Document of The World Bank
Report No: ICR0000729 Public Disclosure Authorized
IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-37630)
ON A
CREDIT
Public Disclosure Authorized IN THE AMOUNT OF SDR 8.8 MILLION, US$12 MILLION EQUIVALENT
TO THE
REPUBLIC OF MOLDOVA
FOR A
PILOT WATER SUPPLY AND SANITATION PROJECT
Public Disclosure Authorized
December 23, 2008
Sustainable Development Department Ukraine, Belarus and Moldova Country Department Europe and Central Asia Region
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without Public Disclosure Authorized World Bank authorization.
CURRENCY EQUIVALENTS (Exchange Rate Effective December 15, 2008) Currency Unit = Moldova Lei MDL 1.00 = US$0.096 US$1.00 = 10.41 MDL
FISCAL YEAR January 1 -- December 31
ABBREVIATIONS AND ACRONYMS
ACTD Agency for Construction and Territorial Development (ex-Agency for Regional Development until June 2006)) CAS Country Assistance Strategy DANCEE Danish Cooperation for Environment in Eastern Europe DCA Development Credit Agreement DEPA Danish Environmental Protection Agency EECCA Countries from Eastern Europe, Caucasus and Central Asia EGPRS Moldova’s Economic Growth and Poverty Reduction Strategy EMMP Environmental Mitigation Measures Plan FY Fiscal Year GDP Gross Domestic Product ICR Implementation Completion Results Report IDA International Development Association IFRS International Financial Reporting Standards KFAED Kuwait Fund for Arab Economical Development M&E Monitoring and Evaluation MAC Moldova Apa Canal Association MDGs Millennium Development Goals MDL Moldovan lei (local currency) MECTD Ministry of Environmental, Construction and Territorial Development MoENR Ministry of Ecology and Natural Resources MoET Ministry of Economy and Trade
MoF Ministry of Finance
MoHSP Ministry of Health and Social Protection
N.A. Not applicable or not available
NBF Not Bank financed NEAP National Environment Action Plan NGOs Non-Governmental Organizations NO No-objection
OECD Organization for Economic Co-operation and Development PAD Project Appraisal Document PDO Project Development Objective PIP Project Implementation Plan PIU Project Implementation Unit PP Procurement Plan
PWSSP Moldova Pilot Water Supply and Sanitation Project QAG Quality Assessment Group QEA Quality at Entry QSA Quality of Supervision
RFP Request for Proposals
RR Rate of Return SAC III Structural Adjustment Credit III SDC Swedish Agency for Development and Cooperation TA Technical Assistance TD Tender Documents UNECE United Nations Economic Commission for Europe UNEP United Nations Environment Programme WHO World Health Organization
WSS Water Supply and Sanitation
Vice President: Shigeo Katsu, ECAVP Country Director: Martin Raiser, ECCU2 Sector Manager: Wael Zakout, ECCSD ICR Team Leader: Takao Ikegami, ECCSD
REPUBLIC OF MOLDOVA PILOT WATER SUPPLY AND SANITATION PROJECT CONTENTS
Data Sheet
A. Basic Information...... i B. Key Dates...... i C. Ratings Summary...... i D. Sector and Theme Codes ...... ii E. Bank Staff...... ii F. Results Framework Analysis...... ii 1. Project Context, Development Objectives and Design...... 1 1.1 Context at Appraisal ...... 1 1.2 Original Project Development Objectives (PDO) and Key Indicators...... 1 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification...... 2 The project development objectives were not modified...... 2 1.4 Main Beneficiaries...... 2 1.5 Original Components (as approved)...... 2 1.6 Revised Components ...... 3 2. Key Factors Affecting Implementation and Outcomes ...... 5 2.1 Project Preparation, Design and Quality at Entry...... 5 2.2 Implementation ...... 5 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization...... 6 2.4 Safeguard and Fiduciary Compliance...... 6 2.5 Post-completion Operation/Next Phase...... 6 3. Assessment of Outcomes...... 7 3.1 Relevance of Objectives, Design and Implementation...... 7 3.2 Achievement of Project Development Objectives...... 10 3.3 Efficiency...... 11 3.4 Justification of Overall Outcome Rating ...... 11 3.5 Overarching Themes, Other Outcomes and Impacts ...... 11 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops...... 13 4. Assessment of Risk to Development Outcome...... 13 5. Assessment of Bank and Borrower Performance ...... 14 5.1 Bank Performance...... 14 5.2 Borrower Performance...... 15 6. Lessons Learned ...... 15 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ...... 15 ANNEXES MAP : IBRD 36574
REPUBLIC OF MOLDOVA PILOT WATER SUPPLY AND SANITATION PROJECT
A. Basic Information Pilot Water Supply & Country: Moldova Project Name: Sanitation Project Project ID: P074469 L/C/TF Number(s): IDA-37630 ICR Date: 12/18/2008 ICR Type: Core ICR REPUBLIC OF Lending Instrument: SIL Borrower: MOLDOVA Original Total XDR 8.8M Disbursed Amount: XDR 8.8M Commitment: Environmental Category: B Implementing Agencies: Agency for Construction and Territorial Development/Apele Moldovei Cofinanciers and Other External Partners:
B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 01/24/2002 Effectiveness: 04/08/2003 04/08/2003 Appraisal: 03/25/2002 Restructuring(s): Approval: 05/30/2002 Mid-term Review: 07/24/2006 07/24/2006 Closing: 12/31/2007 06/30/2008
C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory Borrower Performance: Satisfactory
C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Satisfactory Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Satisfactory Satisfactory Performance: Performance:
i C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry Yes N.A. at any time (Yes/No): (QEA): Problem Project at any Quality of No N.A. time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status:
D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Sanitation 25 25 Water supply 75 75
Theme Code (Primary/Secondary) Access to urban services and housing Primary Primary Other financial and private sector development Secondary Secondary Other urban development Primary Primary Pollution management and environmental health Secondary Secondary
E. Bank Staff Positions At ICR At Approval Vice President: Shigeo Katsu Johannes Linn Country Director: Martin Raiser Luca Barbone Sector Manager: Wael Zakout Motoo Konishi Project Team Leader: Takao Ikegami Seema Manghee ICR Team Leader: Takao Ikegami ICR Primary Author: Klas Ringskog
F. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document) To enhance the welfare of the population living in some of the poorest rural areas and medium-sized towns and cities by improving the quality, efficiency and sustainability of water supply and sanitation services as outlined in the Government’s National Action Plan.
ii
Revised Project Development Objectives (as approved by original approving authority)
(a) PDO Indicator(s)
Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Quality of Service: Percentage of microbiological water quality samples meeting Indicator 1 : target values:
Cahul 100; Orhei Value Cahul 98.5; Orhei 99.8; 100; Soroca 99.8; quantitative or Soroca 99.91; Stefan N.A. N.A. Stefan Voda 100; Qualitative) Voda 97.5; Balti 98 Balti 99.1 Date achieved 12/31/2002 06/30/2008 Comments The improvement in bacteriological quality is due in part to the increased (incl. % constancy of supply which prevents polluted groundwater from infiltrating the achievement) periodically empty pipe. Indicator 2 : Quality of Service: Hours a day of water service under pressure (Continuity) Cahul 13; Orhei Value 10; Soroca 24; Cahul 24; Orhei 24: quantitative or N.A. N.A. Soroca 24; Stefan Qualitative) Stefan Voda 4; Voda 19; Balti 24 Balti 24 Date achieved 12/31/2002 06/30/2008 Comments The constancy of supply in four out five towns greatly improves the convenience (incl. % of service to consumers as well as prevents infiltration of polluted groundwater achievement) into the periodically empty pipe.
