The World Bank Mozambique Urban Water Security Project (P178653) Program Information Documents (PID) Appraisal Stage | Date Prepared/Updated: 28-Jun-2023 | Report No: Mar 18, 2023 Page 1 of 22 The World Bank Mozambique Urban Water Security Project (P178653) BASIC INFORMATION OPS_TABLE_BASIC_DATA A. Basic Program Data Country Project ID Program Name Parent Project ID (if any) Mozambique P178653 Mozambique Urban Water Security Project Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead) EASTERN AND SOUTHERN AFRICA 03-Jul-2023 28-Sep-2023 Water Financing Instrument Borrower(s) Implementing Agency Program-for-Results Financing Ministry of Public Works National Directorate for Water Supply and Sanitation, Housing and Water Water Supply Asset Holding and Investment Fund, Resources Water Regulatory Authority, South Regional Water Administration Proposed Program Development Objective(s) The project development objective (PDO) is to increase access to improved water supply services and to improve service delivery capacity in selected cities. COST & FINANCING SUMMARY (USD Millions) Government program Cost 3,118.00 Total Operation Cost 309.58 Total Program Cost 309.58 Total Financing 309.58 Financing Gap 0.00 FINANCING (USD Millions) Total World Bank Group Financing 250.00 World Bank Lending 250.00 Total Government Contribution 59.58 June 28, 2023 Page 2 of 22 The World Bank Mozambique Urban Water Security Project (P178653) Decision The review did authorize the team to appraise and negotiate ABBREVIATIONS AND ACRONYMS AIAS Water and Sanitation Infrastructures Administration (Administração de Infra-estruturas de �gua e Saneamento) ARA-Sul South Region Regional Waters Administration (Administração Regional de �guas do Sul) AdRMM Maputo Metropolitan Area Water Company (�guas da Região Metropolitana de Maputo) AdRS South Region Water Company (�guas da Região Sul) AURA Water Regulatory Authority (Autoridade Reguladora de �gua), former CRA Conselho de Regulação de �guas CPF Country Partnership Framework DLI Disbursement-Linked Indicator DLR Disbursement-Linked Result DMF Delegated Management Framework DNAAS National Directorate for Water Supply and Sanitation (Direcção Nacional de Abastecimento de �gua e Saneamento) DNGRH National Directorate of Water Resources Management (Direcção Nacional de Gestão de Recursos Hídricos) e-SISTAFE Electronic State Financial Administration System ENASU Urban Water and Sanitation National Strategy (Estratégia Nacional de �gua e Saneamento Urbano) ESSA Environmental and Social System Assessment ESMS environmental and social management system FIPAG Water Supply Asset Holding and Investment Fund (Fundo de Investimento e Património do Abastecimento de �gua) FM Financial Management FSA Fiduciary Systems Assessment GBV gender-based violence GDP gross domestic product GEMS Geo-Enabling initiative for Monitoring and Supervision GIIP good international industrial practice GMMA Greater Maputo Metropolitan Area GoM Government of Mozambique GRID Green, Resilient and Inclusive Development GRM grievance redress mechanism GRS Bank’s Grievance Redress Service HC household connection HDI Human Development Index IDA International Development Association June 28, 2023 Page 3 of 22 The World Bank Mozambique Urban Water Security Project (P178653) IFC International Finance Corporation IFR Interim Financial Report IA investment area IPF investment project financing IRR Internal Rate of Return IWRM Integrated Water Resources Management KPI Key Performance Indicators MAPS Methodology for Assessing Procurement Systems MISAU Ministry of Health (Ministério da Saúde) MOPHRH Ministry of Public Works, Housing, and Water Resources (Ministério das Obras Públicas, Habitação e Recursos Hídricos) MTA Ministry of Land and Environment (Ministério da Terra e Ambiente) NDC Nationally Determined Contribution NPV net present value NRW non-revenue water OHS Occupational Health and Safety PAP Program Action Plan PBC Performance-based contract PCU Project Coordination Unit PDO Project Development Objective PEFA Public Expenditure and Financial Accountability PER Public Expenditure Review PforR Program for Results PIAP Performance Improvement Action Plan PQG Government 5-Year Plan (Plano Quinquenal do Governo) PSP private sector participation PWP private water provider RA result area RF Result Framework ROC Regional Operating Companies RVR Result Verification Report SDG Sustainable Development Goals SEA sexual exploitation and abuse SH sexual harassment SMWS safely managed water services SPA Provincial Environmental Service (Serviço Provincial do Ambiente) STEM science, technology, engineering, and mathematics TA Tribunal Administrative UNICEF United Nations Children's Fund UoF Utilities of the Future UWSIP Urban Water Supply Investment Program VA verification agent WASH water, sanitation, and hygiene WB World Bank June 28, 2023 Page 4 of 22 The World Bank Mozambique Urban Water Security Project (P178653) WHO World Health Organization WSP Water and Sanitation Program WSS water supply and sanitation WTP water treatment plant June 28, 2023 Page 5 of 22 The World Bank Mozambique Urban Water Security Project (P178653) B. Introduction and Context Country Context 1. Mozambique has achieved significant economic growth since the end of the civil war in 1992, but important challenges are affecting the country’s growth prospects. Mozambique grew at an average of 8 percent between 2001 and 2015, driven by several large-scale foreign investment projects in the extractives sector amidst political stability and significant donor support. However, falling commodity prices, climate shocks, fiscal tightening, and a slowdown in foreign direct investment in the aftermath of the US$1.4 billion hidden-debt disclosure caused economic growth to drop to 3 percent in 2016–2019, and inflation to peak at 26 percent in 2016. When tropical cyclones Idai and Kenneth hit the country in 2019, growth fell sharply to 2.3 percent due to the supply shock to productive capacity. This situation worsened in 2020 due to the economic impact of the Coronavirus Disease 2019 (COVID-19) pandemic and the escalation of the insurgency in northern Mozambique. This resulted in the economy registering its first contraction since 1992. However, Mozambique embarked on a growth recovery, with growth reaching 3.8 percent by 2022, owing to a rebound in global demand, improved agriculture performance, and additional stimulus to the business environment from liquified natural gas projects. 2. Mozambique is one of the most vulnerable countries to climate change in the region, and its economic growth is historically correlated to climate shocks. A catastrophe risk modeling study estimates that Mozambique faces average annual losses of US$440 million due to floods alone.1 A recent analysis of climate shocks and household well-being in Mozambique finds that a cyclone, flood, or drought event can lead to a 25 –30 percent drop in per capita food consumption and 0.4 fewer meals per day per person.2 The tropical cyclones Idai and Kenneth, respectively in March and April 2019 resulted in widespread damage to infrastructure and affected more than one million people, causing 602 direct deaths, 1,600 injuries, 6,506 cases of cholera, and 14,059 cases of malaria. Hundreds of thousands lost their homes, and a significant number of people took shelter in displacement sites.3 Without climate change adaptation and mitigation strategies, disaster risk management, and investment financing, climate change is expected to cause economic damage of between US$2.3 billion and US$7.4 billion during the 2003–2050 (discounted and in 2003 prices) period.4 Exposure of Maputo, Gaza, and Inhambane provinces to extreme temperature, recurrent droughts, extreme precipitation, and flooding was assessed as high with moderate impacts to physical infrastructure and assets.5 This implies that potentially damaging and life- threatening floods and droughts are expected to occur at least once during the 30-year life span of planned infrastructure. Moreover, climate change-exacerbated droughts, floods, and cyclones are increasingly undermining water security in the project area. 3. Investments in water security have led to significant economic and human development gains. The socioeconomic gains of water investments in Mozambique are evident in the main urban centers, where more than 1 Baez, et al. 2018. Extreme Weather and Household Well-being: Evidence from Multiple Shocks in Mozambique. World Bank. link: https://openknowledge.worldbank.org/handle/10986/30989. 