Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 49332 - MA PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN Public Disclosure Authorized IN THE AMOUNT OF EUROS 25.9 MILLION AND US$8.6 MILLION (US$43 MILLION EQUIVALENT) TO THE OFFICE NATIONAL DE L’EAU POTABLE (ONEP) (NATIONAL POTABLE WATER AUTHORITY) WITH THE GUARANTEE OF THE Public Disclosure Authorized KINGDOM OF MOROCCO FOR THE OUM ER RBIA SANITATION PROJECT May 20, 2010 Sustainable Development Department Middle East and North Africa Region Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective March 28, 2010) Currency Unit = Moroccan Dirham (MAD) MAD 8.312 = US$ 1 US$ 0.120 = MAD 1 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS BOD Biological Oxygen Demand CAS Country Assistance Strategy CDM Clean Development Mechanism CPS Country Partnership Strategy CR Rural Municipality/Commune Rurale DAE Department for Sanitation and Environment (ONEP)/Direction de l’Assainissement et de l’Environnement DAM Department for Procurement (ONEP)/ Direction Approvisionnement et Marchés DPL Development Policy Loan EA Environmental Assessment EMP Environmental Management Plan ESW Economic and Sector Work GEP Program for Access to Potable Water/Programme de Généralisation de l’Eau Potable GOM Government of Morocco HC House Connection IBRD International Bank for Reconstruction and Development INDH National Human Development Initiative /Initiative Nationale de Développement Humain () MDG Millenium Development Goals MEMEE Ministry of Energy, Mines, Water and Environment MENA Middle East and North Africa MIC Middle-Income Country O&M Operation and Maintenance ONEP National Office for Potable Water/Office National de l’Eau Potable PAGER Water Supply Program for Rural Populations/Programme d’Approvisionnement Groupé en Eau Potable des Populations Rurales PDO Project Development Objective PNA National Sanitation Plan/Plan National d’Assainissement RWS Rural Water Supply RWSS Rural Water Supply and Sanitation SEEE State Bureau for Water and Environment/Secrétariat d’ Etat chargé de l’Eau et de l’Environnement SDR Safeguard Diagnostic Review SIL Specific Investment Loan SMT Social Mobilization Team WSS Water Supply and Sanitation WUA Water Users Association Vice President: Shamshad Akhtar Acting Country Director: Francoise Clottes Sector Director Laszlo Lovei Sector Manager: Francis Ato Brown Task Team Leader: Alexander E. Bakalian KINGDOM OF MOROCCO - OUM ER RBIA SANITATION PROJECT TABLE OF CONTENTS Page I. STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 A. Country and sector issues.................................................................................................... 1 B. Rationale for Bank involvement ......................................................................................... 2 C. Higher level objectives to which the project contributes .................................................... 3 II. PROJECT DESCRIPTION ................................................................................................. 4 A. Lending instrument ............................................................................................................. 4 B. Project development objective and key indicators .............................................................. 4 C. Project components ............................................................................................................. 4 D. Lessons learned and reflected in the project design ............................................................ 5 E. Alternatives considered and reasons for rejection .............................................................. 6 III. IMPLEMENTATION ...................................................................................................... 7 A. Institutional and implementation arrangements .................................................................. 7 B. Monitoring and evaluation of outcomes/results .................................................................. 8 C. Sustainability....................................................................................................................... 8 D. Critical risks and possible controversial aspects ................................................................. 9 E. Loan/credit conditions and covenants ............................................................................... 11 IV. APPRAISAL SUMMARY ............................................................................................. 13 A. Economic and financial analyses ...................................................................................... 13 B. Technical ........................................................................................................................... 15 C. Fiduciary ........................................................................................................................... 16 D. Procurement ...................................................................................................................... 16 E. Social................................................................................................................................. 17 F. Environment ...................................................................................................................... 18 G. Safeguard policies ............................................................................................................. 19 H. Policy Exceptions and Readiness...................................................................................... 20 Annex 1: Country and Sector or Program Background ......................................................... 21 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ................. 24 Annex 3: Results Framework and Monitoring ........................................................................ 26 Annex 4: Detailed Project Description ...................................................................................... 30 Annex 5: Project Costs ............................................................................................................... 33 Annex 6: Implementation Arrangements ................................................................................. 35 Annex 7: Financial Management and Disbursement Arrangements ..................................... 38 Annex 8: Procurement Arrangements ...................................................................................... 45 Annex 9: Economic and Financial Analysis ............................................................................. 51 Annex 10 - Social Assessment .................................................................................................... 65 Annex 11: Safeguard Policy Issues ............................................................................................ 71 Annex 12: Project Preparation and Supervision ..................................................................... 78 Annex 13: Documents in the Project File ................................................................................. 79 Annex 14: Statement of Loans and Credits .............................................................................. 80 Annex 15: Country at a Glance ................................................................................................. 81 Annex 16: Map IBRD 37425 ...................................................................................................... 84 KINGDOM OF MOROCCO MOROCCO OUM ER RBIA SANITATION PROJECT APPRAISAL DOCUMENT MIDDLE EAST AND NORTH AFRICA MNSSD Date: May 20, 2010 Team Leader: Alexander E. Bakalian Acting Country Director: Francoise Clottes Sectors: Sanitation (100%); Sector Manager/Director: Francis Ato Brown/ Themes: Access to urban services and housing Laszlo Lovei (67%); Pollution management and environmental health (33%) Project ID: P098459 Environmental category: B Lending Instrument: Specific Investment Loan Joint IFC: Joint Level: Project Financing Data [X] Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing: EUR 25.9 million and US$ 8.6 million (equivalent US$43 million) Proposed terms: Euro and dollar denominated commitment -linked IBRD flexible loan with a variable spread and a final maturity of 30 years including a 5-year grace period. Financing Plan (US$m) Source Local Foreign Total Borrower 32.1 0.00 32.10 International Bank for Reconstruction and 43.0 0.00 43.00 Development Total: 75.1 0.00 75.10 Borrower: ONEP - Morocco Responsible Agency: Office National de l'Eau Potable (ONEP) Station de Traitement Akrach Avenue Mohamed Belhassan El Ouazzani Rabat, Morocco Tel: (212-537) 650-695 Fax: (212-537) 759-106 Estimated disbursements (Bank FY/US$m) FY 11 12 13 14 15 16 Annual 5.00 8.00 10.00 10.00 5.00 5.00 Cumulative 5.00 13.00 23.00 33.00 38.00 43.00 Project implementation period: Start May 1, 2010 End: September 30, 2015 Expected effectiveness date: August 1, 2010 Expected closing date: December 31, 2015 Does the project depart from the CAS in content or other significant respects? [ ]Yes [X] No Ref. PAD I.C. Does the project require any exceptions from Bank policies? Ref. PAD IV.G.