Indicator 3 : Efficiency of Service: Energy consumption in kWh per m3 of water supplied: Cahul 1.51; Orhei Value Cahul 2.53; Orhei 1.8; 1.87; Soroca 0.0; quantitative or Soroca 2.04; Stefan Voda N.A N.A. Qualitative) 8.2; Balti 4.12 Stefan Voda2.8; Balti 2.84 Date achieved 12/31/2002 06/30/2008 Comments The replacement of oversized and worn electro-mechanical equipment has (incl. % reduced substantially energy consumption per m3 supplied. achievement) Indicator 4 : Efficiency of Service: Non-revenue water (%) Cahul 34; Orhei Cahul 35; Orhei 60; Value 44; Soroca 68; quantitative or Soroca 80; Stefan Voda N.A. N.A. Stefan Voda 43; Qualitative) 70; Balti 58 Balti 48 Date achieved 12/31/2002 06/30/2008 Comments The NRW decreases confirm the experience elsewhere in the world that
iii Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years (incl. % considerable time is required to reduce non-revenue water. The observed achievement) decreases under the project are reasonable, considering they happened in the course of 6 years. Indicator 5: Sustainability of Service: Collections as percentage of billings (%) Cahul 90; Orhei Value Cahul 95; Orhei 111; 97; Soroca 82; quantitative or Soroca 98; Stefan Voda N.A. N.A. Qualitative) 89; Balti 108 Stefan Voda 103; Balti 91 Date achieved 12/31/2002 6/30/2008 Comments High collection rates are due to collection of overdue accounts receivable for all (incl. % towns achievement) Sustainability of Service: The inverse of (Cash Operating Revenue as a Indicator 6: percentage of cash operating expenditure plus debt service) Cahul – 75%; Cahul – 109%; Orhei – Orhei – 77%; Value 100%; Soroca – 125%; quantitative or N.A. `N.A. Soroca – 81%; Stefan-Voda – 116%; Qualitative) Stefan-Voda – Balti – 106% 71%; Balti – 85% Date achieved 12/31/2004 6/30/2008 Comments The town utilities all report decreasing ratios of (cash operating expenditure plus (incl. % debt service) divided by cash operating revenue which means that the operating achievement) cash flow is positive. The covenanted ratio of 90% is met in all apa-canals.
G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 06/27/2003 Satisfactory Satisfactory 0.00 2 11/14/2003 Satisfactory Satisfactory 0.00 3 05/25/2004 Satisfactory Satisfactory 0.50 4 12/08/2004 Satisfactory Satisfactory 0.62 5 06/08/2005 Satisfactory Satisfactory 1.01 6 01/02/2006 Satisfactory Satisfactory 1.51 7 10/19/2006 Satisfactory Satisfactory 4.87 8 11/17/2006 Satisfactory Satisfactory 5.08 9 11/06/2007 Satisfactory Satisfactory 10.86 10 05/30/2008 Satisfactory Satisfactory 13.29 11 07/07/2008 Satisfactory Satisfactory 13.29
H. Restructuring (if any) Not Applicable
iv
I. Disbursement Profile
v REPUBLIC OF MOLDOVA
PILOT WATER SUPPLY AND SANITATION PROJECT 1. Project Context, Development Objectives and Design
1.1 Context at Appraisal
1. The Republic of Moldova is a small, landlocked country situated between the western border of Ukraine and the eastern border of Romania. The population of 3.8 million is decreasing and is predominantly rural with 59% of the population living in towns and communities of fewer than 10,000 people. Approximately 80% of urban residents are connected to centralized water supply networks and 63% to sewerage. Few of the existing wastewater treatment facilities operate in such a way as to meet standards and many are abandoned because of the difficulties in paying for the operating costs and for lack of maintenance. Studies show that about 10% of samples from urban water supplies are contaminated with coliforms.
The Government’s Strategy in the Water Supply and Sanitation Sector
2. The Government is cognizant of the deficient service coverage and quality, and of the inefficient, unnecessarily costly services and has consistently assigned high priority to remedying the sector deficiencies. To this end the Government approved the Program of Water Supply and Sewerage in Communities of the Republic of Moldova until 2015 (Government Decision No. 1406 of December 30, 2005.
3. The Government has assigned the responsibility for the implementation of its Strategy to Agency for Construction and Territorial Development, then Apele Moldovei (AM). AM is in charge of both water resources management and of heading the drive to improve the coverage and quality of urban and rural water supplies and wastewater systems, which was established pursuant to Government Decree No. 904, dated August 09, 2007. Small and medium sized water and wastewater systems are operated by the semi-autonomous Apa Canals, which are responsible to their respective local governments and are represented at the national level by the Moldova Apa Canal Association (MAC). Other stakeholders are represented through the more than 100 national environmental NGOs that are officially registered in Moldova.
1.2 Original Project Development Objectives (PDO) and Key Indicators
4. The project development objective is to enhance the welfare of the population living in some of the poorest rural areas and medium-sized towns and cities by improving the quality, efficiency and sustainability of water supply and sanitation services as outlined in the Government's National Water Action Plan. The project would achieve this objective by: (i) rehabilitating and improving operations of selected water and sewerage systems to increase service quality and efficiency; (ii) strengthening selected Apa Canals (water utilities) to improve their operational and financial sustainability; (iii) piloting the involvement of the local private sector in the above; and (iv) rehabilitating water and sanitation services in targeted rural areas.
The relevant key outcome indicators were selected to measure progress towards each of the dimensions of the PDOs:
1 Quality of Service: Percentage of water samples testing negative for pathogens (Indicator 1); and Continuity in hours of service under pressure (in hours per day) (Indicator 2).
Efficiency of Services: Energy use per m3 of water supplied (Indicator 3); Unaccounted-for-water (indicator 4);
Sustainability of Service: Collections as a percentage of billings (Indicator 5); and Cash operating revenue in percent of cash operating expenditure plus debt service (Indicator 6);
1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification.
The project development objectives were not revised.
1.4 Main Beneficiaries
Beneficiaries: - the 5 utilities and their staff in the 5 targeted areas (Orhei, Cahul, Stefan Voda, Soroca, Balti1) and the municipalities as the sole owners of the Apa Canals from 2000, and the inhabitants of the Corjova village, within the Rural component; - more than 200,000 persons – inhabitants of the PWSSP targeted areas are benefiting from better quality water and more reliable water supply and sanitation services.
1.5 Original Components (as approved)
Table 1: The Project Financed Five Components Indicative Bank- % of Component Costs % of financing Bank- (US$M) Total (US$M) financing A. Investments for Improved Urban and 7.02 50.1 7.02 58.5 Sanitation Services B. Village Water Supply 1.50 10.7 0.00 0.0 C. Institutional Strengthening 0.77 5.5 0.42 3.5 D. Engineering Services/Engineers/Technical 0.50 3.6 0.50 4.2 Advisor E. Project Implementation Unit (PIU) 0.45 3.2 0.30 2.5 F. Unallocated 3.76 26.9 3.76 31.3
Total Project Costs 14.00 100.0 12.00 100.0 Total Financing Required 14.00 100.0 12.00 100.0
1 Approximately 3.7 million US $ from the total IDA Credit remained unallocated and it was agreed in 2005 that these funds would be used for one more utility, the Balti Apa Canal. The Subsidiary Credit Agreement was signed in January 2006.
2 Component A: Investments for Improved Urban Water Efficiency
Least-cost priority investments that are economically justified based on a broad investment strategy for system improvement and lowering energy and other operating costs (e.g., leak detection and repair, network rehabilitation, pressure zoning and equipment for operations.); and Technical Engineers/Advisors would be hired under Component D to assist METD and Apa Canals to conduct additional measurements and analysis and identify further least-cost priority investments.
Component B: Village Water Supply
Urgent water and sanitation improvements; organization and staffing of community waterworks to operate and maintain the improved systems; implementation of cost recovery procedures to cover at a minimum system operation and maintenance; and training for the newly formed waterworks and where applicable, protection of shallow wells; a National Hygiene and Sanitation Promotion Campaign; and development of community groups under the rural development components focusing on the poorest areas and economically disadvantaged segments of the population identified by the Social Assessment.
Component C: Institutional Strengthening
Institutional strengthening and capacity building program under the National Water Action Plan; financial improvements and upgrading of equipment and materials; technical assistance with the Financial Action Plan; training of Apa Canal personnel based on a needs assessment to be prepared by the Apa Canals; and assessment and piloting of potential options to facilitate the involvement of local private sector operators in the sector; drafting of legislation.
