Loan Document of May 14, 1969. - 2 -

1.06 Under the previous loan progresswas made in improvingthe organization and managementof the Commission. However, the Commissionwas not able to achieve an 8% rate of return for the water system as stipulated in the loan agreementor avoid operationaldeficits in the sewer system. The inadequate rate of return resulted from wage increasesand delays by the Commission in obtaining Governmentapproval to increase tariffs. New water tariffs were approved and implementedDecember 1974. A new sewer charge has been approved and is expected to be implementedshortly. To further improve the Commission management,the Project would provide for management advisory services,institutional improvements and a training program.

1.07 The objective of the sewer componentin the Project is to reduce health hazards that could arise: first, from sewage contaminatingthe groundwater and entering the water supply system (severalwells already show dangerouslyhigh nitrate concentrations),and second, from sewage polluting the harbor and its tributary streams. To accomplish this, a new sewerage system would have to be built by stages.

1.08 The sewerage component of the proposed project consists of trunk mains, street sewers and laterals in the lower part of two sewer areas and their connection to the existing Greenwich Treatment Plant for treatment of the sewage before disposal. This plant has excess capacity. A subsequent phase extending the sewers to the upper parts of these areas will be required to complete the sewerage and achieve full use of the trunk mains. Provision has also been made for financialassistance to connect to the sewer and install plumbing for low-income inhabitants in the two areas, primarily in the Lower West Sewer District.

1.09 The appraisal of this Project is based on information submitted to the Bank by the Commission, consultant's reports, and field investigations of an appraisal mission composed of Messrs. Freedman, and Fernandez in July 1974. Mr. Todd and Mr. Pogson assisted in the financial analysis.

II. THE SECTOR

2.01 The development of the sanitation sector in Jamaica has been hampered by shortages of qualified technical and managerial manpower and by financial weakness of the responsible institutions. It is estimated that out of a total population of approximately two million, over 90% of the urban population and about 40% of the rural population are served with piped water. The quality of service in Kingston,however, has been deteriorating during the dry season of the past five years. To remedy this, additional supplies of water have to be provided. Kingston and Montego Bay have limited sewer systems, the rest of the urban communities use soakage pits, septic tanks, and pit privies. Sewer systems are practically non-existent in the rural areas. In Kingston, only about 20% of the population is provided with sewerage. Sanitation is poor in many areas, sewage overflows onto the surface of the ground, is contaminatingthe groundwaterand is polluting the harbor. 2t4' The pr±ncipal entitfeo -.-csponsible for the -p.ovision of water supply and se-werage servinces S.f . '7oater er .Ommissiorn (Cot _assionl ( urder t@he Jurisdiction Cf the ti. I of Public UtiU2 ties, Communications ane Transpor (cW- .n the Kingston - St, Andrew Corpc2ata Area (.) the Nationai Water A t'POricr- (Authority) which was placed under the supervision of the same mdLnist-,' I" April J975 and which acts in the rest of the country and (c) thirteen loc.a. government authorities (Parish Councils). Both the Commission and the Atn y suffer from organizational and financial weaknesses. The Commissiorz lacks technical and managerial personnel at the top levels, and has too many staff who also receive excessive overtime. This has resulted in inefficienicy and high operating costs which have off- set the periodic rate increases a.d have weakened the financial position of the CommIssion.

2.03 The Authority also suffers from a shortage of qualified technical and managerial personnel and a weak financial position. It relies on grants from the government to cover debt service an.d certain operating and maintenance costs; Parish Councils have not always paid the Authority for the bulk water it has supplied to the.m, and the Ministry of Local Government has assumed the responsibility for collection from the Parish Councils and has been reimbursing the Authority directly.

2,04 MPUCThas appointed a new chairman of the Board of Directors of the Commission who has begun to decentralize the Commission's operation and maintenance staff, reduce surplus staff and recruit qualified technical and administrative personne. to fill the supervisory positions.

2.05 The Commission and the Authority are planning substantial water supply and sewerage investments estimated at US$80 million over the next five years for which external financing assistance will be required. The Author- ity's plans include major water supply schemes for Montego Bay, Ocho Rios, and Mandeville which would benefit approximately 60,000 people. An IDB loan of US$13 million for the Montego Bay - Falmouth water supply project (US$21 illion) is expected to be approved this year. The feasibility studies of Ocho Rios and Mandeville were partially financed by an IDB technical assistance loan of US$244,000, The Commission's plans include the proposed water and sewer project for Kingston and further stages of the Sewerage Master Plan.

2.06 There have been sporadic discussions at a planning level in the government concerning the possibility of combining the Authority 1/ and the Commission or modifying their responsibilities to bulk supplier and retail distributor respectively. In view of the present institutional weaknesses of both major organizations, the wide range of responsibilities, and the technical problems involved, such a change would delay the proposed urgently needed project and is therefo-e not considered advisable at this time. The Govzernment should study and establish a plan for the organization of the

1/ The functions of the Parish Councils would be taken over by the Authority in the first instance. - 4 - water supply and sanitationsector, and establish a timetable for its implementation. Assuranceswere obtained during negotiationsthat the Government will, in consultationwith the Bank, complete a review of the organization of the water supply and sanitationsector within 30 months of the signing of the agreement.

III. THE PROJECT

Existing Facilities

3.01 The Commissionis responsiblefor providingboth water supply and sewerage service in the Kingston metropolitanarea, Jamaica's capital and commercialcenter, with a populationof about 650,000. The water supply system serves 600,000 people (90% of the total population)through 60,000 connections. The Commission'swater supply system covers an area of 55 square miles. Supply,which diminishesduring the dry season to the point of causing rationing, is derived from both ground and surface water sources. The Wag Water and Hope River catchments provide the main surface sources and have been developed in stages since 1893. Water from these sources is filtered and chlorinatedbefore distribution;supply is mainly by gravity. Water from wells located in different parts of the supply area is pumped into the distribution system after chlorination. There are about 800 miles of water mains of various sizes, 56,000 metered connections and 29 public standpipes. Per capita consumptionaverages 50 Imperial gallons 1/ per day except during periods of drought.

3.02 The sewer system is located in the older part of Kingston near the Harbor and serves an estimatedpopulation of 135,000 (20% of the total population of the Kingston metropolitanarea) through 13,600 connections. Some private sewer installationsserve a small populationin a few scattered residential developments. The sewer system carries an average flow of about 8 Mgd. It includes about 80 miles of sewer lines and three sewage treatment plants which discharge their effluents into the harbor and the ocean. There are separate sewer systems with small package treatment plants serving two housing developments. Five industrial and commercial properties discharge treated effluents into nearby streams which flow into the harbor. The rest of the population uses individual disposal facilities such as privies, septic tanks and soakage pits. In certain areas of the city, the sewage from these facilities is overflowing onto the surface of the ground. Three wells have been taken out of service because of excessivenitrate concentrationindicating contaminationby sewage. A detailed descriptionof the existing water and sewer facilitiesis given in Annex 1 part I.

1/ Comparativedata = Managua 50 US GDP. -5-

The Proposed Project

3.03 The Project is basic to the development of a long-rangeprogram to augment and improve the water supply and to provide adequate sewerage service for Kingston (Maps IBRD Nos. 11301 and 11302 show the location of the works). It would be carried out by the Commission in four years and is expected to be completed in March 1979. Its major objectivesare:

(i) to develop additional sources of water to meet the summer demands and additionalrequirements of the CorporateArea until the next stage of a long-rangeprogram can be designed and built;

(ii) to strengthenthe organization,administration and finances. of the Water Commission;

(iii) to begin a long-rangesewerage program in two areas of Kingston to resolve health problems, protect groundwater sources, abate harbor pollution and permit new residential construction;

(iv) to review various proposals for the developmentand allocation of water resources in the Kingston MetropolitanArea and the Linstead Basin and to recommend the next major water supply scheme.

3.04 The principal elements of the Project are detailed in Annex 1 part IL. A summary is given below:

A. Construction

(i) (1) Wells near Tulloch Springs, in the Linstead Basin and in the Liguanea Plains; (2) intake works at Hall's Green and (3) correspondingconnections to the water distributionnetwork;

(ii) Treatment of water at Tulloch Springs and improvementof the distributionnetwork;

(iii) Inside plumbing,house connections,laterals, street sewers, pumping stations, and trunk mains to collect and deliver the sewage from the Lower Western and Upper Central Sewer Districtsof Kingston to the existing Greenwich Treatment Plant. Existing legislationempowers the Commission to require property owners to connect to sewer lines which pass within 100 yards of a property but this power has not been frequentlyused. The Commissionhas agreed to take steps to ensure that sewerage connectionsare made to all properties fallingwithin the project areas, and that all necessary internal plumbing and water closet installation will be undertaken. The Commission has also agreed to -6 -

submit to the Bank for its approval within nine months of the date of the Loan Agreement a program to provide technical and financialassistance to low income owners occupiers unable to meet the cost of such sewer connections;

(iv) Engineering and design studies for the above.

B. Studies

(i) (1) Water resources desk study to evaluate the north and south Blue Mountain Schemes, the Wag Water Scheme, the Linstead Basin Scheme, and to recommend the next major scheme, and (2) to prepare a plan and recommendations for the integrateddevelopment and allocationof the water resources (includingsewage effluent)of the Kingston metropolitanarea; in the meantime the Commission has agreed not to undertake during the period of project execution any investment other than those provided for in the project, exceedingUS$0.5 million in any financial year;

(ii) A study to determine the potentialyield of the water resources of the Linstead Basin;

(iii) Studies for the stabilizationof Hermitage Dam; and

(iv) Water and sewer connectionsurvey.

C. Technical Assistance

(i) Management advisory services for the reorganizationand improvementof the Water Commission;and

(ii) Staff training program in administrationand operation.

3.05 The estimated cost of the Project is detailed in Annex 2 and summarized on page 8. The correspondinginvestment schedule is shown in Annex 3.

3.06 Basic cost estimates are based on 1975 prices. The estimated foreign exchange component amounts to about 42% of the total project cost (including interest during construction). Physical contingenciesare 15% of the base cost estimate, and price contingencies31% of the base cost estimate. For details see Annex 7.

Amount of Proposed Loan

3.07 A loan of US$15.0 million, is proposed to finance (i) 100% of the foreign exchange componentof USS12.5 million, and (ii) interest during constructionof US$2.5 million. The Commission and the Jamaican Government would finance the balance of the total project cost equivalent to US$17.4 million and interest on local loans of US$0.9 million. -7-

Procurement

3.08 Pipe and accessories,pumps and electricalequipment to be financed out of the proceeds of the loan would be procured through internationalcompetitive bidding in accordancewith the Bank's guidelines. Local manufacturers will be accorded a protection of 15% of the c.i.f. price or the actual tariff, whichever is lower. For the civil works, contractswould be awarded on the basis of competitivebidding advertisedlocally and in accordancewith local procedures,which are satisfactoryto the Bank. The size of the contracts and the type of the work (very labor intensiveprimarily for the laying of sewer pipe) are such that it is unlikely foreign contractorswould be attracted. There would be adequate competition,and foreign contractors would not be precluded from bidding. For the drilling of wells, contracts would be negotiatedwith local contractorswho have qualified personnel, adequate equipment and working capital and successfulexperience in similar sized wells. Because of the scatteredlocations, three separate contracts are anticipated. There are at least four qualified contractorson the island, who are in a position to do the well drilling work required. A foreign well-drillingcontractor would have to ship drilling equipmentand tools to Jamaica at considerableexpense and might experiencedelays in customs, thus necessarilyincreasing the cost of his services. It is thereforeunlikely that foreign contractorswould be attracted or could offer competitiveprices.

Disbursement

3.09 The Bank loan would be disbursed over a period of four years. Disbursementswould be made against 100% of the CIF cost of imported equipment and materials, 100% of foreign expenditurecost of consultantservices, interest on the Bank loan and 15% of total costs of civil works represent- ing the estimatedforeign exchange component. Any surplus of funds remaining in the loan account on completionof the project may be used to finance further sewer system extensionsand improvementsin accordancewith the master plan and water meters and accessoriesto maintain the high level of control of productionand consumption. These would, however, be subject to approval by the Bank. In order to acceleratethe execution of the project, the Commission began the well drilling work and engineeringstudies in December 1974. It is recommendedthat the Bank approve retroactivefinancing up to US$300,000 for such expenditures.

Project Supervisionand Administration

3.10 The Project design and supervisionand the studies (see paragraph 3.04) to be financed out of the proceeds of the proposed loan would be carried out by qualifiedconsultants acceptable to the Bank under terms of reference approved by the Bank.

