Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00004404 IMPLEMENTATION COMPLETION AND RESULTS REPORT (Loan IBRD 7680-DO) ON A LOAN IN THE AMOUNT OF US$27.5 MILLION TO THE DOMINICAN REPUBLIC FOR THE WATER AND SANITATION IN TOURIST AREAS ( P054221 ) May 28, 2019 Water Global Practice Latin America and the Caribbean Region CURRENCY EQUIVALENTS (Exchange Rate Effective March 31, 2018) Currency Unit = Dominican Pesos (DO) DO 1.00 = US$0.02 US$1.00 = DO 49.35 FISCAL YEAR July 1 – June 30 Regional Vice President: Axel van Trotsenburg Country Director: Tahseen Sayed Khan Senior Global Practice Director: Jennifer Sara Practice Manager: Rita E. Cestti Task Team Leader: Marco Antonio Aguero ICR Main Contributor: Craig Phillip Kullmann ABBREVIATIONS AND ACRONYMS APL Adaptable Program Loan ASONAHORES National Association of Hotels and Restaurants (Asociación Nacional de Hoteles y Restaurantes) CEA Country Environmental Assessment CORAAMOCA Moca Water and Sewerage Company (Corporación de Acueductos y Alcantarillados de Moca) CORAAPPLATA Puerto Plata Water and Sewerage Company (Corporación de Acueductos y Alcantarillados de Puerto Plata) CORAAROM La Romana Water and Sewerage Company (Corporación de Acueductos y Alcantarillados de La Romana) CPS Country Partnership Strategy EIA Environmental Impact Assessment ESMF Environmental and Social Management Framework GDP Gross Domestic Product ERR Economic Rate of Return IADB Inter-American Development Bank IBRD International Bank for Reconstruction and Development INAPA National Drinking Water and Sewerage Institute. (Instituto Nacional de Agua Potable y Alcantarillado) IRF Involuntary Resettlement Framework ISDS Integrated Safeguards Data Sheet IUFRs Interim Unaudited Financial Reports LIL Learning and Innovation Loan M&E Monitoring and Evaluation MDG Millennium Development Goals MEPyD Ministry of Economy and Planning (Ministerio de Economía, Planificación y Desarrollo) MGAS Environmental and Social Management Framework (Marco de Gestión Ambiental y Social) NPV Net Present Value NRW Non-Revenue Water O&M Operation and Maintenance ONE National Department of Statistics (Oficina Nacional de Estadísticas) OP Operational Policy PASCT Water and Sanitation in Tourist Areas Project (Proyecto de Agua Potable y Saneamiento en Centro Turísticos) PCU Project Coordination Unit PPP Public-Private Partnerships RPF Resettlement Policy Framework SDG Sustainable Development Goals SEEPYD State Secretariat of Economy, Planning and Development (Secretaria de Estado de Economía, Planeación y Desarrollo) TOR Terms of Reference DOMINICAN REPUBLIC WATER AND SANITATION IN TOURIST AREAS PROJECT TABLE OF CONTENTS DATA SHEET ........................................................................................................................................1 1. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ..............................................................................6 1.1 CONTEXT AT APPRAISAL .......................................................................................................................... 6 1.2 SIGNIFICANT CHANGES DURING IMPLEMENTATION ................................................................................ 9 2. OUTCOME ...................................................................................................................................... 11 2.1 RELEVANCE OF PDOs ............................................................................................................................. 11 2.2 ACHIEVEMENT OF PDOs (EFFICACY)....................................................................................................... 11 2.3 EFFICIENCY Rating: Modest ................................................................................................................... 17 2.4. JUSTIFICATION OF OVERALL OUTCOME RATING ................................................................................... 18 2.5 OTHER OUTCOMES AND IMPACTS ......................................................................................................... 18 3. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ...................................................... 19 3.1 KEY FACTORS DURING PREPARATION.................................................................................................... 19 3.2 KEY FACTORS DURING IMPLEMENTATION ............................................................................................. 20 3.3 FACTORS SUBJECT TO WORLD BANK CONTROL ..................................................................................... 22 4. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME ........................... 23 4.1 QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................................ 23 4.2 ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE .................................................................... 24 4.3 BANK PERFORMANCE ............................................................................................................................ 25 5. LESSONS AND RECOMMENDATIONS .............................................................................................. 26 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ............................................................................... 28 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ................................................ 39 ANNEX 3. PROJECT COST BY COMPONENT .............................................................................................. 42 ANNEX 4. EFFICIENCY ANALYSIS ............................................................................................................ 43 ANNEX 5. FINANCIAL MODELING OF CORAAPLATA .................................................................................. 45 ANNEX 6. DESCRIPTION OF RESTRUCTURING .......................................................................................... 47 ANNEX 7. ORIGINAL AND POST-RESTRUCTURING PDO-LEVEL INDICATORS .................................................. 48 ANNEX 8. BORROWER COMMENTS ON ICR ............................................................................................. 50 ANNEX 9. BORROWERS FINAL REPORT ................................................................................................... 53 ANNEX 10. CONSUMER FEEDBACK SURVEY CONDUCTED BY CORRAAPPLATA ............................................... 56 ANNEX 11. MAPS AND PICTURES OF PROJECT ......................................................................................... 58 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P054221 Water and Sanitation in Tourist Areas Country Financing Instrument Dominican Republic Investment Project Financing Original EA Category Revised EA Category Full Assessment (A) Full Assessment (A) Organizations Borrower Implementing Agency Unidad Ejecutora del PASCT, Ministerio de Economía Dominican Republic Planificación y Desarrollo (MEPyD) Project Development Objective (PDO) Original PDO The objectives of the first phase of the proposed APL (the Project, APL I) are: (i) strengthening and consolidating the policy framework of the water and sanitation sector in the Dominican Republic; (ii) improving and expanding access to sanitation and wastewater treatment and disposal services in the Puerto Plata region; (iii) improving the financial and operational performance of CORAAPLATA, the regionâ s water utility; and (iv) enhancing operational and commercial performance of other regional utilities and preparing them to participate in the second phase of the Program (APL II). Revised PDO The objectives the Project are: (i) strengthening and consolidating the policy framework of the water and sanitation sector in the Dominican Republic; (ii) improving and expanding access to sanitation and wastewater treatment and disposal services in the Puerto Plata region; (iii) improving the financial and operational performance of CORAAPPLATA, the regional's water utility; and (iv) enhancing operational and commercial performance of other regional utilities. Page 1 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) PDO as stated in the legal agreement The objectives of the Project are: (i) strengthening and consolidating the policy framework of the Borrower's water and sanitation sector; (ii) improving and expanding access to sanitation and wastewater treatment and disposal services in the Puerto Plata region;(iii) improving the financial and operational performance of CORAAPPLATA; and (iv) enhancing operational and commercial performance of other regional utilities and preparing them to participate in the second phase of the Program. FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 27,500,000 27,500,000 27,500,000 IBRD-76800 Total 27,500,000 27,500,000 27,500,000 Non-World Bank Financing 0 0 0 Borrower/Recipient 6,500,000 6,500,000 7,950,427 Total 6,500,000 6,500,000 7,950,427 Total Project Cost 34,000,000 34,000,000 35,450,427 KEY DATES FIN_TABLE_DAT Approval Effectiveness MTR Review Original Closing Actual Closing 02-Apr-2009 25-Feb-2010 14-Nov-2012 30-Sep-2013 31-Mar-2018 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 18-Jul-2013 4.35 Change in Results Framework Change in Loan Closing Date(s) Reallocation between Disbursement Categories 30-Jun-2015 8.50 Change in Loan Closing Date(s) 15-Sep-2015 9.45 Change in Loan Closing Date(s) Reallocation between Disbursement Categories 22-Nov-2016 19.11 Change in Loan Closing Date(s) 14-Jun-2017 21.64 Change in Loan Closing Date(s) 05-Jan-2018 26.36 Change in Project Development Objectives Change in Results Framework Page 2 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) KEY RATINGS Outcome Bank Performance M&E Quality Moderately Satisfactory Moderately Satisfactory Modest RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 14-May-2009 Satisfactory Satisfactory 0 02 02-Dec-2009 Satisfactory Satisfactory 0 03 01-Apr-2010 Satisfactory Satisfactory 0 04 21-Feb-2011 Satisfactory Moderately Satisfactory 1.00 05 17-Oct-2011 Moderately Satisfactory Moderately Satisfactory 1.00 Moderately Moderately 06 20-Dec-2011 1.00 Unsatisfactory Unsatisfactory Moderately Moderately 07 01-Jul-2012 1.00 Unsatisfactory Unsatisfactory Moderately Moderately 08 22-Jan-2013 1.99 Unsatisfactory Unsatisfactory 09 09-Oct-2013 Moderately Satisfactory Moderately Satisfactory 4.73 10 22-Dec-2013 Moderately Satisfactory Moderately Satisfactory 5.08 Moderately 11 04-Aug-2014 Moderately Satisfactory 6.96 Unsatisfactory 12 15-Feb-2015 Unsatisfactory Unsatisfactory 8.23 13 28-Aug-2015 Unsatisfactory Unsatisfactory 8.83 Moderately Moderately 14 23-Dec-2015 11.55 Unsatisfactory Unsatisfactory Moderately 15 20-May-2016 Moderately Satisfactory 15.33 Unsatisfactory 16 28-Jun-2016 Moderately Satisfactory Moderately Satisfactory 15.63 17 12-Dec-2016 Moderately Satisfactory Moderately Satisfactory 19.83 Page 3 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) 18 30-Jun-2017 Moderately Satisfactory Moderately Satisfactory 22.34 19 31-Dec-2017 Moderately Satisfactory Moderately Satisfactory 26.36 20 30-Mar-2018 Moderately Satisfactory Moderately Satisfactory 27.43 SECTORS AND THEMES Sectors Major Sector/Sector (%) Water, Sanitation and Waste Management 100 Sanitation 87 Water Supply 2 Public Administration - Water, Sanitation and 11 Waste Management Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Private Sector Development 14 Jobs 14 Job Creation 14 Urban and Rural Development 70 Urban Development 56 Urban Infrastructure and Service Delivery 56 Rural Development 14 Rural Infrastructure and service delivery 14 Page 4 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) Environment and Natural Resource Management 15 Environmental Health and Pollution Management 9 Air quality management 3 Water Pollution 3 Soil Pollution 3 Environmental policies and institutions 3 Water Resource Management 3 Water Institutions, Policies and Reform 3 ADM STAFF Role At Approval At ICR Regional Vice President: Pamela Cox Axel van Trotsenburg Country Director: Yvonne M. Tsikata Tahseen Sayed Khan Senior Global Practice Director: Guangzhe Chen Jennifer J. Sara Practice Manager: Guangzhe Chen Rita E. Cestti Task Team Leader(s): Manuel G. Marino Marco Antonio Aguero ICR Contributing Author: Craig Phillip Kullmann Page 5 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) 1. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES 1.1 CONTEXT AT APPRAISAL 1. At Project1 appraisal, investments in the water sector had resulted in impressive national coverage statistics reaching 96 percent for improved water supply and 94 percent for improved sanitation. 2 During the decade of the 1990s, the Government of the Dominican Republic dramatically increased investments in the sector reaching a peak of 0.93 percent of Gross Domestic Product (GDP), and since 2000, investments have ranged from 0.34 to 0.51 percent of GDP. The investments in the 1990s came prior to the international consensus on the Millennium Development Goals (MDG), and by the year 2000 access to improved coverage had already reached 94 and 91 percent respectively for water and sanitation. 2. Access to improved water and sanitation services under the MDG definitions did not consider quality of services such as continuity, water quality, and proper treatment and disposal of human feces. Impressive coverage statistics did not translate into quality of water and sanitation services. At the time of appraisal, estimates suggested that less than 50 percent of the water supply systems managed by public service providers controlled for water quality, and it was found that only less than 15 percent of the inventoried water systems practiced chlorination.3 While statistics on continuity are not systematically monitored, discontinuity and rationing are reportedly common. Continuity of water supply services provided ranged from 1.5 to 10.5 hours per day. 4 Limited resources and a lack of emphasis on maintenance caused large infrastructure to deteriorate more rapidly. Only 53 percent of the country’s water treatment plants and 26 percent of the fully-functioning wastewater treatment plants were estimated to be at an adequate operating level.5 3. At the time of appraisal and until now, the responsibility for the delivery of water and sanitation services is allocated to eight service providers covering thirty-one provinces. The National Drinking Water and Sewerage Institute (INAPA - Instituto Nacional de Agua Potable y Alcantarillado) (54 percent), Santo Domingo Water and Sewerage Company (24 percent) and Santiago Water and Sewerage Company (10 percent) cover about 88 percent of the population and 84 percent of the provinces.6 The three utilities included in this Project- Puerto Plata Water and Sewerage Company (CORAAPPLATA –Corporación de Acueductos y Alcantarillados de Puerto Plata), La Moca Water and Sewerage Company (CORAAMOC - Corporación de Acueductos y Alcantarillados de Moca), and La Romana Water and Sewerage Company (CORAAROM - Corporación de Acueductos y Alcantarillados de La Romana) - each cover about 3 percent of the national population and are legally responsible for water supply and sanitation services in their entire province.7 4. The institutional arrangements that govern the sector lacked clarity with respect to policy making, financing, regulation of tariffs, and service provision. Discussion of modernization efforts to clarify functional roles started in the late 1990s. Since the 1970s, INAPA’s service area has slowly decreased with the creation of new provincial water and sewerage companies being allocated the functional role for service provision, which have been accompanied by the transfer of assets from INAPA to these regional utilities. In 1999, modernization efforts sought to create a lead agency for the sector and a regulator in addition to the promotion of private sector participation. This was intended to be enshrined into a new water and sanitation law; however, these efforts stalled and did not move forward. At appraisal there was no national water and sanitation strategy nor any official entity responsible for establishing one. 5. The quality of water and sanitation services not only matters for human capital, but also poses a threat to the competitiveness and sustainability of tourism. At appraisal, tourism represented about 12 percent of the country’s Page 6 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) GPD and was expected to grow.8 The poor quality of sanitation systems resulted in a lack of treatment and disposal of human fecal matter impacting surface and groundwater sources including coastal areas. Local water and sanitation systems were also contending with a growing number of tourists arriving, which more than doubled between 1995 and 2005 when a total of 3.0 million tourists visited the country. Between 1995 and 2005, a total of 27,024 new hotel rooms had been constructed, increasing the total number of rooms from 32,846 in 1995 to 59,870 in 2005 with an average occupancy rate of 71.1 percent. 6. The government requested support from the World Bank through the Water and Sanitation in Tourist Areas Project to improve water and sanitation services. This Project also intended to support strengthening the sector strategy and focus on physical works in the greater Puerto Plata region under a phase I of a proposed two-phase Adaptable Program Loan (APL). 7. The Project was strongly aligned with government priorities to promote sustainable economic growth . The FY 2010-2013 Country Assistance Strategy results chain explicitly linked this Project to its Strategic Objective II: Promote Competitiveness in a Sustainable and Resilient Manner and to the government’s National Development Strategy Pillars of (i) Economic Growth and Sustainability and (ii) Territorial Development and the Environment. The level of alignment underpinned the high level of ambition the Project set out to achieve that spanned from sector reform issues, major complex infrastructure works, and improving the performance of selected utilities. 