2 Baez, et al. 2018. Extreme Weather and Household Well-being: Evidence from Multiple Shocks in Mozambique. World Bank. Link: https://openknowledge.worldbank.org/handle/10986/30989. 3 UNOCHA (United Nations Office for the Coordination of Humanitarian Affairs). 2021. Mozambique highlights on humanitarian crisis. link: https://reports.unocha.org/en/country/mozambique. 4 World Bank. 2010. The Economics of Adaptation to Climate Change—Mozambique. link: https://openknowledge.worldbank.org/handle/10986/12748. 5 Rapid Climate Risk Screening for the Mozambique Urban Water Security Project. June 28, 2023 Page 6 of 22 The World Bank Mozambique Urban Water Security Project (P178653) two decades of consistent investments and the contribution of the local private sector have resulted in increased access to a water supply, from 60 percent in 2000 to close to 90 percent in 2020, and contributed to a reduction in child mortality from 95 (per 1,000 children) in 2003 to 69 in 2011, as well as a reduction in the prevalence of diarrheal diseases in children under five, from 13.4 percent in 2003 to 9.9 percent in 2018.6, 7, 8 Further, the gains in the water sector have contributed to narrowing the gap in gender equality and led to the creation of direct jobs. Nevertheless, the water sector still lags behind to meet sector goals by 2030. 4. Despite a slow economic recovery, Mozambique still faces considerable uncertainties, climate vulnerability, and challenges with water-intensive economic activities. The 2020 country private sector diagnostic (CPSD) found that insufficient basic service provision, including water and electricity, limits tourism sector opportunities, curtailing the geographical spread of visits, investments, and benefits.9 Therefore, improving water availability and reliability can boost the country’s economic growth and contribute to poverty eradication by increasing productivity with higher agriculture and industrial production and yields, time-saving and fewer sick workers, and reduced expenditure on health care and treatment.10 Sectoral and Institutional Context 5. A substantial share of the Mozambican urban population continues to lack access to safely managed drinking water services.11 Although access to basic water in urban areas has reached a high level of around 90 percent,12 the service continues to be limited, with an intermittent supply. In addition, a significant portion of the urban population lacks access into their premises through a piped connection, with 8 percent relying on public standpipes and 17 percent on taps in a neighbors’ dwelling.13,14 At present, none of the 21 main cities served by the 15 primary systems15 have continuous water supply service, with only 7 systems reaching the target service level of 16 hours of supply per day defined by the Water Regulatory Authority (Autoridade Reguladora de �gua, AURA) as the threshold for good performance.16 With the urban population growth rate at 4.4 percent per year,17 the public drinking water service managed by state agencies18 is not expanding at the same speed as the growth of the urban settlements. Therefore, private water providers (PWPs) are filling the gap in service expansion and 6 MISAU (Ministério da Saúde). 2005. Demographic and Health Survey 2003 Report. 7 MISAU (Ministério da Saúde). 2013. Demographic and Health Survey 2011 Report. 8 MISAU (Ministério da Saúde). 2018. Inquérito de indicadores de imunização, malária e HIV 2015. 9 IFC. 2021. Country Private Sector Diagnostic. Creating Markets in Mozambique. 10 SIWI (Stockholm International Water Institute) 2005. Making Water a Part of Economic Development. 11 In order to meet the criteria for a safely managed drinking water service, an improved water source should meet three criteria: it should be accessible on the premises (accessibility), water should be available when needed (availability), and the water supplied should be free from contamination (quality). 12 WHO (World Health Organization), and UNICEF (United Nations Children’s Fund). 2020. Joint Monitoring Program—Mozambique Rural and Urban Service Levels. link. 13 According to the Service Regulation Report for 2019 (AURA 2022) the highest level of the use of standpipes, at 26 percent of the urban population, was registered in Nampula and Angoche cities. 14 INE. 2021. Results from the Households Budget Survey 2019/20. 15 A single water system can provide water services to contiguous cities. This is the case of the Greater Maputo system which provides access to Maputo and Matola, the most populated urban centers of the country. 16 AURA. 2022. Service Regulation Report for year 2019. 17 World Bank. 2022. Data Portal. Urban population growth (annual percent) —Mozambique. link: https://data.worldbank.org/indicator/SP.URB.GROW?locations=MZ. 18 Two state agencies are responsible for investments in water supply in the urban space, the Water Supply Asset Holding and Investment Fund (Fundo de Investimento e Património do Abastecimento de �gua, FIPAG) in main cities; and the Water and Sanitation Infrastructure Administration (Administração das Infra-estruturas de �gua e Saneamento, AIAS) in secondary cities. June 28, 2023 Page 7 of 22 The World Bank Mozambique Urban Water Security Project (P178653) access,19 mainly in peri-urban areas. In the Greater Maputo Region, where the average access to safe water is above 97 percent,20 the public water service only covers 56 percent of the population.21 Therefore, slightly above 40 percent of the urban population rely on services from a PWP, most of them unlicensed22 and abstracting groundwater from poorly drilled boreholes that puts the aquifers at a risk of contamination. In addition, PWPs charge a tariff 51 percent higher than the public utility, meaning that the poor living in the peri-urban areas pay more for a drinking water service.23 6. An increased investment in the urban water supply is not always translated into sustained improved services. The latest regulator’s report for 2019 indicates that 12 out of 15 main urban water supply systems have a low performance.24 The Water Sector Public Expenditure Review (PER)25 indicates that from 2013 to 2018 increases in the Water Supply Asset Holding and Investment Fund (Fundo de Investimento e Património do Abastecimento de �gua, FIPAG) expenditures resulted in only small increases in urban water supply access from FIPAG’s operations, and coincided with declining financial and operational performance, and quality of service. FIPAG’s primary systems were on average able to recover 120 percent of operating expenditure (OPEX) in 2014, but this declined to 90 percent in 2018. Average hours of service per day in FIPAG main systems also declined from 19.4 in 2014 to 15.1 in 2021. In the same period, non-revenue water (NRW) increased from 32 percent to 48 percent. Although part of this decline in service can be associated with underfunding of the sector and rapid population growth in the main cities, it indicates that a more sustainable expansion of the water supply service demands a paradigm shift from concentrated investments in infrastructure to a coupling of investments, with institutional strengthening that includes incentives for service performance improvement. The Utilities of the Future26 (UoF) assessment conducted in preparation for this operation indicated that water supply services in project-targeted areas have low levels of inclusion (20% for Greater Maputo, and 40% for Southern Region) and transparency and reliability (with both regions scoring 40%). Table 1 – Evolution of primary performance indicators for Greater Maputo, Inhambane and Xai-Xai service areas27 19 A Survey conducted by the National Directorate of Water Supply and Sanitation in 2018 identified 1,830 PWPs supplying water to 1.8 million people through piped connections, mainly in urban areas from the Southern Region, with more than 75 percent of the total share of this business, nearly 1.4 million, in the Greater Maputo Region. 20 INE. 2020. Results from the Census 2017. 21 AURA. 2022. Service Regulation Report for year 2019. 22Only 20 percent of the private water supply systems were licensed by the end of 2019. 