Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 4 103 8-DO PROJECT APPRAISAL DOCUMENT ON A Public Disclosure Authorized PROPOSED ADAPTABLE PROGRAM LOAN IN THE AMOUNT OF US$27.5 MILLION TO THE DOMINICAN REPUBLIC FOR THE WATER AND SANITATION IN TOURIST AREAS PROJECT - PHASE I(APL1) Public Disclosure Authorized IN SUPPORT OF THE FIRST PHASE OF THE WATER AND SANITATION IN TOURIST AREAS PROGRAM March 4, 2009 Sustainable Devel pment D partment Caribbean Country Management Unit Public Disclosure Authorized Latin America and Caribbean Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its c.ontents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective = March 10,2009) Currency Unit = DO Peso D0$1.00 = US$0.02831 US$l.OO = D0$35.32 FISCAL YEAR January 1 - December31 ' ABBREVIATIONS AND ACRONYMS AFD Administration and Finance Department APL Adaptable Program Loan ASONAHORES National Association of Hotels and Restaurants (Asociacidn Nacional de Hoteles y Restaurantes) BCRD Central Bank of the Dominican Republic BP Bank Procedures CAASD Santo Domingo Water and Sewerage Company (Compaiiia de Acueducto y Alcantarillado de Santo Domingo) CAS Country Assistance Strategy CEA Country Environmental Assessment CEIZTUR Execution Committee for Infrastructure in Tourist Areas (Comite' Ejecutor de Obras de Infraestructuras en Zonas Turisticas) CFP Country Financing Parameters CORAAMOCA Moca Water and Sewerage Company (Corporacidn de Acueductos y Alcantarillados de Moca) CORAAPPLATA Puerto Plata Water and Sewerage Company (Corporacidn de Acueductos y Alcantarillados de Puerto Plata) CORAAROM La Romana Water and Sewerage Company (Corporacidn de Acueductos y Alcantarillados de La Romana) CORAASAN Santiago Water and Sewerage Company (Corporacidn de Acueductos y Alcantarillados de Santiago) CPIA Country Policy and Institutional Assessment CV Curriculum Vitae DA Designated Account DC Direct Contracting DIA Environmental Impact Declaration (Declaratoria de Impact0 Ambiental) DPSPP Provincial Health Directorate of Puerto Plata (Direccidn Provincial de Salud de Puerto Plata) EA Environmental Assessment ECPE Environmental Card of Preliminary Evaluation EIA Environmental Impact Assessment ESMF Environmental and Social Management Framework FEAP Environmental Card of Preliminary Evaluation (Ficha de Evaluacidn Ambiental Preliminar) GCO General Comptroller's Office FOR OFFICIAL USE ONLY GDP Gross Domestic Product GdRD Dominican Republic Government (Gobierno de Repliblica Dominicana) IADB Inter-American Development Bank IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding IDA International Development Association IDSS Dominican Institute of Social Security (Instituto Dominican0 de Seguros Sociales) IFC International Finance Corporation INAPA National Drinking Water and Sewerage Institute. (Instituto Nacional de Agua Potable y Alcantarillado) IRF Involuntary Resettlement Framework ISDS Integrated Safeguards Data Sheet IUFRs Interim Unaudited Financial Reports JBIC Japan Bank for International Cooperation LIL Learning and Innovation Loan M&E Monitoring and Evaluation MGAS Environmental and Social Management Framework (Marco de Gestidn Ambiental y Social) MDG Millennium Development Goals NCB National Competitive Bidding NGO Non Governmental Agency NPV Net Present Value O&M Operation and Maintenance ONE National Department of Statistics (Oficina Nacional de Estadisticas) OP Operational Policy PAFI (Programa de Administracion Financiera Integrada) PASCT Water and Sanitation in Tourist Areas Project (Proyecto de Agua Potable y Saneamiento en Centro Turisticos) PCU Project Coordination Unit PDP Provincial Development Program (Programa de Desarrollo Provincial) PEFA Project Expenditures and Financial Accountability PFM Public Financial Management PP Procurement Plan PPP Public-Private Partnerships PSP Private Sector Participation QCBS Quality and Cost Based Selection REA Environmental Assessment Report (Reporte de Evaluacidn Ambiental) RPF Resettlement Policy Framework SAF Financial Management System (Sistema Administrativo Financiero) RPF Resettlement Policy Framework SBD Standard Bidding Documents This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. SEA Strategic Environmental Assessment SEEPYD State Secretariat of Economy, Planning and Development (Secretaria de Estado de Economia, Planijkacidn y Desarrollo) SEMARENA State Secretariat of Environment and National Resources (Secretaria de Estado de Medio Ambiente y Recursos Naturales) SEOPC State Secretariat of Public Works and Communications (Secretaria de Estado de Obras Pziblicas y Comunicaciones) SESPAS State Secretariat of Public Health and Social Assistance (Secretaria de Estado de Salud Pziblica y Asistencia Social) SET State Secretariat of Tourism (Secretaria de Estado de Turismo) SIFMUN Municipal Financial System (Sistema Financier0 Municipal) SIGEF Integrated Financial Management System (Sistema Integrado de Gestidn Financiera) SIL Specific Investment Loan SOE Statement of Expenditures STP Technical Secretariat of the Presidency (Secretariado Te'cnico de la Presidencia) TOR Terms of Reference TSS Social Security Treasury (Tesoreria de la Seguridad Social) UE-PASCT Executive Unit - Water and Sanitation in Tourist Areas Project (Unidad Ejecutiva - Proyecto de Agua y Saneamiento en Centros Turisticos) UEPEX System of Implementing Units with External Loans (Sistema de Unidades Ejecutoras con Pre'stamos Externos) WTO World Trade Organization WTP Willingness-to-pay Vice President: Pamela Cox Country ManagedDirector: Yvonne M. Tsikata Sector Manager: Guang Zhe Chen Task Team Leader: Manuel Mariiio DOMINICAN REPUBLIC: WATER AND SANITATION IN TOURIST AREAS PROJECT .PHASE I (APL1) 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 ................................................. 4 B. PROJECT DESCRIPTION .................................................................................................. 5 1. Lending Instrument.............................................................................................................. 5 2 . Program Characteristics....................................................................................................... 5 3. Project Development Objectives and Key Indicators. ......................................................... 7 4 . Project Components ............................................................................................................. 8 5 . Lessons Learned and Reflected in the Project Design ...................................................... 1 1 6 . Alternatives Considered and Reasons for Rejection ........................................................ -12 C. IMPLEMENTATION ......................................................................................................... 12 1. Partnership arrangements .................................................................................................. 12 2 . Institutional and Implementation Arrangements ............................................................... 13 3 . Monitoring and Evaluation of Results ............................................................................... 15 4 . Sustainability ..................................................................................................................... 17 5 . Critical Risks and Proposed Mitigation Measures ............................................................ 17 6 . Loan Conditions and Covenants ....................................................................................... -19 D. APPRAISAL SUMMARY .................................................................................................. 20 1. Economic and financial analysis ....................................................................................... 20 2 . Technical ........................................................................................................................... 21 3 . Fiduciary ............................................................................................................................ 22 4 . Social ................................................................................................................................. 23 5 . Environment ...................................................................................................................... 25 .. 6 . Safeguard policies .............................................................................................................. 26 7. Policy Exceptions and Readiness ....................................................................................... 27 Annex 1: Country and Sector or Program Background.......................................................... 28 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ..................33