8. The Bank had established itself as a key partner through a previous Learning and Innovation Loan (LIL), FY00 Wastewater Disposal in Touristic Centers Project (P059510). This Project built upon the Bank’s experience in the sector and intended to draw lessons learned from a previous US$5 million LIL in the Puerto Plata region of the Dominican Republic that focused on innovations in wastewater disposal. The LIL focused on the application and testing of a practical, innovative and cost-effective technology for environmentally sound disposal of treated wastewater for small and medium size coastal towns; and discussions on private sector participation as an option to increase efficiency of the sector. In the LIL and in similar projects in other regions, particularly in Croatia and Dominican Republic, small-diameter submarine outfalls were successfully applied and tested as a low-cost technology for the environmentally sound disposal of treated wastewater for small and medium size coastal towns.9,10 Thus, the existing depths, combined with the prevailing temperature-salinity profiles in the northern coast of the Dominican Republic, seemed to indicate that this could be the adequate solution for the Puerto Plata region. For this reason, the Project focused the infrastructure works in Puerto Plata. 1 The acronym of the Water and Sanitation in Tourist Areas Project in Spanish is PASCT - Proyecto de Agua Potable y Saneamiento en Centro Turísticos. 2 Joint Monitoring Programme Dominican Republic Country File. www.wssinfor.org 3 World Bank. Dominican Republic Water and Sanitation Sector Finance and Service Efficiency Review and Recommendations. 2016 4 International Benchmarking Network. World Bank. 5 Ibid 2. 6 INAPA was created in 1962, and during the 70s began decentralizing services through autonomous corporations. The Corporation for Water Supply and Sewerage for Santo Domingo metropolitan area (CAASD) was created in 1973. In 1977, the Corporation for Water Supply and Sewerage for the city of Santiago (CORAASAN) and all the systems in the province were created. Similar Corporaciones were later created for the provinces of Espaillat (CORAAMOCA, in 1997), Puerto Plata (CORAAPPLATA, 1997), and La Romana (CORAAROM, in 1998). 7 CORAAPPLATA, CORAAMOCA, and CORAAROM respectively cover the provinces of Puerto Plata, Espaillat, and La Roma. 8 See Duffy, L. et al. (2016). Tourism development in the Dominican Republic: An examination of the economic impact to coastal households. Tourism and Hospitality Research. Volume: 16 issue: 1, page(s): 35-49. https://doi.org/10.1177/1467358415613118 9 PASCT Project Appraisal Document, p 11. 10 The LIL installed a submarine outfall of 0.65 meters of internal diameter and length of 787 meters (247 meter on land and 540 meters in the ocean). Page 7 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) Theory of Change (Results Chain) 9. As shown below, the underlying logic of the Project was relatively clear. Figure 1. Causal Chain Project Activities Outputs Outcome Impact  Civil works to  Completion of pre-  Increased access to  Improved provision expand access to treatment plant and sewerage and of efficient and sewerage networks submarine outfall improved wastewater sustainable water  Technical assistance  Completion of treatment and and sanitation to strengthen sewerage networks disposal in the Puerto services in the national policy  Installation of Plata region Dominican framework meters and  Strengthened Republic’s tourist  Technical assistance development of capacity of utilities areas. to improve business plans  Strengthened policy performance of  Draft Water and framework utilities Sanitation strategy Project Development Objectives (PDOs) 10. The original PDO as stated in both the Project Appraisal Document and the Loan Agreement was to assist the Government of the Dominican Republic in: (i) Strengthening and consolidating the policy framework of the water and sanitation sector; (ii) Improving and expanding access to sanitation and wastewater treatment and disposal services in the Puerto Plata region; (iii) Improving the financial and operational performance of CORAAPPLATA; and (iv) Enhancing operational and commercial performance of other regional utilities and preparing them to participate in the second phase of the Program.11 11. The US$27.5 million IBRD loan was approved on April 2, 2009 and was declared effective on February 25, 2010 with an expected closing date of September 30, 2013 for the first phase of the Adaptive Program Loan. Key Expected Outcomes and Outcome Indicators 12. The PDO is comprised of four objectives: (i) Strengthening and consolidating the policy framework of the water and sanitation sector in the Dominican Republic; (ii) improving and expanding access to sanitation and wastewater treatment and disposal services in the Puerto Plata region; (iii) improving the financial and operational performance of CORAAPPLATA; and (iv) enhancing operational and commercial performance of other regional utilities. These 11The PDO in the PAD makes an explicit reference to an phase I (APL I) of an APL Program, whereas the PDO in the Loan Agreement does not. Nevertheless, the Loan Agreement does reference that the Project constitutes the first phase of a Program. Therefore, while the language in the PDO differs slightly, it is the opinion of the author that the difference is not material in nature. Page 8 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) objectives were measured through a total of eight indicators with PDO (i) having two indicators, PDO (ii) three indicators, PDO (iii) two indicators, and PDO (iv) one indicator. Please refer to Annex 1 (Results Framework) for more details on outcomes and indicators. Components 13. The Project had three main components. The first focused on the strengthening the policy framework for the sector and technical assistance activities to improve the performance of services providers. The second focused on civil works, and the third on management of the Project, as summarized in Table 1. At approval, the total Project cost for the first phase of the APL was estimated at US$34 million including contingencies, of which US$27.5 million would be financed by IBRD and US$6.5 million financed by counterpart funds. See Annex 3 for detailed (estimated and actual) Project costs by component. No components were revised during Project implementation. Table 1. Project Components at Appraisal Component Description Financing Amount Component 1: Strengthen and consolidate the water and sanitation sector policy IBRD financing: Technical framework, support the capacity of national policy and regulatory US$3.52 million Assistance for institutions and improve technical, commercial and operational Sector performance of water and sanitation utilities, including targeted training. Development Component 2: The original subcomponents were: 2.1 Sanitation, Treatment and Disposal IBRD financing: Rehabilitation Infrastructure; 2.2 Technical Assistance for Operational and Commercial US$23.01 million and Expansion Improvement. At appraisal, this component would finance: (a) investments Borrower of Sanitation to rehabilitate and improve access to sanitation in the Puerto Plata region; financing: Services in (b) investments to rehabilitate the wastewater treatment plant in San US$3.32 million Puerto Plata Felipe de Puerto Plata and to study, design and construct submarine outfalls in San Felipe de Puerto Plata and Cabarete; and (c) technical assistance to improve performance and efficiency of CORAAPPLATA, to supervise investments and to prepare detailed designs. Component 3: Finance costs associated with program management such as Project related IBRD financing: Program audits, equipment, training and technical assistance to strengthen the State US$0.90 million Administration Secretariat of Economy, Planning and Development (SEEPYD - Secretaria de Borrower Estado de Economía, Planeación y Desarrollo) and CORAAPPLATA, as well as financing: individual consultants. Loan proceeds would not cover salaries and other US$3.18 million recurrent costs for either SEEPYD or CORAAPPLATA. Other Front-end fee IBRD financing: US$0.07 million 1.2 SIGNIFICANT CHANGES DURING IMPLEMENTATION Revised PDOs and Outcome Targets 14. The PDO was amended in the final Project restructuring in December 2017. The change did not affect the substance of the objectives or outcomes, but it simply removed any reference to a second phase of the APL in the Page 9 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) fourth objective. The fourth PDO objective was revised to read, “iv) enhancing operational and commercial performance of other regional utilities”. Due to delays in Project implementation, the second phase of the APL was not initiated. Revised Outcome Targets and Indicators 15. The first restructuring in July of 2013 modified three PDO indicators with the intention of aligning the Project’s scope with the intended results. Two of the three indicators that were modified related to the third objective of “improving the financial and operational performance of CORAAPPLATA”. One of these indicators was changed to provide more specificity. The original indicator was “CORAAPPLATA has completed and made operational a cadaster of consumers”, and the revised indicator states “CORAAPPLATA has identified 100 percent of their potential consumers and has made operating an active registry of at least 40,000 users, covering at least 60 percent of its operational areas”. 16. The second indicator related to the third objective was dropped, which was “the ratio of total revenue to total operating expenses reached 70 percent for CORAAPPLATA, including electricity costs.” There were insufficient resources committed under the Project to make significant improvements in this indicator; hence its removal. 17. The third indicator that was modified related to the fourth objective of “improving the financial and commercial performance of other regional utilities.” This indicator was modified in two ways. First, the indicator moved from an outcome to output focused. The original indicator stated, “Number of regional utilities signing ‘Performance and Financial Support Agreements’ and meeting operational and commercial performance targets (e.g. targets for non- revenue water, revenue collection rates, and cadaster coverage outlined in these agreements to participate in the APL II, the target is to have two utilities, other than CORAAPPLATA, meeting these standards.” The revised indicator states, “Compliance agreements have been signed on improving of Cadaster, Commercial Systems, Administrative and Financial Systems of CORAAPPLATA, and CORAAROM and CORAAMOCA.” The other modification to this third indicator included adding the following, “Strengthening Program for Operation and Maintenance of Sewerage Systems of Puerto Plata.” Other Changes 18. The Project experienced changes to activities largely under Component 2, but the objective of Component 2 itself was not modified. Due to procurement delays, weather related issues, and actual costs that were higher than the assumptions used during preparation for some of the works, the Project experienced six Level 2 restructurings. As explained above, the first restructuring modified the PDO and component indicators. The subsequent restructurings extended the Project closing date and reallocation of funds. Annex 6 provides a summary of the restructurings. . Rationale for Changes and Their Implication on the Original Theory of Change 19. Overall the changes to the PDO, indicators, allocation of funds, and duration did not have implications on the theory of change for the Project. The changes occurred to reflect the true costs of the major works as they differed significantly from the assumptions used at appraisal. Page 10 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) 20. The rationale for Project extensions were a combination of the factors that included (i) a weak Project Coordination Unit (PCU) structure during the first two years to deal with procurement and technical aspects of the Project, (ii) the complexity of the submarine outfall and its installation, (iii) challenges with international procurement of the design and supervision of the submarine outfall that were outside the control of the Project, (iv) longer than anticipated construction timeframe for installation of submarine outfall, and (v) weather related events. 2. OUTCOME 2.1 RELEVANCE OF PDOs 21. The PDOs remain relevant in the current Country Partnership Strategy (CPS) (FY15-18). The Project is explicitly included under the second pillar Service Delivery for the Poor of the FY15-18 CPS and is directly contributing to increasing access to basic services in poor communities. While not explicitly mentioned under the CPS pillar of Resilience, it could be argued that the infrastructure built by this Project contributed to this pillar. For example, the sanitary works in Puerto Plata replaced a four-basin lagoon that received wastewater from the city with a small pre- treatment facility and a submarine outfall. The deep-water outfall provides the secondary treatment of Puerto Plata’s wastewater, which is significantly less vulnerable to flooding occurrences. Additionally, the operational aspects of the Project aimed to improve management and measurement of domestic and commercial water consumption. While there is no indicator under this pillar of Resilience linked to the Project, the Project activities aimed to improve metering of domestic and commercial water consumption, which help improve the resilience of the supported service providers by reducing non-revenue water (NRW). 22. The Project objectives remain highly relevant to the Government’s National Development Plan 2010-2030 and the 2016 National Sanitation Strategy. In 2016, the Medina administration identified the next four-year period as the “Quadrennium of Water” (el Cuatrienio del Agua) highlighting the importance of improving the stewardship of water and minimizing pollution and contamination. In 2016, INAPA issued a proposal for the national sanitation strategy, which underscores the need to improve the quality of sanitation services (collection, treatment, and disposal). In addition, the Bank’s current Systematic Country Diagnostic highlights the importance of improving the quality of water and sanitation services to have a greater impact on human capital, but also its contribution to the environment. 23. Rating. The overall relevance of the project is rated High. 2.2 ACHIEVEMENT OF PDOs (EFFICACY) 24. Although the PDO was amended, a “split evaluation” was deemed unnecessary, as the revision of the PDO statement was not substantive, did not change the key outcomes, and simply removed language that referenced a second phase of the APL. While three PDO indicators were modified during the first restructuring, only US$4.35 million had been disbursed (16 percent of the final disbursed loan amount US$27.5 million) at the time. A split evaluation has not been conducted since it would not have any implications on the overall outcome rating. The evaluation of efficacy is undertaken according to the revised PDO and Results Framework. 25. At the time of the Project closing all activities related to PDO (i) Strengthening and consolidating the policy framework of the water and sanitation sector in the Dominican Republic, PDO (iii) Improving the financial and Page 11 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) operational performance of CORAAPPLATA, and PDO (iv) Enhancing operational and commercial performance of other regional utilities had been completed. However, the submarine outfall related to PDO (ii) Improving and expanding access to sanitation and wastewater treatment and disposal services in the Puerto Plata region had not be completed. An extension for the ICR was granted to ensure that these works were finalized, which occurred in December 2018. The ICR ratings for these PDOs correspond to observed outcomes one month before submission of the report. PDO (i) Strengthening and consolidating the policy framework of the water and sanitation sector in the Dominican Republic. Rating: Substantial 26. The Project achieved its objective to strengthen and consolidate the policy framework. The PDO indicators for this objective were (i) to establish a Water Sector Council and (ii) to support the development and approval of a national water and sanitation strategy. 27. The Water Sector Council was established by presidential decree on August 11, 2011. Due to a lack of sector leadership, poor coordination among sector actors, and lack of clarity on functional roles, the Project aimed to establish a council to improve sector coordination, dialogue, and reach consensus on the direction of water supply and sanitation reforms. The resulting Water Sector Council was led by INAPA with representation from the Ministry of Economy, Planning, and Development, Ministry of Public Health and Social Assistance, Ministry of Environment and Natural Resources, National Institute of Hydraulic Resources (INDHRI), the Water and Sanitation Utility of Santa Domingo (CAASD- Corporación de Acueductos y Alcantarillados de Santo Domingo), and two representatives from other regional utilities. Between 2011 and 2018, the Water Sector Council served as a convening body to discuss, debate and finalize a draft water and sanitation law and a national strategy for water supply and sanitation. The Council continues to serve as a platform for inter-institutional dialogue and remains committed to seeing through Congressional approval of the envisioned sector reforms. 28. The national water and sanitation strategy were endorsed by Water Sector Council. The Project provided technical assistance through local and international consultants to support government counterparts in developing a national strategy and updating a draft water and sanitation law. These policy documents were debated and endorsed by the Council and by sector actors. These sector actors concluded that implementation of the strategy was contingent upon legislative approval of the draft water and sanitation law. The law was sent to Congress in late 2013 but was ultimately not approved. In addition, in 2015, sector stakeholders felt that they needed to agree on a broader water resources law that would clarify roles and responsibilities for water resource management, while at the same time moving forward with a revision of the water and sanitation law. At the time of the ICR, the debate around the comprehensive water resources law was still underway; however, stakeholders had revised and finalized the new the water and sanitation law and the Council is planning to resubmit to Congress for approval in 2019. 