Component D: Engineering Services/Technical Engineers/Advisors
Assistance to Apa Canals in the planning, design and implementation of investment programs; engineering services for the preparation of final designs and bidding documents; and technical advisors/assistance with procurement and supervision of construction for investments. Component E: Project Implementation Unit
This component would assist with implementation of the project, salaries, operating expenditures related expenses and audits to ensure that the Bank's procurement guidelines are observed.
1.6 Revised Components
5. There were no revisions to the components although actual costs turned out somewhat different from the appraised amounts due to the following reallocations requested to be made between the project categories:
• Approximately US$ 3.7 million from the total IDA Credit remained unallocated and it was agreed along with the implementing agency to use these funds for one more water utility. Balti Water Utility was identified and selected in 2005. The Subsidiary Credit Agreement between the Balti Water Utility and Ministry of Finance was signed on January 31, 2006 in the amount of US$ 3 million for rehabilitating and improving operations of the selected water system.
3 • The project includes a village component to address the contamination of water and other urgent infrastructure problems of villages and small towns. A list of villages to be included in the rural component was developed and Corjova village, Criuleni district was selected .The project matched this contribution with US$100,000 from the credit for the costs of pipes, pumps and related system requirements.
• The first request to amend the Schedule 1 of the Development Credit Agreement was to finance procurement of goods, works and services out of the proceeds of the signed Subsidiary Credit Agreement with Balti Water Utility and implementation of the rural component in Corjova village.
• The second request to amend the Development Credit Agreement was to use the unallocated funds to finance feasibility studies for sub-projects that formed the core of a second small town and rural water supply and sanitation project (NWSSP). For this purpose, the Schedule 1 to Development Credit Agreement has been amended by reallocating an amount of US$ 450,000 from Category (5) Unallocated to Category (3) Consultant’s services, including auditing services, and training.
1.7 Other significant changes
6. There were no significant changes in project scope and implementation arrangements except that the loan closed 6 months after the original closing date. The extension was justified by the need to finance the preparation of feasibility studies for the 60 villages identified for the rural water supply component under the National Water Supply and Sanitation Project (NWSSP) from the PWSSP cost savings amounting to US$ 0.2 million.
Table 2 below compares the final against the originally estimated project costs for the Bank-financed components:
Table 2: Actual Project Component Costs as of June 30, 2008 (in US$ million) Component Original Bank Final Bank Final as a percent of financing financing original Bank financing, % A. Investments for Improved Urban and 7.02 11.6 165% Sanitation Services B. Village Water Supply 0.00 0.1 100% C. Institutional Strengthening 0.42 0.25 60% D. Engineering Services/Engineers/Technical 0.50 0.75 150% Advisor
E. Project Implementation Unit (PIU) 0.30 0.48 160%
F. Unallocated 3.76 0 Total 12.00 13.2 110%
The total project cost increased by 10% due to the appreciation of the SDR against the US$.
4 2. Key Factors Affecting Implementation and Outcomes
2.1 Project Preparation, Design and Quality at Entry
7. The Water Supply and Sanitation project was the Bank's first operation in this sector in Moldova. A major factor that influenced project design was the lessons learnt from previous Bank- funded projects: (a) Lessons learnt from the kinds of service contracts patterned on similar contracts used in Santiago de Chile and in Lima, Peru since the early 1980s and the mid-1990s, respectively. The sample contracts from these two cities were adapted for the smaller size and for local conditions in Moldova. (b) Creating client ownership at all levels of Government by preparing the project in close collaboration and implementation with the local stakeholders. ; (c) Setting realistic and prudent efficiency improvement targets, including as a basis for sound financial projections. During project preparation, a Financial Action Plan was agreed upon and monitored bi-annually; (d) Establishing a sound institutional framework to ensure that the project is sustainable in this regard; and (e) Ensuring implementation readiness to avoid potential delays in the project after effectiveness. Bid documents were prepared early so that the first-year investments could be executed immediately after effectiveness.
8. The successful incorporation of these factors in the project design helped to ensure satisfactory quality at entry for this project. No formal QAG review took place.
2.2 Implementation
9. The PWSSP was implemented by the PIU which was created with the specific task of implementing the project during 2003-2007 under the overall responsibility of Agency for Construction and Territorial Development. PIU was transferred intact from the Agency of Construction and Territorial Development (ACTD) to Agency “Apele Moldovei” (AM) on December 14, 2007.
10. There were no significant factors affecting implementation and outcomes. In 2006 one final covenant was rated “not complied with” for a short time. Other than this, at no time was the project at risk; neither was there any major restructuring of the project.
11. Implementation was initially somewhat slow because the MoF only signed one Subsidiary Credit Agreement (SCA) to let the project become effective but then insisted that Action Plans be prepared for each remaining utility before letting them sign the SCAs. Given that most of the utilities have limited neither capacity nor computers at that time, it took a couple of months to complete the Plans with USAID's technical assistance. All SCAs were signed by April 2004. Based on the analysis of the historical performances and considering the macroeconomic scenario envisaged by the authorities, a financial forecast for the period of the loan was prepared and different scenarios as part of a detailed sensitivity analysis were performed for Cahul, Orhei, Soroca and Stefan Voda water and wastewater utilities.
5
2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
12. The monitoring of the implementation of the Pilot Water Supply and Sanitation Project was undertaken by the Project Implementation Unit (PIU), which started as a separate legal entity reporting to the Agency of Environment and Territory Development and subsequently moved to the Agency “Apele Moldovei”.
13. The monitoring and evaluation arrangements were contained in the Annex of the Supplemental Letter No. 2 to the Project Agreement. Each Bank supervision mission tracked progress towards the performance indicators and, based on trends as compared to target compliance, requested corrective action from the PIU and Apa Canals. A total of 15 performance indicators were selected to track progress towards meeting the Project objective of “improving the operation and management of the water supply and wastewater systems in the beneficiary towns.” (Schedule 2 of the Loan Agreement). The evolution of the performance indicators was analyzed in connection with the evaluation of the Project outcome. The performance indicators were utilized by each successive Bank supervision mission.
2.4 Safeguard and Fiduciary Compliance
14. The PIU was responsible for ensuring safeguard and fiduciary compliance.
15. The project was classified as an environmental category B and its proposed investments triggered the World Bank Policies OP/BP 4.01 on Environmental Assessment and the OP/BP 7.50 on Projects on International Waterways.
16. The environmental assessment applied although the project comprised only rehabilitation. Nevertheless, an Environmental Impact Assessment and Environmental Management Plan were prepared and a public hearing and consultation process were successfully conducted in Cahul on November 14, 2002; Orhei on November 14, 2002; Soroca on November 17, 2002. The EMP was sent to the Infoshop on November 14, 2002.
17. Operational Policy 7.50 applied since the projects’ sites are such as the cities of Cahul, Orhei and Soroca are located on international waterways. All relevant procedures in this regard were followed to comply with OP 7.50.
2.5 Post-completion Operation/Next Phase
18. For the post-completion phase, the PWSSP funded a feasibility study to provide a good technical basis for the selection of priority investments to be financed by the next IDA Projects and by other interested external financing agencies. Based on feasibility studies, Agency “Apele Moldovei” proposed 7 towns to be included into the next IDA operation (Balti, Cahul, Causeni, Soroca, Orhei, Ungheni and Floresti). PIU worked with “Apele Moldovei” and local authorities on identifying the priority investments to be financed under the NWSSP during 2008-2012.
19. The annual level of financing from the NWSSP meets merely a minute share of the annual sector investment needs that have been estimated as US$65 million under the Government’s own strategy contained in the document “On approval of the Strategy for water supply and sewerage of the localities of the Republic of Moldova”. (Decree No. 662 of June 13, 2007). The Bank and 6 Agency “Apele Moldovei” has continued its effort to secure more external financing for the unmet sector investment needs.
