91500 Aide Memoire 1. A World Bank mission1 visited Malawi over the period August 18 to 28, 2014 for an implementation support mission for the Second National Water Development Project. The objective of the mission was to support all aspects of implementation of the Project ahead of the closing date of October 31, 2015. The Bank received a Quarterly Implementation Progress Report which formed the basis for the review. 2. The Bank team met representatives from the Ministry of Finance and Economic Planning and Development (MoFEPD), Ministry of Agriculture, Irrigation and Water Development (MAIWD), the Program Management Unit (PMU), the five Water Boards, beneficiary communities, consultants and contractors and visited many of the project sites. A list of people met is in Annex 1. The team very much appreciates the hospitality and cooperation it received from the Malawian authorities. Table 1: Key project data – IDA (credit 43070 and grant 2940) and AF (credit 4946 and grant H690)2 as of July 31, 2014 Board date May 24, 2007 Original amount USD 50 million eq. Additional Finance (AF) board date June 2, 2011 AF original amount USD 120 million eq. Closing date October 31, 2015 Total USD 170 million eq. Time remaining 1 year 2 months Disbursed amount USD 132 million Percentage disbursed 78% 3. Overall performance: The Bank team concluded that the likelihood of achieving the development objective remains rated as moderately satisfactory as only 49% of the main results indicator (people with improved water supply) has been achieved; however, noted that if the low level of beneficiaries persist, the project may need to be downgraded. The Bank will field a technical mission in November 2014 to determine progress on connections and reassess the PDO rating. However, the team is recommending that implementation progress be upgraded to satisfactory due to the significant increase in disbursement (from 57% in the February mission to 78% in this mission). Public sector debt to the Water Boards remains the single biggest threat to performance of the Project due to its impact on Water Board revenues. Component A and 1 The mission comprised Michael Webster (Task Team Leader), Solomon Alemu (Technical oversight and component D), Zvikomborero Hoko (Component A), Elias Chimulambe (Component B), Pieter Waalewijn (Component C), George Namazinga (Component E), Steven Mhone (Procurement), Trust Chimaliro (Financial Management), Kristine Schwebach (Social Safeguards, from DC), George Ledec (Environmental Safeguards, from DC), Webster Muti (Safeguards), Esther Lozo (Executive Assistant) and Zione Kansinde (Team Assistant). 2 For completeness the financing table should also show the ACGF grant of US$25 million that closed on December 31, 2012 and co-financed the IDA funds. Page 1 of 61 component C were upgraded to satisfactory due to the increased effort of the Water Boards and the MAIWD to commit and sign the various contracts. Component D remains moderately satisfactory due to the lack of progress in contracting the “engineering oversight” consultancy and poor progress in other activities. Component B has been downgraded to reflect the poor O&M of the Dedza school sanitation pilot, and monitoring and evaluation has been downgraded due to the poor follow-up on the meters connection campaign. Safeguards have also been upgraded to satisfactory. All other ratings remain the same as in the previous mission. The Bank team was pleased to note that most of the agreed actions from the February 2014 mission have been fulfilled. Table 2: Project ratings Previous This Previous This mission mission mission mission Likelihood of meeting objectives MS MS Procurement S S Overall implementation progress MS S Financial Management S S Component A MS S Monitoring and Evaluation S MS Component B S MS Environmental Assessment S S Component C MS S Involuntary Resettlement MS S Component D MS MS Overall safeguard compliance MS S Component E S S Ratings: HS (highly satisfactory), S (satisfactory), MS (moderately satisfactory), MU (moderately unsatisfactory), U (unsatisfactory), HU (highly unsatisfactory) 4. Results: The Government has reported that a total of 1,029,635 people have benefited from new and improved water supply against a target of 2.1 million (49%), and 64,107 with improved sanitation against a target of 70,000 (92%). The low levels of achievement of the key project development objective results indicators in water supply were noted with concern by the mission. The mission also noted that there was lack of clarity on the definition of the indicator on rehabilitation of existing water supplies – which the PMU need to further define – and mistakes in the beneficiary calculations as per the assumptions in the Additional Financing Project Paper. The revised Results Framework is summarized in annex 2. 5. Connections: In order to achieve the target beneficiaries agreed to under the Project, and hence the impact of the Project, Water Boards, and MAIWD (for the rural component) will need to ramp up their connection campaign. The mission had extensive discussions on ways to incentivize customers to connect, through reduction in the cost of connection, amortizing the connection charges into the bill, and other ways to promote connections. MAIWD has agreed to champion the connection drive over the remaining period of the project and prepare an action plan to expand connections. 6. Disbursement: The project has disbursed US$39 million since the February supervision mission representing 21% of the total project funds, i.e., from 57% to 78% disbursement. The PMU estimates the project will fully disburse by June 2015 as shown in table 3 below. The Bank team commended the Government and Implementing Entities on the impressive increase in disbursement over the review period. 2 Table 3: Disbursement Original Disbursed Disbursed Disbursed Disbursement projections Amount (USD) (USD Eq) Jan-14 Jul-14 Jul-14 Q3 '14 Q4 '14 Q1 '15 Q2'15 Q3 '15 Orginal IDA 50,000,000 89% 50,410,636 101% 101% 101% 101% 101% 101% AF 120,000,000 43% 81,799,636 68% 77% 86% 94% 100% 100% TOTAL 170,000,000 57% 132,210,272 78% 84% 90% 96% 100% 100% 7. Proposed reallocation of funds: MAIWD has indicated that it intends to request a minor reallocation of funds to ensure all project resources are disbursed by the closing date. The PMU estimates that over $ 4 million is currently unallocated (although this figure needs to be confirmed). The PMU will support MAIWD allocate the remaining funds – ensuring some allowance for future foreign exchange changes and potential amendments to existing contracts – based on agreed priorities. The mission noted that the Bank would prioritize activities that increased connections, completed current tasks and improved sustainability of projects. 8. Public Sector debt: Despite assurances during the last two implementation support missions that the Government would pay outstanding public sector debt over 90 days, the public sector debt to the Water Boards has deteriorated significantly. This debt is impacting the liquidity of the Water Boards significantly which in turn impacts on the operational budgets and performance. Consequently Water Boards do not to have sufficient cash flow to finance connections, which are critical to ensuring the project benefit is realized. In addition, the Project is out of compliance with the covenant to eliminate public sector arrears which may start to have serious implications for the project, and even the entire Bank portfolio. The mission was pleased to learn from MoFEPD that the Government plan to substantially clear the arrears to the Water Boards and will join a Task Force set up by the Water Boards to focus on this issue. 9. Contract management: The mission noted an improvement in contract management by most implementing agencies, but also notes that despite previous agreements, the PMU has not contracted an engineering firm to boost their capacity to supervise contracts. The PMU has agreed to hire experienced international engineering consultants by November 2014 to address this issue 10. Proposed Lilongwe Water Supply Project: The mission was joined by colleagues from IFC (International Finance Corporation, part of the World Bank Group) to further discuss the proposed Lilongwe Water Supply Project. The Government confirmed its interest in the project (as per the letter from MoFEPD in September 2013), its interest in a potential Public Private Partnership (PPP), and the priority of a new water source for Lilongwe. The team followed up a number of preparatory activities and participated in a workshop in which the consultant presented the LWB tariff study and willingness to pay survey. 11. COMPONENT A: Urban, Towns and Market Center Water Supply: The mission was pleased to note that there has been tremendous progress and a complete turnaround for some 3 problematic contracts especially those under BWB and SRWB. The mission commended the water boards for this. Most contracts have now been signed and the few remaining ones under LWB (consultancy) and SRWB (works) should be concluded in the next few weeks. Most ongoing contracts have closing dates between September and December 2014 with the exception of the works contract for the expansion of treatment works II under LWB. However the mission noted that contract management remained an issue that was affecting progress and cost effectiveness of the investments and as such most contracts had lots of variations and extensions. The mission has therefore upgraded the component to satisfactory. 12. Original Financing: All procurement is essentially complete and met the agreed deadline of May 31, 2014. Most works contracts have been completed and are now operational. Those that were lagging behind during the last mission showed tremendous progress (Rehabilitation of Mudi Pump Station (BWB); Kasungu Water Supply Scheme and Salima Lakeshore Water Supply Scheme (Lot 1) both under CRWB; and Zomba and Mangochi and Neno Water Supply Schemes both under SRWB). The mission urged the implementing entities and government to focus on optimizing operations for completed works and ensure that connections are made. 13. Additional Financing: Procurement of all planned activities under four water boards (BWB, CRWB, NRWB and SRWB) have been completed. Remaining activities to be procured are under LWB: the detailed design and ESIA for Kamuzu Dam I raising. These two contracts are at advanced stages of procurement and will be concluded in the next few weeks. The contract for construction of 100 kiosks, goods contract for procurement of the remaining pipes, fittings and meters for Airwing and Chikungu, works contract for installation of pipe lines for Airwing and Chikungu Project, and construction of raw water conveyance Aqueduct (now proposed to be replaced by expansion of Treatment Works II) which were outstanding during the last mission have now been signed and are under implementation. Overall, construction has progressed well and there has been significant progress since the last mission. Further details are provided in Annex 3. 14. COMPONENT B: Sanitation and Hygiene: Progress under the component has been downgraded to moderately satisfactory due to the poor O&M of the Dedza school sanitation pilot project. The implementation of the Blantyre and Lilongwe Peri-Urban sanitation and hygiene project is ongoing and expected to complete by August, 2015. Although progress is slow, the project is showing positive indication of improvements from its revised implementation arrangement, strategies and general management to accelerate progress. The mission noted the positive developments made specifically in establishing an effective sanitation supply chain for provision of services and financing mechanism for households to upgrade household latrines. Artisans and masons are being identified and trained to provide sanitation services support to households. The mission was informed that 40 village hygiene savings and loan groups have been formed to help families save money for improving household livelihood including upgrading latrines. A total of 2,400 latrines (1,600 basic and 800 improved) have been constructed. 15. Dedza school sanitation and hygiene pilot project is benefiting 20,732 pupils and 192 teachers. The mission was informed of O&M challenges including cleaning of toilets. MAIWD and the Dedza District Council are in the process of developing O&M guidelines to support 4 schools improve O&M and cleaning of toilets facilities. The mission advised MAIWD to support the district council and schools to also develop hygiene behavioral promotion activities/strategies from other hygiene approaches like PHHE and School led total sanitation targeting pupils. The court injunction restraining MAIWD from implementing the 2008 National Sanitation Policy is negatively impacting the operation of the department of sanitation and hygiene including progress to finalize the sanitation and hygiene bill and other activities. Further details are provided in Annex 4. 16. COMPONENT C: Water Resources Management: Under the component there has generally been good progress during the course of the review period. The Ministry has completed all agreed actions and the tight procurement calendar for the remaining studies was successfully adhered to and all contracts were awarded and work has started. All consultancies can be completed within the remaining project period. For these reasons, progress under the component has been upgraded to satisfactory. It will now be very important to closely oversee and manage the different consultancies to ensure quality of the process and outputs as well as timely delivery of the same. There appear to have been delays and inefficiencies in reviewing and approving reports, especially where responsibilities have been shared between the Ministry and water boards. It was agreed that reviews will be streamlined and that all reports will also be shared timely with the Bank to give an opportunity to comment. A detailed assessment of issues under this component is provided in Annex 5 and the key highlights are:  All consultancies are in place and starting to deliver initial outputs. These are of varying quality and it will be very important for the PMU and Ministry to have a clear timetable of deliverables as well as an efficient review and quality review system, involving its partners and stakeholders.  Institutional development is supported alongside administrative and technical support and it is important that these are harmonized within one roadmap. Especially important is the installation of the NWRA management and board and its linkage with the licensing reform campaign, as this is the first visible communication from the new institution.  Many of the strong linkages between NWDPII and SRBMP pursued under the same ministry have been very smooth, and the ministry is commended for using different programs to achieve a common objective and the mission encourages this to continue so that benefits of both projects jointly support the sector.  It will be important to take stock of the currently proposed Diamphwe designs and its impacts. As currently the information is insufficient to make decisions on the way forward, it was discussed and agreed that a formal review meeting with the consultants would need to be held end of September/early October to come to conclusion on the critical issues informing the Diamphwe Project. 17. COMPONENT D: Sector Reform and Program Management: This component is rated moderately satisfactory as many key activities are still lagging behind. This component supports, in general, sector reforms, training and capacity development and more specifically program management, institutional and governance framework, Sector-wide Approach (SWAp) management, communication, monitoring, evaluation, among others. Because the component supports the interventions across the sector, Planning Division of MAIWD has been championing its implementation. However, the limited capacity of the Division has hampered 5 effective management and monitoring of the activities of the component, as demonstrated by weak contracts management by implementing agencies. The mission emphasized that the Government put more focus on improving the management of the component. The mission notes that the recruitment of consultants for engineering oversight to improve contract management and performance enhancement has been lagging unduly. 18. The mission, however, notes that significant progress was recorded in the following areas: (i) Water Sector Investment Plan was prepared; (ii) the drafting of the revised Water Board Corporate Charters was completed. Terms of references for the structures proposed in the charter that include terms of reference for the Charter Performance Management Committee, Tariff Review Committee and the Planning Department in the Ministry have been prepared; (iii) media communication materials were developed and aired on public and private radio stations; (iv) Sector Performance Report for the 2013 Joint Sector Review was prepared under the leadership of Planning Division and presented at the JSR Workshop, and revised taking recommendations into account; (v) the previously approved Training Plan is being implemented and 293 staff members have been trained, while the ministry has submitted a revised training plan during the mission taking into account the Bank’s comments, and will be implemented to the end of the project; and (vi) the Preparation of Sector Strategic Plan (2012-17) has been completed, and will be printed soon. The mission was pleased to note that MAIWD has reinvigorated the discussion on a potential water supply regulator for the sector. The Bank strongly encouraged the MAIWD to pursue this issue further – particularly in light of the potential PPP – and inform the Bank of progress. Further details are provided in Annex 6. 19. COMPONENT E: Rural Water Supply: Work progress under the rural water supply (RWS) component remains satisfactory. MAIWD has completed the construction of civil works in all schemes. However the construction of communal water points has trailed with only 20% of the target achieved so far (140 taps have been rehabilitated out of the targeted 691). MAIWD has agreed to intensify efforts to complete all tap installations as soon as possible. The RWS Investment Plan is in progress with report reviews indicating steady progress on the assignment. The investment plan can be a useful analysis for the MAIWD to develop their RWS investment strategy and utilize the plan for marketing and allocating resources in its future construction and rehabilitation programs. Further details are provided in Annex 7. 20. Procurement: The overall project rating of procurement performance has continued to be satisfactory as most contracts under both the original NWDP II and Additional Financing have been committed. However there is need for close monitoring of large value works contracts in order that they should be completed within the signed contract period and contracts of underperforming consultants or contractors need to be assessed early in implementation and remedial action taken before it is too late. 21. Financial Management: Financial Management (FM) is rated satisfactory. The FM Residual Risk Rating remains Moderate. The following were the objectives of the mission: (i) to assess the continued adequacy of the NWDP II FM system, (ii) review the financial status of the five Water Boards. This included assessing their capacity to satisfy the financial covenants to 6 clear trade debtors’ arrears of 90 days and over and of the Water Boards’ ability to meet all cash operating costs from collected revenue with effect from 2011/2012. The financial management of the project has remained sound and has ably supported in implementation and monitoring of the project activities. All reporting requirements have been satisfied including submission of annual work plans and budgets, interim financial reports and audited financial statements. 