Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00005527 IMPLEMENTATION COMPLETION AND RESULTS REPORT IDA-52900 ON A CREDIT IN THE AMOUNT OF SDR 118.8 MILLION (US$178 MILLION EQUIVALENT) TO THE REPUBLIC OF MOZAMBIQUE FOR THE GREATER MAPUTO WATER SUPPLY EXPANSION PROJECT February 25, 2022 Water Global Practice Eastern and Southern Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective September 24, 2021) Currency Unit = New Meticais (MT) MZN 63.81 = US$1 US$ 1.419 = SDR 1 FISCAL YEAR July 1 - June 30 Regional Vice President: Hafez M.H. Ghanem Country Director: Idah Z. Pswarayi-Riddihough Regional Director: Catherine Signe Tovey (A) Practice Manager: Fook Chuan Eng (A) Task Team Leader(s): Pierre Francois-Xavier Boulenger ICR Main Contributor: Luis Alfonso Alvestegui ABBREVIATIONS AND ACRONYMS AdeM Maputo Regional Water Company (Águas da Região de Maputo) AFD French Development Agency (Agence Française de Développement) AfDB African Development Bank AURA Water Regulatory Authority (Autoridade Regulatória de Água) CORAL Local Regulatory Committees (Comissões Reguladoras Locais) CPS Country Partnership Strategy CRA Water Regulatory Council (Conselho de Regulação de Água) DA Designated Account DB Design-and-Build DMA District Metered Areas DMF Delegated Management Framework EMP Environmental Management Plan ESIA Environmental and Social Impact Assessment ESMP Environmental and Social Management Plan e-SISTAFE Electronic State Financial Administration System FIPAG Water Supply Assets Holding and Investment Fund (Fundo de Investimento e Património de Abastecimento de Água) FMS Financial Management System GDP Gross Domestic Product GMA Greater Maputo Area GMMA Greater Maputo Metropolitan Area GoM Government of Mozambique HDPE High-Density Polietylene Pipeline IBNET International Benchmarking Network IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding IDA International Development Association IFAC International Federation of Accountants IFC International Finance Corporation IPF Investment Project Financing IFR Interim Financial Reports IPSAS International Public Sector Accounting Standard IRR Internal Rate of Return ISP Implementation Support Plan KPI Key Performance Indicators MDG Millennium Development Goals MOF Ministry of Finance MWSD Maputo Water Supply Department NCB National Competitive Bidding NPV Net Present Value NWRDP National Water Resources Development Project O&M Operations and Maintenance ORIO Netherlands Facility for Infrastructure Development PAD Project Appraisal Document PAP Population Affected by the Project PDO Project Development Objective RAP Resettlement Action Plan SDR Special Drawing Rights SIL Specific Investment Loan SOE Statement of Expenditures ToC Theory of Change UFW Unaccounted for Water WASIS Water Services Institutional Support Project WHO World Health Organization WTP Water Treatment Plant TABLE OF CONTENTS DATA SHEET .......................................................................................................................... 1 1. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 5 A. CONTEXT AT APPRAISAL .........................................................................................................5 2. OUTCOME .................................................................................................................... 10 A. RELEVANCE OF PDOs ............................................................................................................ 10 B. ACHIEVEMENT OF PDOs (EFFICACY) ...................................................................................... 11 C. EFFICIENCY ........................................................................................................................... 14 D. JUSTIFICATION OF OVERALL OUTCOME RATING .................................................................... 15 E. OTHER OUTCOMES AND IMPACTS (IF ANY) ............................................................................ 16 3. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 17 A. KEY FACTORS DURING PREPARATION ................................................................................... 17 B. KEY FACTORS DURING IMPLEMENTATION ............................................................................. 19 4. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 21 A. QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................ 21 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ..................................................... 22 C. BANK PERFORMANCE ........................................................................................................... 23 D. RISK TO DEVELOPMENT OUTCOME ....................................................................................... 24 5. LESSONS AND RECOMMENDATIONS ............................................................................. 25 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 28 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 36 ANNEX 3. PROJECT COST BY COMPONENT ........................................................................... 38 ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................... 39 ANNEX 5. STATUS OF IMPLEMENTATION OF ENVIRONMENTAL AND SOCIAL SAFEGUARDS .. 45 ANNEX 6. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 47 ANNEX 7. SUPPORTING DOCUMENTS (IF ANY) ..................................................................... 50 The World Bank Greater Maputo Water Supply Expansion Project (P125120) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P125120 Greater Maputo Water Supply Expansion Project Country Financing Instrument Mozambique Investment Project Financing Original EA Category Revised EA Category Full Assessment (A) Full Assessment (A) Organizations Borrower Implementing Agency Water Supply Investment Fund (FIPAG), CRA (Water Government of the Republic of Mozambique Regulatory Council) Project Development Objective (PDO) Original PDO The project development objective (PDO) is to increase access to clean water for residents in the Greater Maputo Area. PDO as stated in the legal agreement The PDO as stated in the LA is to increase access to clean water for residents in the Greater Maputo Area. Page 1 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 178,000,000 178,000,000 166,475,499 IDA-52900 Total 178,000,000 178,000,000 166,475,499 Non-World Bank Financing 0 0 0 Borrower/Recipient 0 0 0 Total 0 0 0 Total Project Cost 178,000,000 178,000,000 166,475,499 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 25-Jul-2013 29-Jul-2014 06-Nov-2018 30-Sep-2019 24-Sep-2021 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 13-Sep-2019 90.30 Change in Components and Cost Change in Loan Closing Date(s) Change in Implementation Schedule 24-Sep-2020 118.19 Change in Results Framework Change in Loan Closing Date(s) Change in Implementation Schedule 29-Sep-2020 118.23 KEY RATINGS Outcome Bank Performance M&E Quality Moderately Satisfactory Moderately Satisfactory Substantial Page 2 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 25-Nov-2013 Satisfactory Satisfactory 0 02 23-Jun-2014 Satisfactory Satisfactory 0 03 22-Dec-2014 Satisfactory Moderately Satisfactory 0 04 11-Jun-2015 Satisfactory Moderately Satisfactory 1.99 05 22-Dec-2015 Satisfactory Moderately Satisfactory 2.85 06 03-Jun-2016 Satisfactory Moderately Satisfactory 16.48 07 22-Dec-2016 Satisfactory Moderately Satisfactory 43.81 Moderately 08 27-Jun-2017 Moderately Unsatisfactory 51.15 Unsatisfactory Moderately 09 28-Dec-2017 Moderately Unsatisfactory 59.58 Unsatisfactory Moderately 10 27-Jun-2018 Moderately Unsatisfactory 66.81 Unsatisfactory 11 04-Oct-2018 Moderately Satisfactory Moderately Satisfactory 68.77 12 13-May-2019 Moderately Satisfactory Moderately Satisfactory 81.80 13 06-Nov-2019 Moderately Satisfactory Moderately Satisfactory 90.65 Moderately 14 08-May-2020 Moderately Unsatisfactory 104.93 Unsatisfactory 15 03-Nov-2020 Moderately Satisfactory Moderately Satisfactory 122.41 16 03-May-2021 Satisfactory Moderately Satisfactory 142.83 Page 3 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) SECTORS AND THEMES Sectors Major Sector/Sector (%) Water, Sanitation and Waste Management 100 Water Supply 90 Public Administration - Water, Sanitation and Waste 10 Management Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Social Development and Protection 1 Social Inclusion 1 Other Excluded Groups 1 Fragility, Conflict and Violence 0 Forced Displacement 0 Urban and Rural Development 99 Urban Development 99 Services and Housing for the Poor 99 ADM STAFF Role At Approval At ICR Regional Vice President: Makhtar Diop Hafez M. H. Ghanem Zviripayi Idah Pswarayi Country Director: Laurence C. Clarke Riddihough Director: Jamal Saghir Catherine Signe Tovey Practice Manager: Jonathan S. Kamkwalala Fook Chuan Eng Pierre Francois-Xavier Task Team Leader(s): Luiz Claudio Martins Tavares Boulenger Luis Alfonso Alvestegui ICR Contributing Author: Justiniano Page 4 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) 1. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL Context 1. Between Mozambique’s 1992 peace agreement and the 2013 appraisal of the Project, the country experienced substantial economic growth. On average between 1993 and 2010, real Gross Domestic Product (GDP) had grown eight percent annually, and real GDP had nearly doubled since the end of the war. The early years of this growth were the result of post-conflict investments in infrastructure and agriculture, while the latter years were driven by foreign direct investments in large, rapidly expanding extractive industries and related infrastructure investments. 2. The Government of Mozambique (GoM) started implementing water policy reforms in 1998, when it first set out its policy of a delegated management framework (DMF). Under the policy, water supply assets remained the property of the government, to be managed by a state-owned asset holding company, while water supply systems were to be operated under contract by independent providers operating on a commercial basis. Under the first phase of these reforms, the GoM established an asset holding company – the Water Supply Assets Holding and Investment Fund (Fundo de Investimento e Patrimonio do Abastecimento de Agua, FIPAG) – for the water supply assets of large urban areas, and established an independent water regulator, the Water Regulatory Council (Conselho de Regulação de Águas, CRA). In the case of the city of Maputo, operations were leased to the Maputo Regional Water Company (Águas da Região de Maputo, AdeM), a joint venture of domestic and foreign investors. These reforms contributed to service expansion and improvements in the largest secondary and tertiary cities, where the number of hours of service and population served increased, and the percentage of unaccounted-for-water (UFW) decreased. 3. The situation was more problematic for the wider Greater Maputo Metropolitan Area (GMMA), the largest urban area in the country. The water system was not able to meet the needs of a metropolitan area of more than 2 million people, growing at a rate of 2.7 percent per year. Both FIPAG and AdeM were focused on filling the gap in service by increasing household connections and production capacity. However, as production capacity didn’t improve substantially, the increase in connections came at the cost of reducing the number of hours water was supplied, from 14 hours a day in 2005 to 9 hours a day in 2011. The diversification of water sources, as well as an increase in total water supplied, became a key priority. At that time, water for the formal (FIPAG/AdeM) water supply system came from a single source, the Umbeluzi River, located 25 kilometers south of Maputo. The sole water treatment plant serving Maputo was located on the riverbank at the same location. The river and the treatment plant were subject to the variable climatic conditions of the southern coast of Mozambique, including periodic tropical cyclones during the summer months. 4. The Greater Maputo Water Supply Expansion Project1 was to finance investments that were part of the overall Master Plan for the Greater Maputo Water Supply System.2 The Master Plan was completed in April 2011 and identified the Corumana Dam as the first choice to augment water supply for the GMMA. A separate World Bank- financed project, the National Water Resources Development Project (NWRDP),3 had been approved to finance, inter alia, the completion of the spillway gates to raise the maximum operational water level of the Corumana Dam to the 1 Greater Maputo Water Supply Expansion Project (P125120) was approved on July 25, 2013, for US$178 million equivalent. 2 Master Plan for the Greater Maputo Water Supply System, C. Lotti/SIM Spa., April 2011. 3 National Water Resources Development Project (NWRDP, P107350) was approved on September 15, 2011, for US$70 million equivalent. Page 5 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) original design criteria. A detailed feasibility and preliminary design study were undertaken in 2012 to determine the appropriate sites and specifications of the potable water treatment works and related infrastructure. It was determined that the optimum first phase of infrastructure investments – considering the up-front costs of major works and the slower development of revenues resulting from new connections – involved laying the main pipelines capable of transmitting 120,000 cubic meters per day (m3/day) of treated water and the construction of a water treatment plant (WTP) with a capacity of 60,000 m3/day. Construction of another treatment plant with an additional capacity of 60,000 m3/day would be undertaken in a second phase of FIPAG’s investment program financed through a separate project. 5. Parallel financing of up to Euro 23 million was agreed through a grant from the Government of the Netherlands Facility for Infrastructure Development (ORIO) to finance distribution mains, reservoirs, and networks, and additional 20,000 household connections. The Bank project was a requirement for the ORIO funded assets. Additional parallel financing of Euro 40 million from the French Development Agency (Agence Français de Développement, AfD) was also secured to fund the construction of the Intaka distribution center and the rehabilitation of networks and distribution centers in the Greater Maputo area. These investments were interlinked, as they relied on the project’s WTP to achieve their respective development outcomes. Likewise, the Bank’s investments relied on the parallel financing to connect to the northern part of the network and achieve the 100,000 household connections with access to water.4 Figure 1 (Theory of Change) illustrates the contribution of ORIO and AfD parallel financing to the PDO. Theory of Change (Results Chain) 6. The project was expected to increase the quantity and improve the quality of water available, helping to meet the unmet demand in the GMMA. The additional water supplied to the GMMA from the proposed project would be used primarily to provide water coverage to unserved and underserved areas, mostly low income, peri-urban areas. Figure 1 depicts the theory of change (ToC), which is an ex-post reconstruction based on the Project Appraisal Document (PAD)5 that was prepared before such diagrams were required. The ToC illustrates the inferred links between the project’s interventions, outputs, and outcomes, along with underlying assumptions, as described in the PAD. The project would contribute to the safe drinking water target of the Millennium Development Goals (MDG),6 as well as to an outcome indicator established in the Bank’s Country Partnership Strategy 2012-2015 (CPS)7 on increased access to potable water. Note that critical assumptions underlying the results chain included: (a) safe yield from Corumana dam is available to supply the water treatment plant; (b) institutional capacity is available to manage and operate the new infrastructure and control losses; (d) institutional capacity is available to develop and apply full cost recovery through tariffs; (e) customers are willing and able to actually pay for water tariffs; (f) ORIO and AfD parallel financing under the umbrella of Componenta A and B are approved and works carried out as planned. 