23 The tariff updates from November 2021 fixed the PWP tariff of 70 MT per cubic meter for a system connected to the power grid and 80 MT per cubic meter for systems powered by diesel generators (Resolution 3/2021 from AURA). The average tariff for the Greater Maputo Region for the public utility was fixed at 46.28 MT per cubic meter (Resolution 2/2021 from AURA). 24 A performance compounded index below 50 percent is considered low and attributed the lowest rating “C� in the five -range scale (A+, A, B+, B and C). 25 DH Infrastructure and MB Consulting. 2020. Public Expenditure Review of the Mozambican Water Sector 2010-2018 (prepared for the World Bank). 26 The Global Water Unit has developed a tool (Utility of the Future) to assess the performance of the water utilities and to define the key actions to be implemented. 27 Data for years 2013 and 2017 from the AURA’s performance reports, and for year 2022,*January to October, from FIPAG’s reporti ng on key performance indicators presented during the WASIS II November 2022 mission. June 28, 2023 Page 8 of 22 The World Bank Mozambique Urban Water Security Project (P178653) Greater Maputo Xai-Xai Inhambane Key performance indicators 2013 2017 2022* 2013 2017 2022* 2013 2017 2022* 1 Coverage by household connections (%) 54% 56% 49% 81% 69% 65% 90% 85% 95% 2 Average hours of supply (hours) 17 10 16 24 19 20 24 20 12 3 Non-revenue water (%) 47% 42% 46% 14% 52% 52% 31% 38% 20% 4 OPEX coverage ratio 1.17 0.98 - 0.98 0.99 - 0.82 0.75 - 5 Invoicing based on meters reading (%) 73% 81% 82% 100% 94% 94% 100% 99% 93% 6 Collection ratio (%) 90% 85% 74% 96% 93% 96% 98% 97% 91% 7 Conformity of water quality parameters (%) 97% 99% - 100% 55% - 100% 95% - 7. To support decentralized management, FIPAG created four regional operating areas—Maputo Metropolitan, South, Central, and North Regions—and established in May 2021 the formal Regional Operating Companies (ROCs)28 in those areas, to use the assets owned by FIPAG to provide operational services for water supply, which will operate under lease agreements with FIPAG. Having incorporated these four ROCs, the Government of Mozambique (GoM) now wishes to procure private partners for the ROCs. The objectives of this private sector involvement are to (i) bring forward suitable external expertise to continue the improvements in the financial and service performance of the ROCs, and (ii) assist in mobilizing the necessary investment to expand the water infrastructure to meet the demands of Mozambique’s population and the wider challenges in the water sector. In this context, FIPAG has hired a transaction advisor29 to move forward with private sector participation in water supply operations. Currently, the government and FIPAG’s strategy is to allow private participation up to 49 percent of the shares of the ROCs. The transaction adviser is expected to advise on the feasibility of that strategy and, as necessary, to develop innovative fit-for-purpose arrangements to engage the private sector as partners for each region. In the meantime, technical assistances are in place to assist the ROCs in strengthening technical and operational management in anticipation of future involvement of the private sector. 8. To strengthen private sector participation (PSP) and mobilize private capital, it is key to de-risk the enabling environment, with a strong and clear regulatory and service delivery framework. Progress was made with the approval of the decree with a clear framework for regular tariff adjustments based on the principles of cost recovery, service delivery efficiency, and affordability in 2021. This tariff adjustment mechanism is supposed to address both the unpredictability of tariff reviews and the lengthy tariff review process that increases uncertainty for sector operators. The country’s decentralization framework assigns local governments (municipalities, provincial, and districts) the responsibility of leading investments for water supply and sanitation. This is not fully aligned with the Delegated Management Framework (DMF) that assigned to FIPAG the investment and asset ownership for urban water supply in the main cities. The GoM initiated in 2021 the drafting of a new water supply and sanitation (WSS) law that is expected to clarify some of the conflict roles of central and local governments, clarify service and asset ownership, and address fragmentation of the sector. 9. The intention under the DMF has consistently been to lease or otherwise arrange for the private sector operation of the water supply assets; however, its successful implementantion was limited in time and space. In the early 2000s, when FIPAG’s responsibility was for the five largest cities in Mozambique, it was expected that all five would be leased by experienced foreign operators who would bring in technical and managerial skills and systems.30 In the end, however, only Maputo was able to be leased, by a consortium initially led by SAUR 28 These include the (i) Maputo Metropolitan Area (�guas de Região Metropolitana de Maputo, GMMA), (ii) Southern (�guas da Região do Sul, SA), (iii) Central (�guas da Região do Centro, SA), and (iv) Northern (�guas da Região do Norte, SA). 29 Financed under the World Bank’s WASIS II project (P149377) . 30 It is important to remember that there was simply very little local experience in water supply management at that time, and foreign expertise was needed. June 28, 2023 Page 9 of 22 The World Bank Mozambique Urban Water Security Project (P178653) International, integrating �guas de Portugal (AdP) and MAZI, a minority consortium of local investors. In December 2001, SAUR International left the consortium and AdP took the lead position. At that time, there was simply no interest from foreign companies to try to operate in the other cities. The Maputo lease contract unfortunately failed within its first five years, and FIPAG bought out AdP’s portion of the joint venture in December 2010.31 This failure was most likely due to a combination of too-high expectations on both sides, a complicated contractual structure, and significant disagreements regarding which party should be responsible for necessary investments and how the costs of those investments should be recovered. With the failure to attract experienced foreign operators, FIPAG continued direct operations of the service areas other than Maputo, with the expectation that as systems were strengthened through investments in infrastructure and skills, contracting out to private operators would be possible in the future. Learning from past reform, the ongoing sector reforms is more structured and phased with the creation of the ROCs, followed by the approval of a mechanism for annual tariff review and adjustment, that will be complemented by a new WSS law that will clarify the asset and service ownership and investment roles will contribute to derisk the enabling environment for PSP. These reforms combined with the channeling of investments to utility performance improvement can contribute to increasing the potential for a successful PSP in the ROCs. 10. The performance of the urban water supply sector is further limited by increased water scarcity, and the occurrence of droughts is correlated with the decrease in drinking water service performance indicators. The Southern Region has the highest occurrence of droughts in the country. A prolonged drought, which affected the Umbeluzi River basin between 2014 and 2019, reduced water availability, causing restrictions in drinking water supply, with average hours of supply declining in the Greater Maputo to a record low of nine hours per day. Inhambane and Maxixe cities face a recurring decline in key service standards (e.g., people served and hours of supply) during the dry season due to reduced water availability in their main surface water source (Guiua and Inhanombe rivers, respectively), with climate change-exacerbated effects during episodes of the La Niña phenomenon, which is linked to severe droughts in the Southern Region. It is projected that both the frequency and intensity of droughts will increase in the future due to climate change. 