29. Consensus among sector actors was built around water supply and sanitation reforms, but advancing these reforms is contingent on larger water sector reforms outside the scope of this Project. While the Project was successful in achieving its indicators for PDO (i), the ICR Team also acknowledges that ideal indicators would have focused on outcomes such as implementation of the national strategy. However, given that legislative approval of a draft water law was ultimately deemed necessary for the implementation of the strategy, getting passage of the law was outside the scope of the Project. Despite the pending approval of legislation, feedback from sector stakeholders confirm that the inputs provided by the Project contributed to the creation of an important space for internal dialogue on the assignment of roles and responsibilities for the provision, management, and regulation of water and sanitation services. This debate allowed the stakeholders to reach a consensus on roles and responsibilities that is Page 12 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) articulated in the final version of the water and sanitation law and national strategy. Even though this consensus has not yet been formalized through a legislative process, the stakeholders consider the progress towards strengthening and consolidating the policy framework to be substantial. PDO (ii) Improving and expanding access to sanitation and wastewater treatment and disposal services in the Puerto Plata region. Rating: Substantial 30. The second PDO has two distinct features that are important to separate. First is increasing access to the sanitation sewerage network, and second is increasing access to wastewater treatment and proper disposal. 31. By the completion of the ICR, the Project achieved the PDO (ii) target by expanding access to sanitation, wastewater treatment, and disposal to 142,952 people out of 128,000 people envisioned at design. The PAD distinguished this target between those gaining new access to sewerage (18,000 people) and those receiving new access to wastewater treatment and disposal (110,000 people). By the end of the project, CORAAPPLATA’s consumer registry documented 39,709 residential connections to the sewerage network in the city of Puerto Plata where all works were installed. These connections translate into 142,952 people with access to improved wastewater treatment and disposal. This includes the number of new sewerage connections installed because of the Project. 32. The Project intended to expand sewerage networks in the localities of Sosua and Montellano that CORAAPPLATA manages, but investments were redirected to unserved areas in the city of Puerto Plata. 12 The PAD specifically indicated that it intended to increase access to 18,000 mostly poor households in the Puerto Plata region, but ultimately connected 3,679 people who reside in the poorest neighborhoods of Puerto Plata city.13 The reduction in the scope for expanding the network was a decision forced by the lack of resources, given the cost overruns of the submarine outfall and the higher than anticipated costs for sewerage expansion in Sosua and Montellano. This change in activity was identified in 2015, but the Project targets were never updated to reflect the revised scope (see section on Key Factors During Implementation). 33. The PDO (ii) target of 80 percent of the consumers in Puerto Plata region are connected to a sanitation network was almost reached. The ICR Team needed to calculate the sewerage coverage based on the estimated population for Puerto Plata, Sosua, and Montellano as the Project was originally designed, because the results framework was not updated to reflect the reduction in geographic scope related to the expansion of the sewerage network. CORAAPPLATA’s consumer register totals 39,709 residential connections to the sewerage network in Puerto Plata and 4,880 in Sosua, which equates to 160,520 people connected to a sewerage network. The estimated population in Puerto Plata, Sosua, and Montellano is 203,659.14 As a result, the Project achieved a 79 percent coverage rate in the Puerto Plata region, which almost reached the target of 80 percent. 34. CORAAPPLATA’s consumer registry shows 78 percent of hotels in their service area are connected to a 12 Sosua and Montellano are municipalities located in the service area of CORAAPPLATA, which are adjacent municipalities to Puerto Plata. CORAAPPLATA operates a wastewater treatment plant and outfall in the municipality of Sosua. The project originally intended to expand the sewerage network in these localities and connect to the existing treatment and disposal system in Sosua. 13 According to the 2014 Poverty Map for the Dominican Republic (p. 360), Playa Oeste is ranked the poorest neighborhood (barrio) in the city of Puerto Plata (53.8 percent of households are poor, and 8.4 percent are extremely poor). The report did not list Aguas Negras or Nuevo Renacer, but these neighborhoods are adjacent to Playa Oeste. 14 These figures are drawn from the 2010 Census. The ICR Team notes that there is little documentation on the data used to calculate the original baseline and target figures. At the time of the design, the 2010 census did not exist, which provided more accurate estimates of the population at smaller administrative units than did the 2000 census. Page 13 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) sewerage network. The project originally intended to connect the Playa Dorada hotel complex, which is located just outside of Puerto Plata city. Due to various factors that are detailed in the Key Factors During Implementation Section, this activity was not executed. The Project made no material impact on expanding access of hotels to the sewerage network, and this indicator should have been dropped during one of the restructurings to reflect the executed activities. 35. Nevertheless, of the 86 hotels that are connected to the sewerage network provided by CORAAPPLATA, 71 (86 percent) are in city of Puerto Plata and will benefit from the new wastewater pretreatment plant and submarine outfall delivering a higher quality of treatment and disposal. In addition to the 71 hotels, which have a combined capacity of 6,100 units, there are an additional 8,003 connections serving commercial, industrial, and mixed-use properties that are also benefiting from the new treatment and disposal system. This system is designed to process 86,343 m3/day of wastewater, which provides significant capacity for the connection of future residential and commercial areas of Puerto Plata including Playa Dorada. 36. The future capacity to accommodate the expansion of residential and commercial consumers are important for the region of Puerto Plata to meet the country’s National Sanitation Strategy targets and the Sustainable Development Goals (SDG). Under the MDG the focus was on basic access that did not consider the quality of services. This Project is enabling CORAAPPLATA to provide sanitation services to its existing population and the opportunity for future populations to meet the higher standards of treatment and disposal articulated under the SDG. These works (pre-treatment plant and submarine outfall) are designed to serve CORAAPPLATA’s consumer base for the next 30 years. 37. The Project is considered to have a high rating in terms of its target for expanding access to wastewater treatment and disposal. Due to changes in activities related to expanding access to the sewerage network, this element of the PDO is rated modest. As such, a combined rating for PDO (ii) is a Substantial rating. PDO (iii) Improving the financial and operational performance of CORAAPPLATA. Rating: Substantial 38. The Project significantly improved the operational performance of CORAAPPLATA . With the support of the Project, CORAAPPLATA identified 100 percent of its potential consumers and made operational an active registry of 67,740 users of which 55,052 are registered in their cadaster (surpassing the PDO-level target of 40,000). This equates to 81 percent of its operational area being covered surpassing the PDO-level target of 60 percent. The impact of the Project on CORAAPPLATA’s operational performance was mostly that of a catalyst and enabler, mainly by financing investments in micro-metering and the development of a business plan for CORAAPPLATA. For instance, the Project contributed to an increase in metering from 3 percent to 24 percent over the course of the Project (far surpassing the intermediate outcome indicator of 12 percent) through financing the installation of 4,000 micro meters. This was a catalyst as CORAAPPLATA went on to contract a private operator to expand metering and take over the commercial aspects of their distribution system without direct financing or technical assistance from the Project. As a result, CORAAPPLATA increased the volume of metered water sold from 36 percent in 2015 to 54 percent in 2017. These improvements also correspond to reductions in non-revenue water from 57 to 45 percent between 2015- Page 14 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) 2017.15,16 39. These operational gains translated into modest Figure 2: CORAAPPLATA Financial Performance improvements in CORAAPPLATA’s financial performance. The original PDO indicator, which was CORAAPPLATA Income from Sales of Services dropped at the 2013 restructuring, was the ratio of 180,000,000 total revenue to total operating expenses, including 160,000,000 140,000,000 electricity costs. This indicator had a target of 70 Dominican Pesos 120,000,000 percent. As detailed in the Monitoring and Evaluation 100,000,000 (M&E) Section, this indicator was considered 80,000,000 unrealistic (electricity costs, which are almost fully 60,000,000 40,000,000 subsidized by the central government, represented 50 20,000,000 percent of CORAAPPLATA’s operating costs at - appraisal) and was dropped; however, the financial 2014 2015 2016 2017 improvement aspect of the PDO was maintained. As a Source: authors calculations based on data from Dirección General de result, the ICR Team is reporting on this indicator. Presupuesto (DIGEPRES) Financial records on executed budgets maintained by the Ministry of Finance show that CORAAPPLATA’s ratio of total own-source revenues to total operating expenses including energy costs improved from 0.38 to 0.45 between 2014 and 2017.17 Since energy costs are directly paid by the central government to energy providers for all water and sanitation utilities owned by the state, the ICR Team also reported on the same ratio excluding energy costs, which rose from 1.07 to 1.20 in the same period (see Table 2). 18 The improvements in this ratio correspond to increasing own-source revenues between 2014 and 2017(see Figure 2).19 Table 2. CORAAPPLATA’s Own Source Revenue to Operating Cost – 2014-2017 Service Own source revenue to Operating Costs (including energy) Own source revenue to Operating Costs (excluding energy) Provider 2014 2015 2016 2017 2014 2015 2016 2017 CORAAPLATA 0.38 0.44 0.50 0.45 1.07 0.90 1.19 1.20 Source: authors calculations based on data from Dirección General de Presupuesto (DIGEPRES) 40. The Project achieved a high rating in terms of CORAAPPLATA’s operational performance improvements set out by the Project while the financial improvements were modest when compared to the original while the financial 15 Data provided from IBNET uses a definition of the difference between the volume of water supplied and the volume sold to estimate non- revenue water. 16 With regards to client satisfaction and responsiveness, CORAAPPLATA conducted activities and developed a grievance response strategy for clients as stated in their commercial management plan of 2017. More than 120 grievances were resolved and close to 100 maintenance works were completed as a result of the grievance responses in 2017. Specifically, CORAAPPLATA incorporated as part of its strategic plan the creation of i) grievance mechanism and development of customer satisfactory statistics for future reporting, and ii) client satisfaction survey design and implementation. Consumer satisfaction results for CORAAPPLATA are included in Annex 10. 17 The Ministry of Finance’s General Budgeting Office (DIGEPRES) publishes budgets and executed budgets for state owned enterprises. These publicly available documents from 2013-2017 capture central government transfers, own sources revenues and recurrent and capital expenditures. 18 Energy costs are paid by the central government directly to the electricity provider for all water and sanitation state owned enterprises. Energy costs for CORAAPPLATA were 59 percent of total operating costs in 2017. 19 Preliminary sales figures for 2018 shared by CORAAPPLATA show a revenue of $RD 212 million. These were not included in the graph as DIGEPRES has not yet made officials expenditures and revenues public for 2018; however, the self-reported figure by CORAAPPLATA shows an overall increasing trend since 2014. Page 15 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) while the financial improvements were modest when compared to the original PDO-level indicator target described above. As such, PDO (iii) is considered to have achieved a Substantial rating. PDO (iv) Enhancing operational and commercial performance of other regional utilities. Rating: Substantial 41. The CORAAS’ improvement in own source revenue reflected the Project’s investments in micro and macro meters, updated cadasters, new administrative and financial software and the development of strategic business plans. 20,21 For instance, over the course of the Project, coverage of metering increased from 4 percent (2012) to 42 percent (2017) for CORAAMOCA and from 8 percent (2012) to 13 percent (2017) for CORAAROM.22 The increase in metering enabled the CORAAs to bill consumers based on actual consumption, which increased their revenue (see Figure 3), and to more closely monitor non-revenue water loss. For example, CORAAROM registered a drop in non- revenue water from 83 to 68 percent between 2013 and 2017. Figure 3: Financial Performance of Other Regional Utilities 42. The ICR Team also used the ratio of own- source revenue to operating costs for PDO (iv) even though this indicator was not in the results framework. Table 3 below shows this ratio with and without energy costs for CORAAMOCA and CORRAROM, which are improving over time. Energy costs for CORAAROM comprise 40 percent of total operating cost whereas they are 15 percent for CORAAMOCA. This helps explain why the ratios to own-source revenues to operating costs are more similar between the two providers when energy costs are excluded. While these providers are not yet able to cover their operating costing (with and without energy costs included), they are moving in a positive direction. Source authors calculations based on data from Dirección General de Presupuesto (DIGEPRES) Table 3. CORAAMOCO and CORAAROM’s Own Source Revenue to Operating Cost – 2014-2017 Service Own source revenue to Operating Costs (including energy) Own source revenue to Operating Costs (excluding energy) Provider 2014 2015 2016 2017 2014 2015 2016 2017 CORAAMOCA 0.64 0.68 0.68 0.72 0.72 0.80 0.79 0.90 CORAAROM 0.42 0.33 0.56 0.51 0.70 0.50 0.93 0.91 Source: authors calculations based on data from Dirección General de Presupuesto (DIGEPRES) 43. The implementation of the new administrative and financial software at the CORAAs was transformative in terms of increasing efficiency in daily transactions. Prior to the modernized software system, the CORAAs utilized an 20 CORAAMOCA’s strategic plan http://coraamoca.gob.do/transparencia/phocadownload/PlanEstrategico/Plan-Estrategico-2013-2017.pdf 21 The Project also documented improvements in improved billing and collection through case studies. 22 Coverage rates at CORAAMOCA exceeded those of CORAAROM given that CORAAMOCA employed its own resources to further develop its metering program both in terms of investment in additional micro-meters and the carrying out of a strong social outreach component to build awareness among its clients on the benefits of metering. The Project invested in 3,000 new meters for CORAAMOCA, but the provider secured additional resources to significantly expand their metering program. Page 16 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) inefficient and cumbersome paper and excel based financial and billing system. The strategic business plans have guided the CORAAs’ investments and actions to improve commercial and operational performance. A case study of the CORAAs conducted by the Bank in 2017 revealed the commitment of CORAAMOCA’s commercial team to achieving the objectives established in the plan. 44. Overall efficacy rating. The achievement of the composite PDO is rated Substantial based upon the substantial achievement towards consolidating the sector, the substantial achievement in increasing access to improved wastewater treatment and disposal, the substantial achievement towards improving the operational and financial performance of CORAAPPLATA, and the substantial achievement towards enhancing the operational and commercial performance of other regional utilities (CORAAMOCA and CORAAROM). 2.3 EFFICIENCY Rating: Modest 45. The Project is expected to bring sizable economic and social benefits to those targeted in the Project areas. Even with a substantial reduction of sewerage beneficiaries as explain in the efficacy section, the completion of the submarine outfall is the activity that received almost 60 percent of the entire World Bank funding, and with over 100,000 people directly benefitting from it. Applying the economic analysis methodology with all works completed and amending parameters at exit and final costs and beneficiaries, the Project proved to generate positive net benefits for both sewerage and wastewater services. 46. Economic efficiency. The cost benefit analysis for the Project was carried out for the following components: (i) sewerage expansion benefits, including health benefits in the sensitivity analysis; and (ii) final disposal of wastewater and treatment systems, including the value of wastewater treated and environmental benefits. There were also two aspects (not quantified in the economic analysis) that affected the overall efficiency of the Project: (i) improved operation and efficiency of CORAAPPLATA, and the fiscal impacts from these improvements; and (ii) the implementation capacity and efficiency of the entire Project. 