4 For this reason, letters of commitment by ORIO and AFD were required for the Bank team to proceed with appraisal. 5 Project Appraisal Document (PAD) for the Greater Maputo Water Supply Expansion Project (Report No. 75919-MZ), June 27, 2013 6 Ibid. 7 Country Partnership Strategy for the Republic of Mozambique FY 2012-2015, World Bank, 2012. Page 6 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) Figure 1. Theory of Change Intermediary PDO Higher level Activities Outputs Outcomes Outcomes outcomes ▪ Build abstraction works of 120,000 m3/day of water from Corumana Dam ▪ Build pipeline to transport 120,000 m3/day of raw water from abstraction Investment in Water Supply point to treatment plant ▪ Abstraction works and transmission line with a Network System ▪ Build WTP with a capacity of 60,000 m3/day • Connected water Component A: ▪ Build 93 kilometers of transmission pipeline, with capacity of 120,000 capacity of mains, WTP, pumping m3/day of treated water 120,000m3/day stations and reservoirs ▪ Build reservoirs, pumping stations, offtakes to provide water to operational settlements close to pipeline ▪ WTP with a capacity of ▪ ORIO to build a 18 km main offtake, located at Matola-Gare, to supply 60,000 m3/day treated water to the northern part of Greater Maputo and the operational Human and neighboring city of Matola* • Increased social access in development, ▪ Build up to 300 kilometers of network to serve the new connections in urban areas through ▪ Connected ▪ Secondary and tertiary Component B: peri-urban areas of GMA Investment in Water Supply to improved increased, Distribution distribution networks, ▪ Install 100,000 new connections and associated meters in GMA distribution networks System reservoirs, and water sustainable, and ▪ ORIO to build distribution mains, reservoirs, networks, and additional operational source well managed domiciliary 20,000 household connections* ▪ Domiciliary connections access to safe connections installed • Increased drinking water ▪ AfD to rehabilitate networks and build distribution centers* capacity of Technical assistance to perform: ▪ Enhanced capacity of ▪ Project implemented the water Technical Assistance ▪ Supervision of works FIPAG to supervise large and monitored system Component C: ▪ Implementation of Environmental Management Plans (EMPs), and infrastructure works and according to project to FIPAG Resettlement Action Plans (RAPs) the implementation of management plans, • Quality of ▪ Preparation of Phase II of the project EMPs and RAPs EMPs and RAPs water supply ▪ Consulting services to support project implementation, including support ▪ Feasibility / engineering ▪ Registered grievances improved for AdeM’s transition in 2014 studies prepared related to project ▪ Financial and technical audits benefits addressed ▪ Tariff review approved ▪ DMF expanded to Capacity Building Fund operating expenses and technical assistance to: to allow FIPAG full and Operational Support to CRA Component D: secondary cities and ▪ Support the implementation of regulations on water and sanitation cost recovery, towns. services in the country including operating ▪ FIPAG and AURA staff ▪ Support for the expansion of the regulatory framework and oversight in expenses, with knowledge in peri-urban areas, reviews of the tariff structure depreciation, cost of updated tariff ▪ Financing means to extend services to the urban poor capital in a reasonable structures time horizon Page 7 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) Project Development Objectives (PDOs) 7. The project development objective (PDO) was to increase access to clean water for residents in the Greater Maputo Area. The PDO as stated in the PAD was the same as that in the Financing Agreement. Key Expected Outcomes and Outcome Indicators 8. The achievement of the PDO was to be measured through the following outcome-level indicators: (i) direct project beneficiaries, the percentage of whom are female; (ii) people in urban areas provided with access to an improved water source under the project; (iii) increased capacity of the water system. The concept of "clean water" in the PDO conforms to the Bank's definition of "improved water source" as captured in the outcome indicators and refers to treated water that complies with Mozambican and World Health Organization (WHO) water quality standards. Components 9. The Greater Maputo Water Supply Expansion Project comprised investments that would increase the overall water production capacity in the GMMA by 25 percent, or 60,000 m3/day.8 It would incorporate a new water source (the Corumana dam) and would expand the distribution network to benefit 100,000 households with access to potable water supply services. The project had four components. Component A: Investment in Water Supply Network System (Planned: US$133 million from IDA. Actual: US$ 118.00 million from IDA) 10. The objective of this component was to enable the abstraction, treatment, and conveyance of water to the Machava distribution center, located at the Maputo water supply network’s northwestern point. The component included goods and civil works to: (i) construct the abstraction works for 120,000 m3/day of raw water from the Corumana Dam; (ii) piping to transmit 120,000 m3/day raw water from the abstraction point to the water treatment plant; (iii) build a WTP with a treatment capacity of 60,000 m3/day; (iv) build 93 kilometers of transmission pipeline, with a transmission capacity of 120,000 m3/day; and (v) reservoirs, pumping stations, and ancillary works. In addition, offtakes from the main pipeline would allow the provision of water to settlements located close to the pipeline between the treatment plant and Machava. The main offtake, to be funded by ORIO, would supply treated water to the northern part of Greater Maputo and Matola. Component B: Investment in Water Supply Distribution System (Planned: US$27 million from IDA. Actual: US$ 27.93 million from IDA) 11. This component aimed to install around 100,000 new connections and associated meters in Greater Maputo. In addition, the component would install up to 300 kilometers of network to serve the new connections. This component was to be complemented by the ORIO and AfD-financed programs to install distribution centers, primary distribution networks in new service areas, and 20,000 additional connections and household meters. Component C: Technical Assistance to FIPAG (Planned: US$13 million from IDA. Actual: US$16 million from IDA) 8At the time of project preparation (2013), AdeM was producing approximately 200,000 m3/day of treated water; AdeM projected, however, that the Umbeluzi treatment plant would be able to operate at its full capacity in 2015-2016 with a total production of 240,000 m3/day. Page 8 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) 12. This component would provide technical assistance to FIPAG, including: (i) supervision of project works, the implementation of the Environmental Management Plans (EMPs) and Resettlement Action Plans (RAPs); (ii) preparation of Phase II of the program to increase the amount of water available to the GMMA to meet residential demand to 2025, including technical assistance for engineering, dam safety, and safeguards and economic analyses; (iii) consulting services to support the preparation of a follow-on project to cover selected other cities; (iv) consulting services to FIPAG to support project implementation, including support for AdeM’s transition in 2014;9 (v) financial and technical audits; and (vi) capacity building and training. Component D: Capacity Building and Operational Support to CRA10 (Planned: US$5 million from IDA. Actual: US$4.53 million from IDA) 13. This component would fund operating expenses and technical assistance to CRA, aiming to support the implementation of current regulations on water and sanitation services in the country. It included support for the expansion of the regulatory framework and oversight, particularly in peri-urban areas, and reviews of the structure and form of subsidies for low-income customers and of financing means to extend water and sanitation services to the urban poor. Legal covenants included in the financial agreement 14. The financial agreement included three legal covenants, namely: (i) no later than twenty-four months after the effective date, the recipient shall ensure that the tariffs for the water systems under the direct and indirect responsibility of FIPAG, shall reflect the principles of full cost recovery and be sufficient to cover operating expenses, depreciation, and the cost of capital in a reasonable time horizon; the tariffs should be assessed annually; (ii) the recipient shall cause FIPAG to maintain at all times during the life of the project, service contract(s) with utility operator(s) to operate the water supply assets supported under the project, (iii) the recipient shall ensure that (a) the utility operator selected to operate the water supply assets has been incorporated as a Corporation under Mozambican law; and (b) the contract(s) between FIPAG and the utility operator(s) address the financial obligations undertaken by FIPAG under various loans and credits extended to FIPAG and the sustainability of the future investments in the water supply system, through defining clearly the parties’ respective contractual obligations including lease fee charges payable to FIPAG and the tariffs payable to utility operator(s). B. SIGNIFICANT CHANGES DURING IMPLEMENTATION 15. The project was restructured twice. The first restructuring was approved on September 13, 2019, to extend the original closing date from September 30, 2019, to September 30, 2020. The second restructuring was approved on September 24, 2020, primarily to extend the closing date from September 30, 2020, to September 24, 2021, allowing for the completion of all works needed to achieve the PDO. The two restructurings amounted to a cumulative extension of nearly 24 months. There were no changes to the PDO, indicators, targets, or components, however, the cost of each component changed, as reflected in Section 1.A. 9 Operations of the Maputo water service assets had been managed under a lease contract between FIPAG and Aguas de Mozambique (AdM), which was due to expire in 2014. 10 The Water Regulatory Council (Conselho de Regulação de Águas, CRA), changed its name to Water Regulatory Authority (Autoridade Reguladora de Água, AURA), through Decree 08/2019 of February 18, 2019. Page 9 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) Rationale for Changes and Their Implication on the Original Theory of Change 16. Project implementation delays, specifically to the civil works, stemmed from the lengthy procurement process for the Sábie WTP which had to be cancelled and then relaunched, and the Covid-19 pandemic, which resulted in work stoppages and strict protocols at work sites. Investments in the distribution network were also delayed. Furthermore, the original project funding was reduced by nearly US$15 million (from US$178 million to US$166.46 million) due to the Special Drawing Rights (SDR) exchange rate fluctuation. This funding shortfall did not negatively affect the overall implementation, as some work contracts were below the original cost estimates, however it limited the scope of activities considered in Component C, specifically the early preparatory work for a further expansion of the water treatment and distribution system for GMMA, including ToRs of studies, detailed designs, and bidding documents. 2. OUTCOME A. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating 17. The project built on a history of Bank engagement in the water sector in Mozambique and was well aligned with the Bank’s regional and country strategies. The Bank strategy for Africa11 sought to close Africa's infrastructure gap to drive productive development of urban growth poles and build resilience to climate change and natural disasters. The project was consistent with and contributed to the regional strategy's two pillars: (i) Competitiveness and Employment, and (ii) Vulnerability and Resilience. The project anchored the water portfolio in the Bank’s Country Partnership Strategy 2012-2015 (CPS), approved by the Board in 2011.12 Support to key infrastructure investments was a core part of the CPS’s Pillar 1, and increased access to potable water was included as a CPS outcome indicator. Moreover, the project contributed to Pillar 2, as it provided the GMA with a second source of water supply and treatment that is climate-change resilient, with the main assets strategically located inland about 93 kilometers northwest of Maputo and 110 meters above sea level. 18. The project remained relevant to the World Bank Group’s Country Partnership Strategy (CPS) for FY17-21.13 The subsequent CPS highlighted the challenges of developing and managing the country’s water resources; addressing the country’s infrastructure deficit; improving basic services such as access to safe water; and reducing the country's vulnerability to weather-related shocks. The project supported Pillar III, “Enhancing Sustainability and Resilience” of the CPS. It also cut across the other two Focus Areas of “Promoting Diversified Growth and Enhanced Productivity” and “Investment in Human Capital”, given the role water resources play in productivity and human development. The PDO is aligned with the CPS objectives of improving management of climate risks and natural resources, improving access to water, and promoting inclusive urbanization and decentralization. Lastly, the project addressed the emerging priority of responding to natural disasters, as discussed in the April 2020 Performance and Learning Review of the CPS.14 11 Africa's Future and the World Bank's Support to It: Africa Regional Strategy (59761), The World Bank, February 2011. 12 Country Partnership Strategy for the Republic of Mozambique, FY12-15 (Report No. 66813-MZ), February 8, 2012. 13 Country Partnership Strategy for The Republic of Mozambique, FY17-21 (Report No. 104733-MZ), March 30, 2017. 