22. Public Debt Arrears: Except for the once-off clearance of public debt arrears in 2008, all the Water Boards have not managed to stay current on trade receivables as they had started to accumulate new arrears immediately thereafter. As at June 30, 2014 total government debt amounted to MK3.1 billion of which MK1.9 billion (61%) is 90 days and over. As at June 30, 2013 total government debt amounted to MK1.6 billion of which MK852.3 million was 90 days and over. All Water Boards have substantial government debts in arrears with most of them having more than fifty percent in 90 days and over category. The Government made a significant payment of about 50% of outstanding debts in September 2013. This means that of the overdue debt of MK 1 .9 billion, over MK800 million is over one year old and the remainder of about MK 1 billion is between 90 days and 365 days representing an average of 227.5 days assuming a substantially even buildup of the debts over the year. Given that the cost of generating the revenues is locked up in these unpaid debts, the pressure on the water boards cannot be overemphasized. The working capital of the Water Boards and other resource requirements are being financed from the collections of the private debts. The opportunity costs of the debt arrears, including overdraft interests, are making the water boards operations unsustainable, and preventing the Water Boards from implementing key operational activities such as making connections. Some of the Water Boards have started using pre-paid meters and this is supported by government policy that strongly encourages a change to pre-paid meters. However the experience to date is that the MDAs are unwilling to have pre-paid meters in the absence of assured funding to meet the cost of water consumption on a sustained basis. During the previous mission the government was requested to facilitate the uptake of pre-paid meters by the MDAs as this will significantly improve the cash flow of water boards and consequently improve their operations. The Government will need to realistically review this state of affairs and come up with a deliberate policy that will enable sustainable financial management of the boards otherwise a catastrophic financial crisis will be experienced by most of the boards with disastrous consequences on supply of water to the public. The covenant to clear debt arrears of 90 days and over has therefore not been satisfied. 23. Private Debt: While the private debt is not in the covenant, it has a direct bearing on the cost recovery ratio covenant because of its impact on the collected cash revenue which is the numerator used in the calculation of the ratio. Total private debtors totaled MK3.2 billion of which MK1.1 billion is 90 days and over. 24. Cost Recovery Ratio: On cost recovery ratio covenant, all the water boards except CRWB (1.04) achieved a ratio of at least 1.1 as at June 30, 2014. CRWB also failed to achieve cost recovery ratio of 1.1 as at June 2012 (1.0) and June 2013 (1.04). The reason for low cost recovery under CRWB was given as low volume generation of water in Salima and Kasungu schemes both of which have been undergoing major works. Most of the works are nearing completion and it is expected that the water volumes will soon improve and the cost recovery ratio will correspondingly improve subject to debt collection constraints. The other water boards 7 have been barely achieving the agreed cost recovery ratio of 1.1. The loan repayment under the program is now due and this means substantial repayments to the government. Against the background of substantial public debt arrears, this is likely to further put pressure on water board’s resources with the likely result of reduced generation capacity which will have a direct impact on cost recovery ratio. The management of the Water Boards and government of Malawi should agree on how to manage loan repayment in the light of huge public debt arrears relating to water consumed by government agencies. 25. Project closing arrangements: The project is closing on October 31, 2015 and the major implication of this is that only activities that will have been done up to and before this closing date will be eligible to be financed from IDA funds. It is also imperative to ensure that invoices issued for such activities are dated on or before October 31, 2015 as appropriate. Any payment for activities done after October 31 will be classified as ineligible and government will be requested to refund. The only exception to this is the cost of the audit which can be paid from IDA funds even though the audit will be done after the closing date. However this relates strictly to cost pertaining to the auditor and not including cost of project staff and other associated costs required to prepare and conduct the audit. In this regard government is requested to adequately budget for this activity during the FY 16 budget. 26. Environmental and Social Safeguards: The mission has recommended upgrading the safeguards rating to satisfactory. Significant progress was observed throughout all other implementing agencies in the systematic approach to the implementation of environment and social safeguards, with some issues in LWB and elsewhere. The mission noted improved coordination of safeguards within the PMU and more systematic enforcement from the implementing agencies. There is now a safeguards designate in all implementing agencies. Reports from the safeguards personnel show improved appreciation and commitment for implementation of safeguards amongst management of implementing agencies. 27. During the mission, a joint safeguards meeting for safeguards personnel and PIU Managers and the mission was convened. The meeting created a platform for extensive exchange on key environment and social safeguards approaches. Each Water Board gave a presentation on key safeguards issues within their areas of jurisdictions and it was agreed that general safeguards standards agreed on one Water Board will be applied across all applicable Water Boards. The meeting agreed to focus on the following issues since most construction works are near completion and handover for operation: (i) Ensure retrievable record keeping especially in compensation related cases; (ii) Rehabilitation of all excavated areas; (iii) Provision of on-site shelter and sanitation for personnel working on such sites such as guards and operators; (iv) Access restriction at all applicable infrastructure like intake points and storage tanks; (v) Drinking water quality management; (vi) Formulation and enforcement of occupational safety requirements for various work station that may have potential for occupational safety accidents like laboratories, chemical storage areas, working on elevated heights and deep sedimentation tanks. Areas that require attention are in Annex 10. 28. Key ESIAs underway: The inception of the ESIA for Blantyre new water source is satisfactory. The procurement processes for Kamuzu dam 1 raising are underway and progressing well. The implementation of the Diamphwe Dam ESIA is not progressing well due 8 to a wide spectrum of reasons. The mission advised the client to critically review the ESIA contract, current performance and take corrective action to ensure delivery of service by the ESIA consultant. 29. The Government requested the Bank to support the proposed Lilongwe Water Supply Project through a letter from the Ministry of Finance on September 9, 2013. The Bank responded on October 8, 2013 that certain knowledge gaps would need further assessment prior to any decision being taken on potential IDA support. The following activities are progressing in order to address the knowledge gaps identified: 30. Issue 1: Note on Lessons Learnt from PPPs in the water sector and PPP training: The IFC and Bank team have produced a lessons learned booklet on water PPPs in Africa and discussed with the PPP Commission to develop an appropriate training program. 31. Issue 2: Willingness to pay and tariff study for Lilongwe Water Board: PPIAF funds were used to support a tariff and willingness to pay study to assess the potential for LWB to finance the bulk water supply charges from tariffs. During the mission, the Bank held a workshop to present the findings of the study. While the assumptions and analysis in the report require further confirmation, the draft report indicates that the current agreed tariff increase (a 50% increase proposed by LWB and agreed by the Government (Department of Statutory Corporations)) may be enough to cover a portion of the capital cost of the project. It also concludes that this agreed tariff increase would be affordable to the poor (less than 5% of household income, a typical affordability benchmark). The report provides recommendations on improving the efficiency and equity of the tariff structure, and strengthens the case for an independent economic regulator to monitor the competing objectives of affordable tariffs and the financial viability of the utility. 32. Issue 3: Design and ESIA: The detailed design and ESIA for the Diamphwe dam are underway and have been discussed in other section of the Aide Memoire. The LWB and MAIWD will need to redouble their efforts to better manage both of these assignments to ensure they are completed in time, and at adequate quality. 33. Issue 4: Public Sector Funding: EIB confirmed to the Government that it is prepared to finance up to 50% of the project costs. Other financiers are also being explored, such as the OPEC fund for International Development and the Kuwait Fund. The Bank will review the potential to allocate IDA funds to support the project over the coming months, in consultation with MoFEPD and in consideration of the various competing priorities for IDA resources of the new Government. 9 Action By Whom By When General 1 MAIWD to assign a “champion” and prepare an action MAIWD September 15, plan for achieving target number of connections in 2014 urban and rural areas, based on a better understanding of current and planned connections 2 Reallocation between categories, as needed MoFEPD October 31, 2014 3 As preparation for the Borrower Completion Report PMU October 31, 2014 and to inform future projects, the PMU should undertake a series of independent assessments of key issues such as: project impact, connections, customer satisfaction, peri-urban water supply and sanitation, school sanitation etc. PMU to propose approach for the Bank’s review Component A 4 CRWB to resolve the issues of the supervision CRWB September 30, consultant under the Salima Lakeshore Works Contract 2014 5 CRWB to resolve the issues related to underperforming CRWB September 30, pumps in Kasungu and share with the Bank 2014 6 LWB to ensure adequate supervision arrangements are LWB September 30, put in place for the contract for the expansion of the 2014 treatment works II 7 LWB to fix the leak on the pumping main for clear LWB September 30, water at TWII 2014 Component B 8 Complete School Sanitation and Hygiene Operation MAIWD, Dezda September 30, and Maintenance guidelines and implement District Council 2014 9 Develop hygiene behavioral promotion MAIWD September 30, activities/strategies and implement 2014 Component C 10 Organize a joint meeting on roadmap for recruitment of DWR October 15, 2014 NWRA and SRBA CEOs and recruit (meeting) November 15, 2014 (recruitment) 11 Close Kamuzu Barrage Design contract PMU September 30, 2014 12 Install new Dam Safety Panel members PMU/DWR September 30, 2014 13 Share and publish Aerial Survey data on MASDAP PMU/DWR/DoS September 30, 2014 14 Inform Bank and stakeholders on timeline for licensing PMU/DWR September 30, reform campaign and NWRA establishment 2014 (strategy) December 31, 10 2014 (implement) 15 Communicate contract management responsibilities DWR September 15, with consultants for Blantyre and Lilongwe New Water 2014 Source 16 Organize technical review meeting with inputs from PMU October 15, 2014 DSRP, WB, IFC, DWR, LWB on Diamphwe optimization study and baseline report 17 Assign appropriate officer as counterpart staff to DWR September 15, critical consultancies 2014 18 Share all outstanding reports with WB DWR/PMU September 15, 2014 Component D 19 Arrangements for supporting key staff of the PMU MAWDI December 31, beyond the project closure to ensure smooth 2014 finalization of the closure of the project 20 Recruitment of Engineering Oversight TA for MAWDI/PMU November 1, 2014 enhancing Contract Management 21 Inform the Bank of the way forward for a water MAWDI November 1, 2014 services regulator Component E 22 Consider proposed fund reallocation to increase MAIWD/PMU September 15, connections under the ACGF-supported RWS schemes 2014 and fences for treatment works 23 Implement tap connection campaign as agreed with MAIWD Ongoing MAIWD Safeguards and fiduciary 24 MoFEPD to advise the Bank on a resolution to the MoFEPD September 30, covenant on public sector arrears 2014 25 Water Boards to significantly reduce private debt Water Boards February 1, 2015 through targeted campaigns 26 Submit Revised Procurement Plan PMU September 15, 2014. 27 Recruitment of artisans for Usingini, Chapananga, MAIWD September 30, Mvula and Usisya 2014 28 SRWB to follow up on issues raised from field visits SRWB Ongoing (such as fencing, landing platform on ladder in intake, provision for scour drainage etc.) 29 CRWB to attend to Senga tank stabilization, land CRWB Ongoing acquisition for communal water kiosks and other agreed actions 30 All Water Boards to mainstream safeguards issues Water Boards Prior to operation relating to the operational phase of the works of works 31 Next supervision mission February 2 to 12, 2015 11 List of Annexes: Annex 1: List of persons met Annex 2: Results Framework Annex 3: Component A: Detailed Review Annex 4: Component B: Detailed Review Annex 5: Component C: Detailed Review Annex 6: Component D: Detailed Review Annex 7: Component E: Detailed Review Annex 8: Procurement Annex 9: Financial Management Annex 10: Safeguards Annex 11: Pre-paid meter pilot project in NRWB Annex 12: Field Trip report 12 Annex 1: List of key persons met Ministry of Finance, Economic Planning and Development Nations Msowoya Assistant Director Ministry of Agriculture, Irrigation and Water Development Sandram.C.Y. Maweru Principal Secretary, Water Development and Irrigation N. B. Mwambakulu Director of Administration Steve K. Mwanza Director of Water Supply Services Mr. M.G. Mpasa Director of Sanitation and Hygiene S.J. Milanzi-Kalemera Director of Human Resources Fumbani Sichinga Deputy Director of Administration Emma Mbalame Deputy Director of Water Supply (OMME) Pepani W.R. Kaluwa Deputy Director of Water Resources (Surface) G. Lapukeni Senior Deputy Director of Planning Peter Chipeta Regional Water Development Officer (Central) Phidelia Moyo Regional Water Development Officer (South) Hyde Sibande Chief Hydrologist /Desk Officer John M. Kumwenda Water Development and Irrigation Officer Mike Msonkho Human Resources Planning Officer T. Sitolo Principal Community Water Supply Officer WATER BOARDS Lilongwe Water Board Alfonso Chikuni General Manager Sinosi Maliyano PIU Manager Silli Mbewe Financial Controller Charles Kachingwe Social Safeguards Officer Central Region Water Board Gift Sageme Direct of Technical Services and Acting General Manager Ernest Mtawali Acting Director of Finance and Administration John Makwenda PIU Manager Zefeliano Mitumba Public Relations Officer Ellen Bolokonya Social Safeguards Officer Northern Region Water Board Titus C. Mtegha Chief Executive Officer Asumani Ungwe PIU Manager Francis Mtawali Financial Controller C. Mtenga Social Safeguards Officer Southern Region Water Board 13 Edward M. Mbesa Director of Planning Hendrix Napolo Financial Controller Jacqueline Dias PIU Manager A. Gobede Social Safeguards Officer Blantyre Water Board Andrew Thawe Chief Executive Lon Zizwe Ag Chief Accountant Booker Waya Projects Manager J. Chimeta Water Quality Officer Project Management Unit Prof. Zachary M. Kasomekera Programme Manager Barnett A.N. Phiri Programme Accountant Prisca J. Kutengule Community Participation Specialist/Safeguards Lazarus B. Phiri SCE/RWSS Focal Point Officer Hastings Chipungu Monitoring and Evaluation Specialist Mike Chimaliza Sanitation and Hygiene Specialist Anthony Msendema Procurement Specialist Rhoda Chisuwo Executive Assistant 14 Annex 2: Results Framework The Results Framework is an aggregate of the results agreed for the original IDA credit/grant, the Additional Financing credit/grant at the ACGF grant. The Results Framework below includes the revisions made at the time the project was restructured during the mid-term review. During the mission, the Bank noted inconsistencies in the calculation of rehabilitated connections and in the estimate of the beneficiary of the Project that need to be corrected. The Project Development Objective (PDO) is to increase access to sustainable water supply and sanitation services in target areas and improve water resources management at national level Baseline Target April to Cumulati Rate of (2007) (2015) July ve Status- progress 2014 July, 2014 PDO Level Results Indicators 1. People provided with access to “Improved Water 2,099,700 105,790 1,029,635 49% Sources” under the project - In Urban Areas 1,571,400 87,000 727,765 46% In Rural Areas 528,300 18,790 301, 870 57% 2. People trained to improve hygiene behavior or - 10,000 - 11,624 116% sanitation practices under the project 3. People provided with access to “Improved - 70,000 3,167 64,107 92% Sanitation” under the project In Urban Areas 20,000 3167 10,460 52% In Rural Areas 50,000 - 53,647 107% 4. Water Boards maintaining a working ratio 0 5 4 4 80% (collected revenues / cash operating expenses) not less than 1.1 5. Number of Water Users Association established 0 17 - 17 100% under the project 6. Water Resources Investment Strategy No Yes Yes Yes 100% satisfactorily completed Project beneficiaries - 2,169,700 108, 957 1,093,742 50% Of which female beneficiaries 0 1,106,547 51% 51% 51% Intermediate Results Indicators Intermediate Result 1: Increase sustainable access to water supply services in cities and towns 1. New piped household water connections that are 0 59,400 194 27,429 46% resulting from the project intervention 2. Piped household water connections affected by 0 100,000 12,215 60,372 60% rehabilitation works undertaken under the project 3. Improved community water points constructed or 0 500 72 679 136% rehabilitated under the project (Kiosks) 4. Working ratio (collected revenues / cash operating expenses) of the Water Boards[3] -Northern Regional Water Board 0.9 1.1 1.2 1.2 109% -Lilongwe Water Board 1.08 1.1 1.4 1.4 127% -Central Regional Water Board 0.9 1.1 0.7 1.04 64% -Blantyre Water Board 0.9 1.1 1.2 1.2 109% -Southern Regional Water Board 0.95 1.1 1.3 1.3 118% 5. Average hours of water supply service per day in 15 utilities targeted by the project -Northern Regional Water Board 19 23 -Lilongwe Water Board 24 20 -Central Regional Water Board 16 24 -Blantyre Water Board 19 24 -Southern Regional Water Board 20 22 6. Water utilities that the project is supporting 5 5 5 100% Intermediate Result 2: Improve water resources management 1. Detailed design and Environmental/Social Impact 3 - 1 33% Assessment of for critical water resources infrastructure approved by the MAIWD Intermediate Result 3: Support sector management and urban water sector reform 1. 2012-2016 Sector Strategic Plan approved by the No Yes Yes Yes 100% Ministry Intermediate Result 4: Increase sustainable access to water supply services in rural areas 1. Improved community water points constructed or 0 2,790 147 2,506 90% rehabilitated under the project 2. Number of Water Users Association established 0 17 - 17 100% under the project 3. Other water service providers that the project is 0 17 - 10 59% supporting Intermediate Result 5: Increase sustainable access to sanitation services Improved latrines constructed under the project 0 6,900 659 4,682 68% Urban 4,000 659 1,831 46% Rural 2,900 - 2,851 98% Additional Indicators proposed in MTR 1.Additional quantity of water produced in utilities 73,240 20,829 34,764 47% targeted by the project (m3/day) Lilongwe Water Board Blantyre Water Board Northern Region Water Board Central Region Water Board Southern Region Water Board 2. People reached with sanitation and hygiene 330,000 30,000 358,879 109% messages Urban 30,000 - 28,879 96% Rural 300,000 30,000 330,000 110% 3. User satisfaction rating of at least 70 % for water 70% supply in project areas using community scorecards 16 Annex 3: Component A: Urban, Town and Market Center Water Supply – Detailed Review A1. Blantyre Water Board (BWB) 1. Status of outstanding activities under original credit: All activities planned under BWB are complete except the rehabilitation of Mudi Pumping Station, the status of which is indicated below. Rehabilitation of Mudi Pumping Station: The contract was signed and commencement date was July 29, 2013. Supervision is in-house by BWB for which a team of three engineers has been assigned. The closing date was 30th July 2014. The mission was pleased to note that some of the 11 the pumps (7) and related ancillaries have now been delivered and that 5 had been installed by the time of the mission. The progress now stands at around 60% according to BWB. The completion of the works is being affected by the need for replacement of four pumps that were damaged during delivery. The contract is expected to be completed by October 28, 2014. 