3.11 During negotiationsit was agreed that the appointmentof a qualified and full-timeProject Manager with adequate supporting staff would be a condition of effectiveness. - 8 -

SUMMZiARYOF PROJECT COSTS

J$ (Millions) US$ (Millions) Local Foreign Total Local Foreign Total I CONSTRUCTION

Water Supply 2.71 2.69 5.40 2.98 2.96 5.94 Sewerage 6.19 4.50 10.69 6.80 4.95 11.76 Subtotal 8.90 7.19 16.09 9.78 7.91 17.70

II STUDIES

Water Resources 0.05 0.18 0.23 0.06 0.20 0.26 Water Connections Survey 0.11 0.05 0.16 0.12 0.06 0.18 Hermitage Dam Study 0,09 0.09 0.18 0.10 0.10 0.20 Subtotal 0.25 0.32 0.57 0.28 0.36 0.64

III TECHNICAL ASSISTANCE 0.08 0.08 0.16 0.09 0.09 0.18

IV ENGINEERING AND ADMINISTRATION 1.00 0.73 1.73 1.10 0.80 1.90

Base Cost Estimate 10.23 8.32 18.55 11.25 9.16 20.41

V CONTINGENCIES

Physical 1.53 1.25 2.77 1.68 1.37 3.05 Price 4.04 1.81 5.85 4.44 2.01 6.45 Subtotal 5.57 3.06 8.62 6.12 3.38 9.50

TOTAL COST BEFORE INTEREST 15.80 11.38 27.19 17.37 12.54 29.91

INTEREST ON IBRD LOAN (during construction) - 2.24 2.24 - 2.46 2.46

INTEREST ON OTHER LOANS 0.84 - 0.84 0.92 - 0.92

TOTAL COST OF PROJECT 16.64 13.63 30.27 18.30 14.99 33.29

TOTAL TO BE FINANCED BY IBRD 13.63 13.63 15.00 15.00

For details of construction, see Annex 2. - 9 -

3.12 Annex 13 shows the indicatorswhich would be monitored during the executionof the project to measure the achievementof the technical,financial and administrativegoals set for the proposed project. This annex also gives the values forecast for these indicators. The Commissionwill be requested to include in its periodic reports informationon progress made in achieving these targets. During supervision,progress in the project executionwill be evaluated on the basis of these indicators,and if necessary,appropriate recommendationswould be made to the Commission.

IV. JUSTIFICATION

Demand

4.01 The p-esent water system serves 90% of the population;the average growth in population has been estimatedat 3.1% per year and total water demand is estimatedto increase at 2% per year; surface water supplies can provide 60% of the average daily demand in the rainy season but diminish greatly during the dry season. In consequence,rationing has been imposed during each of the last five-yearsin varying degrees but of five months duration in the higher areas of the town. Contamination 4.02 The balance of water supply comes from wells the numbers of which have been increased in recent times, including the Rio Cobre scheme. However, in the second half of 1974, three wells with a combined capacity of 3.0 Mgd were shut because of excessivenitrate. Four other wells with a similar capacity are now showing increasinglevels of contaminationwhich could cause them to be shut down in 1977. The combined productionof these seven wells is about 19% of the 1975 total production. The high nitrate concentra- tion is attributed to sewage seepage from septic tanks in areas not served by the existing sewer systems. The present sewerage system is in bad condition and only serves 20% of the population. In addition to the health hazards caused by seepage, overflows and well water contamination,there is further risk that sewage could infiltratethe water distributionsystem during periods of rationing.

4.03 Feasibilitystudies for a water and sewerage project were prepared by the Commission'sconsultants based on the Kingston Town Planning Department Zoning Map'which reflects recommendationsof the 1971 Kingston Regional Plan prepared with UNDP assistance. The project elements were.selected by the Planning Department and the consultantsto achieve maximum impact in the areas of the city most affected by drought-causedwater shortagesand the lack of trunk sewers. The Project is the least-cost solution designed to resolve Kingston's near term water supply and sewerage problems. 4.04 The Project would provide sewers in the Lower West and Upper Central districts and connect them to the GreenwichTreatment Plant which has unused capacity. Because trunk sewers must be built for the future sewage flows resultingwhen the populationof the tributaryareas has reached the zoning - 10 - population density, high initial investmentsare required. The most densely populated parts of these two districts house a residentialpopulation of approximately84,000 and industrialestablishments producing wastes equivalent to those from approximately135,000 people (Kingston's1975 population is estimated to be 668,000 of which about 135,000 are now provided with sewerage). In a future second stage, an additionalpopulation of 204,000 could be served. According to the consultants'studies, the harbor can assimilate the added effluent from the Plant.

4.05 The Project will help the governmentdetermine the allocation of water resources in the Linstead Basin, Spanish Town, and Kingston metropolitan area where there is a growing competitionfor agricultural,domestic, and industrialuse. It will also help the Commission select the next major water supply scheme to provide water for the future needs of the Kingston metropolitan area. Return on Investment 4.06 The major component of this project is the extensionof the sewerage system to two areas of the city. The second largest component is the provision of additionalwater (11 Mgd). The project's economic benefits have been evaluatedas: (a) Increase in Land Values The Kingston Town Planning Department has establishedan urban zoning plan which provides for substantiallyhigher density residentialand commercialuse in the two areas to be served by the extension of the sewerage system. Evidence from other areas of Kingston which have a sewer system suggest that land values in the project areas may increase by 100% in the Upper Central district and 50% in other areas. These figures are supportedby the Kingston Planning Authority who regard them as conservative. Although the land values will increase when the constructionmoratorium is lifted it will be the provision of sewers which will permit this to happen. (b) IncrementalSales of Water and Sewer Revenues

Calculationshave been made on the sale of water valued at the tariff imposed in December 1974. As consumershave had little time to react to the tariff and as water is being rationed it is too early to calculate the effect on demand of the price increases. The calculationsassume a 10% decrease in demand from the 1974 levels. Further calculationsshowed that the rate of return would only be marginally effected by a 20% drop in present demand levels. The incrementalbenefits of the project have been calculated using the combined water and sewerage revenues and costs. (c) Water from Contaminated Wells

As a direct result of the sewerageworks, the Commissionwill be able to continue using wells at present threatenedby increasingnitrate concentrationand will be able to bring back into service three wells at present out of use. The estimates of future consumptioninclude the use of these sources which are reflected in the incremental sales calculation.

4.07 The economic rate of return of the water and sewerage project has been calculatedin constant prices assuming a project life of 30 years. No shadow prices have been used. The calculationwas made using 40 percent of the predicted land value increase because, although the lifting of the building moratoriumis a direct result of the availabilityof sewers, other infrastructurecontributes towards t-heincrease in land values, and the respectivebenefits cannot be imputed accurately. The economic rate of return is 11%. 1/

4.08 The economic rate of return calculationdoes not include a weight- ing of income distributioneffects. However, water and sewerage tariffs are designed to distributethe cost of the project both on the basis of the consumer'suse of the services and his ability to pay for them. Water service is charged by means of a progressiveblock tariff based on water consumption. The result is that 20% of the water consumerspay 70% of the Commission'swater service income (10% pay 55%). Chart 4 shows the cumulativedistribution of customersversus the personal income,water consumptionand water revenue. Annex 6 shows the percent of income expended for water.

4.09 The above discussed rate of return does not fully measure the economic worth of the project, because additionalbenefits not quantified include:

(i) the reduction in stream and harbor pollution;

(ii) the reductionof health hazards due to current sewage seepage from septic tanks;

(iii) the employmentof 300-400 unskilled laborers on construction work for 4 years when unemploymentrates are as high as 25% in Kingston; and

(iv) the benefit to landownersof the avoidanceof the cost of cess pits and the annual maintenance costs.

1/ If land revaluationis 20% lower or higher than expected, the rate of return will be 7.5% and 16% respectively. - t2 -

V. FHIEBORROWER

Organization

5.01 The Water Commissionof Kingston-St.Andrew will be the Borrower. It is a semi-autonomousgovernment corporation created in 1937 to be responsible for providingwater supply and sewerage services in the Kingston-St. Andrew area.

5.02 The Commissionis governed by a board of nine members headed by a chairman. The members and chairman are appointedby the Minister of Public Utilities, Communicationsand Transport. The chairman is the chief executive officer of the Commissionand is empowered to make day-to-day decisionsand call meetings of the full board at least once a month. A new capable and dynamic chairman has recently been appointed.

Management

5.03 The Commission'sefficiency has suffered from the shortage of experiencedand qualifiedmanpower; for example, the post of Chief Engineer was filled in October 1974 after a six month gap. The Commissionhas received a number of consultants'studies, and work has begun on some recommendations includingdecentralization of control and reductions in manpower levels.

5.04 Some progress in improvingthe organizationhas been made during the supervisionof Loan 598-JM:

(i) The number of employees has been reduced; 180 were made redundant in two groups from a total of 2,040 employees. Other employees will be retrainedin new trades and transferredto other public authorities. This has not been easy to achieve due to strong trade union opposition and the high levels of unemployment;

(ii) Consultants'studies have been made on staff decentralization and a program to achieve this has been approved. A scheme of job evaluationand position classificationhas begun; and

(iii) The Commissionhas increasedthe percentageof consumers - metered from 88% to 93%, simplifiedthe water tariff structure and obtained the right to collect the sewer tax direct.

5.05 The expansionof the activitiesof the Commissionnow requires the appointmentof a GeneralManager to implement the organizationalchanges needed--underthe directionof the Board. Agreementwas reached during negotiationsthat the Commissionwould, as a conditionof effectiveness,have employed a full time qualifiedperson designatedto assume duties as General Manager within six months of his employment. - 13 -

Reorganizationand Training

5.06 Led by the new GeneralManager and assisted by funds from this loan for technical assistance,the Commissionwill be able to (a) implement a program of management reorganizationand (b) begin on a program of staff training. Agreementwas reached during negotiationsthat within six months of signing the Loan Agreement, the Commissionwould prepare these programs and promptly begin their implementation.

FinancialPosition

5.07 The financialposition has deterioratedin recent years, and the Commission'slosses before interest for the financialyear ended March 31, 1975 are expected to be about J$1.02 million (1974 losses J$1.7 million). The Commission has not achieved the covenanted 8% return on unrevalued water net fixed assets under the previous loan. This was due to the high level of labor costs and delays in implementinga tariff increase at a time of increasing inflationof operating costs. A number of measures are to be implemented, many in the next year which should help to restore the Commission to a sound financialstate. These are discussedin Chapter VI.

5.08 With the technical assistancebeing provided and with the direction of the new Chairman and leadership of a new General Manager, the Commission should make significant progress in the next few years.

VI. FINANCES

Financial Performance

6.01 The Commission's past and future financial results are summarized below. Detailed financial statements for the period 1973-1982 are given in Annex 8. - 14 -

-- Actual-- - Forecast------(Financial Year Ends March 31) 1973 1974 1975 1976 1978 1980 ------J$ Million ------

Total Revenues 5.9 7.3 9.5 13.7 16.2 23.7

Total OperatingWages & Salaries 2.7 3.7 5.2 4.9 5.4 7.0

Total Operating Cost 4.7 6.2 8.3 8.5 10.2 13.3

Govt. Contributions-Sewer Opng. Deficit 0.4 0.7 1.2 1.6 -

Internal Funds for Investment 1.6 0.9 0.5 0.7 3.9 7.5

Rate of Return - (In real terms) (1.6) (2.6) (3.6) 2.7 2.0 4.0

Operating Ratio - 78.8 83.9 87.7 62.0 63.3 56.0

Opng. Wages as % Total Opng. Cost 57.4 59.7 62.7 57.6 52.9 52.6

Past Finances

6.02 The Commission'swater revenues are derived from tariffs and were covenantedunder the first loan to provide a rate of return of 8% on the Commission'swater net fixed assets unrevalued. Sewer revenues are from earmarkedproperty taxes but have been traditionallyinsufficient to meet even operating costs and in accordancewith the GuaranteeAgreement of Loan 598-JM 1/ the Governmenthas been subsidizingthese operations.

Tariffs

6.03 The Ministry of Public Utilities and the Cabinet approved early in November 1974 a 60% averageincrease in the water tariff which has already been implementedsince December 1974. Annex 11 gives the old and new tariff structures. The new tariff is highly progressivewith only two categories: residentialand commercial (industrial). It begins at J$0.30 per 1,000 gallons and rises in six steps to J$1.75 per 1,000 gallons. The average tariff for residentialconsumers would be J$1.00 (US$1.10)per thousand gallonswhich is high even by US standards. 2/

6.04 The present charge for sewerage service is a land tax payable by property owners on premises within 100 yards of the sewer lines. Land

1/ Section 5.06 of this Agreement stipulatesthat the sum of sewer charges and Government contributionshould cover all the Commission'scommitments related to its sewer operations. 2/ In suburbanWashington, D.C. the average rate for water is about US$0.50 per thousand gallons. - 15 - in Kingston was revalued in 1974 but the sewerage service charge will continue to be based on the old value. The new charge is designed to produce a 50% increase in revenue in the 1976 FinancialYear.