14 Performance and Learning Review of the CPS for Mozambique, FY17-21 (Report No. 144024-MZ), April 3, 2020. Page 10 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) 19. The project also remained consistent with the GoM’s national and sectoral priorities. The project supported Mozambique's 2015-2035 National Development Strategy.15 The project contributed to the GoM’s Five-Year Program for 2020-202416 and its priorities of inclusive and sustainable growth, social and economic stability, and climate change. The project was consistent with various sectoral instruments, including the 2013-2025 National Strategy for Adaptation and Mitigation to Climate Change17 which proposes priority actions to reduce climate risk. 20. The relevance of the PDO is rated "High". The project objectives reflected the GoM’s priorities as elaborated in its poverty reduction strategies, plans and policies. The objectives were strongly aligned with the Bank CPSs, both at appraisal and completion, and addressed the priority of water security for the country’s largest urban area. Furthermore, the project built on a long history of support in the water sector. The PDO was correctly pitched: it reflects the project’s final outcomes and was sufficiently challenging but not overly ambitious, reflecting the GoM’s priorities and implementation capacity. B. ACHIEVEMENT OF PDOs (EFFICACY) Assessment of Achievement of Each Objective/Outcome Objective 1. To increase access to clean water for residents in the Greater Maputo Area. (Rating: Substantial) 21. The project Substantially achieved the stated objective. All works contracts financed under the project were duly completed and the infrastructure is operational. Water treated through the project complies with Mozambican water quality standards, which are consistent with the World Health Organization (WHO) standards. The project installed 101,671 new household connections in the Greater Maputo Area, exceeding the target of 100,000 connections originally planned and directly benefiting 565,356 people. 22. The abstraction works and the 95 km-long transmission line in ductile iron, with a capacity of 120,000 m3/day and diameters ranging between 800 and 1400 mm, were concluded and tested in September 2019. The power lines were completed and became operational in March 2021. Eight offtakes from the main pipeline were built to allow the provision of water to settlements located along the pipeline between the treatment plant and the Machava distribution center. The main offtake, located at Matola-Gare, is supplying treated water to the northern part of Greater Maputo and the neighboring city of Matola through a 21.7 km pipeline. It was built with funding provided by ORIO, concluded in April 2021 and became operational in June 2021. 23. The construction of the Sábie WTP, with a full capacity of 60,000 m3/day, started in December 2018 and concluded in May 2021. Its dry and wet tests were duly completed, and it began operations in June 2021. Two contract addendums were signed to allow for the construction of an energy sub-station to supply electricity to the WTP and to cover the costs related to rock excavation volumes in excess of what was initially agreed to in the contract. Neither addendum negatively affected the project’s total budget. The construction contract of the WTP included a six-month operation period after the taking over certificate, during which the contractor was fully responsible for the operation and maintenance of the plant. This period, which concluded on September 23, 2021, also allowed for the training of AdeM 15 República de Moçambique, Estratégia Nacional de Desenvolvimento (2015-2035), Maputo, July 2014. Accessible through www.cabrisbo.org/en/documents/national-development-strategy-2015-2035 (accessed on October 8, 2020). 16 República de Moçambique, Conselho de Ministros, Proposta do Programa Quinquenal do Governo: 2020-2024, Maputo, 2020. 17 República de Moçambique, Ministério para a Coordenação da Ação Ambiental, Estratégia Nacional de Adaptação e Mitigação de Mudanças Climáticas, 2013-2025. Page 11 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) technicians involved in the operation, monitoring, and maintenance of civil, electrical, and mechanical components of the plant, including the energy sub-station. A 12-month defects liability period will end in May 2022. The plant operation began with a production of 30,000 m3/day and has gradually increased its output to 40,440 m3/day by November 2021. The output increase is driven by the demand for treated water which is expected to steadily grow as new users increase their consumption and customers who previously suspended their accounts due to poor water delivery reinstate their accounts. Daily water quality monitoring reports shared by FIPAG for the period covering June to September 2021 confirm that the water quality from the Sábie WTP meet the expected parameters for turbidity, pH, conductivity, total hardness, total alkalinity, content of organic materials and residual chlorine under Mozambican and WHO water quality standards, hence conforming to the World Bank’s definition of “improved water source.” 24. The construction of 388 km of secondary and tertiary distribution networks was completed by September 2021. Furthermore, 67 km of primary distribution network was built with parallel funding provided by ORIO, which was concluded in April 2021. The following table presents a breakdown of the different components of the distribution network built with project proceeds. The construction of the distribution network was supplemented by the construction of three distribution centers, each comprising a water reservoir, a pumping station and a water tower. Two of the three distribution centers were funded by ORIO, and the third center by AfD. Table 1. Breakdown of the different components of the distribution network Item Description Financier Date of Completion 1 150 km of secondary and tertiary distribution network, linked to July 24, 2021 IDA the Intaka distribution center 2 155.4 km of secondary and tertiary distribution networks, linked June 23, 2021 IDA to the Matlemele and Guava distribution centers 3 82.6 km of tertiary distribution networks, Matola and Machava IDA September 24, 2021 4 67 km of primary distribution network, Matlemele e Guava ORIO April 30, 2021 5 Matlemele and Guava distribution centres ORIO June 11, 2021 6 Intaka distribution center AfD June, 2016 25. The project installed 101,671 new domiciliary connections in the Greater Maputo Area, exceeding the target of 100,000 connections initially proposed. The proposed 20,000 domiciliary connections to be installed with funding from ORIO is on-going, with the contract expected to be awarded in 2022.18 26. Within the scope of Component C, FIPAG recruited four main consultants to supervise the water supply production, transmission, and distribution works, and to assist FIPAG with quality control and environmental and social compliance for the various works. The preparation of Phase II of this project, aiming to increase the volume of water available to the GMMA to meet residential demand by 2025, is being funded by the Water Services Institutional Support II Project (WASIS II).19 Terms of References (ToRs) of studies for the preparation of this second phase, which will include the preparation of detailed designs and bidding documents, were submitted to the Bank for no-objection, consultants have been shortlisted, and technical proposals are currently under review. 18 FIPAG reported the bidding process is ongoing with the implementation contract scheduled for award in calendar year 2022. Cavadias, Sergio (Project Coordinator, GMWSP). Written communication to Pierre Boulanger, January 27, 2022 19 Water Services & Institutional Support II (WASIS II), P149377, approved on March 29, 2016 with a US$165 million budget Page 12 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) 27. Within the scope of Component D, the Water Regulatory Authority (AURA) carried out various studies and technical assistance services to support the expansion of the delegated management framework to several secondary cities and small towns. Furthermore, extensive training on tariff structure and analysis was provided to AURA staff. A tariff review was carried out in 2018, which led to FIPAG increasing tariffs by an average of 22 percent across the country. Later, a comprehensive tariff review and the development of a tariff model was concluded and delivered in September 2021. This study included the development of guidelines and a manual to guide the process of establishing the tariff structure in each regulated water provider. AURA reported the tariffs model was shared and presented to both FIPAG and AIAS but acknowledged it would require more time and effort for its dissemination, as well as additional training to manage and master the tools proposed in the model. Justification of Overall Efficacy Rating 28. The project substantially achieved its objectives. All works planned under the project were completed as planned. The construction of the WTP resulted in an increased capacity of water treatment by 60,000 m3/day. The conveyance and distribution systems and household connections resulted in increased access to 565,356 people living in the GMMA. Water quality reports confirm that the treated water meets WHO and Mozambican quality standards, and the Bank’s definition of improved water source. The three outcome targets were met or exceeded (see Table 2 below) and all seven intermediate indicators were achieved (see Annex 1). The two restructurings, which amounted to a cumulative project extension of nearly 24 months, allowed the completion of all works needed to achieve the PDO. Overall, the project diversified Maputo’s water system with a second source of water supply and a treatment facility. The project efficacy is rated Substantial. Table 2. Summary of Key Outcomes Achieved by Project Objective Outcome Baseline Target Achieved Comments Objective. Increase access to clean water for residents in the Greater Maputo Metropolitan Area Direct project beneficiaries 0 560,000 565,356 Target exceeded. (number) Indirect beneficiaries of towns benefitting from offtakes located along the transmission line reached an estimated additional 4,172 people. Female beneficiaries 50% 52% Figure updated for the GMMA (percentage) according to the last National Census of 2017. Number of people in urban 0 560,000 565,356 This indicator is similar to the areas provided with access first one, thus the same values to improved water sources were reported for both under the project (number) indicators throughout the implementation period. Increased capacity of the 0 60,000 60,000 Target achieved, with a WTP water system (cubic meters capacity of 60,000 m3/day per day) Page 13 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) C. EFFICIENCY Assessment of Efficiency and Rating 29. The ICR efficiency analysis compares the economic returns of the project to the estimates made at appraisal, while also accounting for implementation delays (two years). As in the Appraisal economic analysis, a with- and without- project cost-benefit analysis was undertaken. Benefits were estimated for three categories of benefits: (i) net operating revenues to the utility resulting from the project; (ii) time savings to newly connected households; and (iii) new customers’ consumer surplus, based on the additional water they can consume compared to the pre-project state. The economic costs used were the same as those estimated at Appraisal (adjusted to reflect economic costs). 30. For the post-project economic analysis, project costs included the actual investment costs (adjusted to reflect economic costs by using the average conversion factor at appraisal), and current operating costs. Operating costs and revenues were adjusted to pre-implementation cost levels using annual Mozambican inflation data, then converted to US Dollar amounts using the exchange rate for the relevant year. Table 3 provides an overview of factors that changed between the Appraisal and ICR analyses. Table 3. Overview of factors that changed between the Appraisal and ICR analyses Assumption at Appraisal Results at ICR1 Investment Costs (economic costs) US$ 153.29 million US$ 132.21 million Implementation period 5 years 6.5 years2 Beneficiary Households 120,0003 101,671 Electricity (US$/m3 treated)4 0.073607 0.01145 Chemicals (US$/m3 treated) 0.016 0.04032 Personnel (US$/person/month) 816.00 1,083.00 Staff/1,000 connections 4.4 3.8 Water loss ratio at year 1 of water 10% 10% delivery Average tariff (US$/m3) US$ 0.91 US$ 0.81 Average tariff (MT/m3) MT 27.6 MT 32.3 1 Figures in local currency have been deflated to 2015 cost levels. 2 The implementation period was approximately 6.5 years, but does not include a one-year delay in the start of implementation. 3 Assumption at Appraisal included 100,000 connections financed directly by the project and 20,000 connections financed by ORIO. 4 Electricity costs at appraisal were based on existing electricity costs for the Maputo water system; electricity costs at ICR are based on actual operations of the new treatment plant; the dramatically lower electricity costs likely reflect significant efficiencies at the new plant. Page 14 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) 31. Economic Results: The economic results of the project fell somewhat from the appraisal estimates but are still well above threshold levels. The lower estimate of economic returns is due to fewer beneficiaries than assumed at appraisal and higher operating costs. The results, and the comparison with the appraisal analysis, are as follows: Table 4. Economic results of the project Appraisal Results ICR Results Internal Rate of Return 20% 15% NPV (discounted at 10%) US$ 69.0 million US$ 44.7 million 32. Sensitivity of Results: An area of concern with respect to the benefits of the project is the impact of higher-than- expected water losses. The initial analyses (and the base-case ICR analysis) assumed very low levels of non-revenue water in the new service areas due to the new network – 10 percent combined technical and commercial losses, worsening about 0.5 percent each year. However, initial data from the Maputo utility indicates losses consistent with their overall water losses, which are about 50 percent. In discussions with the utility, it was found that, rather than confining the distribution of water from the Sábie WTP to the new network built under the project, treated water is being released to the larger Maputo distribution network. Project design had envisioned the connection of water from Sábie into the larger system only in emergencies; in addition, it was expected that interventions in the intervening period would have resulted in significantly lower water losses in the system. This arrangement – the use of water from Sábie in the larger system, but with high water losses – is likely to continue, the result being that approximately half of the water treated at the new treatment plant is lost to either commercial or technical losses. Analysis of the net project benefits given water losses of 50 percent indicated, perhaps surprisingly, a still positive IRR, shown below. However, it is significantly lower than expected at appraisal. For this reason, as well as issues related to delays in project implementation, the ICR is rated Modest for Efficiency. Table 5. Sensitivity of results Sensitivity Analysis ICR Results (50% non-revenue water) Internal Rate of Return 15% 7.5% NPV (discounted at 10%) US$ 44.7 million US$ 14.7 million 33. Additional information on the economic analysis is provided in Annex 4. The annex also provides an analysis of the likely impact of the investments on the service provider’s financial