47. At appraisal, the Project showed an economic rate of return (ERR) of 36 percent and net benefits of US$31 million at a discount rate of 12 percent. Upon commissioning of the submarine outfall, the overall efficiency of the Project reached an ERR of 11.2 percent. Using a discount rate of 6 percent, the benefit-cost ratio was estimated at 1.61. Net present value of cost and benefits over the life of the Project were estimated at US$28.7 million and US$46.2 million, respectively; and the net present value of net benefits was estimated at US$17.4 million. 48.Financial analysis. The commercial efficiency of CORAAPPLATA and other CORAAs, and the fiscal impacts from these improvements also explain the overall efficiency of the Project. At entry, the fiscal impact was estimated at US$4 million due to the increase of value added tax paid on investments and operating costs. The estimated fiscal impact of the entire Project funding at exit reached US$5.2 million. Subsidies to cover staff costs of the CORAAs were reduced to prepare these institutions to transition to commercial independence and financial sustainability. 49. Cost-effectiveness. Comparison with other submarine outfalls in terms of average incremental costs per cubic meter (m3) of safety disposed wastewater provides a measure of the cost effectiveness of the Project’s infrastructure. Cartagena in Colombia and Taboada in Peru have larger-scale submarine outfalls with pre-treatment wastewater plants, serving 850,000 and 4.1 million users, with average incremental costs (including investment and operation and maintenance costs at 6 percent discount rate) of US$0.06/m 3 and US$0.05/m3, respectively. The estimated average incremental cost of the Puerto Plata system is US$0.08/m 3. Page 17 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) 50. Benchmarking of NRW. A benchmark of NRW between CORAAs, shows that CORAAPPLATA, COAAROM and CORAAMOCA performed slightly better that other CORAAs in terms of reducing NRW. Between 2012 and 2017 CORAAPPLATA reduced NRW from 76 percent to 46 percent (a reduction of 30 percent), which is close to the Latin American average for 2017 of 41 percent. Other CORAAs such as CAASD, and CORAAVEGA reduced NRW in the same period by 14 and 8 percent respectively. 51. Operational efficiency. Implementation delays due largely to weak implementing capacity during the first years of implementation, complexity of works, and weather-related events were the reasons for the several restructurings and for extending the Project’s closing date by 51 months. This impacted on the administrative cost which was originally estimated to reach 10 percent of the total Project costs, but upon completing, it reached 17 percent of total project costs. These delays in implementation and increased in administrative cost hampered the efficiency of the overall Project despite completing all the tasks. 52. The overall efficiency is rated as Modest. 2.4. JUSTIFICATION OF OVERALL OUTCOME RATING 53. The overall outcome is rated Moderately Satisfactory. The Project achieved substantial efficacy against the PDOs and revised activities that were identified in 2015. The Project remained highly relevant throughout its duration. Efficiency is rated Modest given the long duration of the Project, and increased costs for specific activities. 2.5 OTHER OUTCOMES AND IMPACTS 54. Innovation with submarine outfall. The submarine outfall of the Project is an innovative infrastructure that improves environmental conditions, increases resilience to climate change, and promotes cleaner solutions in a country that largely depends on tourism. The submarine outfall built by the Project is a unique infrastructure in the northern Caribbean region that provides long-term and continuous management of wastewater discharges as means of increasing dilution of organic material into the ocean, while improving assimilative capacity to the environment. 55.Coastal areas of the Caribbean are increasingly facing contamination from wastewater outflows, plastic and organic pollution in tourist areas. These ongoing environmental challenges are particularly relevant for the Dominican Republic and require new solutions to make effective use of resources and reduce high pollution loads with cost-effective infrastructures. Because of the characteristics of the submarine outfall built by the Project, wastewater can be disposed safely and economically into coastal waters with minimal environmental impact. Water quality objectives can be met for CORAAPPLATA with the operation of the outfall and the pre-treatment wastewater plant. 56. The submarine outfall can serve as an example to implement these types of infrastructures in other Caribbean countries. The knowledge generated from designing and implementing this infrastructure in the Dominican Republic can help other countries understand the benefits in terms of removing contaminants from wastewater, floating matter, coarse suspended solids, and toxic micro contaminants. With this submarine outfall, other countries can increase their knowledge about how discharges of effluents into the sea needs to be done in such a manner that ensures high level of dilution into the seawater to improve ocean’s quality and health. Other CORAAs throughout the Page 18 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) country already expressed willing to identify potential zones to construct submarine outfalls and reduce oceanic pollution in tourist areas. 3. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME 3.1 KEY FACTORS DURING PREPARATION 57. The infrastructure aspects of this Project built on the previous LIL and were a continuation to expand the quality of sanitation services to the Puerto Plata region. The LIL that closed in 2005 constructed a submarine outfall that benefited the locality of Sosua, which is part of CORAAPPLATA’s service area. Key elements of this Project were a continuation of infrastructure support to the north coast’s most populated center, Puerto Plata, to improve the management of wastewater in a sustainable manner for decades to come bringing benefits to the environment, public health, and improving conditions for tourism. 58. The Project correctly identified procurement as a high risk; however, this risk was not adequately mitigated with respect to the infrastructure works. As discussed in more detail below, the PCU was supposed to be strengthened with respect to procurement capacity prior to the Project became effective; however, initial supervision reports highlight the deficiency in procurement capacity and the need to strengthen it. 59. Miscalculation of technical support required for infrastructure works related to submarine outfall. While the PAD correctly identified the fiduciary risks, the technical risks were not foreseen. Apart from the LIL, the Dominican Republic had very little experience with deep water submarine outfalls let alone CORAAPPLATA or the Ministry of Economy and Planning (MEPyD - Ministerio de Economía, Planificación y Desarrollo). While the Project design originally envisioned replicating the submarine outfall works carried out under the LIL, circumstances changed on the ground requiring a more complex design of the outfall (see more details below). The lack of technical expertise on submarine outfalls to support the PCU during procurement was one factor that contributed to delays as discussed in more details below. After significant delays in procurement, the PCU and Task Team ultimately agreed to hire short- term consultants to support the PCU with technical issues related to reviewing bidding documents and outputs from the engineering firms and contractors. 60. Preparing for implementation post-effectiveness. The level of readiness for this Project is considered low with respect to the design of the sanitary works and the management capacity of the PCU given the Project had an original closing date of September 30, 2013.23 The PAD was clear that feasibilities studies were required for the submarine outfall in Puerto Plata after effectiveness, and for the originally planned sewerage expansion in Sosua and Montellano. 61. The fact that feasibility studies needed to be carried out after the Project became effective introduced uncertainty into whether the allocated financing would be sufficient to cover actual construction costs of the planned works, and whether the original implementation of 3 years and five months was realistic (Project became effective 23The project was originally envisioned as an eight-year Adaptive Program Loan (APL) project comprised of two four-year phases (2010-2013 and 2011-2015). The components of this Project were designed for the first phase, which was for US$ 34 million with a closing date of September 30, 2013. The second phase was for an estimated additional US$50 million with an estimated closing date of June 30, 2015. This second phase anticipated expanding, deepening and consolidating the results of the first phase through the: (i) improvement of sector management and financial viability in CORAAPPLATA and other Corporaciones, including possible participation of the private sector; (ii) further development of sanitation coverage and treatment levels; and (iii) development of watershed management plans. Due to delays in executing the first phase the second phase not carried out. Page 19 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) in February 2010). As discussed below this low level of readiness had significant impacts on the costs of several Project activities and the implementation timeframe. 62. The Bank team identified a discrepancy between design and the allocated resources for making improvements in the operational and commercial performance of the CORRAs. During Project preparation, there were specific performance targets set for CORAAPPLATA, and a reference to performance agreements to be established for other service providers once they were identified. However, during implementation it was found out that the allocated resources for making improvements were insufficient, and the Task Team proactively followed up with recommendations to rectify this discrepancy (See Key Factor during Implementation). 3.2 KEY FACTORS DURING IMPLEMENTATION 63. Initial low capacity of the PCU to manage implementation. Between Project effectiveness (Feb 2010) and June 2012, the Project experienced volatility (and poor management) in the PCU leadership by having three different coordinators.24 The third PCU coordinator, who was hired in 2012, brought stability to the unit overseeing the Project through its completion, and hired a procurement specialist trained by the Bank to help strengthen the unit. Nevertheless, the PCU did not have the technical competency to supervise the development of adequate bidding documents for the sanitation works and initially did not receive adequate technical and procurement support to compensate for this shortcoming. This capacity gap contributed to significant procurement delays (see paragraph below). Over the course of the Project, however, the PCU gained capacity and successfully oversaw the procurement of additional activities aimed to improve the operational and commercial performance of the three utilities – namely micro-metering, new administrative software for CORAAROM and CORAAMOCA, business plans, and consultancy services to help the utilities update their cadaster of users; in addition, to providing support to the sector reform process. 64. Significant procurement challenges and delays led to low disbursement. Due to procurement delays, the engineering designs and related studies for the submarine outfall started at the beginning of 2013, three years after the Project became effective. Designs and studies for the sewerage networks, and wastewater treatment plant did not start until the beginning of 2014.25 Final designs and bidding documents for construction of all sanitary works were ready in January 2015, which was five years after effectiveness. After five years of implementation, only US$8.5 million or 30 percent of the loan amount, had been disbursed. 65. Procurement delays of the engineering firms reflected a combination of factors including readiness of the Project, the capability of the PCU, and technical support from the Bank. For example, in November 2011, two separate bidding processes were launched for the sewerage network expansion and the wastewater pre-treatment plant.26 The third PCU coordinator came on board during this process and determined flaws with the procurement and cancelled it one year after it has been launched. The design for these two works were appropriately combined into one package and the bidding processes were relaunched, and successfully completed in December 2013. This 24 The first PCU coordinator suffered from health issues and died. 25 In November 2011, nine months after the Project became effective, three bidding processes were launched: (i) design and supervision of sewerage networks, (ii) design and supervision for wastewater treatment plant, and (iii) design and supervision of the submarine outfall. In November 2012, a year after the bidding processes were launched, the Bank and PCU, agreed to stop the processes for the sewerage network and wastewater pre-treatment plant, and relaunch them to combine the activities into one bid. The main reason was to simplify the contracting and implementation of the works. This combined packaged was relaunched in January 2013. 26 These bidding processes were launched one year and eight months after the Project became effective. Page 20 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) process concluded almost three years after the Project became effective. Poor management of the procurement by the PCU and lack of initial Bank supervision support early in the process underpinned the delays. 66. The Project’s original timeframe was not realistic, did not account for the required time to design and construct the submarine outfall, and created unrealistic expectations. With an implementation period of February 2010- September 2013 (3.5 years), the first phase of the APL grossly underestimated the required time to design and construct a deep-water submarine outfall. In addition to the procurement delays for the design of the submarine outfall, the design firm took over two years to produce feasibility studies and subsequent final designs and construction bidding documents.27,28 This process also involved community input on the final location of the outfall route, and as such is not considered egregiously long. Similarly, the construction of the submarine outfall, with its size and length underwater (see technical and weather issues below), took approximately three years to construct, which was done by a firm with substantial experience. Barring the procurement delays, the only way this project could have come close to meeting the proposed timeframe would have been if all feasibility studies, community input, and engineering designs were ready when the Project became effective. The Project completion date created unrealistic expectations by the Bank given the nature of this work. 67. Cost increases impacted ability to execute all works. The feasibility studies prepared for all sanitary works (sewerage network, treatment plant, and outfall) during implementation revealed a significant variation in costs compared to those assumed at appraisal. The assumptions on cost and physical location of the infrastructure used at appraisal were based on feasibilities studies conducted in 1999. Between this time and 2013-2014, when designs were prepared, inflation substantially increased and the physical landscape was modified preventing a more simplified route and version of the outfall from being constructed.29 As a result, the submarine outfall costed twice the estimate at appraisal, and the proposed sewerage network in Sosua and Montellano, and the connection of the Playa Dorada hotel complex costed 2.6 times the original cost estimate.30 The available financing and counterpart contributions were not able to cover all planned sanitary works, so the sewerage networks in Sosua and Montellano, and the Playa Dorada hotel complex were not pursued. These works were replaced by a modest expansion of the sewerage network in Puerto Plata as described in the efficacy section. 68. Technical issues with the design of the submarine outfall. The contractor hired to construct the submarine outfall raised issues with the quality of its design. The contractor conducted geotechnical surveys, which should have been done at the design phase, and identified that the soil in the land portion of the outfall would not support the size and weight of the pipe proposed by the design firm. The construction contractor also questioned the design of the underwater anchor system, which the contractor considered to be overly costly. As a result, the PCU and Bank agreed that the contractor would redesign these elements before starting construction, which contributed to 27 The procurement of the design for the submarine outfall suffered from the same poor management as the procurement for the design of the other works. The bidding process was launched in November 2011, one year and 8 months after effectiveness, and was concluded in January 2013 28 The design of the submarine outfall required oceanic surveys to be completed once the final outfall location was determined. This was part of the design process. 29 The Dominican Republic witnessed a significant rise in its Consumer Price Index between 2000 and 2014, 30 to 119 respectively, which equates to a 239 percent increase over 14 years or 21 percent per year. This contributed to the large variation in costs estimated between preparation and when works were procured. (https://tradingeconomics.com/dominican-republic/consumer-price-index-cpi) 30 See Annex 3 for assumptions of costs at preparation vs actual. The actual cost of the works for the sewerage network in Sosua and Montellano along with the connection between the treatment plant and Playa Dorada hotel complex was US$27 million compared to US$10.1 million at preparation. Page 21 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) additional delays and highlighted deficiencies with the submarine outfall design firm. Disputes between the design firm, contractor, and the PCU over design elements and construction supervision costs ultimately led to the cancellation of the design firm’s contract after construction began. 