11. Besides the decline in volume, deteriorating water quality in both surface and groundwater sources is threatening urban water security and the ability of urban households to cope with climate change impacts. Poor watershed protection, with an increased loss of natural vegetation to cropland and the use of fertilizers in buffer zones, is contributing to reduced water quality in the Guiua, Inhanombe, and Jatingue rivers (the main water source to Chibuto city). In Xai-Xai, nearly 40 percent of the boreholes (21 out of 54) drilled to supply water to this coastal city are out of service, as overexploitation and poor monitoring of the aquifers have led to saline water intrusion (due to grounwater depletion and sea level rise) and contamination of the aquifers. The lack of monitoring of more than 2,300 boreholes serving private water supply systems owned by PWP,32 most of them unlicensed and drilled without complying with applicable standards, poses a permanent risk of further groundwater pollution and a quality decline. 12. The Ministry of Public Works, Housing, and Water Resources (MOPHRH) has the overall responsibility for the water sector. The MOPHRH’s National Directorate for Water Supply and Sanitation (Direcção Nacional de Abastecimento de �gua e Saneamento, DNAAS) oversees policy development, planning, and investment promotion in water, sanitation and hygiene (WASH), while the National Directorate of Water Resources Management (Direcção Nacional de Gestão de Recursos Hídricos, DNGRH) oversees water resources management. The water supply in large urban centers falls under the responsibility of the FIPAG, which is the asset holder for the 17 large urban systems. To address the service deficit in small towns, in 2009, the GoM created the Water and Sanitation 31 The formal lease between FIPAG and �guas de Maputo (AdeM) continued until 2019, with FIPAG as the majority shareholder of AdeM. 32 DNAAS. 2018. Survey of Private Water Supply Systems—Final Report. June 28, 2023 Page 10 of 22 The World Bank Mozambique Urban Water Security Project (P178653) Infrastructures Administration (Administração de Infra-estruturas de �gua e Saneamento, AIAS), a national asset management agency for 130 small towns. Both the AIAS and FIPAG are autonomous entities reporting to the MOPHRH on technical and policy issues and to the Ministry of Economy and Finance on financial issues. AURA has the overall responsibility for ensuring a balance between the quality of the WSS service provided, the interests of users, and the economic sustainability of the water supply systems, through economic regulation. Water resource planning and coordination is the responsibility of DNGRH, through three regional water resource administrations —ARA-Sul (South Region Regional Waters Administration - Administração Regional de �guas do Sul) for Southern Mozambique; ARA-Centro (for Central Mozambique); and ARA-Norte (for Northern Mozambique). The ARAs are responsible for the operational management, allocation, conservation, and investment in water resources and related infrastructure, including Pequenos Libombos and Corumana dams, the main water sources for the Greater Maputo Region. While the ARAs receive some revenues from the allocation of water (for urban water supply, irrigation, and commercial and industrial use), they are largely dependent on government transfers, which are limited and in decline. 13. Women and water. Women and girls experience the greatest burden of inadequate water, sanitation, and hygiene (WASH). Although Mozambique has been experiencing a positive socio-demographic transformation, with women increasingly taking a leading role in the economy and society, women are “time poor� relative to men. This is mostly driven by the unequal division of labor within the household caused by the extra time women and school-aged girls devote to fetching water from public standpipes. The water supply coverage indicator does not allow the identification of the coverage of vulnerable households, mainly women-headed households and households headed by elderly people, among others. Most vulnerable families are at risk of not being covered by the social tariff; thus they are unable to pay for the water supply service, which compromises their acess to safe water and sanitation. With one in three women having experienced some form of gender-based violence (GBV) in Mozambique, the risks are higher for women without access to water on the premises. Growing evidence points to widespread fear or experiences of GBV while collecting water from public water points or using shared or public latrine blocks. Power imbalances between the Maputo Metropolitan Area Water Company (�guas da Região Metropolitana de Maputo, AdRMM) and South Region Water Company (�guas da Região Sul, AdRS) staff and the consumer may increase the risks of sexual exploitation and abuse/sexual harassment (SEA/SH) (if there is a risk of water supply cutoff due to lack of payment capacity), as well as during the the works construction. Women represent around one-fourth of the total workforce from the water urban water supply sector; for AdRMM and AdRS, less than one-third of the staff are women (27 percent for AdRMM and 23 percent for AdRS). Furthermore, water sector institutions lag behind in terms of female participation in decision-making roles, as the percentage of women in decision-making roles (28 percent for AdRMM and 23 percent for AdRS), and female engineers (13 percent of the staff for both utilities) are also low. Due to the predominantly technical nature of the water sector, the lower share of female engineers in the utilities limits their potential ascension to leadership positions. 14. World Bank has played a key role in supporting the urban water sector in Mozambique. In 1998, the Bank financed the first National Water Development Project (NWDP), and later financed its follow-on, the NWDP II. These projects focused investments in the five major cities of Maputo, Beira, Nampula, Quelimane, and Pemba and began support for the DMF. NWDP I and II were followed in 2007 by World Bank’s support for a first phase of WASIS (P104566) targeting selected investments in rehabilitation and expansion of networks in the water supply systems serving the cities of Beira, Quelimane, Nampula, and Pemba. More recently, the National Water Resources Development (P107350) and Greater Maputo Water Supply Expansion Project (P125120) have together successfully contributed to improve water security and expand water services in the Greater Maputo Region, though the Water Services & Institutional Support II (P149377) is improving access to water in six urban areas in the Northern and Central regions and supported the process of the creation of the ROCs. A Regional Climate June 28, 2023 Page 11 of 22 The World Bank Mozambique Urban Water Security Project (P178653) Resilience Project (P180171) has recently been approved33 and will finance works on the three main dams34 of the South Region of Mozambique, which will increase and secure the water sources for the Greater Maputo Metropolitan Area (GMMA) and the main towns of the South. PforR Program Scope Government program 15. The proposed interventions are part of the Investment Program for Sustainable, Inclusive, and Resilient Urban Water Services (Urban Water Supply Investment Program, UWSIP) in Mozambique 2022 –2032 presented by the Government of Mozambique (GoM) in September 2021 during the Investment Conference.35 The UWSIP consolidates the water sector’s medium-term investment plan outlined in the Water Sector Action Plan (PASA, 2015–2030) for the achievement of SDGs, that are aligned with the ENASU (2011–2025), and the NWRP. The main objective of the UWSIP is to reach universal access in the main urban centers of Mozambique by 2032, ensuring high-quality and continuous water service. It is expected that the implementation of the UWSIP will result in (i) modernized urban water services delivery; (ii) improved efficiency with a significant reduction in NRW (below 30 percent); (iii) increased revenues from additional customers and increased consumption; (iv) resilient infrastructure to climate change; and (v) skilled water professionals with specialized competences. The outcomes from the program are expected to go beyond improved water services, as its implementation will contribute to improving public health, economic development, and poverty reduction, as well as social resilience to extreme weather events. Besides supporting the government commitment to reach SDG 6, the UWSIP will contribute to the following SDGs: good health and well-being (SDG 3), gender equality (SDG 5), reducing inequalities (SDG 10), and sustainable cities and communities (SDG 11).36 16. The investment program presented by the GoM indicated that US$3.1 billion are needed between 2022 and 2032 (US$1.8 billion for water supply infrastructure and US$1.3 billion for water storage infrastructure) to reach universal access in the main urban centers (see table 2). Table 2. Structure of the Government program for the Urban Water Supply Sector with Estimated Investment Needs Per Region and Program Areas (MOPHRH 2021)37 Estimated investment cost (Million US$) Investment area Total Maputo South Center North 1 Resilient water supply infrastructure 1,651 524 229 365 534 2 Resilient water storage infrastructure 1,289 540 10 327 422 3 Sustainable services – NRW reduction 125 54 13 35 23 4 Sustainable services – Energy efficiency 25 11 4 6 4 5 Capacity building 28 9 2 7 9 Total 3,118 1,138 248 740 992 33 Board date in May 24, 2023 34 Pequenos, Limbombos, and Corumana. 