6.05 Details of assumed future tariff increases for sewerage and water are given in Annex 7.

FinancingPlan

6.06 The financial plan for the financial years 1976-1979 is summarized below:

J$ US$ % ---- Million --

CAPITAL INVESTMENTS IBRD Project 27.2 29.9 77.0 Interest during Construction 3.1 3.4 8.8 Other Works 5.0 5.5 14.2

Total InvestmentProgram 35.3 38.8 100.0

FINANCED BY Net Internal Cash Generation 26.5 29.2 Less: Increase in Working Capital 7.9 8.7 Less: Debt Service 7.5 8.3

Total Available for Investment 11.1 12.2 31.5

Borrowing IBRD Loan 13.6 15.0 39.0 Jamaica GovernmentLoan 6.4 7.0 18.0

Total Long-Term Debt 20.0 22.0 57.0

Other Loans 0.6 0.6 1.5

Contributions Government- Sewer Deficit 3.1 3.4 8.0 Urban Developers 0.5 0.6 2.0

Total Financing 35.3 38.8 100.0

6.07 The plan is based on:

(i) IBRD financingof J$13.6 million (US$15.0million). The Bank loan is assumed to have a term of 25 years, including 4 years of grace, and to carry interest of 8-1/2% and a commitment fee of 3/4 of one per cent; 16 -

iU) Governmentloans of J$6.4 million kUS$7.0 millon). The Government loan is assumed to have a term of 25 years including4 years of grace and carry interest of 8%;

(iii) The Commission'snet internal resourcesfor J$11.1 million (US$12.2million) for financingof 31.5% of the investment;

(iv) Governmentgrant of J$3.1 million (US$3.4 million) to meet deficits in sewer oper-rion.

Assuranceswere obtained from the governmenton items ii, and iv.

Future Finances

6.08 The Jamaican Government and the Commissionhave agreed on a program to improve the financialstate of the Commissionby increasingrevenues and reducing costs.

6.09 Agreementwas reached during negotiaPionson the following:

(i) The principlethat water and sewerage service revenues will be sufficientto obtain stipulated financialrates of return, ultimately 4% in real terms for the FinancialYear ending March 31, 1980. The rate of return will be calculatedon asset values adjusted for inflation. For details see Annex 7, para. 1.2;

(ii) that the Governmentwill, as a conditionof loan effectiveness provide to the Bank, and promptly thereafterimplement, a plan satisfactoryto the Bank for capitalizingor writing off overdue maturities of governmentloans to the Commission outstandingat March 31, 1975 and up to 50% of the balance of debt outstandingat that date; and

(iii) that the Commissionwould not incur any debt unless its net revenues for the precedingfinancial year or 12 months period, whichever is greater, shall not be less than 1.5 times its maximum consolidateddebt service for any succeedingfinancial year.

This should promide a framework for satisfactoryfinancing of operations.

Reducing Water Losses

6.10 According to the records of the Commissionthere is an average of ten people per connection. A review of the available informationon the size of families,number and type of dwellings, and census data did not explain the reason for this high average (the national census records an average family size of four). The local authoritiesattributed this to the existenceof numerous "least-lands",tracts of land where the owners permit tenants to - 17 - erect shanties and similar dwellings,all served by a single connectionto the water system. Specific data however were not available. A study of the consumer records of the Commissionalso indicatedmany improperlyclassified connectionsand possibly,clandestine connections, which could representa loss in revenue. Assuranceswere obtained from the Commissionduring negotiations that within one year of the signing of the loan agreementthat a survey of water and sewer connectionswill be conducted.

6.11 Accounts receivablehave been as high as four months due to defects in the proceduresfor producing informationon outstandingdebts, and conse- quent delays in making disconnectionswere necessary. Improvementsin the procedures are being made and agreementwas reached during negotiationsthat:

(i) The Commissionwill within six months of the signing of the Loan Agreement implementan effective shut-offprogram for accounts in arrears; and

(ii) the Commissionwill process its accounts more quickly so as to reduce by March 31, 1977 the receivable to a maximum of two and one-half months' billings.

6.12 The Commissionwill continue with its program of reducing the high levels of labor costs and in particularreducing the excessivelevels of overtime payments. The Commissionhas agreed to a target specifyingthe ratio of operatingwages to total operating costs, and agreementwas reached during negotiationsto set a target to reduce the figure from its present level of 62.0% to a level not exceeding 53% by the financialyear 1977 and thereafternot exceed this level.

6.13 Providing that the new GeneralManager can effectivelydirect these programs and the other programs of staff reorganizationand training,the Commissionshould make a small surplus in the current financialyear and move on steadily during the project period to a sound financialstate.

VII. AGREEMENTSREACHED AND RECOMMENDATIONS

7.01 The followingassurances were obtained during negotiations.

A. That the Commissionwill:

(i) as a conditionof effectivenessemploy a full time qualified person designated to assume full duty as General Manager within six months of employment (para. 5.05);

(ii) As a conditionof effectivenessof the loan appoint a Project Manager with suitable staff for the supervisionof the project (para 3.11); - 18 -

(iii) Through increases in rates and charges for water and sewerage services and through reductionsin operating costs attain progressivelyincreasing financial rates of return on net fixed assets to reach 4% by the financialyear 1980 (para. 6.09 and Annex 7 page 1);

(iv) Use its legal powers to cause sewer connectionsto be made and within nine months of loan signing prepare a plan to provide financialassistance for low-incomeowners and occupiersunable to finance the cost of these connections (para. 3.04 and Annex 1 page 15);

(v) Within six months of the signing of the Loan Agreement, prepare a program satisfactoryto the Bank for managementreorganization and shall promptly thereafter implementthe program,(para.5.06);

(vi) Within six months of the signing of the Loan Agreement, prepare a training program satisfactoryto the Bank (para. 5.06);

(vii) Within one year of the signing of the Loan Agreement, conduct a survey of water and sewer connections (para. 6.10);

(viii) By March 31, 1977, reduce its accounts receivable balance to a maximum of two and one half months billing (para. 6.11);

(ix) Within six months of the signing of the Loan Agreement, implementan effective shut-off program for accounts in arrears (para. 6.11);

(x) Employ consultantsacceptable to and on terms approved by the Bank for studies, designs and constructionsuper- vision (para. 3.10 and Annex 1 page 11); and

(xi) It will continue to employ independentcommercial auditors to verify its financial statements

B. That the Jamaican Government will:

(i) As conditions of loan effectiveness:

(a) provide funds to the Commission to meet the sewerage operating deficit for the Financial Year ending March 31, 1975 (para. 6.07). - 19 -

(b) prepare a program acceptable to the Bank for the capital- izationwriting off of debt to the Jamaican Government (para. 6.09); and

(ii) provide funds required to meet any deficit in the Commission'ssewer operations for the FinancialYear ending March 31, 1976 (para. 6.07);

(iii) within 30 months of the date of signing the Guarantee Agreement, complete a review of and define the allocation of responsibilitiesof the agencies in the sector (para. 2.06). ANNEX 1 Page 1

JAMAICA

KINGSTON SEWERAGEI AND WATER SUPPLY PROJECT

KINGSTON WATER COMMISSION

THE PROJECT

I. Existing Facilitiesof the Water Commission

A. Water Supply

The CorporateArea is suppliedwith water from surface and groundwatersources. The surface water is obtained from direct intakes and a small storage dam on the Wag Water River and Hope River systems to the north and northeast of Kingston. The groundwateris obtained from wells in the limestone formations and alluvial soils in the area and a large spring northwestof Kingston. The capacity of the water system is 32 Mgd, and will rise to 44.5 when the Rio Cobre Scheme is in full operation.

1. Surface Sources

(i) Wag Water River System

This source consists of the Hermitage Dam on the Wag Water River at the confluencewith one of its tributaries,the Moresham River. The dam is about 140' high and about 700' long with a crest elevationof 1,689. It is of plain concrete and was built in 1924-27. The dam has a storage capacity of 300 MG.

From the dam, there is a 21" transmissionmain which conducts the water to the Ram's Horn Ridge Tunnel. The tunnel still in servicewas constructed in 1795; it is about 1,400' long and 3' to 6' in diameter. The water flows through the tunnel and then into 16" and 12" mains which lead to the Constant Spring Treatment Plant.

There are also direct intakes on seven other tributariesof the Wag Water River, Mt. Cressy, Tweedside,Pulper Waterfall,Andover, Mullet Hall, Boar and Ginger Rivers. Water from these intakes can be conductedby a series of transmissionmains to the Constant Spring TreatmentPlant. Water from the Hermitage Dam also goes to the Constant Spring ANNEX 1 Page 2

Plant for treatment. Raw water from the Ginger River intake also supplies a small treatmentplant at Sea View.

There is a 21" transmission main which conducts the water from the dam to the Ram's Horn Ridge tunnel. The tunnel still in service was constructedin 1795; it is about 1,400' long and 3' to 6' in diameter. The water flows through the tunnel and then into 16" and 12" mains which lead to the treatmentplant.

Raw water from the Ginger River intakes also supplies a small treatmentplant at Sea View. This plant is at a high elevationand provides water for the inhabitants in the immediatevicinity.

The long term average yield of these sources is about 16 Mgd. During the recent dry season (April 1974 - July 1974) the yield from Hermitage Dam dropped to 4.5 Mgd.

(ii) Hope River System

Water is taken directly from the river and conducted by gravity to the Cavaliers slow-sandfilter plant. When the river flow exceeds the demand, the excess water is diverted to the Mona Reservoir. The Mona Reservoirwas built in 1947, is of the open type and has a total capacityof 825 MG. The reservoir developed leaks after construction,which were repaired over a period of years. Water from the reservoir is either pumped to the Hope Treatment Plant or deliveredby gravity to the CavaliersTreatment Plant. The sustainableyield of the river and reservoir is about 5 Mgd.

(iii) TransmissionMains

The raw water from the various intakes is conveyed to the treatmentplants by steel mains ranging in diameter from 16" to 33" and having a combined length of about 27 miles. The mains are considered to be in good condition.

2. TreatmentPlants

(i) Sea View

This is the smallest plant and serves a high level area north of Kingston. It treats water from ANNEX1 Page 3

the Ginger River. It is a rapid sand filter plant (with mixing, flocculation,coagulation, sedimentation, filtrationand chlorination)with a capacity of 1.4 Mgd.

(ii) Constant Spring

This is the principalplant with a capacityof 18 Mgd. It treats water from the Wag Water River System. It has conventionalmixing and settling facilities,clariflocculator units, and 12 rapid sand filters.

(iii) Hope

This consists of six slow sand filterswith a total filtering area of 1.12 acres. It treats water from the Hope River. The plant is operated at a capacity of 3.6 to 4.8 Mgd and is able to treat up to 6.5 Mgd when needed.

(iv) Cavaliers

The plant, substantiallyin its present form, was built in 1876. It consists of a raw water settling basin with a capacity of 2.6 MG, four slow sand filterswith a total area of 0.92 acres, and an uncovered filteredwater reservoirwith a capacity of 3.2 MG. The plant is often operated at less than its rated capacity of 2.9 Mgd because of insufficient water from the Hope River system.

3. GroundwaterSources

There are thirteenwells in the Long Mountain, Red Hills, and St. Catherine and Liguanea. The average yield from these wells is approximately13 Mgd. The wells in the St. Catherinearea, however, have shown an increase in the chloride content of the water and pumping will have to be reduced. Three other wells with a combined capacity of 3 Mgd located in the central part of the Corporate Area have been shut down because the nitrate concentrationexceeds 45 ppm, the acceptablelimit under WHO standards. Four other wells show nitrate concentrationsclose to this limit and have to be monitored. This indicates sewage pollution caused by the use of soakage pits and septic tanks. ANNEXt Page 4

There is the danger that the sewage will develop direct routes to the wells in the limestone formations. A central sewage system is needed to prevent this contamination.

4. Rio Cobre Scheme - IBRD Loan 598-JH

This scheme, to provide additional water for the city of Kingston, is partially financed by a loan from the Bank. It was undertaken in 1969 and is now substantiallycomplete. Since April 1974 it has been supplying approximately7 MGD of water to the city, and when the final adjustments to the pumping installationsat Tulloch Springs and the wells have been completed,it is expected that its full capacity of 12.5 MGD will be reached. The Rio Cobre Scheme includes the followingelements:

(i) Tulloch Springs Development

Intake works have been built which collect water from springs fed by the outflow from an extensive limestone aquifer. The springs are located in the Rio Cobre Valley approximately20 miles from Kingston. The available hydrologicaldata indicates that these Springs have an average flow that varies from 12 Mgd in the rainy season to 3.5 Mgd at the end of extreme drought. The optimum upper limit of developmentwas determined to be 8.5 Mgd and the facilitieswere designed for this capacity. The water is diverted to a sump from which it is pumped into a new transmissionmain to Kingston. The water is chlorinatedbefore entering the transmissionmain.

(ii) Head Works Wells

These wells are located on both sides of the Rio Cobre Irrigationdiversion dam, the Head Works, about 12 miles from Kingston. Water is pumped from the wells into a collectionsystem, chlorinatedand then injected into the Tulloch-Kingstontransmission main. There are seven wells with an installedcapacity of 7 MGD and which are now operated at 5 MGD.