results, and the ability of revenues generated from project investments to repay the debt undertaken to finance the project. D. JUSTIFICATION OF OVERALL OUTCOME RATING 34. The overall achievement of the objective is Moderately Satisfactory (MS). The rating reflects the PDO’s High Relevance, a Substantial Efficacy, and a Modest Efficiency. There was no need to carry out a split assessment. Page 15 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) E. OTHER OUTCOMES AND IMPACTS (IF ANY) Gender 35. Women comprised a significant beneficiary group. While an estimated 52 percent of the 565,356 direct beneficiaries are female, according to the last National Census of 2017, because women tend to bear the burden of collecting water, caring for children, and cooking for their families, in practice the benefit to the women in the GMWSP project areas is significantly higher. Reliability in access to water is expected to reduce incidence of waterborne diseases. Consequently, this Project’s interventions will reduce: (i) the average mortality rate due to gastrointestinal diseases; (ii) the average rate of hospitalization because of gastrointestinal diseases; (iii) the average number of days people absent from their routine work; and (iv) the time spent on fetching water and caring for sick children and relatives. Institutional Strengthening 36. Although the PDO did not have institutional strengthening as either a final or intermediate outcome, progress in institutional strengthening related to the Water Regulatory Authority (AURA) is essential to sustaining the PDO and key performance indicators to this effect were routinely monitored and reported. Twenty-two towns were incorporated within the DMF, as presented in Table 6. AURA signed inter-institutional agreements with local governments and organized and trained Local Regulatory Committees (Comissões Reguladoras Locais, CORAL) to implement the DMF in each jurisdiction and enable the regulation of water services in those towns. According to the PAD, starting in 2015 AURA was expected to collect and analyze performance data of each regional water utility and publicly release performance indicators through the International Benchmarking Network (IBNET) database. AURA confirmed such collection and analyses have been effectively carried out since 2014, including performance benchmarking, which is published in AURA’s annual report. However, the performance data is not being submitted to IBNET due to delays in its internal data validation process. AURA reported that they have recruited consultants in 2021 to address the issue. Table 6. Small towns incorporated within the Delegated Management Framework in Mozambique 2015 2016 2017 2019 2020 2021 Caia Homoine Massinga Mandlakazi Chibuto Milange Nhamatanda Inharrime Massingir Mabalane Maganja da Costa Ulongue Jangamo Matutuine Malema Mocuba Moamba Pebane Mogovolas Quissico Morrumbene Matutuine Mobilizing Private Sector Financing 37. Operations of the Maputo water service assets had been managed under a 14-year lease contract between FIPAG and Aguas de Mozambique (AdM), which began in 2000 and expired in 2014. AdM was originally a joint-venture between Aguas de Portugal (AdP) and Mozambican investors, with AdP holding approximately 85 percent of shares and intending to be the primary and technical partner. However, the operational performance of Aguas de Mozambique fell Page 16 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) well below expectations, and the relationship between FIPAG and AdM had deteriorated so badly, that FIPAG bought out AdP’s shares in the joint venture in 2010, renaming the resulting company Aguas de Região de Maputo (AdeM). The newly formed AdeM – primarily publicly owned but operated under fully commercial principles – took over the existing lease contract for the Maputo service area, with an end date of 2014 and an expectation that some form of private-sector management and/or ownership might succeed the company at that point. That said, the fact that FIPAG owned a majority stake in AdeM probably reduced the urgency to identify a post-lease solution to the management of the Maputo service area. During the project, IFC Advisory Services was hired by FIPAG (financed by trust funds) to provide technical and transactional advice in the identification of potential private-sector participation in the Greater Maputo water system. In 2014, the lease agreement was extended for five years, until 2019. While FIPAG formally has responsibility for operation of the Maputo assets (as it does for the water supply assets in all other secondary and tertiary cities in Mozambique), AdeM continues to operate the Maputo assets, and is considered a separate corporate entity from FIPAG. The selection of new private sector partners for the regional utilities is scheduled for 2022. Poverty Reduction and Shared Prosperity 38. The Project’s proxy for poverty reduction – a higher level project objective – was urban families’ access to water services, the lack of which is a poverty marker. Providing access to piped water frees up time that is otherwise used in accessing water for income-producing activities, and it frees up existing income to be used on things other than water, which is usually more expensive in the informal market. 3. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A. KEY FACTORS DURING PREPARATION 39. The PDO was realistic and relevant to the GoM’s water sector policies and priorities and Bank strategies. The PDO was well-aligned at the outcome level, seeking to expand access to water, and reflected the project scope and the GoM’s capacity to implement. The 2011 ”Master Plan for the Greater Maputo Water Supply System” helped to identify priority investments to improve water supply for the GMMA. 40. The project design was straightforward, and the operational logic was rational. The project components were closely linked and inter-dependent, with the same target population, objectives, and similar implementation arrangements. The project focused on providing piped good quality drinking water to unserved households in peri-urban areas of the GMMA and also ensured small settlements along the main pipeline would benefit, thereby reducing time and monetary resources used for water and reducing the risks of water-borne illnesses. There was an analysis of the demand side. 41. The project was implemented by two agencies that were professionally capable and had experience implementing World Bank-financed projects. Components A, B and C of the project were implemented by FIPAG, which reports to the Ministry of Public Works and Housing (MOPH), and Component D was implemented by AURA (formerly known as CRA), the water regulator. Since its establishment in 1998, FIPAG has been involved with the implementation of several projects financed by the World Bank and other partners. There was a specific project agreement between IDA and FIPAG and a subsidiary loan agreement signed between FIPAG and the Ministry of Finance (MOF). The project was Page 17 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) implemented by the Maputo Water Supply Department (MWSD), a unit of FIPAG established in 2007. The fiduciary, safeguards, and monitoring and evaluation systems used by FIPAG are integral parts of the agency and were acceptable to the World Bank. As for AURA, it was also familiar with World Bank rules and requirements, as it had implemented two components of the WB-funded Water Services Institutional Support Project (WASIS). Likewise, there was a specific project agreement between IDA and AURA and a subsidiary agreement between AURA and MOF. AURA submitted progress reports separately to the Bank. This rational arrangement sought to ensure the Project’s strategic alignment with the State’s water sector institutional setup. 42. While stakeholder and implementing agency risks were rated as “low”, the assessment turned out to be overly optimistic and proposed mitigation measures proved inadequate. The assessment reflected confidence in the institutional capacity of FIPAG and its cadre of in-house staff and technical assistance teams, with years of experience in project identification, planning, procurement and contract management. The Bank team also noted that FIPAG had staff and procedures to ensure beneficiary and stakeholder participation in project planning as well as social and environmental issues, including reallocation and compensation when required. Governance risk was rated Moderate and expected to be mitigated via the Operational Manual and social oversight, i.e., through dialogue, engagement, and consultation. The Bank team also identified a Moderate risk in the operation of the Maputo water supply system, as the lease contract between FIPAG and AdeM ended in November 2014. It was noted, however, that FIPAG had the capacity to assume more operational responsibility, if necessary, which is effectively what came to pass. Actual implementation risks were much higher, given the large works contracts involved, the complex project design, and associated environmental and social safeguard issues, all of which resulted in long delays in completing civil works. 43. Despite strong preparatory work, detailed technical designs were not prepared until after project approval. This affected the implementation timeline, project management, and M&E for the larger contracts, including the transmission line and the water treatment plant. See the next section for further information. 44. The project played a key role in leveraging other donors’ support to FIPAG, notably the parallel financing provided by the Government of the Netherlands and AfD. World Bank involvement in water sector investments – in particular its regular and consistent implementation support and oversight – provided comfort to other development partners as well as a framework for their targeted investments. In turn, direct technical assistance provided in particular by the Netherlands supported management and implementation capacity within FIPAG. Page 18 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) B. KEY FACTORS DURING IMPLEMENTATION Factors subject to government control and/or implementing agencies 45. The implementation phase of the Project needed to be divided into a design phase, to prepare the detailed designs of the proposed works, and a construction phase. The design phase directly affected the overall implementation timeline. The design phase required over two years due to the procurement of complex consultancy studies and the preparation of the detailed designs. 46. The detailed designs and preparation of technical specifications was carried out by one consultant while another was hired for the supervision of works; a third contract was prepared for works construction. This arrangement was complex and time-consuming, particularly for the implementation of the transmission line and the water treatment plant. Several flaws in the detailed designs of both activities were identified during the construction phase, including structural components and the energy supply for the WTP, which made it necessary to re-engage the design consultant, as no provisions were made in the original contract should the need arise. The additional costs were covered by FIPAG. 47. The design and build model (DB) used for the expansion of the distribution network didn’t result in the time- savings originally expected. The client and the Bank alike reported time delays in the preparation of the detailed designs, which later affected the construction phase. The client specifically reported a lengthy and time-consuming process of reviewing and correcting the detailed designs which impacted in the implementation phase of the contracts. 48. The project suffered implementation delays, nearly 24 months, in the procurement process for the Sábie Water Treatment Plant (WTP). The procurement process had to be re-launched following a long compliance resolution process and expiry of bid validity for the remaining eligible bidder. The decision-making process and agreement between the client and the Bank on the actions to proceed with the procurement process was cumbersome and protracted. The construction contract was finally signed in September 2018. The elimination of the pre- qualification stage in the second procurement process contributed to speeding up the contracting process. 49. To enable proper management of the new distribution network, including the management of water losses and water pressure, 24 district metered areas (DMAs) were planned and implemented in the neighborhoods (bairros) of Zimpeto, Khongolote, Intaka, Matlemele, Siduava, Guava, Mapulene, Chiango, Costa do Sol and Magoanine. Furthermore, hydraulic and monitoring equipment, including valves and macro-metering devices, were purchased with project proceeds for installation in the existing distribution network, which has been reporting 50 percent water loss ratios over the last several years. An isolated SCADA telemetry system is supporting the management of the new infrastructure, including the WTP and the distribution centers. FIPAG also reported that the USAID-funded WASH-FIN project, to reduce non-revenue water in the existing system, was underway. 50. The financial agreement included three financial legal covenants, related to: (i) the maintenance of full-cost- recovery water tariffs and, (ii) legal arrangements for the utility to operate the Maputo water supply system, as described in paragraph 14. Tariffs were supposed to reflect the principles of full cost recovery and be sufficient to cover operating expenses, depreciation, and the cost of capital “in a reasonable time horizon”. Over the course of the project, while proposed tariffs were calculated in a manner that could theoretically enable AdeM and FIPAG to fully cover all costs as described, in fact resulting revenues were never sufficient to fully cover all costs. This was due to Page 19 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) tariff calculations that were based on optimistic operating assumptions – for example, non-revenue water at 30 percent (although NRW has been approximately 50 percent for multiple years); and a billing collection ratio of 95 percent (although, while varying from year to year, it has averaged about 85 percent). Again, technically, tariffs were set at levels that could have enabled FIPAG (and any lease operators) to cover all costs – the covenant was met. But, in practice, operational performance with respect to non-revenue water and collections undermined financial performance, and it would not have been possible to set tariffs at levels that recognized those operating inefficiencies without large-scale customer, regulatory, and government backlash.20 51. The legal covenant requiring arrangements between FIPAG and the utility operator (AdeM) to operate the Maputo water supply assets was met throughout the life of the project. While the covenant was intended to cover a transfer of responsibility for the operation of the assets to a new, private-sector operator at the end of the original lease contract between FIPAG and AdeM, AdeM continued to operate the assets through an extension of the lease contract. 