69. Technical complexities working at sea and weather events contributed to the delays in implementation . The submarine outfall (of high-density polyethylene) is 3.44 km in length, 1.1 meter in diameter with 90 percent installed on the ocean floor up to a maximum depth of 55 meters. It has two diffuser ports (5x280 mm and 16x280 mm) of 144 meter in length. Construction techniques for working at sea and underwater are significantly more susceptible to smaller weather events as compared to working on land. In addition, Puerto Plata experienced major weather events after construction started which took place in November 2016, March 2017, September 2017, and March of 2018.31 70. Above mentioned weather events caused extraordinary flooding and damage in Puerto Plata that impacted construction progress on both land and sea. Moreover, innocuous weather such as strong winds – that don’t impact construction on land – frequently created high sea conditions requiring the marine crew stop working for shorter periods of time for safety reasons. Construction delays due to weather events are not uncommon in these type of construction works. Due to the routing of the outfall through Puerto Plata Bay, the contractor also had to contend with requests from the Puerto Plata Port Authority to cease activities at various times as the bay receives heavy ship traffic. Additionally, in early 2018, the contractor had mechanical issues with their ship which stopped work for several weeks while it was being repaired. These were factors outside the control of the Project that exacerbated the construction delays. 71. Adoption of a National WSS Strategy by the Water Sector Council was contingent upon the WSS law being approved. While sector actors recognized that a new WSS law was required to modernize the sector, it was not politically feasible to develop and pass this law during the life of the project. 3.3 FACTORS SUBJECT TO WORLD BANK CONTROL 72. Technical guidance from the Bank could have been stronger particularly in the beginning, but also during implementation. As documented previously, at effectiveness the Task Team knew that the implementation capacity of the PCU needed strengthening particularly with respect to procurement. The Project became effective in February 2010, and while first the supervision mission occurred in March 2010, the next mission did not occur until January 2011 (eight months later), and the third supervision mission did not take place until October 2011. Given the ambition of the Project, technical complexity, and delays in moving procurement forward, three missions in the first year and eight months of the implementation appear to have been insufficient. This lack of initial technical and procurement support had spillover effects that impacted the quality of the procurement process (i.e., request for proposals), and thereafter the poor performance of the design firm contributed to delays in implementation. 73. Despite the procurement challenges confronted by the Project, the commitment of the PCU and the Bank Task 31Information on weather events: Nov 11, 2017 https://reliefweb.int/disaster/fl-2016-000123-dom; March 22, 2017 https://reliefweb.int/report/dominican-republic/gobierno-ejecuta-obras-en-zonas-afectadas-inundaciones-por-15000- millones>; Sept 2017 ; March 14-15 Page 22 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) Team Leaders who oversaw the majority of implementation helped realize the Project outcomes. The Task Team was committed to supporting the PCU through challenging periods during implementation. While, the Task Team could have gone further during restructurings to update the results framework and indicators to reflect more accurately the variations in some of the indicators, without the dedication of the Task Team the Project would have likely closed before works were started. 4. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME 4.1 QUALITY OF MONITORING AND EVALUATION (M&E) 74. M&E Design. The initial results framework presented several issues. Principally, there was a contradiction in the PAD in which the PDO-levels indicators in the results framework32 differed from those in the monitoring table.33 The original PDO-level indicators were strongly linked to the Project’s PDO, activities and theory of change (See Annex 7). The implementation arrangements for M&E were also straightforward – the PCU was responsible for collecting data on the indicators and validating data sent by the participating utilities. The initial design also foresaw hiring specialized firms to carry out systematic customer satisfaction surveys. Shortcomings included ambiguity between the Puerta Plata Region and the City of Puerta Plata and an unclear calculation method for the PDO-level indicator, Percentages of consumers and hotels that are connected to the sanitation network in Puerto Plata, the target is 80 percent for consumers and 70 percent for hotels. 75. The July 2013 restructuring included various adjustments to the results framework given that several indicators were considered overly ambitious and not aligned with the actual interventions. Although the adjusted results framework was better aligned with Project interventions, the changes were not accompanied by an adjustment to the PDO. As a result, the link between the PDO-level indicators and the PDO was weakened (See Annex 7). 76. In addition to these shortcomings, as implementation progressed, several indicators lost relevance. For instance, the Project originally foresaw extending the sewerage network and pumping stations in the Puerta Plata Region. Over the course of implementation, however, the scope was reduced to focus on the City of Puerta Plata. Nevertheless, the target was not adjusted to reflect this adjustment. Moreover, although the Project dropped the activity to connect the Playa Dorada hotel complex to the wastewater pre-treatment system, the Project maintained its PDO-level indicator on hotel connection rates. 77. M&E Implementation. As a result of the significant implementation delays, the indicators related to the Project’s central work – the wastewater pre-treatment plant and submarine outfall – could not be collected until the final year of implementation. Similarly, the planned customer satisfaction surveys could not be carried out as the residents had not yet experienced the benefits of the Project by the closing date34. As illustrated in the section above, there was also fluctuation in the tracking of indicators over the course of implementation. 32 PAD, p. 37. 33 PAD, p. 39. This contradiction was maintained in the July 2013 restructuring (pp. 11 and 13). 34 In August 2018, before the pre-treatment plant, outfall and related road repairs were completed, CORAAPPLATA began to implement a consumer satisfaction survey on their services. Their survey showed that 35 percent of users rate overall services as good or excellent, 35 percent as fair, and 26 percent as poor (see Annex 10). During final ICR mission and after the works in Puerto Plata were commissioned, the ICR team held a focus group with the presidents of neighborhood boards (juntas de vecinos) in areas where sewerage systems were installed. The feedback from the focus group was overwhelmingly positive citing the elimination of odors from the old wastewater treatment system, and improve drainage from newly paved streets. After construction, one of the neighborhoods was renamed from Aguas Negras (Wastewater) to Renacer (Reborn). Page 23 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) 78. M&E Utilization. The M&E system was not fully applied for most of the Project given the lack of implementation progress. Nevertheless, the PCU and Task Team utilized the framework to evaluate progress towards achieving the PDO and to warrant extension of the Project’s closing date. 79. M&E Overall Rating. The ICR Team rates overall M&E as Modest given the weak link between the restructured M&E design and PDO (iii) and PDO (iv), the administrative issues in implementing the M&E framework, and the limited utilization of M&E data to inform Project decision-making among other issues. 4.2 ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 80. Environmental safeguards. Although the Project was designed to have positively significant environmental impacts, in accordance with OP 4.01 on Environmental Assessment, the Project was classified as a Category A due to its potential negative impacts during construction unless proper mitigation measures were put in place. Since not all the investments were identified by appraisal, a comprehensive Environmental and Social Management Framework (ESMF) including environmental impact assessment (EIA) of two identified investments were developed and disclosed during preparation. The ESMF identified the potential impacts associated with the types of envisioned subprojects and developing appropriate mitigation measures to ensure sustainability of investments. Identified capacity building activities were delivered to staff on relevant policies so that environmental and social safeguard issues could be effectively managed. Two other safeguards policies triggered by the Project were OP 4.01 on natural habitats and OP 4.11 on physical and cultural resources. During implementation, the PCU submitted bi-annual monitoring reports and compliance with safeguards was rated Satisfactory. Overall, the ESMF was implemented satisfactory with Bank supervision. After the completion of the pre-treatment plant works, the Bank recommended that CORAAPPLATA construct a platform to prevent spillage and soil contamination due to solid waste removed from plant. While the lack of a platform will not impede the operationalization of the treatment plant, it will enhance operations after the plant is brought online. Upon the completion of the ICR, the platform had not been constructed. As part of the ESMF, CORAAPPLATA is implementing a water quality monitoring program. 81. Social safeguards. OP 4.12 on Involuntary Resettlement was triggered and adhered to. At Project closing, compliance with this OP was rated as Satisfactory and was based on the efforts taken by the PCU to ensure adequate implementation of the Project’s Resettlement Policy Framework regarding the affected community before works began for the submarine outfall and wastewater pre-treatment plant. Along CORAAPPLATA’s property line of the pre-treatment plant are two vendors, whose small structures are used as convenience stands and encroach on CORAAPPLATA’s property. The Project built a perimeter wall around the property to ensure safety of the plant and local population. The wall was constructed around the small structures to ensure they remained on the outside of the perimeter. Since the location of the stands did not pose any risk to the vendors themselves nor did it interfere with the wastewater pre-treatment plant’s normal operation, both vendors remained operating their businesses normally until they voluntarily decide to move. The Bank also received a grievance in January 2018 from a complainant, through legal representation, alleging that CORAAPPLATA had seized land for a pumping station. A formal response to the complainant was issued by the PCU. The response was prepared in close coordination with the Project’s Social Safeguards Specialist and the Bank’s Grievance Redress Service (GRS) to clarify that the land in question and related infrastructure were not part of the Bank-financed Project or any previous Bank investment and as such, that this matter needed to be resolved between the complainant and CORAAPPLATA. The PCU facilitated a meeting between the two parties and the issue has been satisfactorily addressed. 82. Fiduciary. At the time of Project closure, the rating was Moderately Satisfactory. Financial Management Page 24 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) arrangements were satisfactorily maintained and Interim Financial Reports (IFRs) were submitted in a timely manner. Overall, the Project complied with fiduciary requirements. During Project implementation challenges were faced with counterpart funding that was earmarked to conclude works and supervision of the submarine outfall. This was subsequently addressed by the Government and allocation of the counterpart funds to MEPyD was consigned in the Government’s Fiscal Budget for calendar year 2018. 83. At the completion stage of the Project, there were some outstanding tasks that required close monitoring and were fully addressed by the PCU, namely: (i) the submission of final audit report for the 15 month period from January 1, 2017 to March 30, 2018, which concluded that the PCU complied with the terms of the loan agreement and the applicable laws and regulations and that PCU’s internal controls were overall adequate; (ii) the submission of the final Project Report to the Bank corresponding to the lifetime of the Project, from February 2010 to March 2018, (iii) the satisfactory delivery of all goods, services and construction works financed through the loan agreement including the final works of the submarine outfall, which were financed through the Government’s counterpart funds; (iv) the processing of all payments financed through the loan before the disbursement deadline of July 3, 2018, with the exception of the audit firm; and (v) the transfer of the submarine outfall to CORAAPPLATA completed in January 2019 after the outfall and treatment plant were put into operation. 84. Procurement. At Project closure, procurement was rated as Moderately Satisfactory. During the initial years of Project implementation significant delays were encountered in the preparation and launching of bidding processes for technical and environmental studies. In some cases, several bidding processes had to be re-launched. This in turn impacted contracting and preparation of the final designs for the submarine outfall. In addition, capacity had to be further strengthened and training was provided in the use of Bank-financed procurement guidelines and procedures. 4.3 BANK PERFORMANCE 85. Quality at Entry. The Project’s strategic relevance at entry is considered high. Fiduciary aspects were accurately assessed; however, capacity to deal with procurement was not adequately mitigated at entry. There was a disconnect in the implementation arrangements for Component 2 at entry between the PAD and when the Project became effective. CORRAPLATA was envisioned to play a larger role in the management of the contracts for the infrastructure works, but de facto, MEPyD was the entity that managed all fiduciary aspects of the contracts and oversaw implementation. As previously mentioned the readiness of the Project was considered low due to a combination of factors: (i) low procurement capacity of PCU at entry, (ii) Project appraisal based on 10-year old feasibility studies, (iii) feasibility studies for major works needed to be done after effectiveness, (iv) Bank technical support to guide PCU at entry was insufficient, and (v) overly ambitious targets of PDOs and inconsistencies in the Results Framework. The original Task Team benefited from having the Task Team Leader from the previous LIL be part of the team, but after the Project became effective the Task Team Leader was changed. The combination of the factors along with the volatility of PCU early in the implementation phase led to the delays that ultimately contributed to the long-gestation implementation period. 86. Quality of Supervision. After the Project became effective in February 2010, there was recognition by the Task Team Leader that the PCU would require significant support, yet that support did not materialize in initial supervision missions. As mentioned earlier, eight months past after the first supervision mission in March 2010 before the Task Team made another visit. The Project officially closed on March 30, 2018 and over the course of the eight years there was an average of 2 supervision missions per year. As the Project progressed, the quality of the technical supervision improved substantially, which helped the PCU to traverse difficult conversations with the contracted firms. The Project Page 25 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) benefited from locally based financial and environmental specialists. The deployment of Bank specialists with respect to environmental and social safeguards helped mitigate issues and helped quickly address those that did materialize near the end of the Project. The Task Team was also reinforced with technical experts for the review of engineering design related to the works. These experts provided critical technical support throughout implementation. The Project experienced a total of five Task Team Leaders, which is on average one every two years. 87. Justification of Overall Rating of Bank Performance For the reasons outlined in the previous paragraphs, the overall rating for Bank performance is Moderately Satisfactory. In the early years of the Project, the Bank performance contributed to the delays observed; however, this support substantially improved throughout implementation, and arguably helped the Project achieve an overall Moderately Satisfactory rating. 4.4 RISK TO DEVELOPMENT OUTCOME 88. At Project completion, the risk to development outcomes is high. This assessment focuses on the operational performance of the Water and Sewerage Companies (CORAAs - Corporación de Acueductos y Alcantarillados) and the infrastructure works. The improvements to the operational performance are expected to be maintained for the foreseeable future. The CORRAs improvements in their operational and financial performance such as increasing own-source revenues are moving in a positive direction as mentioned previous sections. Nevertheless, the CORAAs remain heavily subsidized with respect to operational costs. The central government covers on average 92 percent of the energy costs and about 22 percent of staff costs for these three CORAAs. If the country experiences an economic shock, the CORAAs could be faced with cuts compromising their ability to deliver services including the operation and maintenance of the sanitary infrastructure built under this Project. The development rating is considered high until CORAAPPLATA can move closer to cost recovery for operational and maintenance costs. Nevertheless, there is substantial scope for CORAAPPLATA to increase revenues and decrease dependence on the central government by increasing collection rates even without raising tariffs (See Annex 5). 