3. Assessment of Outcomes
3.1 Relevance of Objectives, Design and Implementation
20. The sector-related CAS Goal of the Moldova PWSSP resulted from the necessity to address the institutional strengthening and financial viability in Apa Canals. Through these instruments it was felt that issues of priority in the CAS such as (a) Poverty alleviation; (b) Macro-stability and economical growth; (c) Private sector development, and (d) Public sector reform would also be addressed.
21. The summarized data, on the basis of assessing the measure in which the sector-related CAS- goal was achieved, on the basis of intermediate outcome performance indicators, is systematized in the Table 3 below:
7 Table 3
Projected CAS goal and outcome level Intermediate indicators How does Moldova PWSS Project support Actual Status indicators (implementation towards expected achievement of the CAS outcome or CAS outcomes) intermediate indicator Average 16 hours of supply per day in pilot Average 12 hours of supply per day in Average 22.75 hours of supply per day in 4 pilot areas pilot areas areas: Cahul: 24 hrs/day Stefan-Voda: 19 Cash O&M of water utilities covered by hrs/day cash operating revenues. Orhei: 24 hrs/day Soroca: 24 hrs/day Balti: 24 hrs/day The project development objective is to enhance The total operating result of the utilities was the welfare of the population living in rural areas negative during the first years of project and medium-sized towns by improving access to implementation mainly due to the important safe WSS services. decrease of invoiced quantities. The decrease of The project is rehabilitating and improving water delivered to inhabitants was mainly the result operations of selected water systems; had of metering. The level of metering is relatively high strengthened the financial and technical capacity (app.90%). The evolution of water production by procuring necessary equipment and programs delivered to companies and institutions is the result O&M costs (including depreciation) thus reducing the operating costs. The of these entities’ poor economic situation. Because covered by operating revenues. investments will result in the reduction of energy the level of tariff for institutions (both state and cost, water losses and financial viability of the private) is significantly higher than for domestic Collection ratio to exceed 80% utilities. customers, these entities have the tendency to find water from other sources (have their own sources) and to pay only sewerage services to the utility. The installation of pumps in Cahul, Orhei, Soroca and Stefan-Voda has significantly contributed to energy Use regular water quality monitoring & savings (about 30%), raising efficiency etc. reporting from the Ministry of Health and Taking into consideration the Quote from the Legal Social Protection (MoHSP) for Agreement art. 4.03 “… each Participating Apa benchmarking. Canal shall maintain in the fiscal year ending on December 31, 2006, a ratio of total operating expenses to total operating revenues not higher than 100%, decreasing to 90% by the fiscal year ending on December 31, 2007 …”, Apa Canals met the Financial Covenants of the LA upon project completion: Cahul – 75% (profit); Orhei – 77,3% (profit); Soroca – 81% (profit); Stefan-Voda – 71% (profit); Balti – 85% (profit). Collection ratio to exceed 65% - A study to determine options for credit Average collection ratio exceeds 92.66%: repayment and sustainable development of water Cahul: 90.20% Stefan-Voda: 103.00% utilities has been carried out with a view to Orhei: 96.91% Soroca: 81.80% identify possible sources of covering the future Bălţi: 91,40% Water tariffs adjusted automatically for financing gap. The PIU organized meetings and (including historical debts) annual inflation. presented the conclusions of this study to the - The operational performance of the utilities for representatives of local authorities. the last 5 years reflects both evolutions of physical - It was recommended to moderately increase the production and tariff adjustments. The water utility tariff which will put a relatively medium can not control the tariff adjustment process (this is pressure on the customers. Based on the report, the prerogative of the Local Council); the utility 8 Projected CAS goal and outcome level Intermediate indicators How does Moldova PWSS Project support Actual Status indicators (implementation towards expected achievement of the CAS outcome or CAS outcomes) intermediate indicator the utilities developed an appropriate tariff can only propose tariff increase based on cost adjustment strategy and measures were taken to increase, but the final decision is taken by the Local Establish regular water quality improve their operating result. Council. Tariffs are annually coordinated with the monitoring & reporting by MoHSP responsible agency for the sector and selectively approved by the Local Council. Hygiene campaign for rural areas. The Scientific-Practical Centre of Preventive The percentage of microbiological water quality Medicine by the MoHSP is annually performing samples are meeting target values. water analysis. The project will provide the rehabilitation of the A water hygiene and sanitation information water systems in one village. program has been carried out as an integral part of the rural component. The Government of Moldova is interested in organizing, in cooperation with the WB, an intensive PR campaign for raising public awareness and support towards the importance of sector issues’ solving and regarding the results of the PWSSP implementation.
9 3.2 Achievement of Project Development Objectives
22. The established project development objective was to enhance the welfare of the population living in the project towns. The project achieved this objective as shown in Annex 3 that tracks targets and outcome of the key performance indicators.
Thus, of the DO -“ to enhance the welfare of the population living in some of the poorest rural areas and medium-sized towns and cities by improving the quality, efficiency and sustainability of water supply and sanitation services.” - the project:
• Did improve the quality of service with a constancy of 24 hours per day in 4 towns and 19 hours in Stefan Voda compared to 2 hours over the preceding 15 years; • Did improve the bacteriological quality of supplied water to 99.8% of negative microbiological water quality samples, as compared to 98.7% in 2002; • Did increase consumption levels to 57 liters per capita and day (lcd) from 37 lcd;. • Did decrease physical losses from avg. 25 to 17 m3/km/day and non-revenue water from avg. 61% to 47%. The overly optimistic end-of-project target indicator values were not achieved. Even so the average decrease of NRW for 14% must still be considered successful since the increase in service hours and in service pressure would ordinarily increase leakage (that is directly proportional to the number of service hours and to service pressure which both rose in the course of the project); • Did decrease the specific energy consumption of 4 towns from an (unweighted) average 4.2 kWh to 2.2 kWh per m3 of water supplied (Soroca is excluded due to the change of water source – currently Soroca Apa-Canal doesn’t produce water and buys it from state- owned utility Acva-Nord).
In addition, it is relevant to consider the efficacy of the project, i.e. to what degree the planned physical investments did take place. This is detailed in Annex 2 and is summarized below:
1. Water Investments
• Some 118 km of water supply pipelines were replaced versus the planned 60 km. • 17 pumping stations were rehabilitated versus the planned 0. • 20 deep wells versus the planned 10. • 4 network flushers, 3 excavators, 4 mobile workshops, 4 vacuum tankers, 1 water carrier truck, 1 mobile crane, 1 workers transportation vehicle were purchased for emergency repairs and maintenance.
2. Wastewater Investments
• A total of 11.6 km of sewerage network were rehabilitated in Cahul and Orhei • 1 pumping station, 1 potable water rezervoir, 1 chlorination plant and WWTP were rehabilitated under Pilot WSSP.
3. Institutional Strengthening
• A number of study tours for Apa Canals staff were organized to utilities in Sweden, Finland, and Estonia; • An Accounting and Client Information Software was purchased and commissioned; 10 • A number of Financial, Procurement and Technical Workshops were carried out; • Office and electronic equipment was purchased. • Metering coverage rose from 63% to 87%, allowing the Apa-Canals to measure more precisely their water production, consumption, and water losses.
4. Engineering and Construction Supervision Services
Engineering Services were purchased and provided by one foreign company and one local company (detailed design).
Construction Supervision Services were purchased and provided by one local company.
5. Auditor’s Fees
External auditing services were purchased throughout project implementation.
3.3 Efficiency
23. The project’s maintenance, equipment replacement, leak detection and demand management through metering are expected to solve the main and most acute issues in the WSS systems of the selected water utilities and to produce high returns as shown in the table below (as per the PIP):
Table 6: Illustrative Rates-of-Return on the Project Investments Type of Action Maintenance Pump Replacement Metering Rate-of-return (RR) 33% 27% 78%
A representative calculation, based on actual energy cost savings, on the economic benefits from replacing inappropriately sized and obsolete pumps, is shown in Annex 4. It shows that the internal rate-of-return from doing so is estimated to be 26%, in line with the estimate in the PAD.