(iii) TransmissionMain

The transmissionmain from Tulloch Springs to the Head Works Wells is 24" in diameter. From there to Ferry Hill it is 30" in diameter to Ferry Hill to accommodatethe additionalwater from the wells. At Ferry Hill it divides into a new 18" main up to the ANNEX 1 Page 5

Constant Spring Road where it joins the existing network and a new 21"/24" main to the existing MontgomeryCorner service reservoir,near the Cavaliers Treatment Plant. The combined length of these mains is approximately20 miles.

(iv) Balancing Tank and Reservoir

A reinforced concrete tank of 250,000 MG capacity was built at Caymanas along the transmission main between Spanish Town and Ferry Hill. The pur- pose of the tank is to reduce the fluctuationsin pumping head at Tulloch Spring and the Head Works Wells. A reinforcedconcrete reservoirof 1 MG capacity was built at Harbour View to provide the necessary daily storage for this area.

(v) DistributionLines and Meters

Approximately10 miles of pipe ranging in diameter from 9" to 24" were installed to increase the efficiencyof the distributionnetwork. Two booster stations were built in downtown Kingston, and additional pumps were ordered for the Ferry Hill Booster Station, to improve service to the high area in its vicinity. Because of manufacturers'delays brought about by strikes, the pumps will not be delivered until July 1975.

Bids have been awarded for 10,000 domestic water meters for new connectionsand to replace worn out meters.

5. DistributionNetwork

The distributionnetwork is divided into several pressure zones with a total length of mains (four inches in diameter and over) of about 800 miles. The pipe is mainly of cast iron, which was used extensively until 1967. At that time, asbestos cement pipe came into use for economic and corrosion resistancereasons.

B. Sewerage

There is a limited amount of sewerage in the Kingston-St.Andrew area, the largest system of which is operated by the Water Commission. The facilities cover about 16% of the area and serve about 135,000 people. The estimated average flows are 8 MGD. The remaining populationuses soakage pits and septic tank systems. ANNEX 1 Page 6

1. Collection System

There are about 80 miles of laterals and sewers of 4" to 12" in diameter and about 5 miles of trunk mains 9" to 421 in diameter. The pipes are mostly vitrified clay tile and the siphons are of cast iron. The more recent pipeline installations are of asbestos-cement and plain concrete pipe. The manholes are of brick and concrete with cast iron frames and covers. The mains need to be repaired in some places and relieved of their load with additional trunk sewers. Sewage from the laterals and street sewers flows by gravity into three trunk sewers which flow from east to west.

The Low Level Trunk sewer, which serves the harbor area and adjacent districts is the oldest, having been built in 1893. It discharges by gravity into the Darling St. Pumping Station and from here the sewage is pumped to the Western Sewage Treatment Plant through a 21" diameter main. The sewer is below sea level and there is speculation that the earthquake of 1907 may have affected its carrying capacity. The Harbor Redevelopment Scheme, however, is following the master plan and installing new lines which will reinforce the capacity of this sewer. The low level trunk sewer is 9,000 ft. in length, from 9" to 22" in diameter, and has 49 manholes.

The Mid Level Trunk sewer to the north of the Low Level Trunk sewer was built in 1939 to relieve the load on the Low Level Sewer. It is 8,734' in length, from 9" to 24" in diameter, has an inverted siphon, and has 33 manholes. It flows by gravity to the Darling Street Pumping Station from which the sewage is pumped to the Western Treatment Plant.

The High Level Trunk sewer to the north of the Mid Level Trunk Sewer, is approximately 18,000 feet in length, from 12" to 42" in diameter, and has two inverted siphons and 82 manholes. It was built in 1925 and serves the upper portion of the sewered area in Kingston. It discharges by gravity into the Greenwich Sewage Treatment Plant.

2. Treatment Plants

The Western Plant was built in 1937 and serves those areas drained by the Low Level and Mid Level Trunk Sewers. It has grit chambers, communitors, primary clarifiers, sludge digesters and drying beds. It provides primary treatment and discharge its effluent into the Harbor near the Tivoli Gully. The plant has a rated capacity of 3.5 MGD.

The Greenwich Plant serves the area connected to the High Level Trunk Sewer and receives about 1.5 Mgd. The plant was completed in 1971 and has a capacity of 5 Mgd. It has grit chambers, communitors, primary clarifiers, sludge digesters and drying beds. It provides primary treatment and the effluent is discharged into the Harbor. ANNEX 1 Page 7

The Harbor View Plant was completedin 1972 and has a capacity of 834,000 GDP. It is located at the east end of the city and serves the small residentialand industrialarea there. It has grit chambers, conmunitors,aeration tanks, sludge digestersand drying beds. It provides secondarytreatment and dischargesits effluent (outsidethe Harbor) into the ocean.

There are package plants of the extendedaeration type serving the residentialareas of Duhaney Park (0.8 lIgdcapacity), Hughenden (0.2 Mgd capacity),Independence City and eight small industriesand institutions. They discharge their effluentsinto the nearest watercourses.

There is also a low rate tricklingfilter at the Universityof the West Indies and a septic tank and disposal field at Palisados Airport.

3. Outfalls

The sewage effluent from these plants is dischargedas follows:

Plant Outfall

Greenwich Plant 3,740 ft. in length, 4" diameter into the Harbor in 36' of water.

Western Plant 300 ft. in length, 36" diameter into the Harbor in 36' of water.

Duhaney Plant 1,300' pipeline to Duhaney River.

HughendenPlant 4,000 pipeline to Sandy Gully.

Harbor View Plant 500' pipeline, 16" diameter with diffuser,25' depth, to sea.

Both the Duhaney River and Sandy Gully empty into shallow Hunts Bay which is partially shut off from Kingston Harbor by a causeway and bridge.

4. Operation and Maintenance

Operationand maintenanceof the sewage treatmentfacilities with the exceptionof the GreenwichPlant is deficient. The design of the Harbor View Plant is poor and makes the plant difficultto operate. The Hughenden and Duhaney Park Package Plants are not achieving the desired degree of treatment,and the effluentsare pollutingthe groundwaterand surface water courses. The combined capacity of these plants is nearly 11 Mgd, but the larger plants are being operated at far below their capacity. The soakage pits and septic tanks in several of the populatedareas are overflowing ANNEX 1 Page 8 onto the surface of the ground. In the rainy season the situation is particu- larly unpleasant because the wate- table rises causing more sewage to overflow and form ponds in the streets and yards.

Most of the trunk mains do not have the capacity to carry the present or future flows. Additional mains and pumping stations will have to be installed to provide adequate service.

5. New Sewer Works

The Water Commission is completing some sewer works in the Jones Town area. This area is very congested with narrow streets, irregularly shaped lots, and many tenement buildings. It is located near the center of the city. These works with an estimated cost of J$780,000, are in accordance with the master plan.

In July 1972 sewer extensions were completed in the Denham Town area at a cost of J$68,964.

6. Sewer Income and Tariffs

Sewerage expenses have increased at a greater rate than revenues. The present revenue is obtained from rates based on property valuations, which have not been adjusted for many years. (A revaluation study was begun in July 1974 and is now completed). The sewer charges were paid to the Government Collector of Taxes until May 1, 1974 when the Water Commission was authorized to do the billing and collecting directly. There has been a gradually increasing deficit that is being met by Government grants. These grants, however, are not paid until both the Collector of Taxes Office and the Water Commission have completed their accounting.

II. Description of the Project

Water Supply

Sources

In October 1972, the Commission's consultant's prepared a scheme for stabilizing the yield of the Tulloch Springs to 8.5 Mgd even during the dry season when the flow has decreased to an average of 3.5 Mgd according to available flow records. This scheme consists of the drilling of wells in the extensive limestone aquifer from which the spring and the Rio Cobre are fed. The water from these wells would be pumped through a pipeline to the Tulloch Springs Pumping Station and thence to the Kingston water system. ANNEX 1 Page 9

Pumping from the aquifer during the dry season would reduce the flow of the Rio Cobre the waters of which are used for irrigationin the St. CatherinePlains. Irrigationworks were built in 1874 and water rights for a minimum of 79 Mgd have been established. In order to maintain this minimum flow, compensationwells would be drilled in the same aquifer and the water pumped to the river through a pipeline.

The Commission'sconsultants estimated that another 13.5 MGD (and ultimately25 MCD) to supply Kingston could be developed in the Linstead Basin. The Bank retained the services of a consultantgeologist in May 1973 who examined and agreed with the general concept of the scheme. He recommended a 3-4 year program of drilling and testing before furtherdevelopment of these groundwaterresources.

This groundwaterscheme involves the operationof numerouswells and pumps and the repumpingat the Tulloch Springs Station. The costs for power and labor are rising at an unpredictablerate, directly affecting the cost of this water. There is also the competitionfor use of this water by agriculture,industry, and cities of Spanish Town and Kingston in differentparishes.

Another consultantof the Commissionprepared a feasibility study for a surface water development,the Blue Mountain Water Supply that could be developedby stages to supply ultimately 100 Mgd. The first stage would require 4-5 years for design and constructionand would supply by gravity a flow of 13.5 - 21 Mgd.

The first stage would include a diversiondam, tunnels and pipelines, and a treatment plant at a high elevationcommanding over 60% of the cities' population. The Commission is already successfullyoperating similar treatmentplants. The capacity of the tunnelswould be suitable for the future stages which would require pumping.

The Project

The project provides for the drillingof four wells northwestof the Tulloch Pumping Station to supply up to 6 Mgd as needed. It is expected that the wells would be 16" in diameter,up to 600 ft. in depth, and produce an average of 1.25 Mgd each. Water from the wells would be pumped directly into 8" mains of about 1 mile in length leading to the Tulloch Pumping Station, These wells would be used to maintain a flow of 8.5 Mgd from Tulloch. (Map IBRD No. 11301 shows the location of the water facilitiesin the Project.)

Another group of wells would be drilled in the Liguanea Plains within the metropolitanarea of Kingston. These wells would be 12" - 16" in diameter,up to 400 ft in depth and have a yield of approximately0.75 Mgd each. The water would be pumped directly into the adjacentmains in the ANNEX 1 Page 10 dsistributionnetwork through short connectingbranch mains, 6" to 8" in diameter. The water would be disinfectedby chlorination. The combined output of these wells (4 Mgd) would be for the water supply of Kingston.

A third group of wells would be drilled in the Rio Magno Valley north of Tulloch Springs. These wells would be used in the dry season to compensatefor the reduction of flow in the Rio Cobre. It is expected that 4 wells would be needed, 16" in diameter,up to 600 ft. in depth, and have an average yield of 1.25 Mgd each. The water would be pumped through about 3.5 miles of 8" branch mains to a 24" pipeline. This pipeline,about 2 miles in length would convey the water to the Rio Cobre River near Linstead. A well will be drilled near Halls Green intake works and pumping station and a new 16" pipeline installed from Halls Green to the Boar River transmission main. This will augment the supply by an estimated 1 Mgd.

HermitageDam

The major reservoir of the water system is formed by the Hermitage Dam on the Wag Water River about 2.5 miles (4 miles by channel) east of the town of Golden Springs. The original storage capacity of the dam was 460 MG and by 1962 it had been reduced to 360 MG by silt. Another 75 MG was lost in 1963 because of more silting caused by HurricaneFlora, leaving a net storage of about 285 MG. Silt removal with a floating dredge was begun and by 1970 the capacity had been restored to about 360 MG. Tn 1974, at the end of the drought in August, the reservoirwas practicallydry so that bulldozersand trucks were able to excavate and remove much of the silt before heavy rains caused the reservoir to fill.

The Commission'sconsultants have analyzed the structureof the dam and found it to be unstable according to modern theory. They have recommendedthat it be strengthenedby several methods but have not prepared detailed plans and cost estimates for a selected solution. Breaching of the dam would send a flood wave that could damage life and propertydown- stream at Golden Spring. The project provides for a study to define the best method for stabilizingthe dam and the related cost estimate.

Water Resources Studies

The Kingston metropolitanarea will continue to need water for industrialand domestic purposes and dispose of its waste water. Waste water, properly treated, could constitutea valuable water resource and be used for irrigation.

The Ministry of Agricultureis planning to increase the use of water from the Linstead Basin for irrigation. Many of the irrigation wells in the St. Catherine'sPlain are showing increasingsalinity. The Ministry estimatesthat there are 36,000 acres primarily in sugar cane under irrigation,4,000 additionalwhere irrigationcan be improved,and 10,000 additionalacres that can be placed under irrigation. ANNEX 1 Page 11

Water will also be needed for future residentialdevelopment in the St. Catherine'sPlain. Such developmentis taking place near Spanish Town because of the new highway to Kingston. Property values are cheaper than in the Kingston area which is now only 30 minutes away because of the new road.

Consequently,the various regional needs -withrespect to water must be evaluatedand the possible sources and transmissionof water studied.

The proposed project contemplatestwo studies related to water resources, (a) a study to determine the long-termyield of the Linstead Basin, and (b) a study for the regional allocation of water resources.