52. The final covenant, also related to the legal arrangements between FIPAG and the utility operator was also met throughout the life of the project. The covenant was intended to ensure appropriate terms in a contract with a new, private-sector operator. However, the existing lease contract with AdeM continued to apply through the life of the project. That said, lease revenues from the AdeM lease have been consistently far lower than expected every year of the lease. FIPAG reports that this is due to AdeM only being required to pay FIPAG lease fees based on billings that they have collected, rather than on sales. In addition, this was compounded by the multi-year drought in Maputo, which significantly decreased water sales, as well as the high-water losses reported elsewhere. Regardless of the reason, low lease payments have resulted in lower overall revenues at FIPAG, which in turn has impinged on their ability to cover their debt obligations. Factors subject to World Bank control 53. Having a task team decentralized to the field was critical, given the level of technical complexity, detailed engineering designs and two large constructions contracts. All three of the project’s task team leaders were experienced senior water supply and sanitation specialists, with the last two based in the field. They were assisted by largely field-based international and Mozambican team members, including procurement, financial, environmental, and social specialists. The location of the task team allowed for closer supervision and implementation support. Factors outside the control of government and/or implementing agencies 54. The original project funding was reduced by about US$15 million (from US$178 million to US$166.46 million) due to the Special Drawing Rights (SDR) exchange rate fluctuation. Though this funding shortfall did not impact overall implementation, as some of the works’ contracts were below the original cost estimates, particularly for the construction of the Sábie WTP, it hindered the possibility of carrying out studies to design Phase II of the project. 20 In addition, various economic challenges and natural disasters, and then the Covid-19 pandemic, occurred sequentially across several years, each one worsening FIPAG’s financial situation. This included: a currency devaluation in 2016 resulting from fiscal is sues, which halved the value of the Metical; and drought that affected Greater Maputo through 2016, 2017, and 2018, which reduced available water for sale, in turn reducing revenues while increasing expenses as AdeM and FIPAG scrambled to try to expand water resources. In following years, back-to-back cyclones significantly damaged water-supply assets in several cities, necessitating emergency rehabilitation. The GoM suspended FIPAG debt repayments to the government, enabling profits that would otherwise have gone to debt service to be used for other purposes. Despite those reallocations, however, FIPAG still found it difficult to pay its ongoing operating expenses out of its water sales. Page 20 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) 55. On December 2019, a section of the newly built transmission line of ductile iron collapsed at the Incomati river crossing. The bridge collapse was the result of an inadequate design with the design consultant having failed to uphold the requirements established in its service contract related to the Standard of Performance clause.21 A temporary solution, with a capacity of 30,000 m3/day, was built until a final solution, with HDPE pipeline and a diameter of 930 mm was concluded in January 2021, with the full capacity of 60,000 m3/day. 56. The COVID-19 pandemic affected the speed of construction of the WTP. The construction works of the Sábie WTP were interrupted for a month and a half – from mid-March until end of April 2020 – due to the pandemic, as the contractor and supervision engineer were reluctant to continue working without proper safety protocols in place. Works resumed with a reduced number of workers in May and June 2020, and progressively returned to normal workforce levels as restrictions lifted and Covid-19 protocols were put in place. 4. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 57. Indicators were aligned to operational objectives, and targets were reasonable. However, two out of the three outcome indicators were similar, with the same values being reported throughout the implementation phase. Furthermore, additional intermediate indicators regarding institutional capacities of the client could have helped to better reflect the capacities to manage the newly implemented infrastructure. FIPAG and AURA monitored key sectoral indicators as part of their regular responsibilities as sector asset holder and regulator; indicators specific to the project, such as progress in population served, connections made, kilometers of network installed and water treatment capacity, were monitored by the project implementing staff as part of their project management tasks and were included in the regular project reporting. In the specific case of Component D -Capacity Building and Operational Support to CRA-, no intermediate results were considered. M&E Implementation 58. For Components A, B and C, quarterly management reports were prepared by FIPAG while AURA prepared similar reports related to the implementation of Component D. An M&E officer within FIPAG was appointed specifically to monitor key indicators from FIPAG and AdeM. Reporting formats that include progress on key performance indicators, the status of procurement processes, the status of contracts, and payments and financial management were developed, and semi-annual reports submitted to the Bank, reflecting progress on project-specific indicators. The Mid-Term Review (MTR) was conducted in November 2018, as planned. The GoM’s completion report is yet to be delivered at the time of 21 The pipe crossing over the Incomati River consisted of a 1000mm inner diameter steel pipe that was supported by trusses with cradles connected to the bridge piers. Construction of the crossing was completed in January 2018 and from December 2019 the WTP pumped purified water through the pipeline and on the afternoon of 2 December 2019 the supports collapsed, causing the pipeline to fall into the river. The investigation of the crossing failure, which was commissioned by FIPAG yielded the following conclusions and recommendations: i) the bridge collapse was the results of an inadequate design and the design consultant failed to uphold the requirements established in his service contract related to the Standard of Performance clause, ii) submit a claim for damages and costs to the design consultant. Page 21 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) submission of the ICR report which, coupled with the fact there was no end-of-project mission, limited the access to key personnel and stakeholders, and generated delays in access to information for the preparation of the ICR. M&E Utilization 59. The M&E framework helped inform project management and decision-making. Despite implementation issues that resulted in project delays, the implementing agencies and the Bank remained focused on achieving the results set out in the project M&E framework. Bank Implementation Status and Results (ISR) Reports assessed ratings for Development Objective and Implementation Progress based on mission discussions on progress to meet the indicators. A relevant example of decision making is the action plan adopted to speed up the construction of household connections, which was closely monitored by the Bank team. Another example, related to the use of the set of key performance indicators (KPIs), is the targeting of areas to expand the distribution system, including Mathlemele, Guava and Intaka. Due to the monitoring of the collection rate, FIPAG and AdeM were able to identify areas with low customer satisfaction and these also became intervention areas. Coincidentally, areas with low collection rates were also areas with the lowest distribution times such as Djuba, Djonasse and Matola Gare. The KPIs were also used to assess the results the project was achieving. After project implementation, the distribution time increased in areas like Guava and Mathlemele which now receive 24 hours a day service. Justification of Overall Rating of Quality of M&E 60. On balance, the quality of M&E is rated Substantial. The M&E system as designed and implemented was sufficient to assess the achievement of the objectives and test the links in the results chain. There were moderate weaknesses which limited the possibility of paying more attention to the development of institutional capacities of the client to manage the newly implemented infrastructure. In addition, operational information for the overall Maputo water system were not included in the M&E system. The World Bank tracked, with FIPAG, NRW throughout the implementation of the project, but did not make adjustments to the project to try to improve AdeM’s operational performance in that respect. B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE B1. Environmental and Social Safeguards 61. The project was classified as an Environmental Assessment (EA) Category A, requiring full assessment. The EA reflected the expected impacts of large-scale civil and hydro-mechanical works to implement the proposed infrastructure. Consequently, the following environmental and social safeguard policies were triggered: OP/BP 4.01 Environmental Assessment, OP/BP 4.37 Safety of Dams, OP/BP 4.12 Involuntary Resettlement, and OP/BP 7.50 International Waterways. To comply with provisions under these policies the GoM prepared an Environmental and Social Impact Assessment (ESIA), an Environmental and Social Management Plan (ESMP) and a RAP in 2012 and 2013. An environmental license was issued in 2013 and again in 2018, as licenses expire after 5 years. Annex 5 discusses how the project complied with requirements under each triggered safeguard policy. 62. Given the nature, magnitude and sensitivity of the proposed investments, the project included a standalone component to ensure compliance with Bank safeguards requirements as well as applicable national regulations. An Environmental and Social Service Provider was hired to review and update the original ESIA and ESMP in 2015. The supervising engineering teams had environmental safeguards personnel. The monthly safeguard reports covered the Page 22 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) required safeguard topics but varied in quality, some being more insightful than others. The Client’s quarterly reports were well set out and comprehensive, covering key indicators of environmental and social performance at a high level. 63. The project environmental and social safeguards performance was rated as Satisfactory until mid- 2019, when it was downgraded to Moderately Satisfactory due to EA and Safety of Dams change of ratings. The risk was rated Substantial throughout project implementation. The change in the performance rating was due to the delays in the submission of social and environmental progress reports. The Bank also requested a Gender-Based-Violence (GBV) Risk Assessment and Action Plan in 2020, and a Grievance Redress Mechanism sensitive to GBV issues. There were significant delays in the client’s preparation and submission of these. 64. Regarding social safeguards for the implementation of the transmission line between Corumana and Machava, FIPAG prepared and implemented a Resettlement Action Plan (RAP). The RAP was successfully implemented, as the 387 affected people were adequately compensated, and the 93 claims received were properly addressed. 65. Overall, an environmental and social audit was conducted at the end of the project by an independent consultant and concluded that the project’s environmental and social measures were properly designed and allowed adequate management of environmental and social aspects. Works were implemented within the standards and procedures for environmental and social management. The audit was reviewed by the Bank and was deemed satisfactory. B2. Financial Management 66. The overall Financial Management (FM) risk remained Low throughout project implementation, and the FM performance rating was consistently rated Satisfactory in Bank ISRs. The project had no overdue audit reports, no major issues were reported during the reviews. Financial management and audit throughout the project were consistently compliant with the Bank requirements. With respect to fiduciary monitoring, the financial teams in both FIPAG and AURA maintained adequate accounting systems to record project funds, expenditures, and resources following the procedures outlined in the Project Implementation Manual. The project produced acceptable quarterly interim financial reports and annual financial statements. Financial management supervision was also carried out by the Bank on a timely basis, overall sustaining regular reviews of interim financial and audit reports, most of which were unqualified. Payments were made through transactions from the designated accounts directly to the providers of goods, works, and services, upon submission of statements of expenditures by the implementing agencies. B3. Procurement 67. The project's procurement performance was rated Moderately Satisfactory until May 2020 and was upgraded to Satisfactory until project completion. The overall Fiduciary risk remained Low throughout project implementation. The established arrangements were kept throughout the project and its extensions. There were no instances of non- compliance with Bank policies or Mozambican laws. Section 3 describes the multiple factors affecting implementation in a challenging project with two large infrastructure contracts. Once the large contracts were completed, the smaller packages were processed with relative efficiency. Despite strong preparatory work, detailed designs were not done until after project approval, which affected implementation timeline, project management, and M&E, as explained in paragraphs 46 to 48 above. C. BANK PERFORMANCE Page 23 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) Quality at Entry 68. The quality of entry is rated Moderately Satisfactory. The project reflected the strategic priorities of both the Bank and the GoM and was viewed as a cornerstone of the GoM’s program to improve the provision of water supply to the GMMA. The project was underpinned by robust analytic work. On the other hand, and as discussed in Section 3, the decision to defer the detailed technical designs of the water treatment plant and the pipeline from Corumana to Machava to implementation had a cascading effect that resulted in implementation delays. Quality of Supervision 69. The quality of supervision is rated Moderately Satisfactory. In addition to the 16 formal implementation support missions, there were frequent technical discussions and the task team provided just-in-time support, problem solved, visited project sites, implemented trainings, and participated in consultations. The task team’s agility was possible partly because most team members were field based. Furthermore, the Bank helped supervise the parallel investments funded by ORIO and AfD, including the distribution centers, without which the project could not connect to the northern part of the network. 70. However, there were also processes that adversely affected implementation. As discussed in Section 3, they included the protracted procurement process of the water treatment plant. 