89. The CORAAs operational improvements such as improved metering and reductions in NRW allow them to better manage water consumption and increase their resilience against climate variability and change. Additionally, climate change has also increased the risk of extreme flooding events particularly in coastal areas such as Puerto Plata. The reduced size of the infrastructure required to treat wastewater in Puerto Plata, due to the submarine outfall, helps reduce the exposure of infrastructure to these extreme events. The Bank expects to continue to be engaged in the sector with a focus on the efficiency of the CORAAs helping them become more financially autonomous and resilient to economic and climatic shocks. 5. LESSONS AND RECOMMENDATIONS 90. The following lessons learned and recommendations from the Project are intended to inform future World Bank Group operations. 91. Sound preparedness is critical in technically challenging projects. While it is commonplace to have feasibility studies if not full designs developed by Board approval, it is important to highlight this point in cases of technical complexity, such as a submarine outfall. As mentioned in other sections, the lack of up-to-date feasibility studies during preparation resulted significant delays and doubling the cost of the outfall. With respect to technically complex works such as submarine outfalls, land for all facilities needs to be fully secured, final designs ready, and all permits and licenses approved prior to effectiveness. Moreover, the timeframe for projects supporting submarine Page 26 of 62 The World Bank Water and Sanitation in Tourist Areas Project ( P054221) outfalls need to be more realistically assessed. 92. Institutional strengthening components require better planning and adequate financing. While the operational progress achieved by the CORAAs was impressive, the institutional strengthening component for the CORAAROM and CORRAMOCA was not well articulated at preparation and was accompanied by a lack of resources. As a result, all diagnostic work was required after the Project became effective, which benefited from the delays in the sanitary works. The Project may have been able to have larger impact with better planning and allocation of resources. 93. Adequately assess the procurement modalities for complex works such as a submarine outfall. Submarine outfalls require a high level of technical competency for both the design and construction. For such technical works, various procurement models should be assessed including design-build contracts with a separate supervision contract. In the case of this Project, the firm hired to construct the submarine outfall had the experience and expertise to carry out the design and construction. This type of contract may have been more beneficial particularly given that the construction firm identified deficiencies with the original design and had to redo various aspects. 94. Be more realistic about the required time to support and implement complex projects. This Project envisioned completion of all activities in a three- and half-year timeframe for phase I of the APL. Putting aside the procurement delays experienced in the first two years, completion of these works and all activities proved to be impossible in such a timeframe. These unrealistic expectations from the beginning placed unnecessary pressures on the PCU and Task Team to manage expectations throughout the project. In addition, significant implementation time was spent dealing with the consequences of less than sound technical aspects of the request for proposals for the designs and bidding documents for the works. These delays could have been partially mitigated with better technical support from the Task Team particularly in early in the project. 95. The benefit of the APL instrument lost its relevance over time, and the Bank discontinued the instrument during the life of the loan. The idea of the second phase of the APL was to build upon the institutional reform and operational gains made among various providers during the first phase of the APL. While the CORAAs did make operational improvements, the long delays with the submarine outfall required the full dedication and attention of the PCU to realize these works. After such longs delays, changes in government, the development of new instruments by the Bank such as the Program for Results and Multiphase Programmatic Approach, and the discontinuing of the APL instrument, the idea of a second phase APL lost its relevance. 96. Ensure PDO level indicators reflect outcomes. Indicators that were related to institutional strengthening were focused on outputs rather than outcomes. While institutional change often takes time to develop, task teams should endeavor to reflect the desired yet realistic outcomes in the indicators. For example, rather than merely establish a Water Sector Council a more appropriate indicator could have expanded on the functionality of the council. 97. Indicators for wastewater treatment should focus on volume of wastewater treated, water quality, and financial indicators. Projects that have wastewater treatment components should include stronger indicators that measure the impact and financial sustainability of the investments. 98. Implementation arrangements, coordination between the PCU and CORAAPPLATA, and ownership. Project design and implementation should understand the capability of the counterparts to execute their functions. In the case of CORAAPPLATA it was assumed that they would have a larger role in the management of contracts for which they didn’t have the capacity. This capacity should be clearly identified in the beginning. Page 27 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) . ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS A. RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: Strengthening and consolidating the policy framework of the water and sanitation sector in the Dominican Republic. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Setting-up of the Water Yes/No N Y Y Y Sector Council 14-May-2009 30-Sep-2013 31-Mar-2018 30-Mar-2018 Comments (achievements against targets): The Water Sector Council was established by presidential decree on August 11, 2011 Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Development and adoption Text No WSS has been Development and Strategy developed Substantially met: The by the Water Sector Council developed adoption by the Water and adopted by the members of the Water of a National Strategy for the Sector Council of a Water Sector Council Sector Council WSS sector National Strategy for endorsed the national the water and strategy and it has sanitation sector. been an important input into updating the draft water and sanitation law; however, the strategy Page 28 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) has not yet been implemented pending legislative approval of the draft water and sanitation law by congress. 14-May-2009 30-Sep-2013 31-Mar-2018 30-Mar-2018 Comments (achievements against targets): The national water and sanitation strategy was endorsed by Water Sector Council meeting the PDO indicator; however, implementation of the strategy is tied to a pending legislative approval process for a new water law that is outside the scope of the project. A new water law has been drafted and is planned to be resubmitted to congress in 2019. Objective/Outcome: Improving and expanding access to sanitation and wastewater treatment and disposal services in the Puerto Plata region Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Consumers that receive Text 0 128,000 128,000 142,952 access to improved or new sanitation and to wastewater 14-May-2009 30-Sep-2013 31-Mar-2018 29-Mar-2019 treatment and disposal services in the Puerto Plata region Consumers that receive Text 0 18,000 18,000 3,679 (20 percent of access to network original target) sanitation in the Puerto Plata region 14-May-2009 30-Sep-2013 31-Mar-2018 29-Mar-2019 Comments (achievements against targets): CORAAPPLATA registers 142,952 who are are benefiting from the pretreatment plant and submarine Page 29 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) outfall. This figure is 117 percent of the original goal. Note that the PDO indicator should read "128,000 consumers in the Project area receive improved access to sanitation services". Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Percentages of consumers Text 60% for consumers 80% for consumers 80% for consumers 80% for consumers and hotels that are and 50% for hotels and 70% for hotels and 70% for hotels and 78% for hotels connected to the sanitation network in Puerto Plata 14-May-2009 30-Sep-2013 31-Mar-2018 29-Mar-2019 Comments (achievements against targets): CORAAPLATA’s consumer registry shows 78 percent of hotels in their service area are connected to a sewerage network. The project originally intended to connect the Playa Dorada hotel complex which is located just outside of Puerto Plata city, but due to various factors that are detailed in the Key Factors During Implementation Section, this activity was not executed. The project made no material impact on expanding access of hotels to the sewerage network. The ICR calculated an access rate of 80 percent for residential consumers based on CORAAPLATA's consumer register along with 2010 population census figures for the localities of Puerto Plata, Sosua, and Montellano, which is the best information available. The ICR team was not able to find reliable population nor hotel estimates to support the baseline figures of 60 and 50 percent, and the 2010 census was not available at the time the project was design. Objective/Outcome: Improve the financial and operational performance of CORAAPLATA Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion CORAAPPLATA has identified Text No cadastre was CORAAPPLATA has CORAAPPLATA has CORAAPLATA 100% of its potential available completed and made identified 100% of its identified 100 percent consumers and has made operational a cadastre potential consumers of its potential operational an active registry of consumers covering and has made consumers and made of at least 40,000 users, all its operational operating an active operational an active covering at least 60% of its areas. registry of at least registry of 41,657 Page 30 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) operational areas 40,000 users, covering users (surpassing the at least 60% of its PDO-level target of operational areas 40,000), which covered 65 percent of its operational areas (surpassing the PDO- level target of 60 percent). 14-May-2009 30-Sep-2013 31-Mar-2018 29-Mar-2019 Comments (achievements against targets): CORAAPLATA identified 100 percent of its potential consumers and made operational an active registry of 67,740 users of which 55,052 are registered in their cadaster (surpassing the PDO-level target of 40,000). This equates to 81% percent of its operational area being covered surpassing the PDO-level target of 60 percent. Objective/Outcome: Enhanced operational and Commercial performance of utilities to participate in APL II Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Compliance agreements have Text No compliance Number of regional Compliance Substantially met. The been signed on improving of agreement or utilities signing agreements have project signed cadastre, commercial sewerage O&M ”Performance and been signed on compliance systems, administrative and strengthening Financial Support improving of cadastre, agreements with each financial systems of program has been Agreements” and commercial systems, of the CORAAs detail CORAAPPLATA, CORAAMOCA signed or developed. meeting operational administrative and the activities that and COAAROM, as well as an and commercial financial systems of would be take place. sewerage systems O&M stre performance targets CORAAPPLATA, As per the (e.g. targets for non- CORAAMOCA and restructuring the revenue water, COAAROM, as well as modified this indicator Page 31 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) revenue an sewerage systems is it considered collection rates, and O&M strengthening achieved. cadastre coverage) program for outlined in these CORAAPPLATA agreements to participate in the APL II, the target is to have two utilities, other than CORAAPPLATA, meeting these standards. 14-May-2009 30-Sep-2013 31-Mar-2018 30-Mar-2018 Comments (achievements against targets): This indicator was modified during a restructuring which changed the focus on outcomes to outputs. The ICR team recognized this short coming, which is discussed in the Monitoring and Evaluation section of the ICR. Because of these short comings the ICR proposed new indicators that are more outcome oriented to capture the impact of the project activities. Nevertheless the project complied and met the indicator in the results framework. A.2 Intermediate Results Indicators Component: Component One: Development and adoption of a National Strategy for the water and sanitation sector with associated public consultation, environmental education, investment planning and the capacity bu Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Completion of business and Text None Completion of Business and Business and modernization plans for business and modernization plans modernization plans regional utilities modernization plans completed completed Page 32 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) for regional utilities participating in the Program, as part of their Financing and Performance Agreements. 14-May-2009 30-Sep-2013 31-Mar-2018 30-Mar-2018 Comments (achievements against targets): The business and modernization plans were completed for all three CORAAs, which were helpful in guiding them to make the changes in operational and commercial performance observed under the project. Component: Component Two: Improved and expanded access to sanitation and wastewater treatment and disposal services in the greater Puerto Plata region. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 80 percent of consumers are Text 60% 80% 80% 80 percent of connected to network CORRAPLATA's sanitation in Puerto Plata. consumer base in the projects designated localities have access to sewerage networks Page 33 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) 14-May-2009 30-Sep-2013 31-Mar-2018 29-Mar-2019 Comments (achievements against targets): The ICR calculated an access rate of 80 percent based on CORAAPLATA consumer register along with population census figures for the localities of Puerto Plata, Sosua, and Montellano, which is the best information available. The ICR team was not able to find reliable population estimates to support the baseline figure, and the 2010 census was not available at the time the project was design. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 70 percent of the occupancy Text 50% 70% 70% CORAAPLATA’s capacity of hotel in the consumer registry Puerto Plate region are shows 78 percent of connected to communal hotels are connected sanitation networks. to a sewerage network. 14-May-2009 30-Sep-2013 31-Mar-2018 29-Mar-2019 Comments (achievements against targets): The project originally intended to connect the Playa Dorada hotel complex which is located just outside of Puerto Plata city, but due to factors detailed in the Key Factors During Implementation this activity was cancelled and the hotel complex was not connected. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Cadastre operational Text N/A A reviewed and A reviewed and Cadastre operational operational cadastre is operational cadastre is in use. in use. Page 34 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) 14-May-2009 30-Sep-2013 31-Mar-2018 29-Mar-2019 Comments (achievements against targets): CORAAPLATA identified 100 percent of its potential consumers and made operational an active registry of 67,740 users of which 55,052 are registered in their cadaster (surpassing the PDO-level target of 40,000). This equates to 81% percent of its operational area being covered surpassing the PDO-level target of 60 percent. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Metering coverage reaches Text 3% Metering coverage Metering coverage 24 percent (Surpassed 12% of all consumers in reaches 15 percent of reaches 12 percent of target by 12 CORAAPPLATA all domestic and 100% all domestic and 100% percentage points) of large consumers in of large consumers CORAAPPLATA in CORAAPPLATA operational areas. operational areas 14-May-2009 30-Sep-2013 31-Mar-2018 30-Mar-2018 Comments (achievements against targets): The project contributed to an increase in metering from 3 percent to 24 percent over the course of the Project (far surpassing the intermediate outcome indicator of 12 percent) through financing the installation of 4,000 micro meters. This investment provided a catalyst where CORAAPLATA engaged in a private public contract with a firm to manage their commercial functions and expand metering. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 60% of domestic and 60% of Text N/A 60 percent of Customer satisfaction CORAAPLATA began hotel sector consumers are domestic and 60 survey made. collecting consumer 'Satisfied' or 'Highly Satisfied' percent of hotel satisfaction in 2018 Page 35 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) with CORAAPPLATA sector consumers are performance based on ‘Satisfied’ or ‘Highly results from consumer Satisfied’ with satisfaction surveys CORAAPPLATA performance based on results from consumer satisfaction surveys. 