Evaluation of Water Supply Studies to Select the Next Major Water Supply Scheme

The Commission and the Government are consideringseveral schemes for the next major water supply developmentfor the Kingston metropolitan area. These studiesvary in their level of preparationfrom desk studies to a feasibilitystudy (pre-engineering)for the Blue Mountain Water Supply (Southern)from which one can proceed to the detailed engineering. Because of the relative sizes, costs, and yields of the project, it has been decided to make a desk evaluationof these studies to select and recommend which scheme will be undertaken next. This evaluationwill be done by a special consultant and the project provides for this. It was agreed during negotiations that the Commissionwould hire a consultanton terms and conditions satisfactory to the Bank to carry out this study.

The schemes that are being consideredare the following:

Blue Mountain Water Supply (Southern)- prepared by consultants for the Commission and planned to satisfy the needs of the area until the year 2000. It would be developed in four stages and eventuallyfurnish 100 mgd. The first stage would provide 13.5 Mgd by gravity and divert water from the Yallahs River, convey it through tunnelsand pipelines to a new treatment plant at a high point commanding 60% of the city. This is the most complete study and permits detailed soil borings and detailed engineeringto be undertaken.

Blue Mountain Northern Supply - estimated to provide up to 15 Mgd. It would divert water from several rivers and convey it through a series of tunnels to the HermitageDam. Additional transmissionmains and treatment facilitieswould be required. This is very preliminaryand requires site studies, hydrologic and geologic verification,and detailed cost estimates.

Devon Pen - Castleton Supply - prepared by consultants for the Commission and planned to provide 6-8 Mgd. It consists of intake works on the Wag Water River, pumping stations and a pipeline ANNEX 1 Page 12

to an existing transmissionmain from the Boar River to convey the water to the Constant Springs Treatment Plant, This has been prepared as a desk study and requires site investigation, hydrologicand geologicverification and more refined cost estimates.

Linstead Basin GroundwaterSupply - proposed by the Commission's consultants. It would consist of two groups of wells, one to provide water for the Kingston metropolitanarea and the other to compensatefor reduced flow in the Rio Cobre River which is used for irrigationdownstream. There would be collectormains, booster stations, transmissionmains and interconnectionwith the Kingston water supply distributionnetwork. It is estimated that an additional13.5 Mgd could be furnishedKingston. To verify the yields of the groundwateraquifer, and the location and size of the wells, a groundwaterdrilling and testing program is necessary and this is provided for in the project. Following this more detailed engineeringis necessary to determinethe most suitable design and refined cost estimates.

Tulloch SpringsFilter Plant

Recent studies by consultantsof the Commissionhave shown that a solution channelmay have developed in the limestoneformation between the Rio Pedro and the Tulloch Spring so that contaminatedsurface water could enter the system during certain periods of the year. In order to safeguard the purity of the water supply, a diatomaceousearth pressure filter will be installedat the site of the pumping station to facilitateits operation.

Improvementsin the DistributionSystem

Hope Filter Plant

During the dry season this plant which serves some high areas of Kingston cannot be operated at its capacity of 6 Mgd and processesonly 3 Mgd. This is because during this time the Hope River flow is too low to provide water and water is transferredfrom the Mona Reservoirby a pumping station and force main with a capacity of 3 Mgd. In order to permit the transferof more water to the Hope Filter Plant, the pumping capacity will be increasedto 5 Mgd and a new 16" force main installed. The intake works and raw water conveyancesystems at the Hope River and Mona Reservoirwill also be improved.

Institutionof Pressure Zones

Based on studiesmade by the Commission'sconsultants, the distributionsystem will be divided into several pressure zones. This will be done by installingvalves and interconnectinglines at selected points in the system. The zoning of the system will prevent excessive pressures in ANNEX 1 Page 13 the system thus reducing leakage and wastage. It will also control the draining of the water from higher areas to lower areas and make for a more satisfactorysupply in the higher areas.

Leak Detectionand Repair Program

A survey will locate leaks in the distributionsystem and a program of making repairs will be carried out.

Replacementof DefectiveMains

There are numerous undersizedand leaking mains in the system that restrict flows causingunsatisfactory service as well as wasting water. The studies made by the consultantshave located these mains.

Source Measurementfor Proper Control

New measuring devices will be installed at all sources of production so that an efficient control of the system can be exercisedand the real productionknown. These devices will be Parshall flumes, Venturi and Dall meters, and mechanicalmeters as necessary.

Sewerage

A master sewerage scheme for the Kingston-St.Andrews' area was prepared in July 1973 by another consultantto the Water Commission. From this scheme high priority areas were selected,one for health reasons and the other for economic reasons. The plan is divided into stages and provides for the collectionand transportof the sewage to a main treatment plant, either the Greenwich TreatmentPlant or a new one at Harbour View, and final disposal cf the effluent in the harbour or in the ocean at Harbour View. Th.eplant has unused capacity and can easily treat the additional sewage load. According to the consultants the assimilative capacity of the Harbor will not be reached with the proposed project and its subsequent stages. Following thls the design and constructionof the transmissionmain end Harbor Head outfall (which is the preferredsolution) will need to be undertaken.

Because of the growing competitionfor water resources,the feasibility of using sewage effluent for irrigationis to be studied and the master plan reviewed to.this end. The areas selected for inclusionin the project would not be affected by modificationsto the plan.

Work in these high priority areas is divided into phases and the first phase takes into considerationpopulation density, ability to pay, and need. An inspectionof the selected areas revealed that the septic tanks were overflowingand dischargingsewage into the streets, even under the present long-termdrought conditionswhen the water table was low. Three wells have been taken out of service because of high nitrate concen- tration, indicatingcontamination by sewage. ANNEX 1 Page 14 The areas to be sewered in the project are the following (see (Map IBRD No. 11302):

Lower West Sewer District

Washington Gardens Patrick City Duhaney Park New Haven

Upper Central Sewer District

The Lower West Sewerage Scheme includes laterals,street sewers, trunk sewers, pumping stations and force mains. Sewage from Duhaney Park, w4hichnow flows to the Duhaney Park treatmentplant, will instead flow directly to the existing Duhaney Park Pumping station. From this station the sewage will be pumped through a new force main into a gravity flow trunk sewer to be constructedthrough WashingtonGardens, and the Duhaney Park treatmentplant taken out of service.

The sewage from Washington Gardens and Patrick City will flow through the new gravity trunk sewer to a new pumping station in Nance Pen. Part of the sewage from New Haven will also flow by gravity to the Duhaney Park Pumping Station and the rest will be conveyedby the new New Haven pumping station and force main to the new Nance Pen Pumping Station.

From the Nance Pen Pumping Station the sewage will be conducted through a new 30" force main to the existing GreenwichTreatment Plant.

The Upper Central Sewerage Scheme includes laterals, street sewers, and trunk sewers. The area to be served is bounded by Hope Road, Eastwood Park Road and West Kings House Road. Laterals and street sewers will be installedin this area and drain by gravity to a new trunk main on Maxfield Avenue. The trunk main will be built from Hagley Park Road along Maxfield Avenue to the Spanish Town Road where it will connect with an existing 42" trunk sewer that goes to the Greenwich Treatment Plant. A branch trunk sewer built along Grove Road from Half-Way Tree Road to the trunk main on Maxfield Avenue.

Plumbing Installationsand House Connections

In order to ensure the optimum use of the sewers and to accelerate the rate of connection,funds are provided in the project for household plumbing and connection lines to the street sewers primarily for low income residentsin the Lower West District. The Commissionis legally empowered to require such installationor do them directly,and extend financingat up to 5% interest and 20 years repaymenttime. ANNEX a Page 1 of 3 pages JAMAICA

KINGSTONSEWRAGE I ANDWATER SUPPIY PROJECT

KINGSTONWATER CaQISSION

COST ESTIMATE

SEWERAGE

.J$ 1000 US$ 1000 Local Foreign Total Local Foreign Total

A. LOWER WEST DISTRICT

WASHINGTONGARDENS

1. Trunk sewers, street sewers and laterals 937 683 1,620 1,020 752 1,772

2. Nance Pen Pumping Station 599 255 854 660 280 940

3. Pumping Main to Greenwich 333 489 822 366 538 904 Subtotal 1,869 1,427 3,296 2,046 1,570 3,616

PATRICK CITY

Trunk sewers, street sewers and laterals 1,319 963 2,282 1,452 1,058 2,510

DUHNEY PARK

Pumping Main 25 37 62 28 40 68

NEW HAVEN

1. Sewers and laterals 365 267 632 402 294 696

2. Pumping Station 45 19 64 49 21 70

3. Pumping main 10 15 25 11 16 27 Subtotal 420 301 721 462 331 793 B. UPPER CENTRALDISTRICT

Trunk sewers, street sewers and laterals 1,058 772 1,830 1,165 848 2,013

C. HOUSECONNECTICNS, PLUMBING 1,500 1,000 2,500 1,650 1,100 2,750

TOTAL CONSTRUCTION 6,191 4,500 10,691 6,813 4,947 11,760 ANNEX 2 Page 2 of 3 pages

JAMAICA

KINGSTON SEWERAGEI AND WATERSUPPLY PROJECT

KINGSTONWATER COMMISSION

COST ESTIMATE

WATERSUPPLY

J$ 1000 US$ 1000 Local Foreign Total Local Foreign Total A.. WELLS, PUMPS AND PIPELINES

TULLOCHSPRINGS

1. Site Investigation 23 15. 38 26 16 42 2. Drilling and Testing (5wells, 600') 145 84 229 159 93 252 3. Equipment and Headworks (4 wells) 23 105 128 25 115 140 4. Branch Mains, Wells to Tulloch Pumping Station, 4 lines, 1 mile, 8" Diameter 99 34 133 109 38 147 290 238 528 319 262 581

LINSTEADBASIN 1. Site Investigation 18 12 30 19 14 33 2. Drillingand Testing(5 wells) 145 89 234 159 98 257 3. Equipmentand Headworks(4 wells 600o) 107 24 131 117 28 145 4. BranchMains, Wells to Pipeline 4 lines,i mile, 8" diam. 12 13 25 13 14 27 5. CompensationPipeline, 2 miles,24" 187 201 388 206 221 427 469 339 808 514 375 889

LIGUANEAPLAINS

1. Site Investigation 117 82 200 129 91 220 2. Drillingand Testing(7 wells,450') 173 106 279 190 117 307 3. Bquipmentand Headworks(4 wells) 83 146 229 89 158 247 4. BranchMains, Wells to Distribution system.4 lines,i mile, 8" diam. 77 26 103 85 29 114 5. Pumphouses(4) 20 8 28 22 8 30 470 366 839 515 403 918

HALLS GREEN 1. IntakeWorks 20 5 25 22 6 28 2. Pumps and Equipment 15 25 40 17 27 44 3. Pipelineand Connections 55 25 80 61 27 88 90 55 L5E7 0 160 Subtotal rT7 L 2,320 1,450 1,100 2,550

B. TREATMNETAND DISTRIBUTION

TullochSpring Filter Plant 100 455 555 110 500 610 Hope Plant TransferMain 240 164 404 264 180 444 PressureZones 370 409 779 407 450 857 ReplacementMains 450 309 759 495 340 835 leak DetectionSurvey 300 191 491 330 210 540 Master Meters - 100 100 - 110 110 Subtotal 1,460 1,628 3,088 1,606 1,790 3,396

TOTAL CONSTRUCTION 2,780 2,628 5.408 3,056 2,890 5,946 ANNEX 2 Page 3 of 3 pages

JAMAICA

KINGSTON SEWERAGE I AND WATER SUPPLY PROJECT

KINGSTON WATER COMMISSION

COST ESTIMATE

STUDIES AND MISCELLANEOUS

J$ ':.000 US$ 1000 Local Foreign Total Local Foreign Total

Water Resource Studies 50 180 230 60 200 260 Water Connection Survey 110 54 164 120 60 180 Hermitage Dam Study 89 89 178 98 98 196

Subtotal 249 323 572 278 358 636

Technical Assistance

Training 80 - 80 90 - 90 Management Consult. 80 80 - 90 90 Subtotal 80 80 160 90 90 180 ANNEX 3

JAMAICA

KINGSTON SEWERAGE I AND WATER SUPPLY PROJECT

KINGSTON WATER COMMISSION

INVESTMENT SCHEDULE

In US$

Item 1976 1977 1978 1979 Total

Construction

Water 1,600 2,390 1,500 450 5,940 Sewerage -- 3,750 5,610 2,400 11,760 Subtotal 1,600 6,140 7,110 2,850 17,700

Studies

Water Resources 100 160 -- -- 260 Water Connections 50 130 -- -- 180 Hermitage Dam 80 116 -- -- 196

Subtotal 230 406 -- -- 636

Technical Assistance 20 100 30 30 180

Engineering and Administration 380 760 570 190 1,900

Base Cost Estimate 2,230 7,406 7,710 3,070 20,416

Contingencies

Physical 350 1,310 1,530 710 3,900 Price 130 1,360 2,510 1,610 5,610 Subtotal 480 2,670 4,040 2,320 9,510