71. Project documents raised key implementation issues, proposed remedies, set out timebound actions, and were generally of good quality. Key recurring issues included capacity constraints, procurement delays, and the need to accelerate implementation, particularly on the works for the water treatment plant, the distribution network and household connections. Four of the 16 ISRs rated the project as Moderately Unsatisfactory, three of them in the period elapsing June 2017 to June 2018 due to the delayed procurement of the water treatment plant and the remaining one in May 2020 due to works slowdown because of the COVID-19 pandemic. Justification of Overall Rating of Bank Performance 72. Given the factors discussed above and elaborated on in Section 3, the rating for Bank Performance is Moderately Satisfactory. D. RISK TO DEVELOPMENT OUTCOME 73. The risk to the project development outcome is Modest. The project was prepared through a multi-year process of demand projection and resource availability analysis. It supported necessary investments in water supply and distribution infrastructure that were identified through the water supply master plan. The master plan assessed regional water source options and recommended the Corumana Dam as the most appropriate source of water for Maputo. The feasibility and design studies reviewed multiple design scenarios – involving two abstraction sites and various technologies and different potential sites for the water treatment plant, alignment of transmission pipelines, placements of pump stations, and capacities of the infrastructure. The alternative implemented through this project was considered the optimal choice. 74. The project diversified Maputo’s water system from a single major water source, providing the GMMA with a Page 24 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) second source of water supply and a treatment facility that are climate-change resilient, with the main assets strategically located inland about 93 kilometers northwest of Maputo and 110 meters above sea level. The technical designs contribute to improved robustness of infrastructure against climate-change vulnerabilities, with the water treatment plant and its electricity source located close to the Corumana dam and protected from major flooding. 75. However, there are key issues, such as non-revenue water (NRW) which are critical to sustaining project outcomes. According to analysis of the information provided by FIPAG, volumes of treated water and sales figures indicate high levels of water losses for the system as a whole – approximately 53 percent of water produced by the combined Umbeluzi and Sábie treatment works, which is the same rate of water losses as prior to the commissioning of the Sábie works. The reduction of UFW was not part of the scope of this project as FIPAG and AdeM were already working to address the issue with the support of AfD and Vitens, a Dutch water utility. While the Sábie WTP is providing water to the new network and connections built under the project, it is also used to supplement water from Umbeluzi into the older network, which has existing high rates of technical and commercial losses. Unfortunately, efforts to reduce non- revenue water in the older network do not yet seem to have had an impact, and information was not available regarding the expected completion of loss-mitigation investments and activities or their estimated impact. 76. There is a long-term risk to the development outcomes due to operational weaknesses (ongoing, high levels of water losses) and lower-than-projected water sales and revenues, which is related to NRW. Though the project was expected at appraisal to provide a financial benefit to FIPAG and AdeM, the financial analysis in Annex 4 presents a more complex situation. Since appraisal FIPAG’s general financial situation has declined due to multiple factors, some within the control of the utility while others not. These include serious damage to infrastructure due to cyclones, which required the use of excess funds (which would otherwise have been used to repay debt) to be used for emergency repairs; drought over several years, which reduced water sales and resulted in customers cancelling service; high and ongoing water losses; and lack of improvement in tariff collection from customers. Resulting pressures on the availability of funds have negatively affected AdeM’s ability to operate and adequately maintain systems. And the ongoing Covid-19 pandemic has made AdeM’s ability to collect customer billings even more difficult, as the GoM enacted a decree requiring customers who had been cut off for non-payment to be reconnected. Finally, tariffs approved in late 2021, which were the first increases in several years, are not sufficient to allow FIPAG and the Maputo utility to cover all their costs. As a result of past and current challenges, revenues have been insufficient to adequately maintain assets, much less make investments in reducing water losses or to cover asset depreciation costs. It should be noted that the GoM responded helpfully to the financial challenges AdeM and FIPAG faced as a result of this series of external impacts, most notably by temporarily suspending FIPAG’s debt service obligations to the Ministry of Finance for several years. 5. LESSONS AND RECOMMENDATIONS 77. Despite the significant increase in treated water under the project, overall water service reliability throughout the system remains a challenge in the metropolitan area, as shown in Figure 2 below (water availability per day between years 2013 and 2021). The average number of hours per day of water service in 2021 is below the number of hours per day the consumers of Maputo had in 2013; this is largely due to the high population growth of the metropolitan area, which has outpaced the growth in the expansion of the system and household connections -while 2,068,560 people lived in the GMA in 2013, that figure grow up to 2,880,730 people in 2021 (see Figure 3, below)-. Equally important, is the adverse effect of NRW, which is affecting the operational performance of the water utility and its reliability. Page 25 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) Figure 2. Water availability between 2013 and 2021 Figure 3. Water coverage per year (hours per day) Total popula on served 0 60 0 40 0 20 10 0 2014 201 2016 201 201 201 2020 Set 21 Source: FIPAG Source: FIPAG 78. In fact, one of the key lessons from the results of the project is the need to pay attention to the broader operational challenges of the service provider. In this case, and as previously discussed, there were serious challenges with NRW. During preparation of the project, it was agreed that other donors involved in the water sector in Maputo would provide assistance in reducing NRW; the project did not include an NRW-reduction component or activities. Nevertheless, the World Bank tracked, with FIPAG, NRW throughout the implementation of the project. Going forward, more consideration should be given to the risks to, and sustainability of, development outcomes if overall operational performance does not show improvement. 79. With a 6-years implementation timeline with large works contracts involved, the project’s overall implementation risk rating of ‘low’ was not commensurate to the challenges the project would face from the very beginning, and the proposed mitigation measures were insufficient. Moreover, the project suffered a one-year delay in reaching effectiveness and was therefore left with a 5-year implementation period to carry out the detailed technical designs, procurement and works implementation. Given the scope of the project and understanding the risks of implementing large works, including a transmission line and a new WTP, the implementation risk should have been elevated accordingly, including a conservative assessment of implementation schedule. 80. The project applied alternative implementation arrangements for the larger works, which gives room for a comparison and a reflection on the best arrangements per each typology of works. For the implementation of the transmission line and the WTP, the detailed designs and preparation of technical specifications was carried out by one consultant while another was hired for the supervision of works. A third contract was prepared for works construction, while the DB model was used for the expansion of the distribution network. The first arrangement was complex and time consuming as several flaws in the detailed designs of both activities were identified during the construction phase. The second arrangement (DB) didn’t result in the time-savings originally expected. Therefore, the client and the Bank specialists alike concluded that the country context required a single-contract design-supervision model for works like the transmission line and the distribution network. However, in the case of complex activities like the WTP, which involves the provision and installation of high-tech equipment as well as civil works, the DB model could render a better result. In fact, the DB model for the construction of WTP and wastewater treatment plants is being applied widely in other countries in the African and the Latin-American regions. Page 26 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) 81. The client strongly recommended the inclusion in consultancy study contracts provisions for consultant liability in case of design flaws or omissions, and, if possible, to include technical assistance/follow up during the construction phase. Furthermore, in projects with complex works there is a need to conduct up-front risk analysis to identify the critical components of major works and propose alternatives. The transmission pipeline included a crossing of the Incomati river using a single large pipe, which subsequently collapsed because of design flaws. Appropriate risk analysis could have identified the risk and proposed, for example, a two-pipeline crossing as a risk-mitigation measure. 82. The experience of the project also indicated that covenants related to tariff reform are not sufficient to make up for financial weaknesses that are largely due to operational inefficiencies or to circumstances outside the control of the utility and the regulator. Both FIPAG (which reviewed tariffs annually and submitted requests for tariff changes on behalf of AdeM) and AURA are noticeably skilled in tariff calculations and in understanding the importance of cost recovery. Tariff requests were professionally calculated and presented. However, due to a series of economic and natural challenges, it was simply not possible to raise tariffs to levels that would compensate for high water losses and weak collections. In fact, raising tariffs in a way that fully recognized the financial costs of NRW and uncollected billings would have likely resulted in a worsening of those operational indicators. This again points to the need to ensure that investment projects also provide direct support for strengthening operations. Alternatively, the intended objectives could have been packaged using multiple entry points, other than this IPF, including for example other Bank projects in the portfolio. . Page 27 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS A. RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: Increase access to clean water for residents in the Greater Maputo Area Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Direct project beneficiaries Number 0.00 560,000.00 565,356.00 01-Aug-2013 01-Aug-2013 24-Sep-2021 Female beneficiaries Percentage 50.00 50.00 52.00 Comments (achievements against targets): The original target was exceeded. Furthermore, 4,172 people living in towns benefitting from offtakes located along the transmission line are regarded as indirect beneficiaries.. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of people in urban Number 0.00 560,000.00 565,356.00 Page 28 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) areas provided with access to 01-Aug-2013 01-Aug-2013 24-Sep-2021 Improved Water Sources under the project Comments (achievements against targets): Target exceeded. Furthermore, indirect beneficiaries living in towns benefitting from offtakes located along the transmission line amounted to 4,172 people. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Increased capacity of the Cubic 0.00 60,000.00 60,000.00 water system Meter(m3) 01-Aug-2013 01-Aug-2013 24-Sep-2021 Comments (achievements against targets): Target achieved. The production capacity from the Corumana System attained 60,000 cubic meters of treated water per day. Water quality reports confirm that this water meets WHO and Mozambican standards for “clean water.” A.2 Intermediate Results Indicators Component: Component A: Investment in Water Supply Network System Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Formally Revised Completion Page 29 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) Target Component A: Installation of Kilometers 0.00 95.00 95.00 conveyance pipelines from Corumana Dam to Maputo 01-Aug-2013 01-Aug-2013 24-Sep-2021 Comments (achievements against targets): Target achieved, the 95 km of pipeline are installed and operational. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Component A: Installation of Percentage 0.00 100.00 100.00 water treatment plant with 60,000 m3/day capacity 01-Aug-2013 01-Aug-2013 24-Sep-2021 Comments (achievements against targets): The Sábie water treatment plant (WTP) with a full capacity of 60,000 m3/day, was concluded on May 2021; its dry and wet tests were duly completed, and started operations on May 24, 2021. Component: Component B: Investment in Water Supply Distribution System Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion New piped household water Number 0.00 100,000.00 101,671.00 Page 30 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) connections that are 01-Aug-2013 01-Aug-2013 24-Sep-2021 resulting from the project intervention Comments (achievements against targets): Target exceeded. By end of the project, AdeM installed 101,671 domiciliary connections in the Greater Maputo Area, exceeding the target of 100,000 connections initially proposed in the project. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Component B: Kilometers of Kilometers 0.00 300.00 388.00 water supply network laid under the project and 01-Aug-2013 01-Aug-2013 24-Sep-2021 operational (cumulative) Comments (achievements against targets): Target exceeded. The construction of 388 km of secondary and tertiary distribution networks was completed by September 2021. Component: Component C: Technical Assistance to FIPAG Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Component C: Water utilities Number 1.00 1.00 1.00 Page 31 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) supported by the project 01-Aug-2013 01-Aug-2013 24-Sep-2021 (number) Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Component C: Supervision of Text Supervision not EMP and RAP Supervision services implementation of EMPs and contracted supervision completed concluded RAPs 01-Aug-2013 01-Aug-2013 24-Sep-2021 Comments (achievements against targets): Supervision services were successfully concluded. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Component C: Supervision of Text Supervision not Supervision concluded Supervision services works contracted concluded 01-Aug-2013 01-Aug-2013 24-Sep-2021 Comments (achievements against targets): Page 32 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) Supervision services for the construction of the transmission pipeline, water treatment plant, and distribution network were successfully concluded with all works operational. Page 33 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) B. KEY OUTPUTS BY COMPONENT Objective/Outcome 1. Increase access to clean water for residents in the Greater Maputo Area 1. Direct Project Beneficiaries (and direct female beneficiaries 2. Number of people in urban areas provided with access to Improved Outcome Indicators Water Sources under the project 3. Increased capacity of the water system Component A 1. Installation of conveyance pipelines from Corumana Dam to Maputo 2. Installation of water treatment plant with 60,000 m3/day capacity Component B 3. New piped household water connections that are resulting from the Intermediate Results Indicators project intervention 4. Kilometers of water supply network laid under the project and operational Component C 5. Water utilities supported by the project 6. Supervision of implementation of EMPs and RAPs 7. Supervision of works 1. 95 kms. of transmission line in ductile iron with a capacity of 120,000m3/day and diameters ranging between 800 and 1400 mm built and operational Key Outputs by Component 2. The Sábie water treatment plant built with a full capacity of (linked to the achievement of the Objective/Outcome 1) 60,000 m3/day. Dry and wet tests duly completed, with plant commissioned on May 2021 3. 388 km of secondary and tertiary distribution networks built Page 34 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) 4. 101,671 domiciliary connections in the Greater Maputo Area installed 5. Enhanced capacity of FIPAG to supervise large infrastructure works and the implementation of EMPs and RAPs 6. The delegated management framework was expanded to 22 secondary cities and towns. // 7. A tariff review was carried out in 2018, which granted FIPAG an average 22 percent tariff increase across the country. 8. A comprehensive tariff review and development of a tariffs model concluded in 2021, with guidelines and a manual to steer the process of establishing the tariffs structure in each regulated water provider. 9. Extensive training on tariff reviews and tariffs’ structure provided to AURA staff. Page 35 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Role Preparation Luiz Claudio Martins Tavares Task Team Leader(s) Antonio Laquene Chamuco Procurement Specialist(s) Elvis Teodoro Bernado Langa Financial Management Specialist Harvey D. Van Veldhuizen Environmental Specialist Kristine Schwebach Social Specialist Supervision/ICR Pierre Francois-Xavier Boulenger Task Team Leader(s) Antonio Laquene Chamuco, Amos Martinho Malate Procurement Specialist(s) Joao Tinga Financial Management Specialist Sheila Lucrecia Francisco Pene Neves Financial Management Specialist Maria Isabel Nhassengo-Massingue Procurement Team Minerva S. Espinosa-Apurada Team Member Odete Duarte Muximpua Team Member Clarisse Torrens Borges Dall Acqua Environmental Specialist Teofilo Domingos Munjovo Team Member Jaime Palalane Team Member Paulo Jorge Temba Sithoe Environmental Specialist Eden Gabriel Vieira Dava Social Specialist Mark Doveton Wood Environmental Specialist Page 36 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) B. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY11 .300 13,348.14 FY12 23.888 188,181.27 FY13 7.038 252,672.15 FY14 .225 5,827.41 Total 31.45 460,028.97 Supervision/ICR FY14 13.289 90,003.46 FY15 9.926 73,687.89 FY16 6.078 34,993.88 FY17 18.982 148,407.81 FY18 29.006 180,140.29 FY19 30.918 146,859.71 FY20 27.958 151,495.60 FY21 0 12.96 Total 136.16 825,601.60 Page 37 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) ANNEX 3. PROJECT COST BY COMPONENT Amount at Approval Actual at Project Percentage of Approval Components (US$M) Closing (US$M) (%) Component A: Investment in Water Supply Network 133.00 118.00 89 System Component B: Investment in Water Supply Distribution 27.00 27.93 100 System Component C: Technical 13.00 16.00 123 Assistance to FIPAG Component D: Capacity Building and Operational 5.00 4.53 91 Support to CRA Total 178.00 166.46 94 Page 38 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) ANNEX 4. EFFICIENCY ANALYSIS 1. Economic and financial analyses were undertaken as part of the ICR review in order to assess post-project economic returns and financial viability of the project. Economic Analysis 2. In order to ensure an apples-to-apples comparison between the appraisal economic analysis and the ICR analysis, and as the original economic analysis was not available for review, the analysis was re-created based on information provided in the PAD. As in the Appraisal economic analysis, a with- and without-project cost-benefit analysis was undertaken. Benefits were estimated for three categories of benefits: (i) net operating revenues to the utility resulting from the project; (ii) time savings to newly connected households; and (iii) new customers’ consumer surplus, based on the additional water they are able to consume compared to the pre-project state. The economic costs used were the same as those estimated at Appraisal (i.e., adjusted to reflect economic costs). While it was not possible to re-create the exact economic returns calculated in the original analysis (an IRR of 20 percent), the IRR calculated in the revised version came close (21 percent). The revised economic model was then used to analyze the results of the project as implemented. 3. For the post-project economic analysis, project costs included the actual investment costs (adjusted to reflect economic costs by using the average conversation factor at appraisal), and current operating costs. Operating costs and revenues were adjusted to pre-implementation cost levels using annual Mozambican inflation data, then converted to US Dollar amounts using the exchange rate for the relevant year. 4. The following table provides an overview of factors that changed between the Appraisal and ICR analyses. Table 4.1 Overview of factors that changed between the Appraisal and ICR analyses Assumption at Appraisal Assumption at ICR1 Investment Costs (economic costs) US$ 153.29 million US$ 132.2 million Implementation period 5 years 6.5 years2 Beneficiary Households 120,000 101,671 Electricity (US$/m3 treated)3 0.073607 0.01145 Chemicals (US$/m3 treated) 0.016 0.04032 Personnel (US$/person/month) 816.00 1,083.00 Staff/1,000 connections 4.4 3.8 Water loss ratio at year 1 of water 10% 10% delivery Average tariff (US$/m3) US$ 0.91 US$ 0.81 Average tariff (MT/m3) MT 27.6 MT 32.3 1 Figures in local currency have been deflated to 2015 cost levels. 2 The implementation period was approximately 6.5 years, but does not include a one-year delay in the start of implementation. 3 Electricity costs at appraisal were based on existing electricity costs for the Maputo water system; electricity costs at ICR are based on actual operations of the new treatment plant; the dramatically lower electricity costs likely reflect significant efficiencies at the new plant. Page 39 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) 5. Special note should be made of the change of piped water tariffs in Mozambique during the project period. In the local currency – the Mozambican Metical – tariffs have risen noticeably. Average tariffs for piped water in Maputo were approximately MT 27.6 per cubic meter at Appraisal, which, at the then-current exchange rate, was US$ 0.91. Since that time, tariffs have risen slowly, but steadily, and are now approximately MT 50.0 per cubic meter – an 80 percent increase over 7-8 years, which is higher than the local rate of inflation. However, because the value of the Metical (compared to the Dollar) has fallen by more than half over the same period of time, the US$ value of the current tariff is lower than it was at the time of appraisal. Because the economic analysis is undertaken in US Dollars, the calculated benefit to the utility in the economic analysis is lower than it would have been, all other things being equal. 6. Economic Results: The economic results of the project fell somewhat from the appraisal estimates but are still well above threshold levels. The results, and the comparison with the appraisal analysis, are as follows: Table 4.2 Economic results Appraisal Results Appraisal Results ICR Results (Original) (Re-created) Internal Rate of Return 20% 21% 15% NPV (discounted at 10%) US$ 69.0 million US$ 106.8 million US$ 44.7 million 7. The distribution of benefits changed somewhat between the appraisal and ICR estimates, as shown in the table below. In particular, the share of project benefits accruing to the utility fell nearly 5 percentage points, which is consistent with the lower tariffs than at appraisal. Consumer surplus, on the other hand, rose somewhat, which is also a reflection of the lower tariffs paid by customers. Table 4.3 Distribution of benefits Appraisal Results ICR Results (re-created) Share of Utility Net Revenues 35.5% 30.9% Share of Value of Time Savings 27.7% 29.6% Share of Consumer Surplus 36.8% 39.4% 8. Sensitivity of Results: An area of concern with respect to the benefits of the project is the impact of higher-than- expected water losses. The initial analyses assumed very low levels of non-revenue water in the new service areas due to the new network – 10 percent combined technical and commercial losses, and worsening about 0.5 percent each year. However, initial data from the Maputo utility indicates losses consistent with their overall water losses, which are about 50 percent. In discussions with the utility, it was found that, rather than limiting distribution of water from the Sábie WTP to the new network built under the project, treated water is being released to the larger Maputo distribution network. Project design had envisioned the connection of water from Sábie into the larger system only in emergencies; in addition, it was expected that interventions in the intervening period would have resulted in significantly lower water losses in the system. This arrangement – the use of water from Sábie in the larger system, but with high water losses – is likely to continue, the result being that approximately half of the water treated at the new treatment plant is lost to either commercial or technical losses. Analysis of the net project benefits given water losses of 50 percent indicated, perhaps surprisingly, a still positive IRR, shown below. However, it is significantly lower than expected as appraisal. For this reason, as well as issues related to delays in project implementation, the ICR has rated project Efficiency as Modest. Page 40 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) Table 4.4 Results of sensitivity analysis Sensitivity Analysis ICR Results (50% non-revenue water) Internal Rate of Return 15% 12.5% NPV (discounted at 10%) US$ 44.7 million US$ 20.8 million 9. Despite the still-positive economic results, it should be noted that the financial impacts of high levels of water losses are significant. These are discussed in the next section. Financial Analysis 10. At the time of project Appraisal, the Maputo utility had undergone significant governance changes, and there were effectively no baseline financial data from which to work. The financial analysis at the time focused on the likely financial returns of the project to the utility, and whether sufficient excess revenues were generated by the project to pay debt obligations undertaken by the holding company (FIPAG). In addition, the analysis looked at the financial returns of two investment scenarios, the second including a second phase of investments in water treatment capacity and network. The ICR financial analysis focuses solely on the financial impact of the project as it was implemented – the additional operating and maintenance costs resulting from the new treatment plant and distribution of water to new customers, and new revenues from customers receiving water resulting from the project investments. 11. It is important to note that the original analysis assumed that the concessional debt undertaken by FIPAG to finance the investments would be repaid using revenues generated by the investment. However, since Appraisal FIPAG’s general financial situation has declined due to multiple factors, some within some control of the utility, and other not. These include: drought lasting several years, which reduced water sales and resulted in many customers suspending service, and which required investments in emergency water resources; serious damage to infrastructure due to cyclones over several years, which required funds otherwise intended to repay debt to be used for emergency repairs; and an inability to reduce water losses, which have hovered around 50 percent for many years; and lack of improvement in collection of billings from customers. Resulting pressures on the availability of funds have negatively affected AdeM’s and FIPAG’s ability to operate and adequately maintain systems. Finally, the ongoing Covid-19 pandemic has made the ability of FIPAG and AdeM to collect customer billings even more difficult, as the Government enacted a decree requiring customers who had been cut off for non-payment to be reconnected. Finally, tariffs approved in late 2021, which were the first increases in several years, are not sufficient to allow FIPAG and the Maputo utility to cover all their costs, in particular, debt payments. Taking the above into account, it is important to stress that higher tariffs, on their own, would not have been sufficient to ensure AdeM’s or FIPAG’s financial sustainability – objectively, AdeM’s tariffs are not particularly low, and FIPAG (which submits tariff requests to AURA) is highly skilled in calculating necessary tariffs. However, it is neither politically nor socially possible to set tariffs at a level high enough to make up for the noted and longstanding operational inefficiencies. 12. Project Financial Analysis: The structure of the Appraisal financial analysis was similar to the economic analysis, although limited to the direct financial impacts to the Maputo utility. Costs included the estimated project investment costs, as well as the projected operating costs. Revenues were based on assumed consumption levels, tariff increases consistent with inflation, and a 95 percent collection ratio. Unlike the economic analysis, financial data has not been adjusted for deflation. Key data and changes in information used between Appraisal and ICR are as follows: Page 41 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) Table 4.5 Financial analysis Assumption at ICR Assumption at Appraisal Current price levels Investment Costs (financial costs) US$ 167.0 million US$ 154.1 million Implementation period 5 years 6.5 years Beneficiary Households 120,000 100,000 Electricity (US$/m3 treated)1 0.073607 0.01127 Chemicals (US$/m3 treated) 0.016 0.03968 Personnel (US$/person/month) 816.00 1,083.00 Staff/1,000 connections 4.4 3.8 Water loss ratio at year 1 of water 10% 10% delivery Non-revenue water (technical losses, Increasing 0.5% per year, Same new network) reaching 15% losses Non-revenue water (commercial Increasing from 5% to 10% Same losses, new network) losses 3 Average tariff (US$/m ) US$ 0.91 US$ 0.79 Average tariff (MT/m3) MT 27.6 MT 50.0 Collection ratio 95% 95% 1 Electricity costs at appraisal were based on existing electricity costs for the Maputo water system; electricity costs at ICR are based on actual operations of the new treatment plant; the dramatically lower electricity costs likely reflect significant efficiencies at the new plant. 