2. Status of Activities Under Additional Financing: Procurement of all planned activities has been completed. The status of implementation of ongoing activities is as follows: i. Construction of three Additional Reservoirs, booster stations, pipelines and associated works: During the last mission this contract was lagging behind and had some contract management issues related to unauthorized subcontracting/involvement of other contractors by the contractor hired to carry out the works. It was reported that these issues had been resolved. The mission was pleased to note that the contract had been turned around and there appeared to be increased oversight from the Board Management. Progress is now at 70%. The contract is expected to be completed by November 15, 2014 after extension from the original date. ii. Rehabilitation and Capacity Increase of Walker’s Ferry Treatment Plant: This contract was also having problems including delays and inadequate supervision arrangements. Progress now stands at 70% and the contract is expected to be completed by November 26, 2014. . iii. Rehabilitation and Renewal Works at Chileka Pumping Station: The contract was signed on November 23, 2012 and commencement date was March 1, 2013. The duration of the contract is 18 months. The mission was pleased to note that most of the pumps, motors, transformers and other ancillaries had been delivered. The contract will need to be extended by some two months. The Board requested for a No Objection during the mission. The mission noted with concern the factors affecting progress and necessitating a need for extension as most of them were related to errors and omissions in design and specification. The Mission urged the water board to ensure these issues are resolved urgently to avoid slippages. iv. Construction Supervision of the Walker’s Ferry TP and Chileka Pumping Station: This consultancy contract for combined supervision of the two works contracts was signed on February 6, 2013, before the commencement of both works contracts. The board reported that there have been improvements in the supervision arrangements following replacement of some of the key staff of the consultant. The Board reported that the performance for of the contractor had improved. A2. Lilongwe Water Board (LWB) 1. Status of activities under Original Credit Most of the planned activities have been completed with the supply and installation of equipment, pipes, fittings, meters and pumps completed a long time ago and now in operation. The Kamuzu Dam Hydrographic survey which has been outstanding has now been included under the contract for Detailed Design of the Raising of Kamuzu Dam I and details are covered under additional financing. 17 2. Status of activities under Additional Financing All planned contracts under AF have been signed except two contracts for ESIA and detailed design of KDI. The status of ongoing activities is as follows: Detailed Design and Construction Supervision for Lilongwe's Raw Water Conveyance System: After concluding (in 2013) that the construction of the aqueduct was technically and economically not feasible, this item was cancelled. The board later decided to prioritize expansion of treatment works II and detailed design and ESIA for Kamuzu Dam I. The Bank gave no objection to the proposal. The proposal also necessitated the recruitment of a supervision consultant. The details of these new activities are presented below. Treatment Works II Extension: The contract was awarded to Aquabor and was signed on June 30, 2014 and commenced on August 1, 2014. The contractor has already mobilized and is working on excavations for foundations for the raw water tank, the sedimentation tanks and filters. He is constructing his offices, storage facilities and other facilities for his camp. Progress is estimated at 13%. Supervision consultant for Treatment Works II Extension: The contract was awarded to Gauff. The consultant has mobilized and a Resident Engineer is now on site. The mission noted with concern that the same engineer was also the resident engineer for Airwing. The mission requested LWB to review the supervision arrangements and also to ensure that the consultant deploys all agreed personnel according to schedules in the contract. ESIA for Lilongwe's Raw Water Conveyance System - A 5-month contract for the preparation of the ESIA commenced in April 2013. This activity was concluded following the change in proposal from the raw water conveyance system to expansion of the water works. Construction of storage facilities at Air Wing, Supply and Installation of pumping main from Mtunthama to Air Wing, and Supply, installation and commissioning of pump sets at Mtunthama, Air Wing and Mwenda There has been significant improvement in progress since the last mission and progress now stands at 90%. The pipeline has been laid and tested and about 1.2 km had failed the test and was under rectification. The ground tank and the elevated tanks have been substantially complete. What remains are small works that include meters and related fittings. The booster pump house civil works are at an advanced stage. Like for the booster pump station at Mtunthama Reservoirs, the pumps are still to be delivered and have been delayed. The board reported that the contract has requested for another two-month extension citing delays in delivery of pumps as the major hitch. Procurement of Pipes, Fittings and Meters for Chikungu and Airwing Water Supply – The materials have been procured and delivered on site. Supply and install cone valves for KDII, and penstocks at TW2 – The penstocks have been successfully installed at TWII and are now in use. A3. Southern Region Water Board (SRWB) 1. Status of outstanding activities under Original Credit Procurement of all planned activities has been completed. The status of implementation of ongoing activities is as follows: 18 i. Mangochi and Zomba water supply rehabilitation works: Two works contracts – Zomba (Lot 1) under IDA financing, and Mangochi (Lot 2) under OFID financing. a) Zomba water supply (Lot 1): contract was signed on October 10, 2011. However due to delays in advance payments, the commencement date was December 26, 2011. The contract has been extended a number of times of which the last extension lapsed in December 2013. The Board did not extend the contract but instead decided to retender the remaining works (pipelines). The Board has identified a suitable contractor following a shopping exercise. The contract is expected to be signed soon. b) Mangochi water supply (Lot 2): The contract was signed on October 21, 2011. The contractor and consultant for this lot is the same as above. The contract was extended to April 2014 and has since expired. However the works are still to be commissioned and outstanding works include power supply to the works, rectification of faults and eventual commissioning of the plant. The mission noted that the contract was in defects liability, although commissioning is yet to be done. c) Mangochi and Zomba construction supervision: The Board replaced the original consultant by a new consultant citing poor performance. The mission noted that the main consultant of the replacement has not been sufficiently present on the ground. ii. Neno expansion works: SRWB signed a contract on April 25, 2013 and the contractor commenced work on May 2, 2013. The scheme was commissioned and is now operational and in defects liability period. iii. Sanitation Study for Balaka, Mwanza and Mulanje Towns: The consultant submitted final documents. A workshop to present findings to various stakeholders was conducted on February 21 and 22, 2013. The consultant has submitted the revised final documents incorporating comments from stakeholders which were accepted by the water board. 2. Status of Activities under Additional Financing Procurement of all planned activities has been completed. The update on progress is as follows: i. Mangochi and Zomba WS works upgrading:. The mission was pleased to note that there has been significant improvements since the last mission progress now stands at 95%. The contractor highlighted that the contract will be completed by the new closing date of September 30, 2014. ii. Mangochi and Zomba WSP supervision consultancy: This is the same consultant supervising Lot 2 of the Zomba and Mangochi Water Supply contract. The mission had similar concerns on the full deployment of the requisite staff by the consultant. iii. Nsanje Water Supply expansion works: The works are now complete an in defects liability period. iv. Balaka Water Supply Expansion works: Works have been completed and commissioned. A4. Northern Region Water Board (NRWB) 1. Status of activities under Original Credit – 19 All planned activities under the original financing have been fully completed. There are no outstanding issues. 2. Status of activities under Additional Financing Procurement of all planned activities has been completed. All works are complete except Songwe which is substantially complete but awaits power supply, installation and commissioning of pumps. The pre-paid meter pilot was completed. The M&E was carried out by Mzuzu University which has already submitted the final report. The board has taken note of the key lessons and recommendations made and are now considering upscaling the project. A5. Central Region Water Board (CRWB) 1. Status of outstanding activities under Original Credit Procurement of all planned activities has been completed. The status of recently completed and implementation of ongoing activities is as follows: i. Kasungu - Works under OFID were re-tendered after cancellation of a non-performing contract. A new 9-month contract was signed on June 16, 2012 and commenced on August 1, 2012. The works are now complete and are now in defects liability period. Key issues that need resolution relate to the rectification of the clear water pumps that are under-performing. ii. Mponela (Phase 1)– Works were commissioned a long time ago and performing well. iii. Salima Lakeshore water supply expansion (Lot 1): The project is in two lots one financed under original financing and the other under additional financing. The lot 1 covers the intake works and water works while lot two covers the remaining parts. These are slightly behind due to alterations in designs of which the consultants took long to finalize. iv. Kochilira-Kamwendo – The works contract was signed on February 2, 2012. Works are now complete and in operation. 2. Status of activities under Additional Financing Procurement of all planned activities has been completed. The status of implementation of ongoing activities is as follows: i. Kasungu WS system rehabilitation and extension works – The works have now been completed and are defects liability period. ii. Mponela WS system rehabilitation and extension works (Phase 2)- The works contract commenced on July 1, 2012. All works were fully completed by February 2013. The system is now fully operational and the board is now focusing on connections. iii. Salima Lakeshore WS expansion works (Lot 2)– A 14-month contract was signed on April 18, 2013 (together with Lot 1, see above, which is to be financed under original credit). Work is progressing well and progress stands at 71%. Issues on this package relate to the delays in conclusion of variations, designs and the failure by the consultant to fully deploy required staff. Annex 4: Component B: Sanitation and Hygiene – Detailed review 20 Status of the sanitation and hygiene activities: Goods: Procurement of goods was completed. Works Contracts: The works contracts under the Dedza school sanitation and hygiene were completed by 30th October, 2013. A total of 60 VIP latrines associated with urinals, hand washing facilities, menstrual hygiene and facilities for people with disabilities are benefitting 20,732 pupils and 193 teachers. During the component discussion and field visits to one school it was noted that Operation & Maintenance of the facilities and hygiene promotion to improve pupils’ hygiene behavioral practices are major challenges which require urgent interventions. O&M of the sanitation facilities including cleaning are not clearly defined and organized. Currently, cleaning is done by the pupils without proper guidelines on issues of safeguard. The mission was informed that each school has school maintenance fund managed by the school management committees and financed by contributions from parents and some periodic funding from the Ministry of Education. Management staff from various schools are lobbying for establishment of a separate sanitation fund to enhance O&M and cleaning of facilities. MAIWD, PMU and District council have drafted O&M guidelines which were presented and discussed during the mission. The mission has the view that the draft guidelines lack some details e.g. on roles of extension workers such as Health Surveillance Assistance, PEAs, DCT, ministry departments and systematic monitoring. The mission advised district council and ministry to ensure that O&M guidelines are developed within the framework of national school sanitation standards and implementation guidelines and also taking into account the safeguard issues as outlined in the Environmental Management Act (EMA, 2004). On promotion of hygiene practices and cleaning, PMU should support the district council to develop strategies from various hygiene promotion approaches that initiate behavioral change such as the PHHE, School led total sanitation. The mission further advised the Ministry and PMU to facilitate post works construction impact assessment to determine the extent of the O&M and hygiene challenges noted during the mission and then develop strategies that facilitate setting up of guidelines and promotion hygiene behavioral change Consultancy assignments: Development of Legislation (Sanitation Act, Standards, Guidelines, Rules and Regulations): The draft sanitation and hygiene Bill was completed in March, 2013. However, further progress depends on when the injunction court case is determined. The mission was informed that the process of vacating the injunction is underway with support from the office of Attorney General in the Ministry of Justice. Development and refinement of Sanitation and Hygiene messages and implementation of sanitation marketing and hygiene promotion in Blantyre and Lilongwe cities: Technical assistance for capacity building of masons and sanitation marketing and hygiene promotion: The mission noted that though the progress is slow there are positive developments and efforts being made by the implementing NGO – Hygiene Village Project to accelerate progress implementation of the programme to achieve target results by close of programme August,2015. The NGO has developed innovative strategies to support households to finance the construction and upgrading of improved latrines. Notable innovations the NGO has developed are: 1) hygiene village savings and loan banks which help the members to invest the money in constructing and upgrading household’s latrines. 2) Reducing the cost of latrine through application of affordable cement sand screed replacing a more expensive concrete slab. 3) Integrating implementation of sanitation activities with other livelihood projects activities e.g. nutrition, HIV/Aids, Youth empowerment.4) establishment of sanitation businesses in the effort to enhance services in latrine construction, supply of construction materials and pit emptying. With these strategies and innovations, the project has made the following accumulative achievements: 21 # Indicator Project targets Accumulative achievements: August 2013 1 Households with access to improved latrines 4000 800: Blantyre: 454 Lilongwe: 346 Households with basic latrines as result of No targets 1600: Blantyre: 854 2 project interventions Lilongwe: 746 3 People reached with sanitation and hygiene No targets 58,000:Blantyre 35,000 messages as result of the project Lilongwe: 23,000 4 People with access to improved latrines 20000 4000: Blantyre: 2270 Lilongwe:1730 5 Number of masons trained in construction skills No targets 375: Blantyre: 210 Lilongwe: 165 6 Number of village savings loan groups No target 40: Blantyre :30 Lilongwe: 10 The mission was pleased with the NGO’s idea to facilitate the village hygiene savings and loan banks as a mechanism to financing construction of improved latrines and the innovation to reduce the cost of constructing or upgrading improved latrine by just applying the sand cement screed. With the sand cement screed, the cost of the floor with concrete slab has been reduced by half implying that the household needs only 2500MK from slab costing 5,000MK. The NGO noted of people’s lack of adequate finances to construct or upgrade their existing latrines due to high costs of constructing improved latrines, casting concrete slabs and materials. The cost of improved latrines ranges from 45,000MK to 75,000MK while the concrete slab is costing minimum of 5,000MK. The NGO facilitated the formation of savings and loan groups called hygiene village savings and loan groups (HVSLG) as one way of supporting poor people investing in their household latrines. In Lilongwe, the NGO is integrating the implementation of the sanitation with youth group projects where it targets the ultra-poor especially the poor elderly people with sanitation subsidies to construct latrines. The mission also participated in a preparatory meeting to review the implementation approaches such as sanitation marketing and no hardware subsidy for household latrines in order to move up the sanitation ladder. The workshop is being organized by WESNET (a water and sanitation network) on behalf of all key sector organizations and government. The workshop will draw up lessons and experiences from various projects implementing sanitation marketing, CLTS and other no subsidy approaches. It is expected that new approaches and strategies will be developed to facilitate increase of poor people accessing improved latrines. However, the mission established that there are some masons who are yet to be supported with skills in social marketing, business development and general advertisement and branding. This is part of the FD communications Ltd (Ad Agent) scope of works and deliverables; however their contract is coming to an end on 30th September, 2014. Mission advises the PMU and Ministry to assess the status of the Ad Agent works before the contract end date ensuring all deliverables are achieved. Strategic Sanitation Planning: Though the assignment was completed in April, 2014, Water Boards have not shared the plan with key sector stakeholders. The mission advised PMU and Ministry to distribute and share sanitation strategic plans with key stakeholders such as city councils, development partners, NGOs and some private sectors. National Communication campaign for the newly established Department of Sanitation and Hygiene: The first phase of the assignment was completed in August 2013. The second phase is to start the 22 campaign through airing of programs and scripts on radio, TV stations and distribution of posters, pamphlets and fliers. These activities have been stalled due to injunction restraining the ministry and department of sanitation to implement 2008 NSP. Department strengthening: Sanitation and Hygiene: The mission was informed that the department has developed a department staff structure comprising of Director, Deputy director responsible for Hygiene and sanitation infrastructure, and four Chief Sanitation and Hygiene Officers – 1) Information, Communication and Regulation: 2)Hygiene Education and Promotion; 3)Design Research and Technologies and 4)Strategy Development, Review, Implementation and Inspectorate . At district level the proposal is to have Director of WASH or as WASH champion. It is anticipated that the moment the positions are filled, the department will be full flanged. The Director of Human Resource and development confirmed of the developments and mentioned that the recruitment awaits progress on the court injunction. 23 Annex 5: Component C: Water Resources Management -Detailed Review 1. This section provides details on current status and proposed actions under Component C: both the original financing and the additional financing. 