3.4 Justification of Overall Outcome Rating
24. The outcome rating combines the individual ratings for relevance, efficacy in meeting the PDOs, and the efficiency. The ICR rates the Overall Project Outcome as satisfactory. Project relevance is judged high because it responded to priorities, both of the CAS valid at the time of appraisal and the most recent one, where the serious deterioration of public services and the need to create institutional capacity were singled out. Project efficacy is similarly rated satisfactory because the project in substance has met or exceeded all relevant targets, albeit with a delay explained by the delayed effectiveness and startup of the project investments. Finally, project efficiency is judged satisfactory as evidenced by the robust rates-of-return for such investments (higher energy efficiency) that are comparable to the estimates at the time of project appraisal.
3.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
The continuity of service and the improved bacteriological quality of water have benefited the residential consumers in the five project towns. Low-income households, such as pensioners on fixed pensions, constitute a substantial portion of such consumers. Such consumers have 11 benefited more from the improved service than higher-income households and industrial consumers since they do not have the financial means to invest in alternative or complementary water supplies.
The expansion of individual metering has likewise benefited low-income households disproportionately since, when unmetered, they were obliged to pay fixed rates, based on the excessive consumption norms that were the practice in the Former Soviet Union. As an example, low-income households in Orhei were previously billed on the basis up to 200 lcd whereas their metered consumption has proven to be only 40 lcd, resulting in more correct and more equitable consumption charges.
(b) Institutional Change/Strengthening
25. The project did achieve the PDO (“to enhance the welfare of the population living in some of the poorest rural areas and medium-sized towns and cities by improving the quality, efficiency and sustainability of water supply and sanitation services as outlined in the Government's National Water Action Plan”). It did this through (i) rehabilitating and improving operations of selected water and sewerage systems to increase service quality and efficiency; and (ii) strengthening selected Apa Canals (water utilities) to improve their operational and financial sustainability.
26. The financial staff of the participating utilities has been instructed in the elaboration of business plans and International Accounting Standards, since an international independent audit company annually audits selected water utilities. At the same time, the technical personnel, namely the welders from the referenced enterprises have also been trained and have obtained certificates enabling them to weld the polyethylene pipes. Electronic equipment and financial programs (software) for business accounting have been procured, thus currently business accounting in all the beneficiary water utilities is managed automatically, through the referenced electronic programs. In every selected utility the Customer Relations Department has been created, there has been also elaborated the database of all consumers with the possibility of elaborating and printing automatically the invoice/bill to be paid for the WSS services provided by the local Apa Canal.
27. Two study tours have been organized to provide insight into financial operations and organizational strategies of public and private organizations engaged in municipal water supply and sanitation services in Sweden and to gain in-depth understanding of the central strategies, policies and change management issues that have been successfully implemented in Finland and Estonia. The key objectives of the study tour were for key personnel of selected water utilities and government decision makers.
28. Several training workshops on utility finances and operations were organized for Municipal Water and Waste Water Utilities, led by the World Bank consultants. The main topics for discussion were: i) the state of municipal water/waste water sector in Moldova: constraints and challenges; ii) tackling the Moldova sector challenge; iii) utility finances and tariffs; and iv) non-revenue water reduction of physical and commercial losses.
29. A World Bank Institute (WBI) workshop on “Enhancing Utility Performance in Moldova” was organized with the focus on methods to reduce non-revenue water in Apa canals. A follow-up workshop was aimed at calculating the water balance of ten selected Apa canals
12 with a view of identifying the priority actions and investments to reduce their non-revenue water. Through the higher efficiency it was expected that their financial situation will improve.
(c) Other Unintended Outcomes and Impacts (positive or negative)
30. Due to a successful implementation of the PWSSP, the cost savings which were realized and applied to finance the preparation of feasibility studies provided a good technical basis for the selection of priority investments to be financed by the next IDA operation and by other interested external financing agencies.
31. In October, 2006 a Water Supply and Sewerage Sector Strategy Workshop was organized by the Agency of Construction and Territorial Development, assisted by the PIU and the World Bank. The Workshop resulted in a resolution, reaffirming the principles of the PWSSP and recommending policy reforms in the area of quality and economic regulation.
32. In December, 2007 the Agency “Apele Moldovei” organized a Donor Coordination Workshop to widen the level of external financing to the sector. A number of financing agencies expressed their potential interest in assisting the sector. European Commission has expressed an interest in providing parallel grant financing to build a Wastewater Treatment Plant for Orhei in an amount of about 3 million Euro. The administrative agreement is now under preparation. The Austrian Development Cooperation (ADC) and the Swiss Development Cooperation (SDC) confirmed their interest in assisting selected villages. The European Investment Bank stated their interest in parallel financing with the European Bank for Reconstruction and Development (EBRD) of water supply and wastewater investments. The Turkish International Cooperation and Development Agency (TICA) committed to financing water works in the Gaugazia region. SIDA has expressed their tentative willingness to finance water and wastewater investments that would reduce energy consumption. The World Bank has continued assisting Apele Moldovei in coordinating the different sources of financing.
3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not Applicable.
4. Assessment of Risk to Development Outcome
The risk to the development outcome is rated as Moderate. The risk assessment is predicated on the following partial risk assessments:
• The technical risks are low since there is no innovative and untested technology. Rehabilitation of equipment is simply the transfer of technology and equipment that has been subjected to the quality control of market competition and the superior project management and supervision afforded by the triple layers of a Construction Supervision Engineer, by the Project Implementation Unit, and by the APA Canals’s own staff, supplanted periodically by World Bank supervision visits. • The financial risks are moderate. The Apa Canals has now reached a financial working ratio of about 0.8 which implies an operating cash surplus that could pay for maintenance. Through the 2005 tariff increase as well as the improvements made possible under the project implementation, the working ratio dropped from about 110% in 2004 to below 90% in 2007. This constitutes a margin to ensure orderly operations and provide financing for further operational improvements.
13 • The next investment phase, the follow-up National Water Supply and Sewerage Project, with about US$23 million of investment to further improve the operational efficiency in the 2008-2012 periods has already received financing from IDA in the amount of US$14.0 million, US$4.5 million from GEF and another US$4.5 million from European Commission. • The economic risks of the project are moderate. Moldova’s economy has steadily improved with high macro-economic growth rates since 2000. The fact that nearby Romania is an EU member is also positive factor for the economic prospects for Moldovan towns and for the likely evolution of the population’s income levels. • The social risks for the project are rated moderate given the essential character of Apa Canals’s water and wastewater services. • The political risks are rated as moderate. The water and wastewater project has received bipartisan political support from the Local Councils ever since project implementation improved from 2005 and onwards. • The project’s environmental risks are moderate and are mitigated by careful environmental assessments of the project and the fact that the project was essentially one of rehabilitating environmentally worse performing assets. • The Government ownership risks are low as evidenced by the fact that both the local and central governments requested follow-on project from the World Bank. • The institutional risks are assessed as moderate given the steady progress of the institutional strengthening program. • The Governance risks are moderate since the rehabilitation of the most critical sections of the water and wastewater systems is largely complete. • The risk of exposure to national disasters that might affect the PDO is rated low.
5. Assessment of Bank and Borrower Performance
5.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
The Bank performance in ensuring Quality at Entry was rated “satisfactory.” The project design benefited from the Bank’s sector study that was completed in 1995. Similarly, the project design was well aligned with the CAS. The project was simple in the sense that 80% of the planned expenditure was for rehabilitation. There was no assessment by the Quality Assessment Group of Quality at Entry.
(b) Quality of Supervision
The quality of the Bank’s performance during supervision is rated “satisfactory”. The technical and financial supervision was by two successive, Washington-based task managers whereas the fiduciary aspects were supervised by Kiev and later on by Chisinau-based Bank staff for financial management aspect and by Washington-based Bank staff for procurement. The background of the two task managers complemented each other. The first task manager had a financial background and was supported by technical staff. This second task manager had an engineering and procurement background and was supplemented by staff specialized in finance and monitoring and evaluation. The Bank was responsive to client preferences as evidenced by the client’s request for a follow-up project.