35 This Investment Conference was organized in September 15, 2021, where MOPHRH presented the UWSIP under the authority of the President of Mozambique. 36 MOPHRH. 2021. Sustainable, Resilient and Inclusive Urban Water Services in Mozambique. Investment Program 2022–2032. Summary note presented during the Financiers Conference. Link: https://pigi.fipag.co.mz/docs/AF_BROCHURA_ENG_DIGITAL_002.pdf. 37 Ibid. June 28, 2023 Page 12 of 22 The World Bank Mozambique Urban Water Security Project (P178653) World Bank–Financed Program for Results— The Program 17. The Program will support the implementation of the UWSIP between 2023 and 2028, focusing on the expansion of access and performance improvement of water supply services. The program will also support the ongoing sector reform, which aims to engage the private sector in efforts to improve the performance of services and sustainability of operations with private sector participation. The Program will also provide extended support to develop the capacity of water resources management institutions to monitor water availability (quality and quantity) and its revenue generation capacity to be able to cover the maintenance cost of key storage infrastructure. The Program’s financing structure is shown in table 3. Table 3. Government program and PforR Program supported by the WB Government program PforR Program IA1: Resilient water supply infrastructure RA 2. Sustainable and climate resilient service delivery (access). Southern Mozambique: - Greater Maputo Metropolitan Area (Province of Maputo) - Chibuto and Xai-Xai (Province of Gaza) - Inhambane (Province of Inhambane) RA 2. Sustainable and climate resilient service delivery (access). No infrastructure, but soft support to strengthen ARA-Sul capacity to manage existing storage infrastructures. IA2: Resilient water storage infrastructure Southern Mozambique: - Strengthen ARA-Sul capacity to reducing climate hazards impacting water supply infrastructure and services through Integrated Water Resources Management (IWRM) and watershed management RA 3. Improvement of performance and efficiency of services. Southern Mozambique: IA3: Sustainable services—NRW reduction - Greater Maputo Metropolitan Area (Province of Maputo) - Chibuto and Xai-Xai (Province of Gaza) - Inhambane (Province of Inhambane) RA 3. Improvement of performance and efficiency of services. IA4: Sustainable services—energy Southern Mozambique: efficiency - Greater Maputo Metropolitan Area (Province of Maputo) - Chibuto and Xai-Xai (Province of Gaza) - Inhambane (Province of Inhambane) IA5: Capacity building RA 1. Improving the enabling environment for private sector participation. Implementation period: 2022–2032 Implementation period: 2023–2028 Cost: US$3.118 billion Cost: US$ 309.58 million June 28, 2023 Page 13 of 22 The World Bank Mozambique Urban Water Security Project (P178653) Program Activities 18. The Program’s three result areas (RAs) are: (i) RA 1. Improving the enabling environment for private sector participation; (ii) RA 2. Sustainable and climate resilient service delivery (access); and (iii) RA 3. Improvement of performance and efficiency of services. Annex 3 provides a detailed Program description. In addition, the Program includes a cross-cutting area aiming at human capital strengthening. The scope of each result area is described as follows: RA 1. Improving the enabling environment for private sector participation 19. RA1 will support a number of critical actions underpinning the operationalization of a broader sector reform effort led by the GoM to achieve universal and equitable access to safe and affordable drinking water for with private sector participation (PSP). This RA will be divided into three sub-result areas, specifically: (a) RA1.1—Support for the implementation of the second generation of the DMF for water supply systems, including the envisaged engagement of the private sector in the four regional water supply companies (commercial societies) created in May 2021, with the possible acquisition of up to 49 percent of their shares or other viable model of PSP. This result area will support FIPAG in managing the process of reforming the urban water supply sector, including strengthening it to be an institution focused on investment and asset management, migrating from its previous focus on operations that transition to the regional companies. (b) RA1.2—Improvement of policies and regulatory environment for PWPs that will also support the development of the legal framework for the integration of PWP services (technical standards with best practices for climate-proofing of operations and service, and bulk water supply models), including the licensing and monitoring of their water quality and services. (c) RA1.3—Strengthening the regulatory role to promote efficiency and inclusion in the provision of services by extending them to the poorest segments of the population and reducing the risk of investing in the sector without economic regulations that guarantee tariffs that make it possible to fully cover operating costs, fulfillment of debt service, a return on private investment, and secure the service for poor segments of the population. RA1.3 will also support activities to support the climate- proofing of operations, including the approval of guidelines for development of water safety plans for floods and droughts events and standard instructions for utilities to guide the provision of services in years of climate change exarcebated droughts and floods; the inclusion and extension of services to people with disabilities, including setting and enforcing minimal requirements for disability inclusive billing systems, customer service policies and procedures, as well as promoting the recruitment of people with disabilities. RA 2. Sustainable and climate resilient service delivery (access) 20. RA2 will support a combination of interventions from source to tap to strengthen the climate resilience and sustainability of urban water supply services that are recurrently affected by climate change exacerbated droughts and floods events, contributing to the implementation of priority climate adaptation investments enacted in the country’s NDC, specifically under the water resources and resilient water supply and sanitation systems strategic area. This includes improving the management of challenging hydrological environments to June 28, 2023 Page 14 of 22 The World Bank Mozambique Urban Water Security Project (P178653) secure water in quantity and quality in the source thus addressing water stress, downstream investment to upgrade and extend water supply infrastructure to better cope with extreme climate events including floods and droughts, and extended improved services to an increased segment of the population in response to water scarcity. RA2 is structured in three sub-result areas, specifically: (a) RA2.1—Expansion of access to climate resilient water supply that includes investments for the expansion of the water treatment and transport capacity, and downstream investments to expand the distribution network to extend services following the key principles for climate resilience water infrastructure design, with key WTP, pumping stations, bridge crossings for main pipes designed to withstand and be installed above the