2. The last mission rated the component moderately satisfactory, noting that disbursements were lagging behind significantly and require re-doubled effort to get back on track. A detailed plan of action was developed and updated during the technical review missions and followed up with diligence by the Department of Water Resources. All agreed actions were achieved and the procurement plan was followed timely. Progress under the component is therefore upgraded to satisfactory and the component is back-on-track to achieve the intended objectives. It will now be very important to closely oversee and manage the different consultancies to ensure quality of the process and outputs as well as timely delivery of the same. There appear to have been delays and inefficiencies in reviewing and approving reports, especially where responsibilities have been shared between the Ministry and water boards. It was agreed that reviews will be streamlined and that all reports will also be shared timely with the Bank to give an opportunity to comment. A detailed assessment of all updates under this component is provided in the following paragraphs: 3. Enabling Legislation and institutional reform: The consultancy to support the establishment of the NWRA has started and the consultant (BRLi from France) submitted its revised Inception Report and during the mission the Ministry shared with the Bank for comment. The Ministry decided to recruit the interim CEO of the National Water Resources Authority (NWRA) under the project. The ToR was reviewed by the Bank and is in line with the ministerial task force requirements. The Ministry agreed to recruit both the CEO for the NWRA and the CEO for the Shire River Basin Agency under the same process, to ensure complementarity and a joint process of building these linked institutions under the new legal framework. To further ensure a harmonized development path it was agreed that the Ministry would soon organize a meeting with its two technical assistants (BRLi on NWRA establishment and NIRAS on SRBA establishment – under the Shire River Basin Management Program (Phase-I) Project) on the joint roadmap for the rollout of these institutions. The taskforce is to oversee both institutions’ inception phase. It was discussed during the mission that it will also be important that the board of the NWRA is established soon, as there will be many decisions to be taken in the establishment process that require the board’s approval. 4. On physical establishment: the Ministry is hoping to soon conclude the acquisition of a building for the NWRA in Lilongwe (area 47). Once this process is completed the building can be furnished and security/good communications put in place. This will provide the NWRA with good facilities and low recurrent housing cost. Two vehicles were procured for use by the NWRA under the project, and goods and equipment are awaiting final acquisition. 5. A consultancy was started to facilitate and support the operationalization of the Trans-Boundary Water Resources Management Unit (TWRMU) within the Department of Water Resources. The consultant (Pegasys from South Africa) subsequently submitted the inception report, which was shared with the Bank during the mission. The Ministry is reviewing. Under this consultancy it is envisaged that there will be a small study tour to SADC Water Division. This activity is expected to strengthen the organization and capacity of the Department to engage on transboundary water resources issues that the country faces, and will therefore require close collaboration between department and consultant. 6. Catchment Management Strategies: This consultancy has the objective to develop strategies in three selected priority catchments, and in doing so come up with optional feasible management and development interventions. The outputs will support local stakeholders, organized in catchment 24 management committees and the NWRA to strategically manage water resources in these catchments. They complement work ongoing in the Shire Basin under the SRBMP. This consultancy is following on from the WRIS as well as the new Water Resources Act that calls for these strategies. The time is very short for this complex assignment and in fact this is one of the consultancies flagged as on the critical path, where the projected end date of the consultancy is close to the Project end date, and the date was brought forward during negotiations. The consultant (Aurecon from Mauritius) has started the work and held consultative workshops in the priority catchments. 7. Kamuzu Barrage Upgrading: All activities were completed for this consultancy under the NWDPII and the final RAP was disclosed and compensation paid. The construction phase and the Panel of Experts have been transferred to the SRBMP, where construction is financed. This has been a smooth transition and a highly relevant output of the NWDPII financing. The one issue raised during the mission is the final payment to the consultant, which is outstanding since the last mission. The mission recommends this issue to be closed soonest. 8. The harmonized Dam Safety Review Panel is still in place and being contracted under parallel programs following the harmonized ToR that was developed and is coordinated by the single focal point (Mr. Hyde Sibande from WRM Department). This is good practice. Under NWDPII the panel will continue to be involved in the design of Diamphwe Dam and their inputs will be required on short notice. Two experts have valid contracts and the Ministry has advertised for additional expertise (on electro- mechanical and geotechnical expertise), on behalf of this project and other projects that will need the PoE services. This recruitment needs to be concluded soon and contracts need to be sent to the Bank for its review. 9. Aerial Survey for the Lower Shire River Basin: The Ministry reported that the consultant has delivered all required outputs and that the Ministry has accepted the revised report. It is now important that the output, including raw data, digital elevation model and aerial photography is shared with all intended users: Department of Disaster Management Affairs, Department of Water Resources and its various consultants, Department of Irrigation Services, Department of National Parks and Wildlife, etc. It is also encouraged that the data is archived with the National Spatial Data Center and made accessible on MASDAP. 10. Licensing reform campaign: The consultant (DHI from Denmark) is in place and has submitted an inception report. Due to delays in procurement processing, this consultancy had to be seriously reduced in time and it will be important to closely follow progress. As noted in the previous mission, it will be very important for the NWRA (formerly WRB) to organize itself in anticipation of the entrance of the consultancy, as this will require close follow up and streamlining of internal procedures to ensure all the licenses are processed. The Ministry is asked to develop and adopt an action plan together with the consultant during its inception stage, and this should also include a timeline for the installation of the NWRA board which has to approve all licenses. This campaign cannot be successfully implemented without the actual processing of the licenses by the NWRA. 11. National Groundwater and Water Quality Mapping started and the consultant (Council of Geoscience from South Africa) submitted its inception report. The objective of this assignment is to improve mapping of groundwater aquifers and water quality paramters to improve the understanding of groundwater occurrence and quality in the country. The exercise does not include the Shire Basin, and it will be important for the Ministry to ensure consistency in approach in all basins in the country, including the Shire, which will be covered under the SRBMP. Development of new/raw Water Sources by Water Boards: 25 12. Southern/Central Region Surface Water: This consultant (SMEC from Australia) has recently submitted the draft Preliminary Design Report and the Ministry is reviewing. The selected options are: Kasungu: Construction of a dam on the Dwangwa River at Kwengwele; Mponela: Construction of a dam on Kasangazi River at Kanyungu; Chiradzulu: Construction of a dam on Mulanje River. Mwanza: Construction of a dam at Wamkulumadzi-Dwalibamba River confluence. This report has been delayed and this is due to community resistance to the consultants’ activities in one of the sites. The issue was picked up by the Ministry, organizing community and traditional leaders’ meetings, which led to resumption of work, but has not yet resulted in a conclusion in Chiradzulu. 13. Southern/Central Region Groundwater: The consultant has drilled 12 out of 18 planned boreholds in Ntchisi, Madisi, Mponela, Namwera and Ngabu, and will need to complete works in Balaka and Dedza. The work is expected to be completed by end of August, 2014. 14. Detailed design of the New Water Source for Blantyre: Both the detailed design consultant (Nicholas O’Dwyer from Ireland) and the ESIA consultant (SMEC from Australia) are in place and work has started in July. Both consultants have submitted inception reports, the first of which was rejected by the Client. The Mission asked to be copied on all these submissions and stressed importance of timely quality review of interim outputs. A first critical output – after the inception report – is the optimization/conceptual design report by the detailed design consultancies. Since this report will have to make many recommendations on design options it will be critical that this report is closely reviewed with relevant stakeholders. 15. Detailed design of the New Water Source for Lilongwe: Work on Diamphwe Dam has continued. Both consultants provided interim products, with the design consultants (Studio Pietrangelli from Italy) providing a dam optimization report and the ESIA consultants (WAPCOS from India) providing a baseline assessment. Both reports were shared during the mission and have not undergone detailed review yet, but the mission had a meeting with the consultants which was also attended by Lilongwe Water Board, the Ministry’s management and IFC. The mission has a number of observations from this meeting:  The design consultant is proposing some radical changes to the design of the dam. This is apparently necessitated by the hydrology, since flows were found to be less abundant – based on information not available during feasibility studies. This has resulted in a raised dam crest, and a new design for the spillway. Also, the consultant proposed to move the dam axis location site by 50 meters to protect a graveyard from inundation, and proposed changing the dam design.  All these changes may have significant impact on the cost of the dam, the inundated area, future uses, and therefore will have an effect on the financial and economic returns. During the mission it was not possible to get clarity on a number of fundamental questions related to this optimization and this will require further review of the documents and information from the consultant. It appears that the ‘dam optimization’ was carried out to find a technical solution to meet the demand as identified during feasibility. Costs and benefits have not been part of the optimization exercise and therefore it is not clear whether the technical optimization is also an economic optimization. Several questions arise: What is the new and supposedly increased engineer’s estimate of dam cost? Is this cost increase justified against the expected multiple returns from the investment? Is irrigation development still justified – it was during feasibility given cost-benefit analysis of incremental cost for dam raising vis-à-vis expected returns? What is the situation for hydropower in this new scenario? What would be the impact of the raised dam crest level in terms of inundated area and subsequent social and environmental impacts? It will be important that these questions are discussed between the engineers, the client, the Dam Safety Panel, the ESIA consultant, and the Bank’s experts, prior to moving further into detailed design. It has been proposed to have a technical review meeting bringing all information together next 26 month, giving the engineers the opportunity to provide relevant information on above questions in good time ahead of the meeting.  The ESIA consultant has recently submitted a revised baseline report after the client had rejected the first version. The consultant so far has not provided estimates in terms of the main environmental impacts or quantification of resettlement based on anticipated reservoir area. It is clear that the two consultants need to exchange more information, but at the same time this work appears delayed also on areas where the consultant could have moved.  Neither consultant seemed aware of the consultancy by SMEC for the department of Irrigation Services under IRLADP. SMEC has been contracted to carry out feasibility studies for the irrigation downstream of Diamphwe. While the feasibility of irrigation highly depends on the outcome of the discussion under bullet 2 above. It is important that the client internally links up these different assignments. 16. The mission visited the Diamphwe dam site and the proposed change in the location of the dam axis by 50 meters appears to be good. Follow-up technical discussions were held on the proposed PPP model and the financial viability of the project. This discussion was informed by the willingness to pay study carried out by ECA, which was discussed and presented during a workshop during the mission. It is also clear that many of these assessments are still preliminary and are influenced by the final design choices that will be made. 17. Internal organization of the client for above mentioned contracts needs improvement. The following was discussed and agreed. For all consultancies the MAIWD is the formal client and will communicate with the consultants and assign an officer is in charge of day to day interaction and give instructions to the consultants. The Ministry will also appoint counterpart staff to critical consultancies to ensure that young officers work hand-in-hand in delivery of the outputs (in case of catchment strategy development) or prospective NWRA staff is able to follow through on the consultants’ advice (in case of the licensing reform campaign). The detailed design work for new water sources for Blantyre Water Board is closely interwoven with BWB operations and it was agreed that the Ministry informs both consultants that BWB will act as the Client’s representative. In this regard, BWB and the Ministry need to agree on an individual officer who will act as contract manager. BWB will on its part ensure that MAIWD is fully updated and official contractual communication will require PS signature. For Lilongwe, the situation is similar and even more critical and encompassing more stakeholders. Report sharing with the World Bank needs improvement as many of the new reports under the recently started consultancies have not yet been shared with the Bank or were shared during the mission. The Ministry is requested to share all outstanding reports and in future send them as they come in along with a timeframe in which to respond, so as to provide an opportunity for the Bank to comment. Critical reports require wider consultation with other stakeholders and the Ministry is encouraged to organize such consultative workshops as required. 27 Annex 6: Component D: Sector Reforms and Program Management – Detailed Review Activities under Original Financing Under the Original Financing, the component consisted of three sub-components namely Management of Sector Program; Strategic Sanitation Planning for Blantyre and Lilongwe, and Urban Water Sector Reform. All planned procurement of goods/equipment, consulting services have been completed and the goods and services delivered. The only activity that is under implementation is Sanitation Planning in low income areas for cities of Blantyre and Lilongwe. Summary of the three sub components is as follows: 1. MANAGEMENT OF SECTOR PROGRAM This included the following: Implementation Support to the ministry in managing its sector program, and support to institutionalization of Sector Wide Approach (SWAp) in the water sector.  Implementation Support: This was carried out by setting up the PMU to provide central services for NWDP implementation, such as donor coordination; contract management; project supervision; monitoring and evaluation; safeguard tracking; communications; program accounting; and procurement. By the end of the first year of implementation, all staff positions were in place.  Sector Wide Approach: including Initial SWAP Training; Sector Working Group (SWG) Meetings which are held every quarter; facilitating Technical Working Groups (TWGs) (six in number) Meetings which are held every quarter; Joint Sector Reviews (JSR)Workshops held annually; development of Sector Investment Plan; Sector Performance Review (SPR); and SWAP Information Sharing by creating a web page. 2. STRATEGIC SANITATION PLAN FOR BLANTYRE AND LILONGWE This activity was to carry out comprehensive strategic sanitation planning in the two cities in readiness for the operationalization of the National Sanitation Policy. A local consulting firm, Water, Waste and Environment Consultants, were engaged in February 2013, and has completed the assignment. This activity is coordinated by and reported under the Sanitation Component. 3. URBAN WATER SECTOR REFORM The project aimed at supporting the GOM effort in urban water sector reform that started with a service contract in Blantyre and Lilongwe supported by the EU/EIB project, to be followed by a longer term plan involving a deeper form of private sector participation as the environment was ready. The NWDP II aimed to support the creation of an appropriate environment for a possible deeper form of PPP. The project therefore supported the following activities;  Development of an appropriate regulatory framework and establishment of a regulatory institution  Preparation and implementation of a proper institutional framework and governance system, through a performance agreement between the water boards and the Government;  Preparation and implementation of a longer term reform option that involves PPP transaction;  Stakeholder consultation and consensus building of the envisaged reform plan. a. Regulatory Framework 28 The regulatory framework to be developed was to be for the water supply services and would cover all the existing water boards. Following the Government’s efforts to establish Multi Sector Regulatory Authorities to regulate the infrastructure sectors, the regulatory authority proposed was to oversee the energy sector and would be called Malawi Water and Energy Regulatory Authority (MWERA). Activities for implementation included the following (i) Review and enactment of proposed Act; (ii) Development of the various regulations which would cover both the operational and financial areas and investment; and public awareness. Through a consultancy, the project supported the development of relevant bills as follows; 1. Water and Energy Regulation Act (essentially a revision of the energy regulation act) 2. Water Supply and Sanitation Services act 3. Water Boards Corporatization Act 4. Rural Water Supply Act These together formed the legal framework for the establishment of the regulatory institution. b. Institutional and Governance Framework: The objective was to support the ministry in the preparation of a proper institutional framework and governance system through a possible restructuring of the water boards. However, resources under this activity were used to support the development of a pricing framework, institutional framework and financial framework for the upcoming regulatory institution-MWERA, through three consultancies that were engaged. All reports were finalized and were part of the submission that was presented to cabinet, where a decision to discontinue the regulatory process towards MWERA was made. This resulted in the ministry reverting to the corporate charters. c. PPP Transaction The objective was to support the sector in putting in place a PPP arrangement where a Water Operating Company would be established with Malawian investors and utility employees invited to join the partnership, while the Government retains the ownership of the water infrastructure. It was expected that the arrangement would transform the Urban Water Boards into efficient operators through contracting out the provision of water services to the water operating company. To date, no progress has been made since the halting of the establishment MWERA which was expected to facilitate the establishment of a legal and regulatory framework, financial framework, institutional and organizational framework to support the proposed PPP arrangements. However, some resources were used for training in PPPs for some staff from the Ministry, PMU, and the Privatization Commission. d. Sector Reform Consensus Building (Public Awareness) Mindful of the sensitivity of the water sector, the government intended to engage and bring on board various stakeholders in the reform process. The NWDP II therefore supported government in holding the first urban water sector workshop. Other activities implemented included the development of a communication strategy and a media plan. Implementation of the strategy however did not take place. This is due to the fact that the major reform to come up with Malawi Water and Energy Regulatory Authority was turned down by the Malawi Cabinet. Furthermore, the ministry undertook a study tour to Tanzania and Zambia, and a tailored training in Scotland as part of the preparations for the consensus building. These were planned to precede stakeholder consultation on the proposed reform. Parts of the resources were also used for the development of TV and radio documentaries and programs respectively. Airing was financed under additional financing. 