14 (c) Justification of Rating for Overall Bank Performance
Given satisfactory ratings for both Bank performances during preparation and during supervision the rating for Overall Bank performance is satisfactory.
5.2 Borrower Performance
(a) Government Performance
Government performance comprises the performance of the Central and Local Government. The rating of the former is rated “satisfactory” as evidenced by making direct financial contributions to co-finance the project. The performance of the Local Government is rated moderately satisfactory because of the substantial delays in approving the tariffs.
(b) Implementing Agency or Agencies Performance
The performance of the Project Implementation Unit that implemented and is now operating the project is rated “satisfactory”. The PIU performed satisfactorily within the constraints imposed upon it by its transfer from ACTD to Apele Moldovei.
(c) Justification of Rating for Overall Borrower Performance
Given the satisfactory ratings for Borrower Performance with respect to the Government Performance and the performance of the Implementing Agency the rating for Overall Borrower Performance is satisfactory.
6. Lessons Learned
Lesson One: The Importance of Client Ownership
Creating client ownership at all levels of Government by preparing the project in close collaboration and implementation with the local stakeholders is critical.
Lesson Two: Monitoring indicators must be Measurable
The choice of performance indicators and the level of technical, economic and financial analysis should be guided by the quality of baseline data. In the particular case of water supply and wastewater projects the quality of production and consumption data is suspect in the absence of widespread and careful metering. In the case of the technical analysis such uncertainties in data argue in favor of flexible and robust project designs as in rehabilitation projects. In the case of economic analysis it may be sufficient to concentrate on flexible least-cost analysis rather than engage in economic cost-benefit analysis where the results could well be spurious when the baseline data are of poor quality and subject to considerable change. Setting realistic and prudent efficiency improvement targets is a basis for preparing sound financial projections.
Lesson Three: Project Implementation Units can provide Continuity
In order to promote sustainability and build institutional capacity, the World Bank policy is that project implementation units should be avoided or quickly merged into the organization of the Borrower or Implementing Agency in order foster sustainability and to build capacity. In the 15 particular case of the Moldova water supply project, the Project Implementation Unit provided crucial continuity when there were changes in ministerial affiliation of the project or in the country counterpart staff. In the case of Moldova, the responsibility for water supply and sanitation projects was shifted from the Agency of Construction and Territorial Development to Apele Moldovei with the concomitant change of responsible directors. However, the PIU remained the same and provided important continuity to Apele Moldovei that did not have the capacity to manage the project since it was a newly established agency.
Lesson Four: Client Ownership is crucial for Successful Subsidiary Credit Agreements
The municipal water supply and sanitation utilities, the apa canals, are the ultimate beneficiaries and are responsible for operating the facilities financed under the project. It is key for sustainability to create strong client ownership in the apa canals and in the municipalities of the project design and orderly project implementation. Client ownership requires frequent contacts and site visits from the PIU and Bank missions. Project efficiency and sustainability are improved if the ultimate beneficiaries are obliged to repay the credit proceeds since they will then be motivated to demand investments that can be recovered from user charges.
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
The Bank received the PWSSP’s report on the completion of the project in September 2008. The final draft ICR was sent to Apele Moldovei on October 15, 2008 and received their comments on December 9, 2008. The comments are ad verbatim and attached as Annex 8.
(b) Cofinanciers and (c) Other partners and stakeholders N.A. (e.g,. NGOs/private sector/civil society)
16 Annex 1. Project Costs and Financing
(a) Project Cost by Component (in US$ Million equivalent) Appraisal Actual/Latest Percentage of Components Estimate Estimate Appraisal (US$ millions) (US$ millions) A. Investments for improved 7.02 11.6 165% urban & sanitation services B. Village Water Supply 0.00 0.1 100% C. Institutional Strengthening 0.42 0.25 60% D. Engineering 0.50 0.75 Services/Engineers/Technical 150% Advisors E. Project Implementation Unit 0.30 0.48 160% F. Unallocated 3.76 0 0%
Total Baseline Cost 12.00 13.2 110% Physical Contingencies 0.00 0.00 0.00 Price Contingencies 0.00 0.00 0.00 Total Project Costs 0.00 Total Financing Required 12.00 13.2 110%
(b) Financing Appraisal Actual/Latest Type of Co- Estimate Estimate Percentage of Source of Funds financing (US$ millions (US$ millions Appraisal ) ) Borrower 0.5 1.2 240% International Bank for Reconstruction 12.00 13.2 110% and Development
17 Annex 2. Outputs by Component
The primary PDO was to “To improve accessibility and quality of the water supply at an affordable level in five Moldovan towns, and to restore public confidence in the sector.” Accordingly, the project components were designed and implemented to make it possible to meet the PDO. Specifically, the project components comprised rehabilitation of the existing infrastructure to increase the continuity of service (“the accessibility of service”), water quality (“the quality of service”) and expanded metering, replacement of wasteful electro-mechanical equipment (all to increase the efficiency of service, notably through reducing losses and wastage, thus reducing operating costs and offering service “at an affordable level,” and improving communications with customers through the service improvements, both of which contributed to “restoring public confidence in the sector.” The planned and actual outputs by the project’s five components are detailed in the preceding Procurement Plan. In physical terms the project accomplished the following:
1. Initial Defined Investments
• 118 km of water supply pipelines were replaced versus the planned 60 km; • 17 pumping stations were rehabilitated versus the planned 0. However, several Balti pumping stations are currently being rehabilitated with Water Utility’s own forces using equipment procured under Pilot WSSP; • 20 deep wells were rehabilitated versus the planned 10; • One potable water tank and 1 chlorination plant were rehabilitated in Stefan Voda; • Leak detection and pipe location equipment was purchased for beneficiary Apa- Canals; • 4 network flushers, 3 excavators, 4 mobile workshops, 4 vacuum tankers, 1 water carrier truck, 1 mobile crane, 1 workers transportation vehicle were purchased for emergency repairs and maintenance.
2. Wastewater Investments
• The Wastewater Treatment Plant in Stefan Voda was rehabilitated; • Total 11.600 km of sewerage network were rehabilitated in the towns of Cahul and Orhei; • 1 wastewater pumping station, was rehabilitated in Stefan Voda.
3. Institutional Strengthening
• A number of study tours for Apa Canals staff were organized; • An Accounting and Client Information Software was purchased and commissioned; • A number of Financial, Procurement and Technical Workshops were carried out;
18 • Office and electronic equipment was purchased; • Special tools for cleanings of sewers were purchased; • Press tour organized in Orhei by the World Bank Country Office in Moldova.
4. Engineering and Construction Supervision Services
Engineering Services were purchased and provided by one foreign company and one local company (detailed design). Construction Supervision Services were purchased and provided by one local company.
5. Auditor’s Fees
External auditing services were purchased throughout project implementation.