historic flood levels, following the protocol for climate-proofing of water supply infrastructure and service (see paragraph 88).38 Investments will benefit the Greater Maputo Region (covering Maputo and Matola cities, Boane, Marracuene, and Moamba districts), and three cities from the Southern Region (Xai-Xai, Chibuto, and Inhambane) affected by climate change exarcebated and recurrent droughts. The proposed interventions include an additional volume of treated water of 105,000 m3/day thereby increasing access and displacing the need for household level charcoal boiled water, improving the climate resilience of operations by diversifying the water sources hence addressing water scarcity and create redundancy for the services, 170 km of network for improved water supply managment thereby reducing drought impacts, 82,500 new connections ensuring higher household connectivity, an increase in service hours in all systems to be intervened; durable pipes will be used to withstand variable hydraulic behavior in the distribution network, especially during the drop in water pressure in the network commonly experienced during the occurrence of droughts. The expansion of water supply infrastructure will be implemented both by the Regional Operating Companies (ROCs) (Maputo Metropolitan Area Water Company [AdRMM] and South Region Water Company [AdRS]). (b) RA2.2—Improvement of the quality of services provided by PWPs through grants for upgrading water supply infrastructure from PWPs to comply with the technical standards with best practices for climate-proofing of operations and service, and to enable them to distribute the bulk water that will receive from the utilities. Upgrading of existing infrastructure will include the construction of flooding barriers to protect the boreholes, the installation of durable pipes that can withstand the drop in water pressure in the network commonly experienced during the occurrence of droughts, and the increase of their installation depth in high-slope areas vulnerable to erosion caused by climate change- exacerbated heavy rainfall events. (c) RA2.3—Reducing climate hazards impacting water supply infrastructure and services through IWRM and watershed management, providing strategic support to ARA-Sul to fulfill its mandate, covering investments that will contribute to strengthening of climate informed water planning and allocation, the enhancement of water quality through improved watershed management that reduces climate change-exacerbated water source contamination, assurance of water availability to meet the urban demand via source diversification and demand conservation, licensing of water users, strengthening of its financial sustainability, capacity building including in climate risk prevention, management and response, and institutional development support. RA 3. Improvement of performance and efficiency of services 38 WBG. 2020. Resilient Water Infrastructure Design Brief. Link: http://hdl.handle.net/10986/34448 June 28, 2023 Page 15 of 22 The World Bank Mozambique Urban Water Security Project (P178653) 21. RA3 will support the improvement of performance and efficiency of services provided by AdRMM in Greater Maputo and AdRS in Southern cities, allocating one-third of the Program investments to finance climate mitigation activities that will contribute to lower energy consumption and greenhouse gas (GHG) emissions, specifically NRW reduction and energy efficiency. AdRMM and AdRS will develop Performance Improvement Action Plans (PIAP), including annual targets for three sub-result areas, specifically: (a) RA3.1—NRW reduction that includes investments to reduce both physical and commercial losses thus ensuring available water supply increases and emissions reduces, management technologies, and capacity-building programs. The NRW reduction program is expected to be implemented by AdRMM and AdRS as part of the PIAP (option 1), benefiting from support (technical, expertise, financial) provided by the Private Operators (POs) after the signature of a publilc-private partnership (PPP) contract. In the case of a delayed engagement of a PO, a performance-based contract (PBC) for NRW reduction will be implemented (option 2A) in the Greater Maputo, with FIPAG recruiting a private contractor for its implementation. Similary, a Management Contract will be signed between AdRS and a private company for the implementation of the NRW investmens in the Southern Region (option 2B). (b) RA3.2—Energy efficiency that includes investments in comprehensive regular energy audits to validate proposed interventions already identified by utility-led assessments and identify investments with quick and high returns, between (i) improved pump systems design with reduced energy consumption thereby lowering emissions, (ii) requalification of equipment and hydraulics installation, including replacement of old and inefficient pumps and installation of variable speed drives to save energy, (iii) redesign of transformers and update of contracted power, (iv) investments in solar energy systems and solar pumps, (v) digitalization of operations with the installation of scada systems and devices to enable the real-time and remote operation of pumps and pressure relief valves to enable reduced losses and savings in energy consumption in the distribution operations, and (vi) training and capacity building on energy efficiency (EE). (c) RA3.3—Capacity building and institutional development of water utilities, AdRMM and AdRS, supporting the implementation of the plans derived from the UoF assessment, including improving operational, commercial, financial, human resources, communication practices including establishing of communication platforms for information sharing on water quality and services and timely resolution of complaints, climate resilience of operations, citizen engagement and social inclusion in service provision, improve utility’s governance, accountability and transparency, construction and rehabilitation of office facilities, and their equipping. For women empowerment, the Program will support a targeted recruitment program for young female science, technology, engineering, and mathematics (STEM) professionals and the training of female staff to help to advance gender equity in management positions in AdRMM, AdRS and ARA-Sul. The capacity building will including dedicated training and awareness raising activities to improve water management practices and enact response plans during times of climate change-exacerbated floods and droughts, and will include an extended support for the implementation of the turn-around plans derived from the Utilities of the Future assessment. Program Boundaries 22. The Program will support the five investment areas of the UWSIP between 2023 and 2028. The five investment areas were selected considering the need to tackle the binding constraints for improving water security from the water source to service delivery, and the need for a paradigm shift from investments focusing on the June 28, 2023 Page 16 of 22 The World Bank Mozambique Urban Water Security Project (P178653) expansion of infrastructure combining them with investments to improve the performance of institutions and services. The investments of the Program will have a geographical boundary as they will be limited to the GMMA and Southern Region. The GMMA covers Maputo and Matola cities, and the service areas of AdRMM in Boane, Marracuene, and Moamba districts. In the Southern Region, project investments in infrastructures will cover the three operational areas of AdRS, specifically: Xai-Xai39 and Chibuto in Gaza province, and Inhambane city in Inhambane province. The geographical focus on the Southern Region and GMMA is justified by the fact of this is the area of the country most affected by droughts, with increased intensity and frequency through to climate change, causing water restriction that has been impacting the sustainability of the utilities and services. The support to be provided for FIPAG for the RA1 Program (reform of the sector) will go beyond the GMMA and Southern Region, covering also the �guas da Região Centro (AdRC) and �guas da Região Norte (AdRN), which covers the Central and Northern Regions, for the PPP transaction process and technical assistance to these two utilities. The Program will not finance any infrastructure investments in dams, and under infrastructure investments will exclude High-value Contracts. C. Proposed Program Development Objective(s) Program Development Objective(s) 23. The project development objective (PDO) is to increase access to improved water supply services and to improve service delivery capacity in selected cities. 