TOTAL BEFORE INTEREST 2,710 10,076 11,750 5,390 29,926 ANMEX 4

JAMAICA

KINGSTON SEWERAGE I AND WATER SUPPLY PROJECT

KINGSTON WATER COMMISSION

ESTIMATED SCHEDULE OF QUARTERLYDISBURSEMENTS

IBRD Cumulative Disbursemenl:s FY and Quarter at End of Quarter US$ (000)

1975/1976

September 30, 1975 December 31, 1975 1,225 March 31, 1976 1,650 June 30, 1976 2,980

1976/1977

Septembier 30, 1976 4,310 December 31, 1976 5,640 March 31, 1977 6,970 June 30, 1977 8,330

1977/1978

Septembier30, 1977 9,690 December 31, 1977 11,050 March 31, 1978 12,410 June 30, 1978 13,060

1978/1979

September 30, 1978 13,510 December 31, 1978 14,160 March 31, 1979 14,800 June 30, 1979 14,900 Septemler 30, 1979 15,000 JAMAICA

KINGSTON SEWERAGE I AND WATER SUPPLY PROJECT

Economic Rate of Return

In 1975 Constant Prices J$000

1 2 3 4 5 6 7 8 Total Incremental Net Benefit Revenue Value Total Net Investment sales - billion per Benefit Land 40% Of Benefit Benefit Year J$ gallons thousand gallons (2 x 3) Appreciation Column 5 (4 + 6) (7 - 1) 1976 3360 - 3360 1977 S070 0.44 Revenue 290 3000 1200 1490 - 6580 1978 7340 0.70 J$1.24 462 18000 7200 7662 + 321 1979 3520 0.96 per 1000 634 15000 6000 6634 + 3114 1980 4350 1.20 less 792 9000 3600 4392 + 040 1981 4090 1.50 JVO.58 990 9000 3600 4590 + 500 1982 3580 1.77 Cost 1168 9000 3600 4768 + 1181 1983 per 1000 1221 1221 + 1221 1984 = 0.66 1254 1254 + 1254 1985 1287 1287 + 1287 1986

-2005 Note 1 Note 2 Note 3

Notes

1. IBRD Project plus future sewer works.

2. Revenues based on a combined water and sewerage tariff.

3. The appreciation in land values as estimated--Upper West Area J$2/sq ft; Lower Central Area J$0.70/sq ft; Other Areas J$0.70/sq ft. JAMAICA KINGSTON SEWERAGE I AND WATER SUPPLY PROJECT KINGSTON WATER COMMISSION

APPROXIMATE WATER COSTS AND INCOME DISTRIBUTION

Household 1' % in each 11 Cumulative Number.g'of Approximate Yearly Assumed % of income group household % connections water consumption Payment Average Income J$ per year income group for that % 1000 gallons for water Annual Expended per month J Income J$ in water

500 or less 30 30 16308 3.3 15.64 260 6.0

501 - 1,000 20 50 10872 6.63 45.7 750 6.1

1001 - 2000 20 70 10872 8.9 75.0 1500 5.0

2001 - 3000 10 80 5436 12.0 125.0 2500 5.0

3001 - 4000 6 86 3262 14.0 156.0 3500 4.45

4001 - 5000 4 90 2174 16.0 173.0 4500 3.8

5001 or more 10 100 5436 36,0 576.0

TOTAL

1/ Interpolating between the 1971 and 1980 curves from F. Oberman, Cost Analysis for Proposed Regional Developing Plans, Vol. I, UNDP, 1971.

2/ Assuming a direct correlation between income and water consumption. ANNEX 7 Page 1

JAMAICA

KINGSTON SEWERAGEI AND WATER SUPPLY PROJECT

KINGSTON WATER COMMISSION

ASSUMPTIONS FOR FINANCIAL PROJECTIONS

Introduction

The latest financial data submitted by the Commission are thei.r internal accounts for the 11 month period to February 28, 1975. These have been adjusted for a full year and are the base used for financial projections.

Projections for Financial Years 1976 to 1982 take into account: capital works pirogram of this project and the assumptions that tariffs will be raised to meet the rates of return agreed upon during negotiation.

1.0 Water Volume Sales and Revenues

1.1 Water Tari.ffs

The water tariffs were increased by about 60% in December 1974. 1.2 The projections assume further increases on the order of 15% on July 1, 1977 and July 1, 1978, July 1977 and 25% by July 1979 to achieve the following real rates of return: Financial Year Ending Minimum Return

March 31, 1976 1.0% March 31, 1977 2.0% March 31, 1978 2.0% March 31, 1979 3.0% March 31, 1980 4.0% Thereafter 4.0%

1.3 These rates of return would be calculated on the combined water and sewerage system assets adjusted for inflation.

1.4 Sewerage Tariffs

(a) The tariff is to be increased during the year ending March 31, 1976 so as to yield a 50% increase in revenue.

(b) The Government will make grants to the Commission for losses on sewerage operations:

J$1.6 million in FY76 J$1.5 million in FY77 ANNEX 7 Page 2

1.5 Water Sales and Connections

(a) The average water consumptionper connection is expected to decline as many of the new connectionswill serve apartment buildings rather than large houses with gardens and because the recent and projected tariff increaseswill reduce revenues. Studies suggest a demand elasticityof 6% - 10% with a higher effect on revenues because of the progressivetariff structure.

(b) As 90% of the population is at present served, the total number of connectionsis assumed to grow at a rate of 2.3% annually.

1.6 Sewer Connections

(a) The assumptionsare that new sewer connectionswill be made as follows:

FY New Conrections

1977 2.040 1978 3,000 1979 3,060 1980 2,680 1981 3,660 1982 1,600

(b) Consumerswill pay J$200 as a connectionfee.

2.0 Inflation

2.1 Internal inflation is measured by the Kingston Metropolit:anConsumer Price Index (CPI). Domestic Inflationreached annual rates of 15% in 1973 and 26.5% in 1974. Governmentmeasures have begun to reduce the rate of increase and the projectionsassume rates of:

1975 24% 1979 15% 1976 15% 1980 10% 1977 12% 1981 10% 1978 15% 1982 10%

(a) Operating Costs

The increases in operating costs are based on the above figures. ANNEX 7 Page 3

Project Cost Inflation

2.2 The estimatesof the costs of the project have been increased using the Domestic Inflationindex for the local componentand using constructionand equipment costs for similar projects.

Price Contingencies

Year Local Supplies Foreign Supplies

1976 15% 10% 1977 12% 9% 1978 15% 8% 1979 15% 7%

Asset Value

2.3 For Asset Valuation purposes a factor of 85% of the Kingston Consumer Price Index has been used. Past figures show this a reasomnble approximationto the GDP deflator and the use of the CPI figures is -referred because of ;hier more timely publication.

Devaluation

3.0 The Jamaican dollar is projected to maintain its present relationship to the US dollar on the assumptionof continuingdemands for Jamaican bauxite and a continuinglow price elasticity.

OperatingCosts

4.0 Wages and Salaries

It is assumed that the Commissionwill reduce the present excessive scale of overtime payments by the followingpercentages, taking the 1975 overtime cost as 100.

(a) FY76, reduce the 1975 amount to 75% and then increase by the inflationfactor for 1976;

(b) FY77, reduce the 1975 amount to 25% and then increase by the inflation factors for 1976 and 1977;

The Jamaican authoritieshave agreed to a target of reducing the wage/salary element of -otal Operating Costs from the 1975 level of 62% to 53% by March 31, 1977. ANNEX 7 Page 4

4.1 Other OperatingCosts

The other operatingcosts are projected to increase in proportion to the volume of water produced and at the inflation rates given in para. 2.1.

5.0 Balance Sheets and Financial Plan

5.1 Jamaican GovernmentLong-Term Debt

(a) Agreementwas reached that the Jamaican Governmentwould restructurethe long-termdeb_ of the Commission to the Covernmentby either capitalization,partial forgiveness or a combinationof methods. The Jamaica Governmentwill submit proposalsfor Bank approval. The projections assume that this will be shown in the Balance Sheet as at March 31, 1975 and projectionsassume:

(1) A Government contributionof J$1.2 million in respect of earlieryear 3ewer operatingdeficits.

(2) A Government contributionof J$5.7 million being the overdue interest and overdue principal on Jamaican GovernmentLoans as at March 31, 1975.

(3) A further contributionof J$9.40 million as a reduction of long-termdebt.

(b) The Government Loan for this project is assumed in the amount of J$6.28 million repayable in 25 years at 8% interest and with a four-yeargrace period.

5.2 The Water Commissionis exempt from taxes other than Social Security and is assumed to remain in that status. JAFtAICA

KINGSTON SEWERAGE I AND WATER SUPPLY PROJECT

KINGSTON WATER COSMMISSION

CONSOLIDATED INCOME STATEMENT

(S$ MILLIONS) (VOLUME IN MILLION OF IMPERIAL GALLONS) - FISCAL YEAR ENDING MARCH 31

197S 1974 ¶079 197h 1977 1978 1979 I0Q¶ 1961 I 9A2 '.- *---.w.-...... --.. -'_...... _._...... _-._...... _.....__,__.,...... , ...... I.._...... pnPL TTtnN-TwnOs$OANl) h,no 6a4,nn 8ROn 0 P9,20 71n0,A 733,n0 7s59,0 778,an 801 ,8n 825,80 POPULATION SFWVED-OATER 570,'6 $94,o0 hn3,qo 624,00 653,82 683,28 71t-,44 760,10 778,60 797,50 POPULATIOn SEWVED-SEwE4 12?,nn 130,25 1350no 139.91 163,48 1Q7,91 23o,17 272,44 312,10 330,32 X POP'OLATTON SERVED-wATER 90,93 q1,67 V0,36 90,54 Q1,98 93,22 Q9,58 p7,6S 97,13 96,57 WATFR CONNECTIONS.IHOUS, 5e,0 60,00n 61,00 62,40 64,10 65,70 67,40 69a10 70,80 72,50 SEWER CONNECTION$.THOUSAN 12.9q 13.16 13,64 1 5,99 16,03 19,03 22,09 24.77 2s,43 30,03 % POPULATTON SERVFO-SF4FR 20,00 20,10 20,2n 20,30 23,00 27,00 31,00 35,00 39,D0 40.00

VOLUME SnOtIO.MILLION TI I0,9? 10,78 10,93 11,04 11,46 11,74 12.00 12,27 12.54 12,81 CnNsUHPTION/CnNNFC/HnNTH 15,47 14,Q7 14,93 14,75 14,03 14,89 14,e4 1(480 14,76 14,72 UNNACCOUNTFO FOD WATER X 25,0n 25,0n 2S,00 25,04 22,0o 20,0D0 160O 1,h O 16,00 16,00 WATFR PROOUCTIDN.MTLL,TTG 14,ss 14,37 t4,57 t4,73 14,72 14,67 14,64 1'461 l,93 15,25 PER CAPITA DRODUCTION LCD 31A.60 29A,28 297,48 290,96 277,63 264,77 252,59 236,97 236,13 235,69

RATER RFVENUES 5,46 6,9O A,q6 12.92 13,3? 15,3S 17.77 21,Y6 24,80 28,14 SEWER REVENUES 0,418 0,4 O,O 0 77 0,77 0,83 2,00 2,00 ?,00 2,40

TOTA( RFVFNUFS 7,34 9,46 13,69 14,094,1 16,18 ¶0,77 23,69 2b,60 30,14

WATER PERSONNEL 2,36 S,19 4,46 4,tl 3,72 4,28 a,42 5.46 6,0b h,73 rHw8FC'^UF ^,;2 O . ; '-0,i" 0,I 0,i6 n,20 0,23 0,27 0,29 0,33 0,37 POWFR A2,2 0.27 n ,s 0,67 0,75 0,86 0,98 t,0s 1,21 1,36 MATERIALS 0,13 0,14 0,1S 0,17 0,19 0,?2 P,I; 0,28 0,31 0,3a ,--,---_...... --.- .. .. - .. _..... ::...... -__., _ , _._...... _.,...... ,__...... ,__ DIRFCT CnsTS-WATER 7,R? 3,73 S,37 S,13 4,86 s,s9 ,4a2 7,t2 7,92 6,81

SEWER PERSONNEL 0,32 0,93 ,^69 O,6S 0,°2 t,t° 1,31 1.49 1,73 1,95 SEwFR MATFRIALS 0,n1 o,nt o,n1 0n01 0,01 0,01 0,0? 0,02 0,02 0,03 OTHER SEWFRAGE COSTS (,04 o,n4 0,07 o,07 0,09 0,13 0,17 0,21 0,27 0,31 ____..... ,...... __...... _ _ ,...... _. .__...... _. . . _., , ...... _, ..... , I.. _* DIRFCI C0OSS SEWFRAtE 0,07 n,97 n,7 0,8a8 ¶,03 1,24 1,49 t,72 2,02 2,29