19 Annex 3
Key Performance Output Indicators For Project Goals no. 1 - Technical performance and efficiency of water and sanitation systems improved in Apa Canals and rural areas and Project Goal no. 2 - Revenues of Apa Canals increased
Status of agreed outcomes indicators: Indicators Measurement Insert the measured value, or a qualitative indicator, or a brief explanation of why indicators are not available, together with the date of the information Baseline Value Progress To Date (End-of- End-of-Project Target Project Achieved Value) Value Number or text Date Number or text Date Number or text Date PDO Indicator 1. Percentage of Cahul 98.5; 12/31/2002 Cahul 100; 06/30/2008 Cahul 99.5; 06/30/2008 microbiological water Orhei 99.8; Orhei 100; Orhei 100; quality samples meeting Soroca 99.91; Soroca 99.8; Soroca 100; target values: Stefan Voda Stefan Voda Stefan Voda 97.5; Balti 98 100; Balti 99.1 99.7; Balti 100 2. Hours a day of adequate Cahul 13; 12/31/2002 Cahul 24; 06/30/2008 Cahul 19; 06/30/2008 water service: Orhei 10; Orhei 24; Orhei 24; Soroca 24; Soroca 24; Soroca 24; Stefan Voda 4; Stefan Voda Stefan Voda Balti 24 19; Balti 24 12; Balti 24 3. Physical losses Cahul 13.3; 12/31/2002 Cahul 17.4; 06/30/2008 Cahul 9.0; 06/30/2008 (m3/km/day) Orhei 12.04; Orhei 8.02; Orhei 4.7; Soroca 20*; Soroca 13.1; Soroca 14.2; Stefan Voda Stefan Voda Stefan Voda 29.5; Balti 50* 4.4; Balti 11; Balti NA 41.89 4. Consumption per capita Cahul 53; 12/31/2002 Cahul 79.5; 06/30/2008 Cahul 61; 06/30/2008 Orhei 18.5; Orhei 67.6; Orhei 24; Soroca 31.2; Soroca 37; Soroca 28.4; Stefan Voda Stefan Voda Stefan Voda 31; Balti 50* 40; Balti 63.1 60; Balti NA 5. Non-revenue water, %: Cahul 35*; 12/31/2002 Cahul 33.9; 06/30/2008 Cahul 20; 06/30/2008 Orhei 60*; Orhei 43.8; Orhei 28; Soroca 80*; Soroca 67.7; Soroca 37.3; Stefan Voda Stefan Voda Stefan Voda 70; Balti 58 43; Balti 48.4 30; Balti NA 6. Number of breakdown Cahul 750*; 12/31/2002 Cahul 690; 06/30/2008 Cahul 390; 06/30/2008 per year Orhei 487; Orhei 133; Orhei <100; Soroca 250*; Soroca Soroca 150; Stefan Voda 233Stefan Stefan Voda 72; Balti Voda 133; 55; Balti NA
20 Status of agreed outcomes indicators: Indicators Measurement Insert the measured value, or a qualitative indicator, or a brief explanation of why indicators are not available, together with the date of the information Baseline Value Progress To Date (End-of- End-of-Project Target Project Achieved Value) Value Number or text Date Number or text Date Number or text Date PDO Indicator 1800* Balti 1665 7. Response time to Cahul 8; Orhei 12/31/2002 Cahul 4.1; 06/30/2008 Cahul 7.0; 06/30/2008 breakdown (h) 48.58; Soroca Orhei 14.2; Orhei 32; 8; Stefan Voda Soroca 8; Soroca 8; 8; Balti 12 Stefan Voda 5; Stefan Voda Balti 7 6.5; Balti 6 8. Energy consumption in Cahul 2.53; 12/31/2002 Cahul 1.51; 06/30/2008 Cahul 2.5; 06/30/2008 kWh per m3 of water Orhei 1.8; Orhei 1.87; Orhei 1.4; supplied: Soroca 2.04; Soroca 0.0; Soroca 3; Stefan Voda Stefan Stefan Voda 8.2; Balti 4.12 Voda2.8; Balti 6.5; Balti 3.5 2.84 9. Collected to billed (%): Cahul 95; 12/31/2002 Cahul 90.2; 06/30/2008 Cahul 99; 06/30/2008 Orhei 111.43; Orhei 96.91; Orhei -; Soroca 97.8; Soroca 81.8; Soroca 96; Stefan Voda Stefan Voda Stefan Voda 89; Balti 108 103; Balti 91.4 100; Balti 99 10. Water connection Cahul 5500; 12/31/2002 Cahul 5652; 06/30/2008 Cahul 12500; 06/30/2008 inventory conducted: Orhei 4640; Orhei 5384; Orhei >6000; Soroca 2300; Soroca 3422; Soroca 9010; Stefan Voda Stefan Voda Stefan Voda 537; Balti 683; Balti 1328; Balti 36000** 39670 NA 11. Metered connection rate Cahul 73; 12/31/2002 Cahul 81.2; 06/30/2008 Cahul 79; 06/30/2008 (%) Orhei 73; Orhei 89.8; Orhei 97; Soroca 60* ; Soroca 76.5 Soroca 52; Stefan Voda Stefan Voda Stefan Voda 34; Balti 75* 100; Balti 86.9 100; Balti NA 12. Operating, maintenance Not applicable 12/31/2002 All utilities 06/30/2008 and emergency response have procedures implemented by established July 1, 2004 and thereafter: operating and maintenance and emergency response procedures. 13. Staff training program Not applicable 12/31/2002 Various staff 06/30/2008 designed by April 2004 and trainings were
21 Status of agreed outcomes indicators: Indicators Measurement Insert the measured value, or a qualitative indicator, or a brief explanation of why indicators are not available, together with the date of the information Baseline Value Progress To Date (End-of- End-of-Project Target Project Achieved Value) Value Number or text Date Number or text Date Number or text Date PDO Indicator yearly targets met: Cahul; provided. Orhei; Soroca; Stefan Voda 14. Customer service and Not applicable 12/31/2002 Several 06/30/2008 public education program activities were designed by September 30: carried out. Cahul; Orhei; Soroca; Stefan Voda 15. Length of water pipe Cahul 0; Orhei 12/31/2002 Cahul 24.8 06/30/2008 rehabilitated, km 0; Soroca 0; (+9.5 km of Stefan Voda 0; sewerage); Balti 0 Orhei 35 (+2.1 km of sewerage); Soroca 28.1; Stefan Voda26.7; Balti 3 16. The inverse of the ratio Cahul – 109% 12/31/2003 Cahul – 75% 12/31/2007 between Cash operating (operational (profit); Orhei revenue and (operating losses); Orhei – 77,3% expenditure plus debt – 100,5% (profit); service), % (operational Soroca – 81% losses); Soroca (profit); – 125% Stefan-Voda – (operational 71% (profit); losses); Stefan- Balti – 85% Voda – 116% (profit) (operational losses); Balti – 106% (operational losses data for 12/31/2004)
*- Reevaluated value (after an adequate metering system was implemented) ** - value for year 2006 N.A. not applicable or not available
22
Annex 4. Economic and Financial Analysis
Representative Rate-of-Return Calculation of Replacement of Electromechanical Equipment in Pumping Stations in the PWSSP Project
Year Pump replacement Energy savings Net costs 1 -2.30 -2.30 2 -2.35 -2.35 31.371.37 41.371.37 51.371.37 61.371.37 71.371.37 81.371.37 91.371.37 10 1.37 1.37 11 1.37 1.37 12 1.37 1.37 13 1.37 1.37 14 1.37 1.37 15 1.37 1.37 16 1.37 1.37 17 1.37 1.37 18 1.37 1.37 19 1.37 1.37 20 1.37 1.37 21 1.37 1.37 22 1.37 1.37 23 1.37 1.37 24 1.37 1.37 25 1.37 1.37 26 1.37 1.37 27 1.37 1.37 28 1.37 1.37 29 1.37 1.37 30 1.37 1.37 31 1.37 1.37 32 1.37 1.37
Economic rate of return= 26%, payback period 3.4 years
23 Annex 5. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members Responsibility/ Names Title Unit Specialty Lending Sector Manager, Water and Motoo Konishi ECSIE Sanitation Seema Manghee Senior Infrastructure Specialist ECSIE Task Manager Klas Ringskog Consultant ECSIE Sandu Ghidirim Project Officer Ahmet Gokce Sr. Procurement Specialist ECSIE Alexander Danilenko Consultant ECSIE Delphine Alberta Hamilton Senior Program Assistant ECSIE Supervision/ICR Seema Manghee Senior Infrastructure Specialist ECSSD Task Manager Takao Ikegami Sr. Sanitary Engineer ECSSD Task Manager Klas Ringskog Consultant ECSSD Sandu Ghidirim Project Officer ECSSD Irina Babich Financial Management Spec. ECSPS Andrei Busuioc Financial Management Spec. ECSPS Ahmed Gokce Sr. Procurement Specialist ECSPS Gurcharan Singh Sr. Procurement Specialist ECSPS Delphine Alberta Hamilton Senior Program Assistant ECSIE
(b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including travel No. of staff weeks and consultant costs) Lending FY02 15.52 85,560.62 FY03 21.81 192,812.24 FY04 0.00 FY05 .20 937.52
Total: 37.53 279,310.38 Supervision/ICR FY03 0 2612.50 FY04 6.95 75,074.75 FY05 24.79 131,220.34 FY06 29.45 106,492.81 FY07 20.88 100,408.81 FY08 17.90 87,600.43
Total: 99.97 503,409.64
24 Annex 6. Beneficiary Survey Results
Not applicable
25 Annex 7. Stakeholder Workshop Report and Results
Not applicable
26
Annex 8. Summary of Borrower’s ICR and/or Comments on Draft ICR
PWSSP was implemented during 2004-2008 years. Out of 34 water supply and sewerage utilities, based on competitive criteria, there were selected 5 localities: Orhei, Cahul, Stefan-Voda, Soroca, Balti and Corjova village, Criuleni rayon within the implementation of the rural component.