29 Activities under Additional Financing Under the Additional financing, the component was designed to continue with support to the sector towards sector reforms, capacity enhancement and program management implemented by the Ministry of Water Development and Irrigation. All planned goods, consulting and non-consulting services were procured. The supported activities and their status are as follows; a. SWAP management The funds will support the efforts towards a Sector Wider Approach, including operations of the Sector Working Group and Technical Working Groups and support the Joint Sector Review. To date, the project has supported the preparation of annual sector performance reports since 2011, which have been presented at annual joint sector review workshops. The project has also supported part of the requirements for the holding of the actual JSR workshops. In between the annual JSRs, the project has been supporting the working of the Sector Working Groups and the Technical Working Groups, which were largely established with resources under the original financing. To complete the requirements for a workable SWAp arrangement, the ministry has been working towards putting in place a fiduciary framework. b. Fiduciary Framework ToRs for the consultant to develop the framework were submitted to the Bank for comments/inputs and No-Objection. The Bank provided comments and inputs which needed to be incorporated. The mission was informed that the Institutional Development and Capacity Building Technical Working Group met on 15th August 2014 to respond to the comments that were raised by the Bank and finalize the ToRs for resubmission for No-Objection. In the response the ministry informed that Bank that the fiduciary framework activity has been withdrawn from the training plan resources after noting that further consultations are still underway in respect of the comments raised by the Bank. c. Communication strategy The development of a communication strategy needs to precede public awareness campaigns. To this effect, the Ministry engaged consultant to facilitate development of a strategy for the sector. The contract for the consultancy was signed on 27th January 2014 and an inception report was submitted and approved on 18th March 2014. The contract was supposed to end in May 2014, however, it was extended to 31st July, 2014. The consultant submitted the Communication Audit Report which was reviewed and rejected. The consultant was then given up to 31st July 2014 to submit the final and acceptable Communication Audit report failure of which the team recommended that his contract be terminated and that the ministry considers developing the strategy in house. The consultant was also advised to seek for an extension of the contract period for him to have time to finalize all outputs if the communications audit is accepted. Currently, the consultant has since submitted a draft audit report. The completed Communication Strategy is expected by end of September 2014. d. Support for the establishment of the regulatory framework and financial sustainability of the Water Boards This is to finance goods, consulting services and possibly operating expenses for the regulation of the sector and to improve the sustainability of the Water Boards, in particular, the tariffs and payment of bills from public institutions. Following the direction from Cabinet to abandon the MWERA, the ministry has been working on corporate charters as a way to regulate the operations of the Water Boards. However the mission was informed that the ministry is exploring ways of resuscitating the process of putting in 30 place a full-fledged regulatory structure for water supply and sanitation service delivery. Although earlier studies recommended combining with energy regulation, hence the MWERA, the ministry intends to establish if that set up still remains the most relevant and preferred option, and is therefore exploring ways to support a study to this effect. Meanwhile, the ministry has been working on corporate charters as a way to regulate the operations of the Water Boards. The drafting of the charters was finalized. Terms of reference for the structures proposed in the charter have been prepared which include terms of reference for the Charter Performance Management Committee, Tariff Review Committee and the Planning Department in the Ministry. Further, a sensitization plan for the Corporate Charters has also been developed, targeting the Corporate Charter task Force, the Sector Working Group, Principal Secretaries and Board Members, and finally the Cabinet. Furthermore, charter implementation guidelines have been prepared. These are meant to provide direction in the implementation of the charters. The mission was informed that the ministry has now put in place a calendar to conduct sensitization meetings. At the end of the meetings, the ministry intends to submit the draft corporate charter to Cabinet for approval by end of February 2015. e. Review/Development of Sector Strategic Plan The funding under this activity is for consulting services to assist the facilitation of the review and development of the Sector Strategic Plan for the next 5 years. The plan had been finalized and submitted by the consultant, after final verification by sector working group members. The Strategic Plan will now be sent for printing. f. Monitoring and Evaluation The funding is for data collection, analysis and reporting, community based feedback meetings, M&E training, project evaluation, annual audit and procurement of M&E equipment. The data collection, analysis facilitates the preparation of regular progress reports for the project. A midterm review of the additional financing implementation was also conducted in mid-2013. g. TA for operational improvements in Water Boards The design of the component included a short-term technical assistance for the improvement of operational and financial performance of the Water Boards. However, resources for this activity were reallocated to the rural water supply to finance shortfalls in the infrastructure needs identified. It was also intended to support the establishment of a simple monitoring and benchmarking system of the Water Boards to track operational and commercial performance over time. This has also been dropped. However, it was agreed to provide technical assistance to the Water Boards and the IWD by recruiting consultants for provision of engineering oversight. The mission notes with concern that the recruitment of individual consultant has taken unduly long and urges that this be expedited to bring the consultants on board in good time for effective use before the project closes. h. PMU operational costs The funds are for fixed-term contract staff of the PMU, office equipment and operations, vehicle operation and maintenance and program management workshops. The PMU continues to exist to provide required central services for the implementation of the NWDP II and other projects under the NWDP. Since the project could support the PMU only until the project closing date (end of October 2015), the mission notes that arrangements need to be made by the ministry for supporting key staff of the PMU beyond the project closure to assist in smooth finalization of the closure of the project 31 i. Engineering software and training for IWD and Water Boards This was meant to finance the procurement, installation and training of engineering software (design, survey, modeling software) for components A, B, C, and E. The resources under this activity were moved during the mid-term review to cover the loss due to exchange rate changes between the dollar and the SDR. j. Capacity Building (as per training plan to be approved) The funds are for short and long term (in country and offshore) training of IWD, PMU and Water Board staff. Under the Additional Financing, US$ 2 Million was allocated for training for WDI, PMU and Water Board staff. The ministry prepared a training and staff development plan, which has been in implementation since July 2012. Out of the US$2 million allocation, about US$ 1.7million (85%) was planned for trainings and staff development, and the balance (15%) was left as a contingency to cover eventualities such as cost/price escalations and emerging training and staff development needs within the implementation period. A total of US$153,244 (8%) was planned for Long term off shore trainings, while 314,837.33 (16%) was planned for long term in-country/regional courses. The bulk of the resources, up to 41 percent, were planned for short term off shore courses As at 31st December 2013, the Ministry has spent and committed a total of US$749,203.21. As such a balance of US$330,796.79 is yet to be utilized by December 2015. The ministry has now revised its training plan and submitted to the Bank for approval in July 2014. The Bank has provided comments and requested for clarification on some of the items in the proposed training plan of the ministry. The ministry responded during the mission and the bank will provide its response shortly. A total of USD 700,000.00 was allocated to water boards, and as at 31st December, 2013, USD480, 178.08 had been utilized, leaving a balance of USD 219,821.92. Except for Blantyre Water Board, all water boards have been implementing a large part of their training as originally planned. BWB had to revise their training plan after realization that the initial submission did address priority areas that would enhance capacity. Notably, BWB is behind in the implementation of their training plan with only seven officers so far having benefitted. A total of 293 person events have been undertaken by July 2014. Summary of Training Interventions by Number of Person Events - July 2014 Implementing Entity/Department Short Term Long term Study Total Tours/Workshops Planned Total Planned Actual Planned Actual Planned Actual Actual Water Suppy Services 40 6 4 3 124 3 168 12 Water Resources 72 61 6 5 84 0 162 66 Sanitation and hygiene 9 9 1 1 8 7 18 17 Irrigation 6 6 12 2 0 0 18 8 Adminstration 8 7 0 0 20 28 28 35 Human Resources 6 5 6 6 0 30 12 41 Internal Finance management 7 4 1 6 0 0 8 10 Planning 9 9 0 0 0 0 9 9 PMU 3 3 0 0 29 10 32 13 BWB 37 7 3 0 0 0 40 7 LWB 7 7 2 1 15 4 24 12 SRWB 20 15 0 0 0 0 20 15 CRWB 32 18 5 5 0 0 37 23 NRWB 24 24 1 1 0 0 25 25 Total 280 181 41 30 280 82 601 293 32 Annex 7: Component E: Rural Water Supply – Detailed Review 1. The Rural Water Supply Component has made significant strides especially in the completion of major works and remains satisfactory. The MAIWD is now focusing on community works that involve distribution line installation and tap construction. At present these works stand at a completion rate of 20% or 140 taps constructed against a target of 691. The mission has once again reiterated the importance of completing the targeted connections in order for the project to achieve its desired objectives. In light of this, it is crucial for the Ministry to intensify efforts during the dry season and leverage the time beneficiaries can avail to avoid any derailment of the program that generally comes along with the rainy season. Table 1 below provides current progress on the schemes. Table1 Works Progress Scheme Connections Beneficiaries Completion Construction Comments Name Planned Actual Targeted Actual Rate Cost (US $) Chikwawa 243 243 29,160 29,160 100% 141,100 Connections East bank were done Lizulu/Mton 214 214 25,680 25,680 100% 464,954 under ACGF da while the AF Mkhamanga 91 91 10,920 10,920 90% 488,294 supported /Katizi construction of Treatment Works. Misuku 74 65 8,880 7,800 90% 682,459.88 Major works Usisya/Usin 228 49 27,360 7,080 68% 1,048,199.17 were completed gini in all schemes Mvula 143 0 17,160 0 73% 453,629.82 but tap Chapananga 246 26 29,520 3,120 60% 477,870.29 installation is on-going. Total 1,239 688 148,680 83,760 3,756,507 Note: The current progress in this circumstance relates to taps that have been revived and are providing water. Complete tap rehabilitation should entail a new tap stand and a newly constructed tap apron and/or washing slab. 2. Work Progress - Prior to the mission, the RWS consultant together with the Focal Point Officer in the PMU, visited the schemes under construction to appreciate progress. The detailed observations are provided below: a) Chapananga- The field visit to Chapananga focused on progress of distribution lines rehabilitation and tap apron construction. Chapananga scheme has not been operating for about 20 years hence required a total overhaul. A meeting with the Project Engineer, Water Monitoring Assistants, WUA Representatives and the Focal Point Officer indicated that 26 taps had been rehabilitated at the time of the visit. This was verified through a random check on a few water points across the system. The rehabilitation process involves flushing the pipe line to enable fixing of breakages and installing pipes in sections where they are missing. At its peak, the scheme was servicing a vast area with 246 taps. Meanwhile the major outstanding works involve the construction of an underground crossing on Mwanza River. This can be easily constructed now with the flow heavily subsided but requires a proper design and supervision. Challenges- Pipe rehabilitation is slow due to siltation that has affected the intake and a number of pipe sections. The project engineer intends to incorporate silt traps at the intake as well as adequate wash out valves on the distribution lines. 33 Mobility of WMAs was noted to be hampering progress as they now have to travel to distant sites but with a shared motor bike. Meanwhile it was learnt during the mission that a new motor bike has just been dispatched to the site. b) Mvula-The visit to Mvula indicated steady progress especially on the distribution line installation. Since this is a new scheme, the approach adopted has been slightly different with the process concentrating on complete installation of the distribution lines at once. On the day of the visit, the main distribution line was close to completion. At present, no taps have been installed so far as the intention is to finish installation of distribution lines and engage an artisan to install tap units and construct aprons. While this approach is feasible, there is still need to commence installation of taps in places where distribution lines were completed. Challenge- Some sections passing through wetlands are using PVC instead of GI pipes as a result the pipes are not buried deep enough. The contractor was advised to rework such sections. The Focal Point Officer has meanwhile arranged for transfer of some idle pipes from Mpira Balaka to be used on this section. c) Katizi/Nkhamanga - The visit to Katizi scheme in Rumphi aimed at appreciating the progress made on construction of Treatment works for the scheme. The contractor has completed one set of slow sand filters and is now working on the roughing filters. The quality of works has improved a lot. There is however need for checking on water tightness of the completed works. According to the site engineer these works will be completed in October. Challenge -The main line intended to feed the Treatment Works has technical problems and consequently does not supply the intended flow. It was agreed therefore that the line be revisited to iron out any bottlenecks. d) Usingini - This is a new scheme whose major works were completed sometime back and are functioning well. To date only 9 tap points have been connected. There is need however to speed up construction of the remaining tap points. Challenge- Delays in delivery of GI pipes is prolonging supply of water to some sections. 3. General Issues- The following are technical and administrative issues that are affecting the implementation of works across all the schemes. a) Exposure of Treatment Works- In some cases the TWs are close to households creating a hazard for the community especially children. It is advisable to provide a boundary fence as a safeguard measure. b) Engagement of Local Utility Operators – The majority of the WUAs have not yet selected and recruited a LUO. It is imperative that LUOs get on board and engage with the community at this crucial time of distribution line installation and tap construction. This will help to ease their operation in future as it will mostly deal with the same areas. c) Operational Tools- The MWDI has provided new offices and also bought office equipment to be used by the WUAs and LUOs. This is a commendable move towards sustainability. Meanwhile it was observed during the site visits that all offices are generally completed but not occupied. With the works going towards completion it is advisable for WUAs to start using these facilities now as this will help cultivate some ownership and familiarization with a new working order. Additionally, the MWDI should consider the preparation of As-Built-Plans and Operational Manuals for each scheme. 34 4. The Rural Water Supply Investment Plan The consultant undertaking the assignment on the Development of the RWS Investment Plan submitted topical reports to MWDI for review and the Bank presented its comments too. During the mission, the consultant presented their findings and a subsequent meeting was arranged for detailed discussion on the reports. The MWDI had previously presented their comments to the consultant, which has since been incorporated. The Bank also reviewed and provided comments on the report which were presented to the consultant for their incorporation in the reports. It was learnt during the discussion that the comments have been incorporated and the final version will be submitted soon. In the detailed discussion the following issues emerged: a) According to the consultants’ recommendation some schemes require rehabilitation to be executed by the beneficiaries themselves since the existing problems are very minor. The meeting noted that it is important for the consultant to indicate the implementation arrangements that should involve the District Assemblies as the drivers of the process. b) The meeting also noted that District Assemblies provided significant data on scheme conditions and requirements however; they face financial challenges for their operational prowess. It will be important to empower the districts financially to ensure sustainability of the schemes as they will be the focal points for mentoring of the WUAs. c) The Bank pointed out on the need for the MWDI to effectively use the Investment Plan for marketing and allocating resources for future rehab and construction programmes. While noting the significance of this assignment, the MWDI remarked that already some development partners have requested for the final report. d) The consultant was requested to adequately address economic issues in the Social Economic Assessment report in order to justify the sustainability of schemes in particular areas. e) An emphasis was put to MWDI to utilize the recommendations in each report as they have significance in the investment plans and the future of RWS. 35 Annex 8: Procurement – Detailed Review 1. Original IDA: Four procurement contracts are still remaining in the Procurement Plan of the Original NWDP and these are completion of waterworks under Southern Region Water Board (US$ 1.5 million) Office Building for NWRA (US$180,000), which is awaiting signing of the Sales Agreement from Lands Department; Refurbishment of NWRA offices (US$ 100,000) and the recruitment of the Chief Executive Officer (US$50,000) which will be advertised by August 28, 2014. There are however some contracts which need close monitoring by the project and these include Upgrading of Mudi Pumping Station, Treatment Works under BWB; Feasibility Studies and Preliminary Design for Multi- Purpose Surface Water Sources, Feasibility Studies and Drilling of Exploratory Boreholes for Ground water Sources for Central and Southern Region Water Boards and Consultancy Services for Development of Catchment Strategy for Selected River Basins in Malawi. 2. Additional Financing: Most contracts have been signed and remaining contracts not yet signed include under Lilongwe Water Board:-Detailed Design for Kamuzu Dam 1 Raising and Rehabilitation and Environmental and Social Impact Assessment for Kamuzu Dam 1 Rehabilitation and Raising, both of which have been negotiated and are awaiting signing. Other contracts not signed include Independent Panel of Experts for Review of Kamuzu Barrage and other dams, Preparation of Implementation Completion Report which needs to start by early next year in order to capture early NWDP activities and, Engineering Oversight on NWDPII which needs to be concluded as time is running out, recruitment of artisans to complete connections for rural water projects at Chapananga, Usingini, Mvula and Usisya as well fiduciary assessment for Water SWAP. 3. Contract Management and Cost Estimates: The mission noted that there was need to improve contract management in order to ensure that actual costs for each contract are within budget and savings are realized. There have been extensions to both works and supervision contracts for Lilongwe, Blantyre and Central Region Water Boards which need to be closely supervised by the Water Boards. 