24. Two PDO-level indicators will be used to monitor progress toward the achievement of the PDO: (i) number of people provided with access to improved water supply services (disaggregated by male and female), and (ii) revenue to operating cost ratio. A set of intermediate results indicators will be used to measure and track intermediate steps toward achieving the PDO. Details, including indicator definitions and targets, are provided in Annex 1. 25. Beneficiaries. By Program closing, it is expected that an estimated 1.2 million beneficiaries (0.4 million initially unserved, and 0.8 million with improved services) will be provided access to sustainable managed services (RA2). With projected investments for performance improvement, including NRW reduction and energy efficiency (RA3), it is expected that the coverage of operational cost ratios will increase from the current value of 0.98 for 2023 to a value above 1.2. D. Environmental and Social Effects 26. The overall environmental and social impact of the Program is expected to be positive. The Program's Environmental and Social System Assessment (ESSA) found that the planned interventions to increase access to improved water supply services and improve service delivery capacity in selected cities will have widely beneficial environmental and social impacts. Much of the program is aimed at capacity building and training of staff in key institutions responsible for water supply and distribution. The central problem of conflict between state institutions responsible for supplying water to urban communities and the increasingly important PWP is directly addressed through a number of interventions that are aimed at facilitating cooperation between the parties and improving cost-effective service delivery. Emphasis on various aspects of NRW recovery will increase efficiencies in the 39 The limits of Xai-Xai operational area extends beyond the border of Xai-Xai city, covering urban expansion areas from the Chongoene district in the North and the Limpopo district in the South. June 28, 2023 Page 17 of 22 The World Bank Mozambique Urban Water Security Project (P178653) system, reducing demand on water resources and increasing the capacity of the responsible institutions through greater revenue collection. Improved management of groundwater is expected to reduce the risk of salinization of aquifers and consequent additional pressure on other water resources. Several specific result areas are aimed at addressing capacity to manage biodiversity impacts of the large water supply reservoirs, gender violence and sexual harrassment, the development and implementation of effective grievance mechanisms, among others. 27. Environmental risks. The unmanaged environmental risks and potential impacts of the Program are considered moderate due to the civil works interventions involving mainline pipeline construction, the second phase of the Sabie Water Treatment Works, the wellfields and the two replacement bridges on the Incomati and Umbeluzi rivers. These works will require heavy construction machinery, the transport of large quantities of supplies and equipment, concrete works, trenching and other excavations that could result in potentially impacts on the health and safety of construction workers and surrounding communities, and pollution impacts due to runoff, hydrocarbon spillages, dust, noise and debris. The construction-related risks and impacts are expected to be moderate. All of the major works are located in modified habitats and there are no known or expected species of conservation significance within the construction footprints. FIPAG, the institution responsible for the oversight of the major works, has experience of large World Bank civil works contracts, and has demonstrated environmental capacity to manage them. 28. Environmental risks associated with the operational phase of the Program will be low, with the possible exception of one of the wellfields where drawdown of the water table could impact on a nearby coastal lake. ‘Barrier’ lakes are a common feature of the coastal belt in Southern Mozambique, but their biodiversity is poorly documented. Available data provides no indication of potential impact on species of conservation concern, but the absence of site-specific information precludes an informed assessment of potential risk and impact. The ESSA recommends that this is addressed by internationally recognised experts during the Environmental Assessment for the licensing of the project. 29. Social Risks. The social risk will be moderate. The construction and rehabilitation of new infrastructure will have associated potential community health and safety impacts, including risks of gender-based violence / sexual exploitation and abuse / sexual harassment. It is anticipated that occasional physical or economic losses may occur, mainly for the installation of pipelines. At the project level there will have to be screening and assessment of potential impacts on cultural heritage and mitigation measures defined, as for the other potential impacts and social risks. There is a risk that the existing conflict between FIPAG and PWPs could be exacerbated if the public service network were to be expanded into areas where PWPs operate. Project activities such as the establishment of bulk water sales, regulation of standards for PWPs, capacity building of PWPs and strengthening of AURA's mediation capacity will contribute to the management of this risk. During operation there would be social risks related to access to water for vulnerable groups, who may be excluded due to lack of ability to pay. This is currently minimised through a social tariff based on water volume and subsidy for connection installation. The project foresees a tariff study that may result in improved social sustainability. In some situations, the power relationship between AdRMM/AdRS staff and the consumer may create GBV/SEA risks, namely if there is a risk or threat of water supply cut-off due to a household’s inability to pay. 30. Assessment of the Environmental and Social (E&S) System. Mozambique has a comprehensive environmental policy and legal framework that addresses environmental assessment, environmental quality, water resources management, biodiversity, climate change, disaster management and occupational health and safety as well as social issues, such as involuntary resettlement and protection to vulnerable groups. While the Ministry for Land and Environment (MTA), responsible for the E&S assessment and licensing, has some known capacity and performance limitations, particularly in relation to monitoring and auditing of compliance, the institutional capacity is considered adequate to manage the expected risks associated with the PforR Program. FIPAG, which will be the June 28, 2023 Page 18 of 22 The World Bank Mozambique Urban Water Security Project (P178653) principal agency responsible for the major civil works, has in place E&S management instruments and staff. Overall, FIPAG is expected to be capable of managing the risks associated with the construction of the large civil works to an acceptable international standard. However, some actions are recommended to strengthen its E&S capacity, including organisational restructuring, team reinforcement (including hiring of a social specialist), and completion of the environmental ans social management system (ESMS) and grievance redress mechanism (GRM) expansion to cover the South region. The current E&S capacity of the remaining implementing agencies is lower than that of FIPAG, but environmental and social risks associated with their activities in the PforR are also lower. It is recommended that their environmental and social management capacity be strengthened. All the agencies that will be responsible for construction and/or rehabilitation works should have in place an E&S Screening Procedure, Resettlement Policy Framework, templates for E&S assessment and should conduct environmental licensing of any activity before starting civil works. ToRs for studies related to water resource management and dams must include E&S provisions and requirements following GIIP, such as the WBG Good Practice Note on dam safety. All agencies must prepare and implement E&S training for staff, taking in consideration the potential E&S effects identified for the PforR activities, including awareness campaigns on GBV/SEA/SH for those involved in activities with higher risk (FIPAG, AdRMM and AdRS). 