14-May-2009 30-Sep-2013 31-Mar-2018 30-Mar-2018 Comments (achievements against targets): The project did not conduct this survey by project close, because the pre-treatment plant, outfall, and road repairs were not concluded. The Borrower finalized these works by December 2018. Nevertheless, CORAAPLATA began collecting consumer satisfaction data on their services in 2018. Annex 10 shows results of data collected by CORAAPPLATA, which shows that 35% rate overall services as good or excellent, 35% as fair, and 26% as poor. This survey was completed prior to project related infrastructure works being completed. Component: Component Three: CORAAPPLATA has developed sufficient institutional capacity to effectively implement the Project. Unlinked Indicators Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of water utilities Number 0.00 0.00 2.00 3.00 that the project is supporting 14-May-2009 30-Sep-2013 31-Mar-2018 30-Mar-2018 Comments (achievements against targets): The project supported three utilities: CORAAPLAT, CORAAMOCA, and CORAAROM. The latter two received technical assistance along with modest investments in metering and new commercial software systems. The former also benefited from technical assistance, metering, as well as infrastructure works. Page 36 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) B. Additional Indicators proposed by ICR Team at PDO level Development Objective Outcome Indicators (reflecting indicators Percent of Target Achieved or Baseline Target 2017 of Phase I modified by restructuring - RS) Percentage Pt. Change PDO 3 - Improve the financial and operational (ICR proposed indicator) % Non Revenue Water (57%) year 2015 N/A 45% 12 percentage point reduction performance of CORAAPLATA CORRAROM (8%) (ICR Proposed Indicator) % of consumers who year 2012 N/A 13% 7 percentage point increase are metered CORRAMOCA (4%) year 2012 N/A 42% 38 percentage point increase PDO 4 - Enhanced CORRAROM (0.42) operational and (ICR Proposed Indicator) Improved Ratio of total year 2014 N/A 0.51 year 2017 11 percentage point increase Commerical performance own-source revenues/ total operating costs CORRAMOCA (0.64) of utilities to participate in (including energy costs) year 2014 N/A 0.72 year 2017 8 percentage point increase APL II CORRAROM (0.70) (ICR Proposed Indicator) Improved Ratio of total yeasr 2014 N/A 0.91 year 2017 21 percentage point increase own-source revenues/ total operating costs CORRAMOCA (0.72) (excluding energy costs) year 2014 N/A 0.90 yeasr 2017 18 percentage point increase Page 37 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) C. Component indicators relevant to Results Framework, but not captured in Annex 1 Intermediate APL Phase I Outcomes Intermediate Outcome Indicators Baseline Target 2019 Evidence Component 1 Note this indicator was not officially dropped from the results framework, but was not included as part of the ISR and Development and adoption of a National therefore is not capatured in the portal. Strategy for the water sanitation sector with Installation of National Water and The ICR team is reporting that a national associated public consultation, environmental Sanitaiton Sector Information and No Yes No information and benchmarking system was education, investment planning and the Benchmarking System never installed. Given the new law water capacity building of key sector regulatory and still needs to be pass which will define poicy institutions roles and responsibilities it was unrealistic that this indicator would be achieved in the project life time. Component 2 This indicator was officially dropped, but the PDO's financial aspect was not changed. Therefore, ICR is reporting on the original indicator. Assumptions for Operating ratio reached 0.7 including baseline are unclear. Current operating electricity costs (Indicator was 0.50 0.70 0.45 ratio of 0.45 is derived from Central dropped in 2013 RS) Government executed budget information. The operating ratio of 0.45 is derived from CORAAPLATAs own source revenues from WSS sales divided by their total operating costs including electricity Improved financial and operational performance of CORAAPPLATA CORAAPLATA reports that 53% of large consumers (hotels and industrial users) Metering coverage reaches 15 percent Not available 100% 53% are metered. No available information was of all domestic and 100% of large found on large providers at baseline. consumers in CORAAPLATA operatoin areas (Indicator modified to "Metering coverage reaches 12 21 percentage point increase in domestic percent of all domestic and 100% of consumers. Note this indicator in the portal large consumers in CORAAPPLATA only reflects the domestic aspects of 3% 12% 24% operational areas" during 2013 RS) metering and does not specify large consumers. Therefore the ICR team is reporting on this breakdown separately. Component 3 This indicator has become irrelevant CORAAPPLATA has developed sufficient 70 percent of loan committed and 50 sinece the APL II will not be pursued. It institutional capacity to effectively implement percent disbursed by the expected start 0% 50% 98% was determined around June 2015 that a the Project of APL II second phase would not happen. As of March 2018 98 percent was disbursed. Page 38 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Role Preparation Manuel G. Mariiio Task Team Leader Taimur Samad Urban Specialist Patricia Lopez Senior Financial Analyst Ignacio Urrutia Junior Professional Associate Natalie Giannelli Junior Professional Associate Violeta Wagner Senior Program Assistant Ventura Bengochea Lead Water & Sanitation Specialist Maritza Rodriguez Financial Management Specialist Patricia Hoyes Senior Finance Officer Karla Chaman Communications Specialist Mariana Montiel Senior Counsel Fabiola Altimari Senior Counsel Alan Carroll Operations Adviser Catherine Abreu Rojas Procurement Annalist Evelyn Villatoro Senior Procurement Specialist Clemencia Onesty Portfolio Officer Jose C. Janeiro Senior Finance Officer Miguel-Santiago Oliveira Finance Officer Jose Luis Gil Environmental Specialist Marco Zambrano Environmental Specialist Luz Maria Gonzalez Financial Analyst Mary Lisbeth Gonzalez Social Specialist Clara Alberquerque Financial Analyst Andreas Rohde Peer Reviewer Page 39 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) Philippe Marin Peer Reviewer Salem Rohana Peer Reviewer Supervision/ICR Marco Antonio Aguero Task Team Leader(s) Zoila Catherine Abreu Rojas Procurement Specialist(s) Maritza A. Rodriguez De Pichardo Financial Management Specialist Oscar E. Alvarado Team Member Ntombie Z. Siwale Team Member Ramon E. Anria Social Safeguards Specialist Patricia Rodrigues de Melo Team Member Christian Borja-Vega Team Member Maria Pia Cravero Counsel Robert H. Montgomery Environmental Safeguards Specialist Ndeye Awa Diagne Team Member Jean-Martin Brault Former Team Leader Sylive Debomy Former Team Leader Page 40 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) B. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY98 0 1,176.00 FY06 19.945 170,821.05 FY07 17.635 140,065.56 FY08 27.136 163,835.76 FY09 8.723 49,956.32 Total 73.44 525,854.69 Supervision/ICR FY07 .338 2,426.95 FY10 8.357 51,409.09 FY11 21.267 106,471.32 FY12 25.451 129,067.65 FY13 12.924 64,458.35 FY14 10.613 62,194.73 FY15 14.126 85,390.75 FY16 35.658 146,099.47 FY17 19.535 106,220.78 FY18 17.003 128,071.99 FY19 8.052 49,818.00 Total 173.32 931,629.08 Page 41 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) ANNEX 3. PROJECT COST BY COMPONENT Amount at Approval Actual at Project Percentage of Components (US$M) Closing (US$M) Approval (US$M) Component 1: Technical Assistance for 3.52 4.62 131% Sector Development Component 2: Rehabilitation and Expansion of Sanitation Services in 26.33 24.70 94% Puerto Plata Component 3: Program Administration 4.08 6.06 146% Front End Fee 0.07 0.07 100% Total 34.00 35.44 104% Page 42 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) ANNEX 4. EFFICIENCY ANALYSIS 1. A cost-benefit analysis was done for this ICR using a modified methodology compared to the one used at appraisal. The analysis was carried out for the following components: (i) sewerage expansion, and (ii) wastewater pre- treatment plant and submarine outfall. 2. The Project assumed a 30-year life span and values of costs and benefits were discounted using a 6 percent discount rate as per World Bank guidelines. All benefits and costs were estimated based on the components of the restructured Project. Health benefits resulting from sewerage and submarine outfall infrastructure were considered in the sensitivity analysis. Sanitation and wastewater benefits include changes in tourist flows in the area of the Project. 3. There were also two aspects not quantified in the economic analysis that affected positively the overall efficiency of the Project (i) improved operation and efficiency of CORAAPPLATA, and changes in the fiscal impacts from these improvements; and (ii) the implementation capacity and efficiency of the entire Project. 4. For the expansion of sanitation services, the analysis considered the benefits of sewerage expansion equal to the willingness-to-pay estimated during Project preparation. This was estimated at US$12 per household (in 2009 prices) per month per services. Based on approximately 1,100 new households, the total benefit amounted to US$0.16 million per year. 5. For the wastewater pre-treatment plant and submarine outfall, the analysis considered the environmental benefits associated with the improvement of coastal water quality estimated at US$0.06 million per year (using shadow prices of biological oxygen demand and suspended solids removed35), plus the benefit of safely disposed wastewater incurred by approximately 143,000 habitants of Puerto Plata equivalent to US$1.69 million per year (assuming that 25 percent of the willingness to pay for sewerage expansion represents the willingness to pay for safety disposal of wastewater) by eliminating the discharges in the River San Marcos and the shoreline plus better conditions for tourist areas, estimated at US$3.5 million on the basis of approximately 354,000 foreign visitor per year and the stated willingness-to-pay of foreign tourists visiting Dominican Republic for clean water. 36 37 6. The investment cost of the Project used in the analysis amounted US$29.5 million and followed the actual disbursement profile plus operation and maintenance costs. 7. The results of the updated economic analysis showed that even after considering the delays in implementation, 35 The environmental benefits used parameters of shadow prices of US$7 per ton of biological oxygen demand removed and US$1 per ton of suspended solids removed. See United Nations Environmental Programme. 2015. Economic Valuation of Wastewater – The Cost of Action and the Cost of Inaction. 36 Assessing Tourists' Preferences for Recreational and Environmental Management Programs Central to the Sustainable Development of a Tourism Area in the Dominican Republic. Article in Environment Development and Sustainability · January 2002 37 Tourists revelated that clean ocean water and beaches are very important and that they were willing to pay US$15 (in 2002 prices) in addition to what they have already paid for staying in hotels that have adopted comprehensive water programs. Page 43 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) the Project was economically efficient with a 11.2 percent internal rate of return and net benefits of US$17.4 million. 8. A sensitive analysis was also done including health benefits, estimated using the Disability-Adjusted Life Years (DALY) reported by the Institute of Health Metrics and Evaluation (WHO/UW) for 2016 for diarrheal diseases. Values were monetized based on the minimum wage of RD$ 8,310 per month per person (US$ 167.2).38 In this case, the results showed a 12.4 internal rate of return and net benefits of US$22.2 million. Another sensitive analysis was done using the same discount rate of 12 percent used during the appraisal stage. In this case, the net benefits with and without the health benefits dropped to US$0.5 million and -US$1.1 million, respectively. 38 In the case of Puerto Plata, the incidence was considered 50 percent higher than national average. Page 44 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) ANNEX 5. FINANCIAL MODELING OF CORAAPLATA 1. An examination of historical financial statements shows that CORAAPPLATA has the potential to improve revenue generation and collection, cover operational costs, and partially cover capital costs related to new infrastructure. CORAAPPLATA’s financial statements and budget information show that between 2015 and 2018, it was generally running small operational surpluses. However, these surpluses are masked by recurrent central government transfers for energy and staff costs. These transfers cover 87 percent of energy costs and 17 percent of staff costs for CORAAPPLATA. These subsidies form a critical piece of CORAAPPLATA’s current and future financial position, accounting for an average of 47 percent of total revenues during the previous three years. 2. CORAAPPLATA currently has a system-wide bill collection rate of 45 percent leaving significant room to increase revenues without immediately raising tariffs. However, collection rate rates vary significantly among CORAAPPLATA’s 20 user categories. Although seven user categories accounted for over 90 percent of total revenues in 2018, four of these categories demonstrated collections rate below 50 percent. If collection rates for these for these four user categories (C, M3, R2 and R3) were increased to at least 50 percent, then CORAAPPLATA’s would be in a better financial position. Larger surpluses could be achieved with even higher collection levels, which could reduce the level of subsidies from the central government (See Figure A.5). The increasing trajectory of own- source revenues since 2015 and the improved Figure A.5 CORAAPPLATA Income from Tariffs as a Percentage of commercial performance Different Tariff Categories that has resulted from the private sector alliance increases the probability that CORAAPPLATA can reduce its dependence on government subsidies.39 This continued trajectory is important as CORAAPPLATA will remain vulnerable to economic shocks and potential abrupt cuts in subsidies as long as they heavily rely government subsidies for operation and maintenance costs. 3. Although a partial tariff increase was implemented in 2018, tariff levels have not increased in relation to inflation. Tariff increases continue to be a challenging political process. 39 In September 2014, CORAAPPLATA signed a 20-year contract with the private sector firm, AAA, to improve their commercial management. This contract went into operation in January 2015. Under this contract, AAA was delegated the following commercial management activities: (i) maintenance of user cadaster and georeferencing of the databases of the clients; (ii) supply and installation of meters; (iii) billing and collection; (iv) installation of commercial software; (v) communication activities to build a culture of payment and water management; and (vi) transfer of knowledge and technology to strengthen CORAAPPLATA. Page 45 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) 4. CORAAPPLATA’s immediate focus is on demand side interventions, which include installing macro and micro- meters to better account for water that is consumed or lost through leakages, and on improving collection rates with outreach programs. It is feasible for CORAAPPLATA to further increase own source revenues by improving collection rates and reducing non-revenue water as they have planned. Their private sector alliance, which is supported by a 20-year contract with the firm AAA, is designed to help the provider improve registration of consumers, billing, collection, and expansion of metering. The trajectory of increasing own-source revenues and improved commercial performance that is a result of the alliance increases the likelihood that CORAAPPLATA can move closer to financial autonomy for at least operation and maintenance costs. Page 46 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) ANNEX 6. DESCRIPTION OF RESTRUCTURING Restructuring No. Description of Restructuring Date 21-Jul-2013 1 To reallocate proceeds of the Loan, modify the Project indicators, and extend the Project closing date from September 30 ,2013 to June 30, 2015. 30-Jun-2015 2 To extend the Project closing date from June 30, 2015 to September 15, 2015. This short extension was granted because of performance issues in getting contracts signed for the completion of the Project’s main sewerage works, namely the construction of a wastewater pre-treatment plant and of a submarine outfall. A follow-on extension of the Project closing date 15.5 months was conditional on the signing of these two contracts to allow these main works to be completed. 15-Sep-2015 3 To extend the Project closing date by 15.5-months from September 15, 2015 until December 31, 2016, to allow for the completion of the contracted works. This restructuring also reallocated US$641,000 provided under the Works Category to the Goods Category. 22-Nov-2016 4 To provide a 6-month extension of the Project closing date from December 31, 2016 until June 30, 2017 to ensure that the Project can complete the construction of the sewage collection and treatment works. 14-Jun-2017 5 To provide a 9-month extension of the Project closing date from June 30, 2017 until March 31, 2018. The purpose of the extension was to allow the completion of the submarine outfall. 