4. The mission noted concerns raised by the project on the underperformance of the consulting firm which is supervising Salima Water Project as well as carrying out an Independent ESIA for Diamphwe dam project. In both cases, due diligence processes for any potential remedial contractual measures must be followed based on provisions in the contracts. 5. Staffing: The project has maintained the services of the Procurement Specialist. 6. Review of Procurement Plans: A comprehensive review of the agreed procurement plan for both NWDP II and Additional Financing was undertaken during the mission. In both procurement plans, contract packing and scheduling is good and of acceptable quality. 7. Post Procurement Reviews: The Bank had undertaken a PPR in all the implementing agencies in April 2014 and it was noted processing of documents followed the correct procedures and record keeping is generally good. The overall procurement risk rating was Low and there was no recommended case of misprocurement. 36 Annex 9: Financial Management Financial Status: The section highlights summarized cumulative financial status and performance on financial covenants for the IDA financed projects IDA H2940, IDA 4307, IDA H6900 and IDA 4946. Period of Implementation: The project has been implemented from 17th July 2007 (agreement signing date) and will close on 31st October 2015, therefore there are 15 months (one and quarter years) left from the date of the report (31st July 2014). According to financial plan, most activities must be in mid to final stages for the project to be executed by the closing date. Disbursements and Expenditure: The current overall disbursement rate is 78%, beating the 70% target set during February 2014 mission by 8 %. 86% of the disbursed funds have been utilized which represents 67% utilization of the total project amount. The original IDA financing (IDA H29+40 and IDA 4307) is fully disbursed at 100%. The IDA Additional Financing disbursement is at 68% with the grant IDA H6900 fully disbursed. Disbursement is projected to accelerate during the period July to December 2014 as most contracts will be completed by then remain with a few that were signed in April and May 2014. This will increase utilization of resources. Table 1: Summary of Disbursement and Expenditure as at 31st July 2014 Disbursed and Expenditure Jul-14 Amount Balance at Disbursement Utilisation of Source of Funds Project Amount Disbursed source of funds Rate (%) Expenditure todate Project Amount Disbursed Amount NWDP II (IDA) 50,000,000.0 50,410,636.0 - 410,636.0 101% 43,934,413 88% 87% NWDP II (IDA) - AF 120,000,000.0 81,799,636.0 38,200,364.0 68% 70,153,466 58% 86% TOTAL 170,000,000.00 132,210,272.00 37,789,728.0 78% 114,087,879 67% 86% Table 2: NWDP II Disbursement Projections up to Project Closure DISBURSEMENT PROJECTIONS AS AT 31ST JULY 2014 PROJECTIONS PER QUARTER TO CLOSURE OF THE PROJECT Balance of AMOUNT AMOUNT amount to be JAN-MARCH APRIL-JUNE LOAN# ALLOCATED DISBURSED % DISBURSED disbursed JULY-SEPT 2014 OCT-DEC 2014 2015 2015 IDA H2940-MAI NWDP II Org 22,500,000 22,513,694 100% 54,810 PLANNED - - - - IDA-43070 -MAI NWDP II Org 27,500,000 27,896,942 101% 119,327 PLANNED - - - - TOTAL NWDP II ORG TOTAL PLANNED - - - - 50,000,000 50,410,636 101% 174,137 IDA H6900 MAI - NWDP II AF 25,000,000 23,985,864 96% 1,014,136 PLANNED - - - - IDA 49460-MAI NWDP II AF 95,000,000 57,813,772 61% 37,186,228 PLANNED 11,155,868 10,040,282 9,296,557 6,693,521 TOTAL PLANNED 11,155,868 10,040,282 9,296,557 6,693,521 TOTAL NWDP II AF 120,000,000 81,799,636 68% 38,200,364 TOTAL PER QUARTER TOTAL PLANNED 11,155,868 10,040,282 9,296,557 6,693,521 TOTAL ACTUAL 170,000,000 132,210,272 78% 38,374,501 - - - - NWDP II ORG 101% 101% 101% 101% PERCENTAGE DISBURSED NWDP II AF 77% 86% 94% 100% CUMMULATIVELY TOTAL 84% 90% 96% 100% 37 Financial Covenants (as at June 2014) The Financing agreement requires the GoM and Water boards to fulfil the following financial covenants:  The recipient shall ensure that the Project Implementing Entities shall maintain for each of its fiscal years after its fiscal year ending on 30th June 2011, a ratio of total operating revenues to total working expenses not lower than 1.1 With reference to Table 3 below, Blantyre, Lilongwe, Northern Region and Southern Region Water Boards are able to maintain financing the working expenses with the operating revenues since the covenant became effective. CRWB is still struggling to attain and maintain the 1.1 cost recovery ratio. The water boards have generally registered great improvement in attaining this covenant from 2010 to date. There would be a further improvement if the arrears are always current. Table 1: Cost Recovery Ratios as at 30th June 2014 Cash Cost Recovery PERIOD BOARD Jun-10 Jun-11 Jun-12 Jun-13 Dec-13 Jun-14 BWB 1.1 1.0 1.2 1.1 1.3 1.2 LWB 1.0 1.3 1.2 1.2 1.5 1.4 CRWB 1.1 1.1 1.0 0.8 1.5 0.7 NRWB 1.0 1.2 1.1 1.2 1.3 1.2 SRWB 1.1 1.2 1.2 1.3 1.1 1.3 1.6 1.4 1.2 1.0 BWB 0.8 LWB 0.6 CRWB NRWB 0.4 SRWB 0.2 - Jun-10 Jun-11 Jun-12 Jun-13 Dec-13 Jun-14 PERIOD The reason for low cost recovery under CRWB was given as low volume generation of water in Salima and Kasungu schmes both of which have been undergoing major works. Most of the works are nearing completion and it is expected that the water volumes will soon improve and the cost recovery ratio will correspondigly improve subject to collection constraints . The other water boards have been barely achieving the agreed cost recovery ration of 1.1. The loan repayment under the program is now due and this means substantial repayments to the government. Against 38 the background of substantial public debt arrears. this is likely to further put pressure on water boards’s resources with the likely result of reduced generation capacity which has a direct impact on cost recovery ratio. The management of the water boards and govwernment of Malawi should agree on how to manage loan repayment in the light of huge public debt arrears relating to water consumed by government  The recipient undertakes to pay or cause to be paid to the respective Water Boards all outstanding water bills from public institutions throughout the project (Government debtors). As at 3oth June 2014, the Water Boards are owed a total of MWK6.25 billion, (MWK3.17 billion by Private Institutions and MWK 3.08 billion by Government Institutions) of which MWK2.97 billion (MWK1.09 billion by Private Institutions and MWK1.88 billion by Government Institutions) is more than 90 days in arrears. The table below shows that Government and Private arrears (90days+) have grown by 135% and 42% respectively from 2012/13 to financial year 2013/14. Significant change in the private arrears resulted from debt write off by BWB. TREND OF GOM ARREARS (+90 DAYS) MWK'000 TREND OF PRIVATE ARREARS (+90 DAYS) MWK'000 PERIOD PERIOD BOARD JUNE 2013 DEC 2013 JUNE 2014 BOARD JUNE 2013 DEC 2013 JUNE 2014 BWB 201,218 97,120 419,187 BWB 1,544,219 204,110 240,218 LWB 126,220 215,448 351,813 LWB 411,113 299,647 641,507 CRWB 168,506 154,662 244,628 CRWB 47,534 38,219 48,789 NRWB 116,041 137,260 371,143 NRWB 7,062 (9,752) (115,925) SRWB 220,275 196,295 492,552 SRWB 223,971 235,128 272,305 TOTAL 832,260 800,785 1,879,323 TOTAL 2,233,900 767,352 1,086,894 MOVEMENT - (31,475) 1,078,538 MOVEMENT - (1,466,548) 319,542 PERCENTAGE 0% -4% 135% PERCENTAGE 0% -66% 42% The tables below further show that arrears are increasing in amount though this is mostly a combination of tariff and customer based increase and indeed failure for the Water Boards to collect from the debtors. A debt collection strategy was developed but was dropped because its implementation and effectiveness to solve the problem proved futile. However there is need for the Water Boards and the Government to find a workable solution to debt collection/payment for both the Government and Private Institutions. 39 Table 2: Status of Aged Debtors as at 30th June 2014 WATER BOARD DEBTORS IN MWK'000 AGED DEBTORS AS AT JUNE 2014 CURRENT 30DAYS 60DAYS 90DAYS + GRAND TOTAL GoM 86,898 57,998 77,859 419,187 641,942 BWB Private 572,112 342,567 290,781 240,218 1,445,678 Total 659,010 400,565 368,640 659,405 2,087,620 GoM 90,298 82,730 96,161 351,813 621,002 LWB Private 319,118 60,595 327 641,507 1,021,548 Total 409,415 143,326 96,488 993,320 1,642,550 GoM 57,911 49,393 61,784 244,628 413,715 CRWB Private 42,720 9,534 6,372 48,789 107,416 Total 100,631 58,927 68,155 293,417 521,131 GoM 69,884 59,401 22,117 371,143 522,546 NRWB Private 89,818 55,116 47,090 (115,925) 76,099 Total 159,703 114,517 69,207 255,218 598,645 GoM 203,090 101,901 84,624 492,552 882,167 SRWB Private 80,342 81,135 84,974 272,305 518,756 Total 283,432 183,036 169,599 764,856 1,400,923 GoM 508,081 351,423 342,545 1,879,323 3,081,372 GRAND TOTAL Private 1,104,110 548,947 429,544 1,086,894 3,169,496 TOTAL 1,612,191 900,370 772,089 2,966,217 6,250,868 AGED DEBTORS BY % Institution CURRENT 30DAYS 60DAYS 90DAYS + GRAND TOTAL GoM 16% 11% 11% 61% 100% GRAND TOTAL Private 35% 17% 14% 34% 100% TOTAL 26% 14% 12% 47% 100%  61% of the Government debtors (K1.9 billion) are in arrears, if these are paid liquidity of the water boards would greatly improve. Private debtors owe the water boards 1.1 billion in 90 days plus category representing 34% of total private debts. The water boards should strive to bring the private debt arrears to within 60 days at worst. This would release much needed resources for working capital and other uses as well as significantly improve the cost recovery ratio.  The government made a significant payment of about 50% of outstanding debts in September 2013. This means that of the outstanding debt of MK 1 .9 billion, over MK800 million is over one year old and the remainder of about MK 1 billion is between 90 days and 365 days representing an average of 227.5 days assuming a substantially even buildup of the debts over the year. Given that the cost of generating the revenues is locked up in these unpaid debts, the pressure on the water boards cannot be overemphasized. The working capital of the water boards and other resource requirements are being financed from the collections of the private debts. The opportunity costs of the debt arrears, including overdraft interests, are making the water boards operations unsustainable. While the water boards are not being subsidized, the government is being subsidized from already stretched resources of the water boards. The government will need to realistically review this state of affairs and come up with a deliberate policy that will enable 40 sustainable financial management of the boards otherwise a catastrophic financial crisis will be experienced by most of the boards with disastrous consequences on supply of water to the public Table 3: Trend of Debtors/Arrears over years DEBTORS / ARREARS OVER THE YEARS PERIOD BOARD CATEGORY JUNE 2010 JUNE 2011 JUNE 2012 JUNE 2013 DEC 2013 JUNE 2014 GoM 73,174 55,328 154,263 403,916 356,007 641,942 BWB Private 1,139,537 1,144,082 1,199,654 1,544,219 1,550,874 1,445,678 Total 1,212,711 1,199,410 1,353,917 1,948,135 1,906,881 2,087,620 GoM 164,379 210,069 191,208 264,061 424,895 621,002 LWB Private 307,275 307,359 364,755 700,022 774,683 1,021,548 Total 471,654 517,428 555,963 964,083 1,199,578 1,642,550 GoM 51,183 101,448 170,282 316,797 294,405 413,715 CRWB Private 58,030 97,822 64,246 120,922 173,422 107,416 Total 109,213 199,271 234,528 437,719 467,827 521,131 GoM 67,214 90,033 139,023 233,458 333,235 522,546 NRWB Private 88,517 15,888 82,508 105,535 206,236 76,099 Total 155,731 105,921 221,531 338,993 539,472 598,645 GoM 173,878 276,252 285,890 405,088 419,639 882,167 SRWB Private 212,447 253,058 337,336 398,547 435,180 518,756 Total 386,325 529,310 623,226 803,635 854,820 1,400,923 GoM 529,828 733,130 940,666 1,623,321 1,828,182 3,081,372 GRAND TOTAL Private 1,805,806 1,818,210 2,048,499 2,869,245 3,140,395 3,169,496 Total 2,335,634 2,551,340 2,989,166 4,492,566 4,968,577 6,250,868 Appendix: Updated FM Risk Assessment Residual Risk Rating Brief Explanation of Changes and any New Type of Risk Previo Curre Mitigation Measures us nt INHERENT RISK Country Level H H Entity Level S S Program Level M M OVERALL S S INHERENT RISK CONTROL RISK Budgeting M M Accounting M M Internal controls M M Funds Flow M M Financial Reporting M M Auditing S S OVERALL M M 41 Residual Risk Rating Brief Explanation of Changes and any New Type of Risk Previo Curre Mitigation Measures us nt CONTROL RISK Financial Accounting and Reporting: Topic Rating1 Comments/recommendations Staffing S Internal controls, including MS weak internal audit accounting policies and procedures Record Keeping S Internal Audit MU No recent report from Internal Audit Financial Reporting and Monitoring3 S Budgeting Systems S Information Systems S Funds Flow Arrangements Topic Rating1 Comments/recommendations Funds Flow between Donors and S . government and within government Banking Arrangements S Audit Arrangements Timely reports4 S Audit results: (1) Nature of audit opinions, NA reasons for any qualifications/disclaimers/adverse opinions (2) Management letter and internal S control issues (3) Timeliness and adequacy of S management corrective action Compliance with related FM U Public debt arrears have not been cleared covenants inc. laws and regulations, conditionalities in adjustment operations Recommended overall rating1: Satisfactory 4 An audit report more than 4 months late at the time of rating the project normally indicates a “U” or “HU” rating. 42 Annex 10: Environmental and Social Safeguards – detailed review 1. Systematic implementation of the Environment and Social Safeguards: The Mission reviewed the level of implementation of the safeguards and noted that there is great progress in the systems approach to the safeguards implementation. Documentation of major safeguards processes used to be a challenge in the past but is now satisfactory. A joint meeting for all Environment and Social Safeguards personnel and the PIU Managers was convened resulting in an extensive exchange on safeguards approaches. The following operational arrangements were agreed on;  Focus on safeguards issues applicable to the operational phase of the project was emphasized since most construction work is complete and the infrastructure now being prepared for handover and operation. This should include and not limited to shelter and sanitation for all areas that are guarded, fencing of all storage tanks with potential for curious children to climb up the ladders on the tanks.  Keep record of all sub-project screening forms and follow up documents available and retrievable at the implementing entities and PMU offices.  Produce a safeguards project completion report for all completed projects.  PMU convenes, and implementing entities attend and present at a scheduled quarterly safeguards meetings. 2. Follow up on non-conforming safeguards practices: The Mission reviewed project progress reports, had follow up discussions with the responsible Safeguards staff and project management staff and also had some field visits. The Mission noted that there has been improvement on work areas that were listed as non-compliant in the previous mission. The following observations were noted: i. Mangochi Water Supply Station The excavations that had not been backfilled are now backfilled. However, new occupational hazards were noted, discussed and agreed as follows;  One storage tank is within a school yard and the other within a highly settled area. Both of the tanks have ladders that are expected to create a fascinating playing point for children within these communities. The tanks are not fenced and easily accessible, thereby creating a potential death trap for the children who may climb and fall from these ladders. It was agreed that SRWB will fence off these infrastructures since provision of guards proved ineffective because there were no guards at the time of the visit. The use of guards will generate more safeguards issues in the form of shelter and sanitation facilities.  All storage tanks do not have a system to drain the scouring from the tanks areas thereby creating a potential for flooding within these areas. The Board will devise means to drain and possibly soak away the waste water.  The roof of the laboratory on the treatment plant protrudes into the walkway thereby creating a potential for slicing of workers as they go to the inlet.  At the treatment plant, the threshold from the walkway to the intake has one missing step making it difficult to access the intake from the walkway.  The ladder at the intake has no landing platform thereby creating a potential for loss of life for anyone who slips from the ladder into the crocodile-inhabited river. The Board will ensure extension of the platform for the old abstraction point to the new abstraction point.  Water quality monitoring records only showed sampling and analysis of the treatment station sampling point. The Board will identify other sampling points 43 in the distribution network including the furthest point to ensure comprehensive monitoring of residual chlorine.  The treatment plant area has inadequate lighting, thereby creating a potential for occupational accidents due to low illumination. The Board should consider adding more lighting provision for the area around the treatment plant. Induction of employees on applicable occupational hazards. The operationalization of the treatment plant creates three major occupational hazards namely potential for drowning in the deep sedimentation tanks, falling from elevated work areas and chemical handling. The Board will keep records of induction for all employees working at the treatment plant on the related occupational safety and health hazards. It was agreed that other Water Boards with such related operational requirements should adapt the observation in Mangochi onto their applicable project areas. ii. Walkers’ Ferry Treatment Plant. It was reported in the progress meeting that BWB corrected the safeguards issues that were being compromised by the supervision consultant. A warning was given to the consultant and all occupational safety issues are under control. iii. Kameza Pipeline. The safeguards issues that were neglected in the past were rectified. BWB and PMU had the RAP and the ESMP for the project formulated. The RAP was accepted and is being implemented. The ESMP was referred back for inclusion of key components. The Board will engage the Roads Authority on the technicalities of using the road way-leave and crossings since this may have future compensation implications in the event that the Roads Authority decides to use the way-leave in a way that may impact the water infrastructure. 3. TW2 Expansion Project: The screening for the project was conducted. The DEA reviewed the screening report and advised an ESMP would be adequate. The ESMP was formulated, reviewed by both DEA and the Bank, and accepted for implementation. The civil works have started and the implementation of the ESMP is being monitored accordingly. 4. ESMP for Mvula Rural Water Supply Project: The ESMP was finalized. The project was completed. The ESMP was implemented and monitored accordingly. 5. ESIA for Blantyre New Water Supply: The ESIA consultant (SMEC) for the project was engaged and has started work. A meeting with the consultant was held and the inception report received during the mission. Indications are that there is good complementarity with the design consultant. The preliminary indications are that there will not be much resettlement issues on the transmission since the line follows an existing pipeline in largely a rural setup, but the connecting lines to the storage tanks in Blantyre urban are lines to generate some notable resettlement issues. The mission got the confidence that the desired deliverables will be met. Though the ESIA should be independent, the Board was encourage to follow the ESIA process closely to ensure the required momentum and a sense of ownership of the ESMP and the RAP, especially the budgetary implications that are required for full implementation of these safeguards tools. i. Diamphwe Dam. The ESIA consultant made a presentation to update the mission on progress. The mission received the revised ESIA Inception Report only in the last few days of the mission; thus, the Bank team’s technical comments on this report will be provided by about September __. 44 ii. The mission rated the performance on this project to date as highly unsatisfactory for the following reasons:  Lack of supervision capacity as evidenced by failure to spur the ESIA consultant into action and ineffective flow of reports for review by the Bank.  Lack of coordination and mobilization of the District Officials in stakeholder consultation meetings.  Failure by consultant to highlight the major environmental and social safeguards issues related to the project.  Deliberate submission of incomplete environmental baseline report.  