:=:===Z=: ::::===z z=::::== :::::=== ==::=:=: :=:::::: ::==m=::: :=:===:: ::=::=: ===cm=== TnTAL DIRECT COSTS 3,?0 4,3n 6,n9 6,01 5,89 6,83 7,92 6,63 9,94 11,09 AOMINISTRATTON 1,32 I.63 1,91 2,15 2,43 2,84 3,35 3,72 4,14 4,59 OTHER INDTRFCT CoSTS 0,1 0,22 0,30 0,33 0,51 0,57 0,64 0,72 0,77 0,83 =:::::=: =::==:==r :::::5:: :::===:== ==:::::: ==::==== ::::::== ===:;==:= ==:==::= ====:s=== TOTAL CnSTS 4,68 6,tS 8,30 8,49 8,R4 10,24 11,91 13,27 14,85 16,92

INCOME BEFORE DEPRECIATION 1,2I t,l9 1,t7 5,20 5,P5 s,sa 7,8h tn,a2 tt,9 13,82 DFPRFCTATION 1,73 2,21 2,49 3,a4 3,92 4,46 5,13 6,01 6,84 7,76 :=::==== C=::==:=: :::::::= ::===::======::: ===:==== :==:::::= :::======:::=:== ==:====:= INCOME BFFORE INTEREST -0,47 .1,02 .1,79 1,66 1,33 1,a8 2,73 4 41 S9t, 5,86 INTEREST CHARGED OPF9. 0,89. 0,97 4,h9 1,11 I,n? 0,9t 0,94 2 S1 2.46 2,40 D NON ODFR,FVFNUES 1+1 -0,03 0,n2 .1,1 0.25 0,7R ).A, Rn.,7 t,t n,69

NET SURPLIJS -1,35 ,t,47 .7,62 0,80 0,77 1,39 2,99 2,77 3,63 4,1tI

AVERAGE RATE HASE 30,45 39.62 5n, 6Oh69P 6h, 1 74,1 90 ,8 I11,2 P 127,69 146,46 *OPERATING RATIO % 78,83 83,8S 87,67 62,02 62,72 63,27 60826 sb,12 55 a2 54,82 *RATE OF RETIJRN X -I .,Sh6 97 .3,a9 2,72 ?,0o 2,o0 3,0n 4,00 4,00 4,00

AVERAGE WATFR TARIFF $/TIG 0,90 0,64 0,62 1,17 1,t, 1,31 1,48 1,77 1t9a 2,20 SEWER REVfNIJE $/C0NN/MDNTH 3,n8 2.79 3,nh 4,59 4a,0 3,63 7,S4 6,71 5,8h 5,55 JAMAICA

KINGSTON SEWERAGE I AND WATER SUPPLY PROJECT

KINGSTON WATER COMMISSION

CONSOLIDATED FLOW OF FUNDS STATEMENT

(J$ MILLIONS) - FISCAL YEAR ENDING MARCH 31

1973 I974 197S 1976 1977 1978 1979 1980 1981 1982

SOUIRCES OF FUNDS z==m:zC=zz:=:::m INCOMF BEFORE DEPRECIATION 1,26 1.19 1,t7 S,20 5,25 5,94 7,86 10.42 11,95 13,62 NON OPER,REVFNUES(NET) .0,03 0,02 .1,14 o,25 0,46 n.78 n,80 o,87 1,18 0,65

GROSS INTFRNAL GENERATION I 1,2 1 0 05 s,45 r"71 6,73 A,hh 11,29 t3, 12 t4,7 GOVFRMFNT CONTRIBUTIONS 0.40 070 16,90 1,60 1,50 0,00 0,00 n,0 0 ,00 o,no DEVELOPERS CONTRIH(UTIONS 0,16 0,10 0,13 0,13 0,13 0,13 0,13 0,13 0,13 0,13 I8RD LOAN 0 ,00 o00 0 o0 1,37 4,47 4.22 1,33 0,00 000 0 ,00 NATIONAL LOAN 0,00 0.00 0,o 40 1,Y3 21 2t? O9 0 00 0,00 0,00 CAPITALIZED INTEREST 000oQ00 00 00 0,15 0,U7 1,01 1,44 o,oO 0,00 0,00

TOTAL LOANS FOR PROJECT 0 00 n,no o,no 2,01 h7s 7,35 3,76 n,nn n,nn 0oo OTHFR LOANS 2,89 1 44 0 ,00 0,o 0,0 0o,o00 0,0 5.00 6,00 5,00 TOTAL OTHFR LOANS 2,89 1,44 00 0o,no 0,00 0,00 0,00 5,00 6,00 5,00 ...... ,.....__.,_,...... _...... _...... ,___._ ...... _...... TOTAL LOANS 7,A9 1.44 0.00 2,01 .A78 7,35 A,7h 5,0( h,0o s,o0 CAPITAL TNCREASE n0.1 0,1o 0,0 0 000 0,00 0,00 n , o 000 0,00 0,00 SNoRr rFRM LOANS 0,n0 o,77 0,55 0.00o,00 0,63 00o 0 ,00 0,00 0,00 :::::::: mzz=z::z :Z======::::==:: :::::::: =:zm=:zz :,:=a=:: :::::::: :::::::: ::::::=: TOTAL SOURCES 4,82 4,32 17,6t 9,19 14,12 14,84 12,55 Ib,42 19,25 19,40

APPLICATIONS OF FUNDS

INVESTMENT IN PROJECT 0,00 0,00 0,00 2,46 9,t5 10,62 4,96 0,00 0.00 0,00 CAPITALIZED INTEREST 0,00 0,00 0,00 0,15 0,47 1,01 1,44 0,00 0,00 0,00 OTHER INVFSTMENT 5,09 4,12 3,30 1.20 0,31 0,36 0,43 8 ,1a 843 8,12 OTNF4 WORKS FXCESS CASH 0,15 o,nn ,00 0n,00 1.19 0,00 1,53 4.52 7.03 7,63 t...... ,__...... _,,...... ___...... __...... _._ ...... ,...... _ . ,... _._._. ._ TOTAL INVFSTMENT 5,23 4,12 5,3n 3,A2 11,13 t1,99 , 3h 12,hh 15,46 15,75 hORD AMORTIZATION 0,n0 0,0 0.ono 0,0 0 ,00 0,00 0 ,00 0,25 n,2e 0,30 NATIONAL PRnJECT LOAN AMOPT 0,00 0 00 0,on 0,00 0,00 0,00o 0 o0 0,12 0,13 0,15 OTHER LOANS AMORTIZATION 0,05 0,26 11 ,; 0,44 o,ao 0,37 0,39 o0,4 0,42 0,a4 SHORT TERM LOANS AMORTIZ. 0,oO 0o,n 0 ,00o a58 0,74 0,00 n,63 0,00 0,00 0,00 ,_ ,, ...... _*., ...... ,,, _ .... ._ ...... ,. __ ...... __,,.._,,.^...... _.,._.__. TOTAL AMORTIZATION n,05 0,26 11 58 1,02 1,14 0,37 ,n2 o,78 n,f3 0,89 OPER,INTPREST LONG T,LOAN 0,85 0,07 4,6n 0,96 0,94 0,Ql 0,87 2,51 2,46 2,40 OPER,INTEQEST SHORT T,LOAN o,0o 0o,00 0,9 0,1oo 0,08o,o 0,00 0,07 0,00 0,00 0,00

0 TOTAL ODERATION L INTEREST 0,85 0,07 0,.' *,11 t,^, C, 2,51 2,46 2,40

TOTAL DERT SERVICE 0,on 1,75 16,?7 2,13 2,17 t,28 t,8 5,29 3,29 3,29 ¢ INCREASE TN WORK,CAPITAL -1,23 -091 -.2,08 4,05 .0,88 0,47 0,83 o,87 0,51 0,76 INCREASE TN OTHER ASSETS .0*,0 0,t13 0,13 .n 8n 1,70 1,10 I,a0 .*,ao 0,o00 0,40 X

TOTAL APPLICATIONS 4,s2 4,52 17,61 9,19 1,12 14,sa 12,55 ,1642 19,25 19,40

DEBT SERVICE RATIO 1,36 0,Q8 0,n0 2,56 2,63 5,25 ,a41 3,43 3,q9 4,34 X FUNDS FOR INVESTMENT 6,66 .0*,6 .433,45 54, 5 39,45 S1,qo 60,83 65,83 67,26 70,14 X FOR INV/NET FIXED ASSET 1,03 -0.05 .2Q903 a,63 a,24 h,18 6,54 6,39 6,78 h,70 JAMAICA

KINGSTON SEWERAGEI AND WATER SUPPLY PROJECT

KINGSTON WATER COMMISSION

CONSOLIDATEDBALANCE SHEET STATEMENTS

(J$ MILLIONS) - FISCAL YEAR ENDING MARCH 31

¶973 s974 197 1976 1917 1978 1979 1980 1981 1982

A 5sF T R .-.-.--....

FIXED ASSFTS IN OPER, 84,87 104,84 133,60 156,76 172,75 202,24 243,81 278,79 315,95 358,55 MINIUS ACClJM,DEPRECTATION 38,11 48,90 61,83 73,26 84,65 99,91 117,77 133,79 152,nl 172,6h ----- * ------* ~.--**. -, *--.--.--.. .. -; ...... *-; .. _...... NFT FIXED ASSETS 46,77 ;Z,94 71,77 83,A 0 88, t0o02,33 126,0n 14s,no 163,94 185,87 WORK IN PROGRESS 10,49 13.76 9,69 7,38 18,51 23,03 1,h60 14,o0 16800 16,00 CASH AND RANKS 0,29 .0,75 *2,tn 0,30 0,37 0,43 0,49 0,SS 0,61 0,67 ACCOUNTS RECEIVABLE 1,19 1,79 2,38 3,70 2,96 3,37 4,11 4,93 5,3h b,03 INVENTORIFS 0,52 0,98 0,28 0,55 0,39 0,45 0,52 o,57 0,64 0,72 OTHER CURRENT ASSETS 0.68 1,56 0,49 0.60 n,60 0,60 O,hO 0,AO 0,60 o,6b

TOTAL CURRENT ASSETS 2,hA s,n8 1,05 5,1$ 4,3? 9,85 5,72 b,hS 7,21 8,02 OTHER ASSFTS 3,40 3,27 3,40 2,60 4,30 5,40 6.80 6,40 6,40 6,00 =::::::: :====a=:: :=:::-= =5=:ZZ ===e ======a== ===_ == ===u= 5==z TOTAL ASSFTS 63,33 76,06 85,q9 98,63 115,23 135,61 154,16 172,05 193,55 215,88

EFQIJTY AND LIABILITIES

EQUITY 24o4, 246 25,56 56 29,96 24,56 24,56 24,96 24,56 24,56 CONTPI6UTIONS 0,96 1,36 18,39 20.12 21,75 2 1,8A 22,01 22,19 22,27 22,40 REVALUATION SURPLUJS 15,78 26,32 37,73 46,88 55,940 66,63 79,68 90,39 102,72 116,65 OPERATIONAL SURPLUS -1,08 -3,06 -20,67 -9,87 -9,11 .7,75 "5,17 .2,40 1,43 5,54

TOTAL EQtJTTY 39,72 a9,1a 70,nn 92,6 -1,69¶05,31 121,08 134,69 150,97 169,14 ,,, ...... ,...... LONG TERM DEBT (NET) P2,47 12, 3 11,89 I3,I0 19,Q1 26,87 296h 34,0n3 A9,14 45,19 ACCOUNTS PAYABLE 0,89 2,20 2,25 2,30 2,35 2,40 2,45 2,50 2,55 2,bO CURRENT MATURITIES 0,26 11,58 ,a44 0,ao 0,37 0,39 0,78 o,83 0,89 O,95 OTHER CURRENT LIABILITIES 000 0,00 0 ,00 000 0,00 0,0 0o00 0n,o00 o,00 0,00

TnTAL CURRENT LIARILITIFS 1,19 15,78 ?,ho 2,70 2,72 2,709 3,23 ,33 ,44 3,59

SHORT TERm DEBT n,0n ,77 !,33 0,74 0o0 0,3 0,00 0,0n n0, 0,00 OTHER LIABLITIES 0,00 0,00°oon 0,00 0,00 0,00 0,00 0,00 0,00 0,00 RESERVES 000 0,00 0o,n00 ,0 0 ,o00 ,00 0,n00 00 0n,0n0 0o ~~~~~====-= = = ------I...... -...... TOTAL LIABILITIES 23,6 p6,8A 1g,91 16,95 22,63 30,30 33,09 37,5b 42,5A 46,74 ===:=:=: ====:=:z :=:-::== =--=:=:= :=:==:== ==:::======:==m=: :::===:: :==:::=: =:=::::= TOTAL EQUTTY-LIABILITIES 63,33 76,06 85,91 98,63 115,23 135,61 154,16 172,05 193,55 215,88