13. Financial Results: The economic results of the project fell somewhat from the appraisal estimates but are still well above threshold levels. The results, and the comparison with the appraisal analysis, are as follows: Table 4.6 Financial results Appraisal Results ICR Results Financial Rate of Return 7.5% - 2.6% NPV (discounted at 10%) - US$ 20.0 million - US$ 73.4 million 14. The investment, therefore, does not generate a positive rate of return. The poor expected results compared to the Appraisal analysis are due to a combination of factors, including: a. Financial costs of investments very close to the original estimate; b. Fewer beneficiary households (101,671 actual vs. 120,000 expected at Appraisal); c. Lower average tariffs than expected, especially in US Dollar terms. At Appraisal, it was expected that average tariffs, converted to US Dollars, would be approximately US$ 1.10 in 2021. In contrast, current tariffs are the equivalent of US$ 0.79, or nearly 30 percent lower. 15. Sensitivity Analysis: The above results are based on relatively positive assumptions regarding two key financial factors – the collection ratio (the percent of billings ultimately collected), and water losses. The first factor is not included in the economic analyses (because there is no net economic cost to unpaid billings – the cost to the utility is a benefit to consumers) but needs to be considered in the financial analysis. The second factor is included in both analyses, but is Page 42 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) more important in the financial analysis because all losses – both technical and commercial – negatively affect the utility’s revenues. (In economic terms, while technical losses have an economic impact, commercial losses don’t.) 16. The following summarizes the results of significantly worse collection ratios and UFW. As is clear, worsening operational performance has a significant and negative impact on the returns to the project. Given the base-case financial losses at existing tariff levels, it is vital (i) to keep collection ratios above 90 percent, (ii) expand the customer base within the newly networked areas as quickly as possible; and (iii) minimize water losses by keeping water from the new treatment plant within the newly networked areas. Table 4.7 Effects of collection ratios and UFW ICR Results 85% Collection Ratio 50% non-revenue water Not possible to be Financial Rate of Return - 2.6% - 5.9% calculated NPV (discounted at 10%) - US$ 73.4 million - US$ 81.3 million - US$ 101 million 17. It is also important to remember that the negative financial returns to the project are largely due to tariff levels that do not provide sufficient income to the utility – average tariffs are about 30 percent lower than had been expected at appraisal. That 30 percent increase would have been achieved if tariffs had been increased, as had been expected, by approximately 8 percent shortly after appraisal, and then 2 percent annually afterwards. Using an average tariff of approximately US$ 1 per cubic meter results in a positive FRR: 2.9 percent. Table 4.8 Effects of tariff levels on project returns 30% increase in ICR Results average tariff Financial Rate of Return - 2.6% 2.9% NPV (discounted at 10%) - US$ 73.4 million - US$ 50.7 million 18. While the rate of return is still below the chosen discount rate of 10 percent, it would be sufficient to cover any concessional debt service obligations. Debt Service Coverage 19. As in the Appraisal financial analysis, a simple cash-flow analysis was undertaken to determine whether project- generated revenues are likely to be sufficient to cover debt service requirements. (Note that FIPAG – not the Maputo service provider – is technically obligated to service the debt related to the project. However, the service provider is expected to provide sufficient lease payments to FIPAG in order to cover those debt-related payments. That said, FIPAG’s operational performance, combined with several natural disasters, and now the Covid-19 pandemic, has prevented FIPAG from making full payments to the government for the last several years.) A simple, concessional loan payment schedule (based on a one percent interest rate and a 20-year repayment period) was estimated and compared with cash flows generated as a result of the project. 20. As can be expected given the negative financial rate of return, the project does not generate sufficient excess revenues – at current tariff levels – to enable the debt to be serviced. However, a 30 percent increase in the tariff, as discussed above, enables a debt service coverage ratio (DSCR) above 1.0 in all years of operation. Page 43 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) Table 4.9: Debt Service Coverage Ratio Projections 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Current 0.77 0.77 0.78 0.78 0.78 0.78 0.78 0.78 0.79 0.79 0.80 0.81 Tariffs 30% increase 1.27 1.28 1.29 1.30 1.31 1.32 1.33 1.34 1.35 1.37 1.40 1.42 in Tariffs Page 44 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) ANNEX 5. STATUS OF IMPLEMENTATION OF ENVIRONMENTAL AND SOCIAL SAFEGUARDS 1. The project was classified as an Environmental Assessment (EA) Category A, requiring full assessment. Consequently, the following environmental and social safeguard policies were triggered: OP/BP 4.01 Environmental Assessment, OP/BP 4.37 Safety of Dams, OP/BP 4.12 Involuntary Resettlement, and OP/BP 7.50 International Waterways. To comply with provisions under these policies the GoM prepared an Environmental and Social Impact Assessment (ESIA), an Environmental and Social Management Plan (ESMP) and a RAP in 2012 and 2013. An environmental license was issued in 2013 and again in 2018, as licenses expire after 5 years. 2. Given the nature, magnitude and sensitivity of the proposed investments, the project included a standalone component to ensure compliance with Bank safeguards requirements as well as applicable national regulations. An Environmental and Social Service Provider was hired to review and update the original ESIA and ESMP in 2015. Full time environmental officers responsible for health and safety, pollution management and community engagement were appointed to the supervising engineers’ team for each of the main contracts (transmission main, WTP, distribution centres, distribution pipelines). 3. Pertaining to OP/BP 4.01 Environmental Assessment, the ESIA followed recognized processes of scoping, baseline data collection, impact assessment and mitigation in accordance with the Bank and GoM requirements. The team of consultants included specialists in biodiversity. The transmission main was routed mainly along or near roads in degraded or partly degraded habitats and major river crossing (Incomati) involved pipe stringing under the bridge as preferred methodology to minimize impacts. No significant residual biodiversity impacts of transmission line construction was reported and post-mitigation biodiversity impacts are predicted to be low, subject to recommended mitigation. No significant pollution incidents were reported, with minor incidents recorded together with general housekeeping issues. No severe (permanently disabling) health and safety incidents were reported on any contract; COVID-19 exposure risk was adequately managed and no deaths were reported. A construction close-out independent audit, concluded in September 2021, identified no significant residual safeguards risks. 4. On OP/BP 4.37 Safety of Dams, safeguards were covered under the Bank funded National Water Resources Development Project (NWRDP, P107350). Dam safety was extensively addressed through engineering studies and a fully articulated Operations Manual and Emergency Preparedness and Emergency Action Plan was developed. 5. Pertaining OP/BP 7.50 International Waterways, Mozambique is the downstream riparian as the project was located on the Sabie River, which flows from South Africa to Mozambique and is a tributary of the Incomati River, an international waterway shared by South Africa, Eswatini and Mozambique. Cooperation among the riparians is governed by the Tripartite Interim Agreement for Cooperation on the Protection and Sustainable Utilization of the Incomati and Maputo watercourses. Mozambique carried out notifications under the NWRDP Project (P107350). Compliance with OP 7.50 and the riparian’s no-objections were affected through the Tripartite Agreement mechanism. Furthermore, agreements were reached with South African conservation organizations to permit tracking of poachers who use the dam as a transport route into Mozambique territory. 6. On OP/BP 4.12 Involuntary Resettlement, a full RAP was prepared and implemented for the 94 Km length of transmission main from Corumana Dam to the Machava Distribution Center. A total of 393 PAPs were identified and adequately compensated. The WTP at Sabie, as well as the construction of power lines required Page 45 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) some compensation of crops and trees under an ARAP, with a consultancy firm appointed to implement the RAP. The RAP was prepared in accordance with the Bank and GoM requirements, including census updates, baseline data collection, valuation of assets, signature of agreements. The transmission main routed mainly along or near roads densely populated, mostly with street vendors and public utilities, and all the grievances and complaints submitted were adequately and timely resolved. Full-time social officers responsible for social safeguards management and community engagement were appointed to the supervising engineers’ team for each of the main contracts. A significant social safeguards management capacity was built-in within the client’s organization, with an ESMS system established. 7. The project grievance mechanisms were successful in ensuring appropriate compensation and restoration of livelihoods. Post-resettlement evaluation indicated that the population affected by the project (PAPs) received appropriate compensation and were able to restore their livelihoods, where applicable. 8. While there were few recorded health and safety incidents and none that resulted in triggering of the Bank’s ESIRT, health and safety was a significant risk on the main civil contracts and health and safety management could have been better at all levels. Proposed measures that could be implemented span from initial planning, with the preparation of a thorough health and safety management plan as a part of the ESMP; to health and safety management capacity, the client for oversight and supervision and the contractor for implementation; embedded worker training requirements in the ESMP; and regular internal and external health and safety audits. Minimum qualifications for a health and safety officer should also be specified in tender documents. Page 46 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) ANNEX 6. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS FIPAG and AURA, as implementing agencies, both sent the same letter verbatim, but under their own letter head. Their comments were addressed and incorporated to the extent possible. Page 47 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) Page 48 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) Page 49 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) ANNEX 7. SUPPORTING DOCUMENTS (IF ANY) Project Appraisal Documents (PADs), Project Papers (PPs), Implementation Completion Reports (ICRs), Legal Agreements PAD for the Greater Maputo Water Supply Expansion Project (P125120, Report No. 75919), World Bank, June 27, 2013 PAD for the National Water Resources Development Project (P107350, Report No. 63794-MZ), World Bank, August 29, 2011 ICR for the National Water Resources Development (P107350, Report ICR5264), World Bank, May 20, 2021) Financing Agreement for Credit 5290-MZ, World Bank, January 31, 2014 Republic of Mozambique, Ministry of Public Works and Housing, FIPAG. Project Implementation Manual of the GMWSP, May 2014 Relatório de Revisão de Meio Termo, Greater Maputo Water Supply Project, World Bank, Novembro 2018 e Marco 2019 Restructuring Paper of the Greater Maputo Water Supply Expansion Project (P125129, Report No. RES38093), 2019 Restructuring Paper of the Greater Maputo Water Supply Expansion Project (P125129, Report No. RES41941), 2020 Country Partnership Strategies (CPS), Other Strategy Documents CPS for the Republic of Mozambique (Report No. 39395-MZ), World Bank, April 24, 2007 CPS for the Republic of Mozambique FY 2012-2015, World Bank, 2012. CPS for The Republic of Mozambique, FY17-21 (Report No. 104733-MZ), World Bank, March 30, 2017 Performance and Learning Review of the CPS for Mozambique, FY17-21 (Report No. 144024-MZ), April 3, 2020 Africa's Future and the World Bank's Support to It: Africa Regional Strategy (59761), World Bank, February 2011 Making Water Work for Sustainable Growth and Poverty Reduction, Country Water Resources Assistance Strategy for Mozambique, 2008-11 (Report No. 56855), World Bank, August 2007 Master Plan for Greater Maputo Water Supply System, C. Lotti/SIM Spa., April, 2011 República de Moçambique, Conselho de Ministros, Plano de Ação para Redução da Pobreza (PARP) 2011-2014, May 3, 2011 República de Moçambique, Estratégia Nacional de Desenvolvimento 2015-2035, July 2014 República de Moçambique, Ministério para a Coordenação da Ação Ambiental, Estratégia Nacional de Adaptação e Mitigação de Mudança Climáticas, 2013-2025 Republic of Mozambique, National Directorate of Water Resources Management, Development of Master Plan for Water Resources Management in Mozambique, February 2018 República de Moçambique, Boletim da República Série I - Número 117, Decreto que define os mecanismos de indexação e ajustamento das Tarifas Médias de Referência (TMR), para o serviço público de abastecimento de água, 18 de Junho de 2021 Page 50 of 51 The World Bank Greater Maputo Water Supply Expansion Project (P125120) República de Moçambique, Boletim da República Série I - Número 212, Resolução Sobre Reajustamento de Tarifas, 2 de Novembro de 2021 Other Documents Implementation Support Missions reports of November 2013, June 2014, December 2014, June 2015, December 2015, June 2016, December 2016, June 2017, December 2017, June 2018, October 2018, May 2019, November 2019, May 2020, November 2020, May 2021 Project reports and electronic mails provided by the client, FIPAG and AURA, in October, November and December 2021 for the preparation of the ICR. Water quality analysis results of the Sábie WTP provided by FIPAG, which include turbidity, pH, conductivity, total hardness, total alkalinity, content of organic materials and chlorine. República de Moçambique, Ministério das Obras Públicas, Habitação e Recursos Hídricos, FIPAG. Auditoria de Conformidade Ambiental e Social do GMWSP, Setembro de 2021 Implementation Completion and Results Report (ICR) for Investment Projects Financing (IPF) Operations, Bank Guidance, OPS5.03-GUID.156, OPSPO, World Bank, March 2, 2020 Page 51 of 51