Misalignment of the ESIA consultant and the design consultant resulting in the ESIA consultant failure to forecast the ESIA work blaming absence of adequate information for demarcation of the potential impact areas.  Absence of expected ESIA team leader on the ground resulting in sluggish implementation of the ESIA process. 6. Salima Water Supply. Implementation of the environment and social safeguards continue to be on the right path for this project. The following areas need attention; i. Stabilization of the Senga Tank excavated areas to prevent soil erosion and weakening of the tank foundation. The Board will innovate and redress the situation. ii. Regularization of land acquisition for communal water kiosks. 16 communal water kiosks were constructed without the required land acquisition documents. The Board will move swiftly to regularize before the kiosks are operated. iii. Sanitation and shelter for the guards working at the intake. There is no provision for shelter and sanitation at the intake yet there will always be some personnel guarding at the infrastructure. The absence of sanitation facility encourages open defecation which could be discouraged by constructing sanitation facility. Absence of sanitation will also compromise the integrity of the security system and the water quality management system. The Board will consider ways to provide sanitation at all such infrastructure. iv. Access road to Senga Hill. It was noted that the Department of Forestry had given the CRWB approval to construct a temporal access road to the Senga Hill for the construction phase only because of fear of use of that road for illegal timber harvesting. This condition affects the operability of the tank in the operation phase because the expectation of Forestry Department is that the road will be decommissioned after completion of the tank. CRWB however needs the access road and will therefore liaise with the Forestry Department on mechanism of making it a permanent road without exposing the forest area to illegal timber harvesting. v. Extension of abstraction point from 80meters to 300meters into the lake. Due to some design changes, the abstraction point was changed from 80m to 300m into the lake. The impact on the boat riding was ranked insignificant since the pipeline will follow the flow of the lake and will only be elevated to avoid siltation, but deep enough not to create a barrier for boat riding. vi. Water abstraction licenses. CRWB has not yet acquired an abstraction license for the intended water treatment works. CRWB will regularize its raw water abstraction with MAIWD accordingly. 7. Occupational Safety and Health Management. The mission noted a great improvement in terms of enforcement of the occupational safety and health requirements in most works stations. As a way to continually improve on this matter, the following actions were agreed:  For all future contracts, each of the NWDP implementing agencies would ensure that each civil works contractor has a person responsible for environmental, health, and safety 45 issues and each supervising consultant include an expert responsible for environmental and social safeguards.  PMU should engage an Occupational Safety and Health Practitioner to formulate safety and health operational guidelines that can be applied by the implementing agencies especially for the operational phase of the project.  Lilongwe Water Board has operational guidelines on chemical handling and other implementing agencies can access then and adapt them to the various applicable work stations. 8. Handling of Backwash: The Mission noted that in most treatment plants there is no clear consideration for safe disposal of backwash effluent. All Water Boards will consider and implement options for safe disposal of backwash effluent where applicable. Specific reference is made to the Mangochi and Salima Water Treatment Plants which have no backwash effluent management system. 9. Dedza School Sanitation. The mission noted serious safeguards issue on this component arising from the use and cleaning of school toilets. Currently the school children are cleaning the toilets without proper safety provisions. It is understood that up to 60% of rural school children go to school on bare feet and the probability of children cleaning the toilets without shoes is high. This practice generates serious hygiene and health inconsistencies for the whole school sanitation aspect of the project. The Department of Sanitation will consider and implement options for safe cleaning of the school toilets. Discussed options include provision of safety wear to children when cleaning the toilets or the school engaging casual labor to complement the investment and avoid children having to clean the toilets. It was noted that the toilets are freely accessed by the members of the community, exposing the school children to the risk of contracting a wider spectrum of diseases when cleaning communalized school toilets. The Department of Sanitation will consider and implement options to control public access to the school toilets. Discussed options included fencing and locking where possible. 46 Annex 11: Pre-paid meter pilot project in NRWB 1. Pre-paid water meter pilot project: The mission followed up on the pre-paid water meter (PPM) pilot project being implemented by the Northern Region Water Board (NRWB) over the past year. The mission received a status report of the prepaid meter pilot project from NRWB which is summarized below: 2. The NRWB procured 1,246 prepaid water meters as part of a pilot project aimed at testing efficacy of prepaid meters as a tool for reducing disconnected accounts, managing consumer demand, improving revenue collection and increasing efficiency. The existing postpaid meters in the selected medium and low-density areas were replaced with prepaid meters. The selected areas were Chimaliro, Chasefu, Katoto and Fairclough in Mzuzu. So far, 1,022 prepaid water meters have been installed. Of these, 143 have been installed to commercial and institutional customers. Prior to launching the pilot project in April 2013, the Board undertook a review of regional experience on prepaid meters and the lessons learnt assisted to design the pilot project. Based on the lessons learnt, among others, it was decided that all the targeted households should be informed individually, or through stakeholder meetings, of the proposed project. In addition, the consumers who were interested to have prepaid water meters were required to apply for the same. The households were also free to revert back to the postpaid meters, although no customer has done so to-date. 3. Monitoring and evaluation (M&E) consultancy: There was a need to conduct monitoring and evaluation of the prepaid meter pilot project. This was necessary in order to review how the project was implemented so that recommendations would be made on how the project should be rolled out. The key areas of assessment included (a) relevance of the project; (b) efficiency of project implementation; (c) effectiveness; (d) impact; (e) sustainability, and (f) inclusivity of the project. A contract was, therefore, signed with Mzuzu University to conduct the monitoring and evaluation of the project. It was important that this exercise be done by the University, an independent institution which did not have any vested interest, so that the assessment could be done independently. The assessment was done between 21 st October 2013 and 21st February 2014. Apart from getting information from the NRWB, and individual prepaid and postpaid customers, the Consultant (Mzuzu University) collected information through the following methods:  Public Consultation: The public were engaged during the town hall meetings at the onset of the project, which prepared the communities about the project concept, design, implementation and the M& E strategy. It was during these meetings that community provided valuable input into the design of the project.  Focus Group Discussions: There were two focus group discussions (FGD) during the M&E process as follows: (i) During development of M&E data collection tools and (ii) During presentation of baseline findings report. The FGD involved members of the project team and the project advisory committee, which comprised members from the Northern Region Water Board and Plan International (which represented the interests of NGOs).  Findings Dissemination Workshop: The Dissemination workshop which was held on 12 th March 2014 drew membership from a wide range of stakeholders including Ministry of Water Development, PMU, Statutory Corporation, Ministry of Finance, other Water Boards, Mzuzu City Council, Media houses, NGOs and representatives from across the consumer profile, i.e. institutional, commercial, low and medium density customers. Both prepaid and non-prepaid customers were represented. The workshop provided vital feedback on the acceptability and relevance of the technology to the wider spectrum of the community and policy makers. 47 4. Key recommendations of the M & E Consultancy  Upscale the prepaid water metering system as there is demand and opportunity based on the number of new applicants: The Board is in the process of identifying financing for upscaling the project. The PPM will undergo a phased rolled-out to commercial and other big customers. The system will be voluntary for domestic customers, but may be compulsory for commercial customers in order for the NRWB to build adequate liquidity to sustain its operations.  Source prepaid water meters at a price lower than the current price for cost effectiveness: The Board will explore options that will ensure migration to the new technology which is more affordable. This will include the possibility of procuring the meters directly from the manufacturer as opposed to sourcing them from the agents which is currently the case. Care will be taken to avoid migrating to cheap but poor-performing meters.  Prioritize commercial and institutional customers whose tariffs are relatively higher than individual customers. In the long run, the high cost of prepaid meters could be absorbed by cumulative income realized from commercial and institutional customers: Prepaid meters have already been connected to a total of 143 non-residential customers. These include Mzuzu Central Hospital, St Johns Hospital, Care Medical Centre, Chibuku brewery Ltd, Grand Palace Hotel, Mzuzu Tourist Lodge, Ilala lodge, Chatonda Lodge, Mphiri Lodge, New Apostolic Church, Assemblies of God – Katoto, Mzuzu Technical College, Viphya Pvt Sec School, Mzuzu University, Katoto Filling Station, Central Medical Stores and Toyota Malawi among others. Prepaid meters will further be installed at Mzuzu Hotel, Southern Bottlers Ltd, Reserve Bank of Malawi and Chenda Hotel. It is therefore expected that the high cost of investment will be offset by collections from these institutional and commercial customers.  Establish/setup additional pay points as new system is being upscaled in other locations and places within the City: The Board will set up additional pay-points at City Centre cash office as the project is being upscaled.  Consider extending the normal working hours to accommodate households willing to access pay-points beyond the current normal working hours. Extended hours should be well publicized: Although the Board has provided enough safeguard by way of reserve units to sustain customers through the night and weekend, pay-point working hours have also been extended to 19:00 hours from Monday to Friday and to 14:00 hours on Saturdays to accommodate customers who may want to access these pay-points beyond normal working hours.  Train and sensitize customers particularly those with low knowledge about the prepaid meter so that they understand the usability and functionality of the system. With increased knowledge, 19.35 % of the prepaid customers who indicated that they would revert to postpaid system if given a chance to do so would change their attitude towards the prepaid system: The Board will continue to create good rapport with customers by periodically engaging them regarding usability and functionality of the system including how they can provide good care of the meter. In addition, the Board is currently developing Communication Strategy which is expected to be finalized by December 2014. The strategy will be used to sensitize customers and the general public on the advantages of using prepaid water meters as opposed to using postpaid meters.  Increase awareness of the social safeguards such as triggering fire mode and credit negotiation in case of social problems requiring large quantities of water: Current prepaid customers are being briefed individually of the available safeguards. As regards potential customers, this information will be provided using the methods that will be recommended in the Communication Strategy mentioned in (f) above. 48  Strive to attain a 100% water supply for all users especially where lack of access was a result of system failure, intermittent supply, pay point closure and malfunction of the meter: In line with the Board’s Strategic Plan, the Board endeavours to maintain an interrupted water supply and of good pressure at all times through proper system operation and maintenance. Already, there is a lot of improvement in water supply in most of the areas in Mzuzu where main distribution pipelines have upgraded. For the areas where water supply is affected by limited capacity of secondary distribution pipelines, the NRWB is implementing some projects and these will continue until all the areas in Mzuzu have reliable water supply.  Ensure that adequate supply of meters and fittings are made available prior to up-scaling to meet the expected demand: Up-scaling of the project will only be done when there will be adequate stock of meters and fittings. NRWB is currently looking for funding for purchasing these materials.  Assess socioeconomic factors that would affect adoption of the prepaid system and what would be affordable for customers in the high density locations: The socioeconomic conditions of the customers will be assessed as part of annual customer surveys that the NRWB conducts. The results will assist the NRWB to decide how to implement prepaid water meter projects in particular areas.  Continue to consistently monitor consumption levels over a period time in order to establish reliable consumption patterns that would guide up scaling of the prepaid water metering system: Consumption figures for prepaid customers are being monitored every six months. The results will guide the NRWB on how best should prepaid water meter projects be implemented. 5. Experience of the Board on performance of prepaid meters is that Prepaid meters are able to deliver water of adequate pressure and that they have assisted most institutions to plan for their water usage. For most households, topping up of units remains in small and regular purchases. For institutions such as Mzuzu Central Hospital, they have tended to get their top-up units on credit basis. This owes to the fact that units have sometimes been exhausted before next round of monthly funding by Treasury. However, once funding has been released they have come forth to clear off their credit note. Some institutions e.g. Malawi Defence Force and Malawi Police Services are reluctant to allow the Board install prepaid meters. The reason is that these institutions are supplied by one bulk meter where bills are paid for by the Government. The institutions are wary of the low and delayed funding from Treasury for them to timely replenish the units under pre-paid system. Monitoring performance, acceptability and customer satisfaction of the technology must continue to ensure that it remains relevant in the future and beyond. 6. Challenges faced and how they are being dealt with: The Board has met a number of challenges with prepaid system which include: (i) The Board would also like to have the Customer receipt with information split into Credit and debt payment to show clearly the two allocations on the receipt as some customers have to account for the total money (Credit + Debt Payment) on the receipt. ; (ii) Subscriber cards do not provide all necessary data and information such as leakages at the meter.; (iii) LCDs has gone blank for few meters and the new LCD does not pick up the data and remains blank; (iv) Difficulties to clear RTC errors for few meters whose LCDs are blank. These meters had their LCDs working in the field when RTC error was first noticed. But when they are taken out for servicing the RTC Error, the LCD goes blank after a while. Efforts to bring back LCD working have failed; and (v) Few meters have shown ‘Pulse Error’ and water keep flowing, without deducting credits on the electronic meter. The Boards has agreed with the supplier to resolve all these technical difficulties with the supplier, but also not4es that the above challenges have affected 34 meters which is only 3.3% of all the meters installed. 49 Annex 12: Field Trip Report Component A Site Visits 1. The mission in the company of representatives of the Ministry of Water Development and Irrigation and the PMU visited selected project sites and met with officials of the water boards, contractors and consultants. The summary of findings at each of the sites visited is summarized as below: 2. Balaka water supply scheme (SRWB): The mission visited Balaka town on August 24. The project scope consists of siting, drilling and equipping 6 boreholes, construction of 3.8 km of transmission line, 1500 m3 reinforced concrete tank, 23 km of distribution network, two pressure filters, auxiliary buildings and M & E. At the time of the site visit all works have been fully completed and the mission was informed that the system has been commissioned on August 15, 2014 after test running for two weeks. The quality of work is good. The challenge now is to enhance connections to the system and ensure sustainable operations and maintenance. The mission was informed by the PIU manager that the SRWB is in the process of setting up an incentive system to potential customers to encourage them to apply for connections. The mission encouraged SRWB to pursue this approach without delay so that by the time the project closes in October 2015, the target of beneficiaries to benefit from the project will be achieved. Balaka town RC reservoir and pressure filters 3. Zomba water supply scheme (Lot 1 – Original financing) SRWB: The scope of this contract includes construction of four new concrete service reservoirs at Namilongo (1000m3), Naisi Spur (250m3), Mountain Top (150m3) and Naisi Extension (150m3); refurbishment and upgrading to 27 Ml/day water treatment work; construction of two new pumping stations at Likangala and Naisi Spur; Laying of two new pumping mains which is 2km, replacement of 65.2km of major pipes; replacement of minor distribution pipelines up to 75mm diameters, 31.05km long. The mission visited the water works where activities being implemented under the project include: (i) refurbishment and rehabilitation of pressure reducing valves (ii) installation of flocculation basin (iii) rehabilitation of chemical dosing pumps, installation of an aeration system and refurbishment of the clarifiers especially the clear water collection system. Most of the activities have been completed except for the refurbishment and rehabilitation of the pressure reducing valves. The team also visited Likangala Booster pump station . The mission noted the pumps (two) have been installed and the necessary ancillary works and electrical installations completed and connection to ESCOM carried out. 50 4. The works contract was extended several times to 31 December, 2013 following No Objection from the Bank. With the expiry of the contract on 31 December 2013, the contractor is in liquidated damages for M & E components while for the pipework and the pressure reducing valves at the intake structure at the treatment works, the contract has been terminated. The mission was informed that SRWB submitted a request to engage another contractor through shopping to finalize major and minor pipeline works and pressure reducing valves, which was granted. The selection of the contractor for the remaining works through shopping is at the final stages and SRWB will submit the evaluation report for no objection to engage the selected contractor to finish the remaining works. It is critical that the contract for the balance of the works be put into effect without delay so that the works are completed before the project closing date. Zomba water Works (aeration chamber) 5. Mudi Intake Works (BWB): the scope of work include rehabilitation of the intake tower (water proofing, replacement/rehabilitation of valves and painting) and replacement of 4 out of the 6 clear water pumps in the clear water booster pump house, and replacement of 7 pumps at Chichiri pumping station. To date work on the intake tower has been completed. Regarding pumps and motors, the following is the status:  Seven (7) pump sets out of eleven (11) for both Mudi and Chichiri pumping stations were delivered in May 2014. The other sets were not delivered as they were damaged on their way to the port of departure in India. Delivery of the remaining 4 pumps is expected in September 2014. Five (5) pump sets for Chichiri pumping station were installed. The installation of the other sets awaits completion of pump plinths which are still under construction.  