31. Consultation and Disclosure. During the preparation of this ESSA internal meetings were held with the implement agencies and other stakeholders such as DNGRH and the Association of Water Providers of Mozambique (AFORAMO), which is one of the largest PWP associations. A consultation meeting40 was held on February 7th, 2023, in Maputo, with possibility of virtual connection. The final version of the ESSA has been disclosed by the client (published at FIPAG on June 28, 2023), and by the World Bank (published at WB website on June 28, 2023). 32. The International Waterways Safeguards Policy OP 7.50 is applicable to the proposed project, as some of the proposed interventions (phase two of Sabie Water Treatment Plant) would use water coming from the Corumana Dam built across the Sabie River, a tributary of the Incomati River, shared by Eswatini and South Africa, and which is an international waterway according to paragraph 1 of the policy; exception to notification requirement is sought for activities relying on the Limpopo and Umbeluzi systems under paras 7(c) and 7(a) respectively. Accordingly, the other riparian countries of the proposed Project, specifically Eswatini and South Africa, have been notified of the proposed intervention41. The proposed investments will not adversely affect the quality or quantity of water flows of the Incomati River to other riparian countries or be adversely affected by other riparians’ possible water use. 33. Grievance Redress. Communities and individuals who believe that they are adversely affected as a result of a Bank supported PforR operation, as defined by the applicable policy and procedures, may submit complaints to the existing program grievance mechanism or the Bank’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address pertinent concerns. Project affected communities and individuals may submit their complaint to the Bank’s independent Accountability Mechanism (AM). The AM houses the Inspection Panel, which determines whether harm occurred, or could occur, as a result of Bank noncompliance with its policies and procedures, and the Dispute Resolution Service, which provides communities and borrowers with the opportunity to address complaints through dispute resolution. Complaints may be submitted at any time after concerns have been brought directly to the Bank's attention, and Bank Management 40 Invitation letters with attached ESSA Executive Summary (in Portuguese) and a link to the draft ESSA were sent to a total of 54 stakeholders, including non-governmental organizations, development funding institutions, water sector entities. The meeting was also adverted in the newspaper with links to access the documents on consultation. A total of 36 participants (24 in the room and 12 virtual) attended the consultation meeting, mostly from entities in the water sector (FIPAG, AdRS, AURA, ARA-Sul). Received comments were addressed in the final ESSA. 41 MOPHRH sent a request to the WB on February 08, 2023, to ask the WB to notify the riparian countries on behalf of the GoM. June 28, 2023 Page 19 of 22 The World Bank Mozambique Urban Water Security Project (P178653) has been given an opportunity to respond. For information on how to submit complaints to the Bank’s Grievance Redress Service (GRS, please visit http://www.worldbank.org/GRS. For information on how to submit complaints to the Bank’s Accountability Mechanism, please visit https://accountability.worldbank.org. E. Financing Program Financing 34. For the implementation of the PfoR, US$ 309.58 million have been secured, of which US$250 million is International Development Association (IDA) financing, and US$59.58 million is GoM counterpart funding. Table 4 shows the program financing by source of funding, as well as the shares of the total financing. Table 4. Budget for the PforR Financing Implementing PforR area PforR IDA GoM agency RA1 - Improving the enabling environment for private sector 17.00 17.00 0.00 participation 1.1 Support for the implementation of the second generation of the 10.00 10.00 0.00 FIPAG DMF for water supply system 1.2 Improvement of policies and regulatory environment for PWPs 2.00 2.00 0.00 DNAAS 1.3 Strengthening the regulatory role 5.00 5.00 0.00 AURA RA2 - Sustainable and climate resilient service delivery 198.23 145.00 53.23 2.1 Expansion of access to climate resilient water supply 158,23 122.00 36.23 FIPAG 2.2 Improvement of the quality of services provided by PWPs 8.00 8.00 0.00 DNAAS 2.3 Reducing climate hazards impacting water supply infrastructure 32.00 15.00 17.00 ARA-Sul and services through IWRM and watershed management RA3 - Improvement of performance and resilience of services 94.35 88.00 6.35 3.1 NRW reduction 66.33 63.00 3.33 FIPAG with AdRS and 3.2 Energy efficiency 20.50 19.00 1.50 AdRMM 3.3 Capacity building and institutional development of water utilities 7.52 6.00 1.52 Total 309.58 250.0 59.58 35. Role of development partners. Several donors have indicated their interest in supporting the UWSIP (e.g.,Invest International, United Nations Development Program, European Investment Bank, African Development Bank, etc.) for an amount of around US$397 million, mainly in resilient water supply infrastructure investments (IA1), but also improving the performance of FIPAG, in NRW reduction (IA3). The European Investment Bank (EIB) June 28, 2023 Page 20 of 22 The World Bank Mozambique Urban Water Security Project (P178653) is planning to support the implementation of the government program with US$ 180 million; from this financing, US$ 85 million is going to be dedicated to supporting the Program investments in the GMMA. 36. The International Finance Corporation (IFC) is also supporting the Program preparation with a key contribution to maximize financing for development. At preparation stage IFC has been contributing to improve the design of the results area of the project that deals with the improvement of the enabling environment for private sector participation, adding value from their extensive experience on mobilization of private capital for investments in the water sector. Its ongoing support can be extended to the implementation phase to further support FIPAG to operationalize a design, build, operate and transfer contract for part of the investment for expansion of the water supply infrastructure, depending on the recommendations of models for private sector engagement that would be proposed by the Transaction Advisor onboard and supporting with on the design of options for PPPs. . CONTACT POINT World Bank Name : Pierre Francois-Xavier Boulenger Senior Water Supply and Sanitation Designation : Role : Team Leader(ADM Responsible) Specialist Telephone No : 5333+2335 / Email : pboulenger@worldbank.org Name : Jaime Palalane Designation : Water Supply and Sanitation Specialist Role : Team Leader Telephone No : 5333+2344 / Email : jpalalane@worldbank.org Borrower/Client/Recipient Ministry of Public Works Housing and Borrower : Water Resources Contact : Title : Telephone No : Email : Implementing Agencies Implementing National Directorate for Water Agency : Supply and Sanitation Contact : Raúl Mutevué Title : National Director Telephone No : 258843120130 Email : bombatejunior@gmail.com June 28, 2023 Page 21 of 22 The World Bank Mozambique Urban Water Security Project (P178653) Implementing South Regional Water Administration Agency : Contact : Edgar Chongo Title : Director Telephone No : 00258824919250 Email : eddychongo@hotmail.com Implementing Water Regulatory Authority Agency : Contact : Suzana Saranga Title : President of the Board Telephone No : 258843115430 Email : suzanasaranga2027@gmail.com Implementing Water Supply Asset Holding and Agency : Investment Fund Contact : Sérgio Cavadias Title : Project Coordinator Telephone No : 258822723340 Email : scavadias@fipag.co.mz FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects June 28, 2023 Page 22 of 22