Document of The World Bank FOR OFFICIAL USE ONLY Report No: 33881-MOR Public Disclosure Authorized PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN Public Disclosure Authorized IN THE AMOUNT OF EURO 49.5 MILLION (US$60 MILLION EQUIVALENT) TO OFFICE NATIONAL DE L’EAU POTABLE (ONEP) (NATIONAL POTABLE WATER AUTHORITY) WITH THE GUARANTEE OF THE KINGDOM OF MOROCCO Public Disclosure Authorized FOR A RURAL WATER SUPPLY AND SANITATION PROJECT November 23,2005 Water, Environment, Social Rural Development Department Public Disclosure Authorized and Middle East and North Africa Region This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not be otherwise disclosed without World Bank Group authorization CURRENCY EQUIVALENTS (Exchange Rate Effective June 10,2005) Currency Unit = Moroccan Dirham (DH) DH9.0 = US$1 US$O.1111 = DH1 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS AFD French Development AgencylAgence Franqaise de De'veloppement CAS Country Assistance Strategy CFAA Country Financial Accountability Assessment CR Rural District/ Commune Rurale DAM Department for Supplies and Contracts DEP Department for Universal Access to Potable Water (0NEP)lDirection Centrale de Ge'ne'ralisation de 1 'Eau Potable DGH General Department of HydraulicslDirection Ge'ne'rale de 1 'Hydraulique DPL Development Policy Loan DR ONEP's Regional DepartmentslDirections re'gionales EA Environmental Assessment EIB European Investment Bank EMF Environmental Management Framework ERR Economic Rate ofReturn EU European Union FMR Financial Monitoring Report GEP Program for Universal Access to Potable WaterlProgramme de Ge'nkralisation de 1 'Eau Potable GOM Government ofMorocco HC House connection ICR Implementation Completion Report INDH Initiative Nationale pour le De'veloppement Humain JBIC Japan Bank ofInternational Cooperation JICA Japan International Cooperation Agency Kfw Kreditanstalt fir Wiederaufbau MATEE Ministry ofLand Planning, Water and EnvironmentlMinistBre de 1 'Amknagement du Territoire, de 1 'Eau et de I'Environnement MDG Millennium Development Goals MEDA Euro-Mediterranean Partnership MNA Middle East and North Africa MSP Ministry ofHealthlMinistBre de la Santk Publique NCB National Competitive Bidding NPV Net Present Value O&M Operation and Maintenance OBA Output-Based Aid ONEP National Potable Water AuthoritylOffice National de 1 'Eau Potable PAGER Water Supply Program for Rural PopulationslProgramme d 'Approvisionnement Groupk en Eau Potable des Populations Rurales PESW Programmatic Economic Sector Work PPP Pub lic-Private Partnership SP Public Standpipe QBS Quality Based Selection QCBS Quality and Cost Based Selection ROSC Report on the Observance ofStandards and Codes RWS Rural Water Supply RWSS Rural Water Supply and Sanitation SDF Saudi Development Fund SFD Saudi Fund for Development SIL Specific Investment Loan SMT Social Mobilization Team SP Standpipe SRP Standard Request for Proposals TA Technical Assistance wss Water Supply and Sanitation WUA Water Users' Association Vice President: Christiaan J. Poortman Country Director: Theodore 0.Ahlers Sector Director Inger Andersen Sector Manager: Vij ay Jagannathan Task Team Leader: Marie-Laure Laiaunie MOROCCO Rural Water Supply and Sanitation Project CONTENTS Page A . STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 1. Country and sector issues.................................................................................................... 1 2 . Rationale for Bank involvement ......................................................................................... 3 3 . Higher level objectives to which the project contributes .................................................... 3 B. PROJECT DESCRIPTION ................................................................................................. 4 1. Lending instrument ............................................................................................................. 4 2 . Project development objective and key indicators.............................................................. 4 3 . Project components ............................................................................................................. 4 4 . Lessons learned and reflected in the project design............................................................ 6 5 . Alternatives considered and reasons for rejection .............................................................. 7 C . IMPLEMENTATION .......................................................................................................... 7 1. Partnership arrangements .................................................................................................... 7 2 . Institutional and implementation arrangements .................................................................. 7 3 . Monitoring and evaluation (M&E) ofoutcomes/results ..................................................... 8 4 . Sustainablhty... ....................................................................................................................... 8 5 . Critical risks and possible controversial aspects ............................................................... 10 .. 6 . Loadcredit conditions and covenants ............................................................................... 11 D. APPRAISAL SUMMARY ................................................................................................. 13 1. Economic and financial analyses ...................................................................................... 13 2 . Technical ........................................................................................................................... 15 3 . Fiduciary ........................................................................................................................... 15 4 . Social................................................................................................................................. 16 5 . Environment...................................................................................................................... 17 6 . Safeguard policies ............................................................................................................. 17 7 . Policy Exceptions and Readiness...................................................................................... 18 ANNEXES: Annex 1: Country and Sector Background .................................................................................. 19 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies .......................... 23 Annex 3: Results Framework and Monitoring.............................................................................. 25 Annex 4: Detailed Project Description ......................................................................................... 29 Annex 5: Project Costs .................................................................................................................. 43 Annex 6: Implementation Arrangements ...................................................................................... 44 Annex 7: Financial Management and Disbursement Arrangements ............................................ 46 Annex 8: Procurement .................................................................................................................. 52 Annex 9: Economic and Financial Analysis ................................................................................. 57 Annex 10: Safeguard Policy Issues............................................................................................... 65 Annex 11 : Project Preparation and Supervision ........................................................................... 70 Annex 12: Documents in the Project File ..................................................................................... 71 Annex 13: Statement of Loans and Credits .................................................................................. 72 Annex 14: Country at a Glance ..................................................................................................... 73 Map: IBRD 34331 MOROCCO RURAL WATER SUPPLY AND SANITATION PROJECT PROJECT APPRAISAL DOCUMENT MIDDLE EAST AND NORTH AFRICA MNSRE Date: November 23,2005 Team Leader: Marie-Laure Lajaunie Country Director: Theodore 0. Ahlers Sectors: General water, sanitation and flood Sector ManagedDirector: Narasimham Vijay protection sector (1 00%) Jagannathan Themes: Rural services and infrastructure (P); Pollution management and environmental health (S) Project ID: PO86877 Environmental screening category: Partial Assessment Lending Instrument: Specific Investment Loan Safeguard screening category: Limited impact [XI Loan [ ] Credit [ 3 Grant [ ] Guarantee [ 3 Other: For Loans/Credits/Others: Total Bank financing (US$m.): 60.00 Borrower: Office National de 1’Eau Potable (ONEP) Responsible Agency: ONEP Station de traitement Avenue Oued Akrach Rabat Morocco Tel: (212)-37-75-96-00 Project implementation period: Start January 3,2006 End: June 30,2012 Expected effectiveness date: March 20, 2006 Gxpected closing date: December 3 1,2012 Does the project depart from the CAS in content or other significant respects? [ ]Yes [XINO Re$ PAD A.3 Does the project require any exceptions from Bank policies? [ ]Yes [XINO Re$ PAD D. 7 Have these been approved by Bank management? [ ]Yes [ IN0 Is approval