Electrical Panels: Panels for Mudi rehabilitation were manufactured and despatch was scheduled to take place in July 2014 from India, with an estimated delivery period of 45 days. The revised contract completion date is October 28, 2014. With only two months remaining, it is critical that BWB make close follow up on the contractor so that there will be no slippage in the completion of the contract. 6. Blantyre – Construction of circular Reinforced Concrete surface water tanks, Booster stations, pipelines and associated civil works (BWB) The scope of work includes construction of three reservoirs each of capacity 5000 m3 at Kameza, Chimwankhunda and Chigumula together with their booster stations, and pumping and supply pipelines. The works were designed by Blantyre Water Board (BWB) and are being supervised by BWB’s 51 engineers. The mission visited all three reservoir sites and associated booster pumping stations. The mission notes that significant progress has been achieved since the last visit in February 2014 and progress of works is as follows:  Booster Stations: The construction of booster station building and electrical wiring completed; installation of pump sets completed and delivery of panels expected by end of August; construction of Generator and Transformer rooms completed and diesel generator sets delivered but yet to be installed; and transformers delivery expected in mid-September  Reservoirs: All concrete walls and roofs of the reservoirs have been completed; ancillary works such as inlet/outlet and scour pipes installed, valve chambers, security fences and water proofing in progress  Booster Stations Pumping and supply mains: the works on laying the pumping and supply mains are at various stages in the three booster stations and over all completion rate is at 70%.  Electro –mechanical equipment: All 11 pumps are delivered and installed; all 3 diesel generators have been delivered and in the process of installation; 3 panels and 3 transformers have been manufactured and will be delivered in mid- September. The mission noted that the revised completion date of the contract is November 15, 2004 and should be adequate for completion of the balance of works. In any case, there is need for close follow up to avoid any slippage in the completion time Kameza Booster Pump House and reservoir Transmission main from Chigumula reservoir in Blantyre 7. Chileka Pump Station (original Financing (BWB)): The scope of work under this package includes replacement of pumps in the new and old motor house of which the total is 8 pumps (2 in the new motor 52 house and 6 in the old motor house). The works also include replacement of transformers and main circuit breakers for the pumps. The mission visited the Chileka pumping station on August 22, 2014 and noted the following progress. All eight (8) pumps, six (6) 1650 KW motors, five (5) 5000KVA transformers, two (2) 200 KVA and two (2) 50 KVA auxiliary transformers, all electrical panels and overhead crane have been delivered and on site. No installation work has commenced. Pending installation of equipment, overall progress for Chileka rehabilitation works is estimated at 60%. Casting of pump plinths is ongoing and installation of pumps will commence in late August upon curing of the plinths and delivery of cables. The mission noted that it is clear that the contract could not be completed by the current contract completion date which is August 31, 2014. BWB is thus urged to consider realistic extension of the completion date before the expiry of the contract. 8. Walker’s Ferry Water Treatment Plant (BWB): The team visited Walker’s Ferry Water Works where the scope of works include rehabilitation and upgrading of capacity of settling tanks, rehabilitation of clarifiers and filters, replacement of chemical dosing pumps and construction of a new chlorination building. The mission toured the plant focusing more on the plant units affected by the project. The mission noted the progress of works as follows:  Pre settlement tanks: cleaning, water proofing and external painting completed; bulk meters for raw water installed; dosing equipment installed; lamella tubes being assembled in Lilongwe for delivery, and delivery of sludge scrapper is expected in October 2014.  New Chlorination Building: building works completed; gantry crane delivered and roller trunions installed; new chlorination equipment cleared by MRA and will be delivered soon.  Chemical building 3: civil works repairs completed  Dosing and distribution chamber: dosing pumps installed but not yet fully operational  Clarifiers: water proofing of walls and floors completed and replacement of metal works and fittings progressing  Filters and backwash buildings: repair works and installation of suction and delivery pipes completed; backwash pumps installed; inflow, collection and filtered water channels are being installed, and 10 filter tanks (out of 18) have been rehabilitated. Walker’s ferry treatment plant – removing of filter floor 53 Overall progress of the treatment plant works is at 70%. The revised contract completion date is November 26, 2014. The mission while appreciating the progress made to date, urges BWB to make close follow up on execution of the remaining works to avoid any slippage in completion. Mangochi Water Supply project (Lot 2) (SRWB) The mission visited Mangochi Water Treatment Works and met with representatives of the contractor and consultant. These works are lot 2 of the contract for Zomba Mangochi Water Supply contract that was awarded to Fargo-PME Joint Venture and financed by OFID. The works are nearly complete (98%). Outstanding works relate to the repair of the filter backwash air supply system that failed during testing. At the time of the visit, the contractor was working on the repairs and indicated that the repairs would be completed in the next few days. There was also indication that power supply to the water works and upgrading of the transformer at the intake works on the Shire River also posed a threat to speedy commissioning of the water works. The contractor was confident that subject to power supply being completed, he would commission the plant by mid-September 2014. The mission was pleased to note that the water board had deployed staff earmarked to operate the new plant to closely work with the contractor. The mission urged the water board to ensure power supply to the plant and upgrading of the transformer at the intake works were completed to avoid delays in commissioning of the plant. Upgrading of Zomba and Mangochi Water Supply Project (SRWB) The mission then visited sites of key components under the upgrading of Mangochi Water Supply part and met held discussions with representatives of the SRWB, the contractor and the consultant. The mission was pleased to note that there has been a significant improvement since the last mission progress now stands at 95%. The contractor highlighted that the contract will be completed by the new closing date of September 30, 2014. Most pipelines have been laid and tested. All the four elevated steel tanks are substantially complete, two have been tested for water tightness and the other two will be tested soon. However there are still a number of outstanding small items such as valve chambers and meters at the four tanks. The drainage for the scour and overflow pipes from the tanks is still to be completed. Discussions with the contractor and consultant revealed that concrete solutions and plans on how to deal with the drainage are still to be agreed upon. The mission also noted that two of the tanks are in areas that present risks especially to children. The mission was of the view that the ladders could present major risks as children were likely to climb on them particularly the tank in the primary school. The Board highlighted that it will deploy security personnel to all reservoir/tank sites in line with its current practice. The mission urged the water board to put adequate measures in place to minimise the risk to children at the tanks including consideration to fence them off. The mission also advised SRWB to make closer follow ups on installation of the remaining pumps at the intake works and the upgrading of the transformer for the intake works to avoid further delays. 54 Figure 1: One of the four tanks under the project Salima Lakeshore Contract (CRWB) The mission proceeded to Salima and met with representatives of the water board, the contractor and the consultant. The mission was pleased by the progress made since the last mission and the fact that the contract was on track given the complex nature of the works and the location of some of the water supply system components. Progress is now at 71%. The three tanks under this contract are nearly complete with the remaining works being fittings, outlet pipes and related ancillaries, and water tightness testing. The mission noted that slope stability was of major concern and could have serious negative environmental impacts in the event of slides. This again may be a threat to the investments especially at Senga Hill Reservoir. The mission raised concerns following revelations that the consultant has not yet provided details and costs on how the slopes could be protected. Given the location of these areas needing stabilization of slopes, the contract closing date of December 29, 2014 and also that we are approaching the rainy season, the mission urged CRWB to ensure the issues are treated with urgency. The pipelines have been laid and what remains are minor works including installation of valves and valve chambers, marker posts and testing of the water lines. The intake works and the water works are slightly behind. Reasons for the delay included the shift in the intake point position in the lake while that for the waterworks were attributed to the change in design of the filters, the need for a clear water reservoir and a booster pump station. It was reported that the consultant took long (about 4 months to complete the design). During discussions at the end of the visits, it became clear that the consultant continued to have limited and inadequate presence on the ground especially for the international staff. This was linked to delays in finalizing technical issues and specifications thus affecting progress. The Water Board highlighted that the contractor had notified the client that he may request for an extension of contract with costs as a result of the delays caused by the consultant. The mission requested the water board to seriously look into this matter and among other issues check and insist that the consultant adhered to contract provisions especially presence on site, ensuring the appropriate personnel from the consultant are on site at each stage, chair and clear payment certificates. 55 Figure 2: Work in progress at the water works Expansion of LWB Treatment Works II (LWB): The mission visited LWB water works where a new water works is being constructed. The contract commenced on August 1, 2014. Progress is at 13% to date. Before going to the site of the new water works, the mission visited the point where there has been a major leak for a very long period on the clear water line. The mission noted that there has been efforts to repair the leak. However there are still some leaks (although of a lesser magnitude than the original). LWB reported that the leak would be attended to soon, after getting clearance from Government for a shut down. The mission was also shown the penstocks installed at Treatment Works II under the contract for Cone valves and Penstocks. LWB reported that there has been substantial reduction in water loss during backwashing of filters following the installation of the penstocks. The Mission requested LWB to determine the increase in production following the repair of the leak and the installation of the penstocks. The mission then went to the site of the expansion works for Treatment Works II. The contractor has already mobilized and has excavated the foundation for the raw water tank. At the time of the visit the contractor was making excavations for the sedimentation tanks and filters. He was also constructing his offices, storage facilities and other facilities for his camp. The contractor reported that he has already started procurement of the materials and planned to make all orders in the next two weeks to ensure that the works are completed on time. The mission noted that the Resident Engineer for this package was the same person being resident engineer for the Airwing Project. The mission advised LWB to review and assess the supervision arrangements. Airwing Project (LWB) The mission then visited locations of key components of the Airwing Project. Overall progress is at 90 %. The mission visited Mtunthama Reservoirs where a booster pump station is being constructed under the project. The civil works for the booster pump station are nearly complete and at the time of the visit the contractor was working on installation of the suction pipeline from one of the exiting reservoirs to the booster pump house. Pumps have been ordered but there has been a huge delay in delivery which the contractor links to industrial action in South Africa from where they are coming from. The mission noted that the breaking into the existing tank in order to effect the connection appeared to have caused some structural damage. The mission urged LWB to ensure the damage to the tank was assessed by a qualified Structural Engineer and that appropriate remedial action (if deemed necessary) is taken. 56 The mission was shown some of the sections of the pumping main on the way to the site of the new tanks under this package. The pipeline has been laid and tested, however about 1.2 km had failed the test and was under rectification. The ground tank and the elevated tanks have been substantially complete. What remains are small works that include meters and related fittings. The booster pump house civil works at the tank site are at an advanced stage. Like for the booster pump station at Mtunthama Reservoirs, the pumps are still to be delivered and have been delayed. As a follow up to the supervision arrangements discussed at the Treatment Works II Expansion site, the mission leant that the Project Manager visits the site roughly once in 3 months. The mission queried this against the background of the key functions of a Project Manager which are to provide oversight and guidance to the Resident Engineer, to be the link Person with the client, to chair site meetings which generally are to be held monthly and to verify and clear payment certificates. The mission requested LWB to critically review the supervision arrangements in view of the next assignment of the consultant which is to supervise Treatment Works II Extension. Figure 3: The new ground and elevated tanks at Airwing Kiosk Contract (LWB) Under this project 100 kiosks were constructed bringing to about 600, the total number of kiosks for LWB. The team visited one Kiosk in Njewa Village. The mission found the quality of works of the kiosk to be of very high standard. The design allows the operator to also sell other merchandise as a way of ensuring financial sustainability. LWB however is of the view that the cost of the kiosks is high compared to the revenue and operating costs. There was an extensive discussion on ways of improving the sustainability of the kiosks. There was also some reflections on some of the recommendations from the ongoing tariff study. It was agreed that there was need to devise strategies to improve the sustainability of the kiosks. Lilongwe Sewage Ponds Although the Lilongwe Sewerage Works were not financed under the Project, as the Bank is working in water and sanitation in LWB, and has an interest in a potential follow-up project in LWB, the mission visited the sewage ponds for Lilongwe. Currently the ponds are owned and managed by Lilongwe City Council. The mission noted with concern the state of the ponds and the apparent weak arrangements for operation and maintenance. The ponds are in a state of neglect, are not fenced and pose a major public health risk. The mission noted that the ponds are in some cases around 50-100 m from the housing developments. Children were playing around the area. The mission noted that the communities including 57 children were also “harvesting” the dried and semi-dried sludge from the ponds without any form of protective clothing. Most were bare footed. The community was also growing crops using effluent that appeared partially treated. There were indications of vandalism/blocking of the effluent line to ensure continuous effluent flow. The crops included maize, vegetables and high capillary plants like sugar cane. Figure 4: (left) Children in one of the anaerobic ponds (right) irrigation of crops with partially treated effluent Component B: Sanitation site visits Field visit: Sanitation and Hygiene The mission undertook field visits to Dedza school sanitation and hygiene project and visited Kachule public primary school where 4 hole VIP latrine for girls, 4 hole VIP boys latrines and 2 hole VIP teacher latrines have been constructed. Discussions were held with officials from the district council and the school head teacher. The mission was pleased to note all 10 VIP latrines, urinals, hand washing facilities were in good, stable and hygienic conditions. In regard to strategies in place to facilitate issues of operation and maintenance, the mission was informed that the school has fund for operation and maintenance of all school facilities including the sanitation and hygiene facilities. The school head teacher told the visiting mission that cleaning of latrines is done by the pupils themselves. However when asked about the safe guard measures put in place for the pupils, the headmaster informed the mission that children clean the toilets without any form of protection. The Mission advised the ministry and district council and the school management to work out some mitigation measures to eliminate the exposure of school children to health hazards. The Mission suggested the following factors be included in the operation and maintenance guidelines; set out funds for cleaning and contract out cleaning services, ministry of education to support the schools with protective clothes through the annual school maintenance fund. 58 VIP toilets with hand washing facilities The mission also visited Chingumula low income area in Blantyre city where the NGO and Advertisement Agents are implementing the sanitation marketing and hygiene promotion project. The mission noted of slow progress which is at 46% against time lapse of 60%. Though progress is slow, the project is starting to show positive indication of improvements from its implementation arrangement, strategies and general management. The mission had an opportunity to discuss with the women members of village hygiene saving loan banks. It was learnt the women are saving money to upgrade their basic latrines. Members contribute K50 per week to village bank and part of the money is for sanitation improvements and each month 4 of its members are supported with an improved latrine. The mission visited 2 household latrines. Status of the latrines was hygienic and had hand washing facilities with soap. The mission noted that pit emptying services in area have not been established and some households requested for the project come up with affordable pit emptying services. The Ministry PMU and city council should come up with innovations to support households with emptying equipment such as the gulper. During the visit the NGO presented progress as follows: TOTAL LATRINES CONSTRUCTED UP TO JULY 2014 No. Latrines Basic Lilongwe 854 Blantyre 746 Improved Lilongwe 454 Blantyre 346 Total 2400 SANITATION VILLAGE BANKS – DETAILS Total No of village banks Blantyre 30 Lilongwe 10 Total no. of bank members Blantyre 700 Lilongwe 210 Total amount of sanitation savings by the Blantyre MK850,000 59 bank groups Lilongwe MK131,700 TOTAL NO OF LATRINES CONSTRUCTED THROUGH SANITATION VILLAGE BANK SAVINGS Upgrading @ MK2100 per latrine BLANTYRE 190 LATRINES (AVERAGE INVESTMENT) Full construction @ MK15,000 per 30 Latrine(AVERAGE INVESTMENT) LATRINES Upgrading @ MK2100 per latrine LILONGWE 27 LATRINES (AVERAGE INVESTMENT) Full construction @ MK15,000 per 5 LATRINES Latrine(AVERAGE INVESTMENT) Projected number of latrines by December BLANTYRE 1560 2014(It is projected that 80 % of bank members will invest into sanitation) LILONGWE 768 Group photo: PS and bank team with women village hygiene savings loan groups: 60 61