These localities were selected, according with the utilities status which operated in a satisfactory manner and not at all the poorer ones. After the examination of the work carried out, the situation changed very much, focusing on strengthening management capacity and training programs.
The implementation of the pilot project in the selected five localities contributed to gather experience of the employees by the means of a continuous training program in water supply and sanitation field, thus strengthening the institutional capacity. This activity is closely interrelated with environment protection aspects, thus the project implementation outcomes contribute to improve the quality of environment.
Project implementation outcomes
• Cahul town is situated in the area where the need of water supply was very high and not long time ago 40,000 residents were supplied with potable water only 8- 10 hours per day. Now tap water is available 24 hours per day, and water supply services covers about 95% from the total number of the population, and the billing rate attained the maximum level. Improvements obtained from the substitution of the pumps - energy costs for the pumping station No. 3 decreased by 25%, and for the pumping station No. 4 – 75%. Rehabilitation of 22 kilometers of water supply network and 13.9 kilometers of sewerage contributed to reduce water losses up to 20%. Initially, it was planned to rehabilitate only 14 kilometers of water supply network.
• From the total number of Orhei town inhabitants, 88% benefit 24 hours per day from the water supply services, compared with 24% of the inhabitants that were supplied with water 24 hours per day, 55% - 12 hours per day, and 17% - 8 hours per day at the beginning of the project implementation. The level of metering increased from 2%, from the beginning of the project implementation to 90% for the middle of the project implementation. Collection rate for 2006 year has registered the highest level, thanks to the recuperation of utility’s debts; it means that water consumers totally relied on utility’s capacity as a water supply and sewerage system supplier.
• In town of Soroca about 30 km of water main pipeline that is already over 50-55 years old, was changed with plastic pipes. During the project implementation there were rehabilitated the pumping stations, the deep wells and the electric
27 station which generated huge electrical losses, about 55-60%. At the end of the project implementation, 98% of the population benefit from the improved water supply services, the level of metering increased to 95%, water losses decreased to 20%, and water utility improved its financial performance.
• Thanks to the World Bank, in town of Stefan-Voda there were rehabilitated 10 deep wells and approx. 24 kilometers of water main pipeline. The project implementation assured with high quality water supply up to 99% of the population. It is a very good outcome, taking into account that the centralized network supplied only 40-45% of the population (the private sector was also connected to the system – about 9 kilometers). Additional, the rate of the non- revenue water decreased with 30%. Daily service hours exceeded even the project targets, it means that today Stefan-Voda benefits of 19 hours per day, compared to just 3 hours per day, at the beginning of the project implementation.
• Village water supply system is to sustain the water pollution issues and other environmental major aspects. The village of Corjova, Criuleni rayon was selected from the short list, submitted to the Ministry of Ecology, Constructions and Territory Development, as a pilot component. PWSSP contributed with 100,000 Dollars USA from the WB credit for procurement of pipelines, and construction of 16 kilometers of water supply network. The implementation of the rural component demonstrated the further possibility to cooperate and to benefit from the grants for other rural WSS projects.
Sincerely yours,
General director Veaceslav Iordan
28
Annex 9. Comments of Cofinanciers and Other Partners/Stakeholders Not Applicable.
29
Annex 10. List of Supporting Documents World Bank Reports:
1. Project Appraisal Document, 2003 2. Project Implementation Plan, 2003 3. Development Credit Agreement, June 9, 2003 4. Subsidiary Loan Agreements 5. PIU’s quarterly and annual reports 6. Reports on Key Performance Indicators Dynamics 7. Procurement Plan 2007 8. Minutes of Meetings and Aide-Memoirs of the WB’s supervising missions 9. Audit Reports performed by KPMG Moldova S.R.L. 10. The National Environmental Action Plan 1996, 2001 11. The National Water Supply and Sanitation Program 2002-2006 (No. 519 from 04/23/2002) and 2006-2015 (No.1406 from 12/30/2005); 12. National Program “Water and health”, from 06/19/2001; 13. National Program “The Moldovan Village 2005-2015”, No. 242 from 03/01/2005; 14. The Strategy of Water Supply and Sanitation of the localities of the Republic of Moldova 15. Government Decision no. 904 dated August 9, 2007 “On creation of a National Water and Sewerage Agency “Apele Moldovei” on the basis of revised functions of the State Concern of the water management “Apele Moldovei”
30 IBRD 36574
27°E 28°E29°E30°E
D MOLDOVA nestr To Vinnytsya UKRAINE To Chernivtsi PILOT WATER SUPPLY Moghiliov-Moghiliov- To Vinnytsya OcnitaOcnita PodolskiPodolski AND SANITATION BriceniBriceni PROJECT B DonduseniDonduseni To Chernivtsi e EdinetEdinet SorocaSoroca s DrochiaDrochia 48°N CamencaCamenca 48°N s RîscaniRîscani
FlorestiFloresti Nis a tru CostestiCostesti SoldanestiSolda˘nesti r GlodeniGlodeni BaltiBalti RîbnitaRîbnita RezinaRezina BalatinaBalatina a Pr ut SîngereiSîngerei r To Voznesens'k FalestiFa˘lesti a TelenestiTelenesti ChiperceniChiperceni 0 10 20 30 40 Kilometers
b OrheiOrhei 0 10 20 30 Miles ROMANIA SculeniSculeni i DubasariDuba˘sari TRANSNISTRIATRANSNISTRIA To Pascani Mt.Mt. BalanestiBalanesati Calarasi˘ ˘ CriuleniCriuleni (430(430 m)m) UngheniUngheni Straseni˘ GrigoriopolGrigoriopol NisporeniNisporeni StauceniSt˘auceni To Zhmerynka CorjovaCorjova
47°N CHISINAUCHISINA˘U 47°N
LapusnaL˘apusna IaloveniIaloveni AneniiAnenii NoiNoi TiraspolTiraspol HîncestiHîncesti BenderBender LeuseniLeuseni (Tighina)(Tighina) SloboziaSlobozia
Cainari˘ Causeni˘ To Odesa Plain
CimisliaCimislia N c Stefan-Voda˘ i a str e u To Birlad g LeovaLeova u B This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank ComratComrat BasarabeascaBasarabeasca Group, any judgment on the legal status of any territory, or any To Birlad endorsement or acceptance of such boundaries. CantemirCantemir UKRAINE 27°E GGAGAUZIAA˘˘˘GA˘UZIA
Ceadîr-Ceadîr- To Artsyz LungaLunga PROJECT SITES 46°N 46°N P r u
t SELECTED CITIES AND TOWNS TaracliaTaraclia AUTONOMOUS TERRITORIAL UNIT CahulCahul CAPITALS GGAGAUZIAA˘˘˘GA˘UZIA RAIONS OR MUNICIPALITIES MOLDOVA CAPITALS* VulcanestiVulca˘nesti NATIONAL CAPITAL RIVERS MAIN ROADS RAILROADS To Imayil AUTONOMOUS TERRITORIAL UNIT BOUNDARIES To Bucharest RAIONS OR MUNICIPALITIES and Constanta BOUNDARIES Black INTERNATIONAL BOUNDARIES Sea *Names of the raions or municipalities are identical to their capitals. 28°E29°E30°E
NOVEMBER 2008