CURRENT RATIO 2,35 0,22 0,39 1,Q1 1,5J 1,74 t,77 2 o0 2 1, 2,26 OEBT/(ODFBT+EQUITY) 36,13 ?0,nS 14,52 14,19 17,70 20,33 19,78 20n17 20, 5 9 2n,34 WORXTNG CAPTIAL 1,79 0o,8 -t,20 2,85 1,97 2,4S 5,27 I,15 4,6 5,42 X

o ANNEX ll

JAMAICA

KINGSTON SEWERAGEI AND WATER SUPPLY PROJECT

KINGSTON WATER COMMISSION

WATER TARIFFS

PREVIOUS TARIFF APPROVED IN MAY 1973

Water consumption, Imperial Gallons J$ per Thousand Imperial Gallons

Domestic: Up to 4,000 0.30 For the next 3,000 0.50 For the next 3,000 0.75 For the next 3,000 0.95 For any additional gallons 1.00

Commercial: Any amount 1.10

NEW TARIFF APPROVED NOVEMBER 7, 1974

Water consuffption, Imperial Gallons J$ per Thousand Imperial Gallons

Domestic: Up to 3,000 0.35 For the next 3,000 0.70 For the next 3,000 1.05 For the next 3,000 1,35 For the next 4,000 1.40 l'or any additional gallons 1.75

Commercial! Any amount 1.75

Government! 1.75 ANNEX 12

JAMAICA

KINGSTONSEWERAGE I AND WATERSUPPLY PROJECT

KINGSTONW9ATER COMMISSION

ASSET CODES AND DEPRECIATIONRATES

Main Secondary .Asset Name Life Deprecia- Code Code Years tion Code Number Nunber

1 1 LAND 1

2 13 BUILDINGS& WAREHOUSES 40 4

3 2 RAWWATER PIPES, WELLS, RESERVOIRS 2 Reservoirs 50 3 3 Intakes 25 6 14 Wells 20 7 5 Transmission Main 40 4 6 PUmS 15 8

4 DISTRIBUTION SYSTEI 8 Distribution lines 40 4 9 Distribution pump-stations 30 5 10 Storage tanks and reservoirs 40 4 11 Service lines 25 6 12 Meters 15 8 21 Line feeder 40 4

5 7 WATERTREAT.MENT PLANTS 30 5

6 FURNITURE& EQUIPMENT 16 Office furniture& equipment 10 9 18 Stores equipment 10 9 19 Tool shop & garage equipment 10 9 20 Laboratoryequipment 10 9 22 Power Operated equipment 10 9

7 17 TRANSPORTATIONEQUIPMENT 5 10

11 14 Sewerage Treatment Plants 30 5

12 15 Street Sewers 50 2 JAMAICA

KINGSTON SEWERAGEI AND WATER SUPPLY PROJECT

KINGSTON WATER CONMISSION

Monitoring Indicators

1973 1974 1975 1976 1977 1978 1979 1980 1981 1982

TECHNICAL INDICATORS

Total Population (thousands) 630.0 648.0 668.3 689.2 710.8 733.0 755.4 778.4 801.8 825.8 % Population Served - Water 90.5 91.7 90.4 90.5 92.0 93.2 94.6 97.7 97.1 96.6 % Population Served - Sewer 20.0 20.1 20.2 20.3 23.0 27.0 31.0 35.0 39.0 40.0 Connections Water (thousands) 58.8 60.0 61.0 62.4 64.1 65.7 67.4 69.1 70.8 72.5 Connections Sewer (thousands) 13.0 13.2 13.6 14.0 16.0 19.0 22.1 24.8 28.4 30.0 % Unaccounted For Water 25-0 25 0 25.0 25.0 22.O 20.0 18.0 16.0 16.0 16.0 Water Produced (millions gallons) 14.55 14.37 14.57 14.73 14.72 14.67 14.64 14.61 14.93 15.25 Water Sold (millions gallons) 10.92 10.78 10.93 11.04 11.48 11.74 12.00 12.27 12.54 12.81

FINANCIAL INDICATORS

Consumer Price Index Increase - % 14.90 20.50 24.00 15.00 12.00 15.00 15.00 10.00 10.00 10.00 Operating Ratio - % 78.80 83.90 87.80 62.00 62.70 63.30 60.30 56.00 55.40 54.80 Total Operating Wages 2.68 3.72 5.15 4.91 4.64 5.38 6.23 6.95 7.79 8.68 % Opng. Wages/ Opng. Costs 57.30 60.50 62.10 57.80 52.50 52.50 52.30 52.40 52.50 52.50 % Return Revalued Assets (1.56) (2.57) (3.58) 2.72 2.00 2.00 3.00 4.00 4.00 4.00 % Accts. Rec./Billings 20.00 24.30 25.20 27.00 21.00 20.80 20.80 20.80 20.00 20.00 7. Revenue Effectiveness Index 1/ 75.60 75.10 74.60 75.00 77.80 79.90 81.80 84.00 83.90 84.10 Debt Service Ratio 1.36 0.98 0.00 2.56 2.63 5.25 4.41 3.43 3.99 4.34

I/ Revenue L Volume Produced unit price water sold JAMAICA KINGSTON SEWERAGE I AND WATER SUPPLY PROJECT KINGSTON WATER COMMISSION Proposed Org8niation Stroctore

MIN1TER OF PUC UTILITIES COMMUNIACATONsAND TRANSPOR

.EN RAL MANAGER

O ,ENGINE. A|ALYST STAFFOF TARYSFOMES OFFICER OFFICE TOTTI T

E-G N EItSTSF OSIIT I AFT-NN-F -FIoC IT Z-N EL~~~~~~~~~~~~~~~~~~~~OTFI-L~~~~~~~~~T ALY~~~~~~~~~~T Ai* ;X+< k xl [ 0E e.L, IAFINANClAL | -

JAMAICA KINGSTON SEWERAGE I AND WATER SUPPLY KINGSTON WATER COMMISSION WATER SUPPLY DATA AND PROJECTIONS

18 -______

EFF-ECT OF

ASSUMEDSENSITIVITY 00011 14OTO RATE INCREASE z 0

LU 0D 10 WAE RDDUCTION

z EF CLE\i DROUGHT zU

0 0 U) . .----. O Do AVERAGEVWATERA CONSUMPTION. - ,. ,, - LU X IL o /~~~~~~~~~~~~(RIGHTSCALE > 600 Ole 60 o < TOTAL POPULATION mC__ I LEFTSCAL z cn ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~m :D 400 4 DECLINING AVERAGE PER CAPITA 40 0 00o CONSUMPTION DUE TO 40> o 1- SERVICE EXTENSION TO_ I - LOW INCOME CONSUMERS >-X < i Z\ P~OPULATI~ONSERVED AND CHANGING HOUSING m I- 200 2 LEFTSCALE) PATTERN 20

0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

0 _ 0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

'55 '56 '57 ' '60 '6'62 '63 '64'65'66 '67 '68E79 '69 31 '71 '72 '73'74'75 6'76 77Y'78 80 82

40 ~~~~~~~IUAL ~ ~ ~~AC PROJECTED

YEAR ENDING MARCH 31

World Bank-9225 CHART 3 JAMAICA

KINGSTON SEWERAGE I AND WATER SUPPLY PROJECT

KINGSTON WATFR COMISSION

WATER AND SEWER CONNECTIONS

850.0 E5

800.0 - Q TOTRL POPULRTION E0

750.0 75 - POPULRTION SERVED WRTER

700.0 ~~~~~~~~~~~~~~~~70

660.0 WATER CONNECTIONS 65

600.0 60

550.0 55

500.0 50 M~~ Uz-450*0F ~45O.o I- 45

40 I:400.0 _- 4 CD CD C- 300 _ 35 0

CE 300.0_ ~X POPULATIONSERVED SEWER1RGE, 3

3250.0 25

300.0 - X S 4 SEWER CONNECTIONS_2

150.0 15

1973.0 1975.0 1977.0 1979.0 1981.0 Y E R R CHART 4 JAMAEICA - KINGSTONSEWERAGE I AND WATERSUPPLY PROJECT KINGSTONWATER COMMISSION CUMULATIVEDISTRIBUTION OF CUSTOMERS.PERSONAL INCOME WATERCONSUMPTION AND WATER REVENUES

-- F------

; ~~~~~F

A_ / 1.

.,83

*, c: / .

> r , / j~~~~/

1 U .3 - i - 1/ #

X,. , / ,~~~~/ // A

'-- ~~~~,WATERCONSUMPTION F _- AL

c->~~ r . PERSOjAL INCOME f

iN.. / ,--V

r / -1 l ,.J .-A WATERREVENUES

,~~~~~~~~~~~ ;-,F_ J iI..A_.-U.il_.-il tij [

/ - J- , < 5 ...... i . . 4. a

JAMAICA KINGSTONSEWERAGE I AND WATER SUPPLY PROJECT KINGSTON WATER COMMISSION ACTIVITY AND CONSTRUCTIONSCHEDULE

CALENDARYEAR 1975 1976 1977 1978 1979 QUARTER I 2 __ 4 1 2 3 1 2 3 4 1 2 3 4 1 2 3 4

CONSTUCOB D concurrently

WaterSupply E B C concurrently E B DI E B D mii. in im mm mimimmii logo, u.mii aIN i ull s, mm...l Sewerage B c

Connectionsand B C Plumbing------

STUDIES

E WaterAllocation I * _ms

"1m- *_ LinsteadBasin _mu1 m w______mm - rr W.K W ,W PW,A HermitageDam _ _ _ f E

Connection Survey

TECHNICALASSISTANCE

Training wm __ __ m __ __-_a*_ - m _

ManagementW I IF" .

LEGEND: p, z - Soil Boring,Investigation, Drilling and Testing E Engineering auaaaaaaaaa Equipment Supply B Bid inC ivil Works,Installation D Delivery mm m * Studies,Services C Construction World Bank-9328(R)

Oct. 1974 IBRD -11301R ______FE< A1975 0<9 \ ° / C /SFBRUARY

.9%,iz sxS < ->7 JAMAICA KINGSTONSEWERAGE I AND WATERSUPPLY PROJECT KINGSTON WATER COMMISSION Ti, <,g9 'i,'LzreSx Saij<-- A *NSTEAD00 24t-0- WATER SUPPLY

FINAL ENGINEERING I PI~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~LUEMOUNTAIN GTAGE 1 PROPOSED EXISTIN

BOG WALK TULLOCH SPRING INTAKL

DAM RA LWAYS 9< X H~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ERMITAGE R VFRS PERENNIAL

'.^g IIILAIM

UREA ,, 0 a \ XCONSTANTSVNING S WATER CAMMISSION SUPPLY

HEAUGUEKSLAM

I-N~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-

BOO'~ATPeoAoo ~F~ ~ ~ ~ ~ ~~ ~ ~~~~~~~~~~~~~~~~~~~~~~ /S / A bO BR I"

N/AREP,~~~N OUNIAMA~~~~~~~~ U9RRNUAS O 0 - RU . 970 GLA tOE ' -MA b b e a r a 5 70ANIS

. . RR'SSOE 'i < GI -V J A UAVSAc C WNJS 1 2 3 A0

VA,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~URARA FEBRDI11302R A 1 JAMAICA

PART Of KINGSTONSEWERAGE I AND WATERSUPPLY PROJECT HAT C/Sr /k/CT COMISSION 4drE? 2uMpIvA4REP fP wEST KINGSTONWATER SEWERAGE -ls 284>e/SQro FF (uv, j

AREAS TO SK/RS11E-T LiOWERr WEST D/STM/C7OT L- ; f 2 \ f 0: \;0 0: \ JM,PAOf /5/6 Vk/CT PUMINGSTOK RAINS ;''SRI_/.

M S K EWiH- r - W I | :; i ; ; SI r5i1 i, mi NATN" +7s 2 wus*X*641;;tlWEh *Z1 &; \ ;&t \ q ; z S 2z // t ~

TO SWNO~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~NII 1- * k7/"

.-.-.- ~ ~ I --JNARITN TIKIORAI;;':"4: "''nS/;.~~'" .. \/IIvROI A '

< 0l ie . ZG> r | - N~ ~~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ MN ST / O, SO P 4 7 w;^-,fia9 1 4 > :' 1: N N 9' s4.. ~~~~~~~~~~~~~~~~~~~~~-'~~~~~~~ A'~~~RSAERRVOIR f

4 T K- ( Tv,~~~~~~~~~~~~~~~. ,. AFT;f5A 111/A~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~00~ N I V J~~~~~~~mvII9,~~~~~~~j4 -~~~ N / 41 N~~~~~~~~~~~~~~~~~~AI5 . I IA 301~~~~~~~~~~~~~~~~~~~~~~~~~~E

R 4'E

',, .... ,. C / ...... ~...

'V "77'<4'jt / /A 17/ 51

AE II-I 1E/'I -N "N1/4/"'> A /s / -1-

1 V, A/ S T \ iT1V''%/H5 '/A e1. 4 A?HROR