27-Dec-2017 6 To remove all reference to the second phase of the APL in the PDO and results framework since a phase II of the project will not be initiated. Page 47 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) ANNEX 7. ORIGINAL AND POST-RESTRUCTURING PDO-LEVEL INDICATORS Link to PDO Original PDO Indicators Post- 2013 Comment Restructuring Linked to PDO (i): PDO 1.1 Setting-up of Maintained This was a loan covenant; the Borrower – Strengthening and the Water Sector no later than 90 days after effectiveness consolidating the Council – had to establish a water sector council. policy framework This indicator represented an of the water and intermediate step in strengthening and sanitation sector in consolidating of the policy framework. the Dominican Republic Linked to PDO (i) PDO 1.2 Development Maintained and adoption by the Water Sector Council of a National Strategy for the water and sanitation sector Linked to PDO (ii): PDO 2.1 Consumers that Maintained The Project originally foresaw extending Improving and receive access to the sewerage network and pumping expanding access improved or new stations in the Puerta Plata Region. Over to sanitation and sanitation and to the course of implementation, however, wastewater wastewater treatment the scope was reduced to focus on the treatment and and disposal services in City of Puerta Plata. Nevertheless, the disposal services in the Puerto Plata region, target was not adjusted to reflect this the Puerto Plata the target for this adjustment. region indicator is to provide access to these services for 128,000 consumers40 Linked to PDO (ii) PDO 2.1 Percentages of Maintained The indicator lacked a clear calculation consumers and hotels methodology. The calculation method that are connected to utilized to establish the baseline was also the sanitation network unclear. in Puerto Plata, the target is 80 percent for consumers and 70 percent for hotels Linked to PDO (iii): PDO 3.1 The ratio of Dropped The dropping of this indicator limited the Improving the total revenue to total capacity to measure the financial aspect financial and operating expenses of PDO3. 40This indicator is listed also listed as 128,000 consumers in the Project area receive improved access to water and sanitation services in the PAD and the 2013 Restructuring. The ISRs, however, track the indicator as it is written above. The restructuring table maintains the inconsistency of the results framework versus the monitoring table. Page 48 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) operational reaches 70 percent for performance of CORAAPPLATA, CORAAPPLATA, the including electricity regional water costs utility Linked to PDO (iii) PDO 3.2 CORAPPLATA Adjusted. has completed and CORAAPPLATA made operational a has identified 100 cadaster of consumers percent of their covering all its potential operational areas consumers and has made operational an active registry of at least 40,000 users, covering at least 60 percent of its operational areas Linked to PDO (iv): PDO 4.1 Number of Adjusted. The revised indicator does not permit Enhancing regional utilities signing Compliance measuring the achievement of this PDO. operational and “Performance and agreements have Nevertheless, the utilities, in line with commercial Financial Support been signed on regulation in the Dominican Republic, performance of Agreements” and improving of submit periodic performance reports that other regional meeting operational cadaster, include information on operational and utilities and post- and commercial commercial commercial performance. restructuring, PDO performance targets systems, (iii) as well. outlined in these administrative agreements to and financial participate in the APL II, systems of the target is to have two CORAAPPLATA, utilities, other than CORAAMOCA and CORAAPPLATA, meeting CORAROM; also a these standards. strengthening program for O&M of sewerage systems of Puerto Plata. Page 49 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) ANNEX 8. BORROWER COMMENTS ON ICR This Annex presents the comments from the Borrower (in Spanish and English translation) on the draft report, which have already been incorporated in the final version of the report. 1. En el marco de la revisión del Informe Final del Proyecto 7680-DO, queremos reconocer lo completo del mismo, sustentado en la recopilación de la memoria histórica del Proyecto, EL esfuerzo realizado por el equipo ha sido loable y dicho informe contiene los principales eventos ocurridos en la ejecución del Proyecto. El Préstamo 7680- DO, fue una continuación del LIL (Préstamo para el aprendizaje y la innovación) que se había ejecutado en el Municipio de Sosúa, finalizándose en el 2005, y se sustentaba en unos Estudios de Factibilidad elaborados en el 1998, al momento de ejecutarse el Proyecto en abril de 2010, por un monto de US$27.5 millones, y compuesto de tres (3) componentes, el Componente 2 (Rehabilitación y Expansión de los Servicios de Saneamiento en Puerto Plata, con un monto de inversión de US$23.01 millones, equivalente al 83.67%), estaba supeditado a las contrataciones de los diseños de las obras, por eso se aprecian los bajos desembolsos desde el inicio abril 2010 hasta Febrero 2013, ya que la ejecución se circunscribía a consultorías y a los procesos de selección de las firmas para los diseños; es decir la incorrecta formulación del Proyecto, generó de inicio esa situación que subsecuentemente evaluaba al Proyecto como Insatisfactorio, por tener como elemento fundamental de evaluación los Desembolsos. In reviewing the Final Report for the Project 7680-DO, we want to acknowledge the completeness of it based on the compilation of the historical memory. The effort made by the team has been praiseworthy and this report contains the main events that occurred in the execution of the Project. Loan 7680-DO was a continuation of the LIL (Loan for Innovation and Learning) that had been executed in the Municipality of Sosúa in 2005 and was based on feasibility studies prepared in 1998. The Project began to be executed in April 2010, for an amount of US $ 27.5 million, and was composed of three components. Component 2 - Rehabilitation and Expansion of Sanitation Services in Puerto Plata comprised 83.67 percent of the loan with an investment of US $ 23.01 million. This component required the contracting of a firm to develop designs, which is why there were low disbursements between April 2010 to February 2013. This component experienced problems with the technical designs, which contributed to delays and a lower rating of the project, since disbursements are a part of the evaluation. 2. Es importante resaltar, que las modificaciones introducidas al Proyecto Original, como consecuencia de las Misiones de Seguimiento en conjunto MEPyD con el Banco, no representaron cambios en el objetivo del Proyecto, y nos permitió cumplir con las Metas e Indicadores de Resultados. Aun cuando la imposibilidad de desarrollar los Sistemas de Alcantarillado Sanitario en Sosúa y Montellanos previstos, debido a que los Estudios realizados, arrojaron que el costo de construcción de dicho Sistema de Alcantarillado ascendía a US$27,5 millones; el Proyecto para logar el cumplimiento del Indicador de Saneamiento, incorporó la Construcción del Alcantarillado Sanitario en el Municipio de San Felipe de Puerto Plata, de los Barrios Playa Oeste I, Playa Oeste II y Nuevo Renacer, dentro de la zona de influencia de la Planta de Pretratamiento y del Emisario Submarino, que nos permitió elevar la cobertura de Saneamiento de CORAAPPLATA a 79%, siendo 80% lo estimado; también se proporcionó a CORAAPPLATA un Catastro de Usuarios superior a los 40,000 usuarios, con lo que se elevó a 143,000 personas con acceso al Saneamiento en el Municipio de San Felipe, los Hoteles están conectados al Sistema en un 86%, el resto tiene principalmente Playa Dorada, tiene un Sistema propio de tratamiento, pero se tiene la capacidad instalada para en un futuro incorporarlos; también se proporcionó a CORAAPPLATA una plataforma que mejoró considerablemente su desempeño Financiero con la incorporación del Sistema del Plan de Negocios Estratégicos, Page 50 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) Plan de Gestión Comercial que incluyó instalación de software y el Plan de Instalación de micro y macro medidores, eso se confirma en que CORAAPPLATA aumentó significativamente su cobertura de servicio medido de agua con medidores de 10% al 25% y aunque los datos no son tan exactos CORAAPPLATA aumentó sus recaudaciones por el cobro de agua de una manera significativa duplicando sus recaudaciones. It is important to highlight that the modifications introduced to the Project, which were introduced by MEPyD in consultation with the World Bank during its missions, did not represent changes in the objective of the Project. These changes allowed us to comply with the Results Goals and Indicators. The studies that were carried out for the expansion of sewerage systems in Sosúa and Montellano, showed that the cost of construction amounted to US $ 27.5 million making it impossible to implement these works. Nevertheless, to make progress towards the indicator of expanding access sewerage, the Project expanded sewerage access in the Municipality of San Felipe de Puerto Plata. The specific areas were West Beach I, West Beach II and New Renacer Neighborhoods. These areas were adjacent the pretreatment plant and the submarine outfall, which allowed us to increase CORAAPPLATA's Sanitation coverage to approximately 80%. The Project also supported CORAAPPLATA with updating its Cadaster of Users of more than 40,000 users, which increased to 143,000 people with access to Sanitation in the Municipality of San Felipe. Hotels are connected to the sewerage and the Playa Dorada complex has its own treatment system; however, the new pre-treatment plant has the installed capacity to incorporate this complex in the future. CORAAPPLATA was also provided with a platform that significantly improved its financial performance with the incorporation of the Strategic Business Plan System and Commercial Management Plan that included software installation and the Installation Plan for micro and macro meters which allowed CORAAPPLATA to significantly increased its metering of water distribution from 10 to 25%. This allowed CORAAPPLATA to increase its collections by charging more accurately the volume of water sold and significantly increased its collections. 3. Respecto a las demás CORAAS en las que el Proyecto intervino, (CORAAMOCA & CORAAROM), la incidencia del Proyecto se denota muy positivamente CORAAMOCA aumentó su cobertura de agua medida de 4% al 42% y en CORAAROM aumentó la cobertura de agua medida de 8% al 13%, lo que se reflejó en un incremento de sus ingresos por la cobranza del agua; adicionalmente, hay que agregar los beneficios intangibles, su incidencia y aporte de los Sistemas de Gestión Comercial y de los Planes de Negocios, que han incidido muy favorablemente en ambas instituciones. With respect to the other CORAAS where the Project intervened, (CORAAMOCA & CORAAROM), the impact of the Project was very positive. CORAAMOCA increased its metering coverage from 4% to 42% and CORAAROM increased the metering coverage from 8% to 13%. These increases were reflected in increased income from billing and collection. In addition, we must add the intangible benefits, such as the contribution of the Commercial Management Systems and Business Plans, which have had a very favorable impact on both institutions. 4. Resulta importante resaltar el Dictamen de los Auditores Independientes, de la firma BDO Auditoría, S.R.L, emitidos en su Auditoría de Cierre que abarca el período comprendido entre 01 de enero de 2017 hasta el 31 de marzo de 2018 y al 31 de diciembre de 2016; que dictaminan que “En nuestra opinión, los Estados de Solicitudes de Desembolsos presentan razonablemente los Certificados de Gastos (SOEs) sometidos al Banco Mundial durante los años terminados al 31 de marzo d 2018 de diciembre de 2016. Asimismo: (a) dichos gastos son elegibles para ser financiados bajo el convenio de préstamo No.7680-DO; (b) los procedimientos de contabilidad y de control interno utilizados en la preparación de los SOEs son adecuados, y el Ministerio de Economía, Planificación y Desarrollo (MEPyD) ha mantenido la documentación adecuada para respaldar las solicitudes de reembolso de los gastos incurridos; y (c) los fondos del préstamo han sido utilizados únicamente para los fines del proyecto”. Page 51 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) It is important to highlight the opinion of the Independent Auditors, BDO Audit Firm, SRL, who issued in its Closing Audit that "In our opinion, the States of Disbursement Requests reasonably present the Certificates of Expenses (SOEs) submitted to the World Bank from December 2016 to March 31, 2018. Likewise: (a) these expenditures are eligible to be financed under loan agreement No.7680-DO; (b) the accounting and internal control procedures used in the preparation of SOEs are adequate, and the Ministry of Economy, Planning and Development (MEPyD) has maintained adequate documentation to support requests for reimbursement of expenses incurred; and (c) the loan funds have been used solely for the purposes of the project. " 5. Finalmente, el Impacto del Proyecto en el aspecto social, medio ambiental y de eficiencia del Sistema Técnico del Alcantarillado Sanitario de Puerto Plata (Tercer Polo Turístico del país), resulta altamente beneficioso y justificó dicha inversión, se enfrentaron grandes desafíos técnicos, adversidades climatológicas y nos quedan las lecciones aprendidas en ese tránsito que culmináramos la mañana del 21 de diciembre de 2018, con la inauguración del Sistema de Alcantarillado Sanitario de Puerto Plata. Finally, the impact of the Project on the social, environmental and efficiency aspects of the Sanitary Sewerage System of Puerto Plata, which is the third largest tourist destination of the country, is highly beneficial and justified this investment. While the Project learned many lessons, faced great technical challenges and difficult climatological events, on the morning of December 21, 2018 we were able hold the inauguration of the Sanitary Sewer System of Puerto Plata. Page 52 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) ANNEX 9. BORROWERS FINAL REPORT The following lessons learned were articulated in the Borrower’s Final Report: 1. Los estimados presupuestarios en la fase de pre-inversión de los Proyectos deben corresponderse con las necesidades reales de las obras; en nuestro caso, debido al tiempo transcurrido entre el Estudio y la Ejecución, debió haberse actualizado el Estudio y verificar que las condiciones iniciales se mantenían o no. Así con los estimados de costo a nivel de perfil de Proyecto, ajustados al momento por la inflación al Proyecto con Estudio de Factibilidad Técnica del Proyecto Alcantarillado Sanitario para Puerto Plata, Sosúa y Cabarete, correspondió al elaborado en Noviembre de 1998 (Habiendo transcurrido 15 años entre los Estudios y la Ejecución del Proyecto),, no ocurrirían esos desfasamientos en la formulación; por ejemplo en el Proyecto original, se preveía ejecutar el Sistema de Alcantarillado Sanitario de Sosúa – Montellano y como resultado de los Diseños del Sistema, resultó que tendrían un costo aproximado de US27.5 millones de dólares, casi la totalidad del financiamiento con el Banco Mundial, un absurdo, por lo que debió eliminarse del Proyecto esas actividades. Budgetary estimates in the pre-investment phase of the Project must correspond to the real needs of the works. In our case, due to the time elapsed between the feasibility studies and the execution of the work, the project should have updated the studies to verify whether the initial conditions were maintained or not. Additionally, these studies should have updated the costs taking into account inflation that occurred between when the original feasibility studies (for the sanitary works) were completed in November 1998 and when the project was executed. As of result of not having the studies updated during preparation, the costs of planned works did not correspond to the available financing. For example, the sanitary sewer system of Sosúa - Montellano was estimated at approximately US$ 27.5 million, which was almost all of the Bank financing. As a result, these activities had to be eliminated from the Project. 2. Los Proyectos al ser formulados deben contar con una línea base bien definida. La comparación de los resultados finales con esta línea base nos permite evaluar objetivamente los impactos generados. Además, se deben seleccionar indicadores más precisos para hacer las evaluaciones y monitoreo regulares y a medio término. Projects need to be formulated with a well-defined baseline. The comparison of the final results with a baseline allows us to objectively evaluate the impacts generated. In addition, more precise indicators should be selected to conduct regular and mid-term evaluations and monitoring. 3. Las Unidades Ejecutoras de los Componentes en los Proyectos deben ser cuidadosamente seleccionadas. El Coordinador, los especialistas de Adquisiciones, administradores de contratos, encargados financieros y administrativos y los supervisores técnicos deben tener las capacidades y experiencias suficientes para alcanzar una buena gestión. También el personal clave de cada Proyecto debe tener dedicación exclusiva y motivación salarial adecuada. The Executing Units of the Projects must be carefully selected. The Coordinator, Procurement Specialists, Contract Managers, Financial and Administrative Managers and Technical Supervisors must have sufficient skills and experience to achieve good management. Also, the key personnel of each Project must have exclusive dedication and adequate salary motivation. Page 53 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) 4. Las salvaguardas que aplican a cada nuevo Proyecto deben ser determinadas con mayor precisión y el cumplimiento de las mismas debe asegurarse en toda la ejecución del Proyecto. Las Gerencias del Banco a los Proyectos y las Unidades Ejecutoras de los componentes deben ser más celosos en estos temas. The safeguards that apply to each new Project must be determined with greater precision and compliance with them must be ensured throughout the execution of the Project. The Bank's Management of the Projects and the Executing Units of the components must be better coordinated in these matters. 5. Así como son de dinámicos y flexibles los Planes de Adquisiciones y los Programas Operativos anuales, deben modificarse los Manuales de Operaciones. Especialmente deben revisarse oportunamente los umbrales a las distintas modalidades de licitaciones y selecciones, de acuerdo a las condiciones específicas de cada país; esa situación ya han sido tomados en cuenta por el Banco en sus Nuevas Regulaciones de Adquisiciones. Just as the procurement plans are dynamic and flexible, the Operations Manuals must be modified. In particular, thresholds should be reviewed in a timely manner for the different modalities of bids and selections, according to the specific conditions of each country. This situation has already been taken into account by the Bank in its New Procurement Regulations. 6. Los diseños de las obras no pueden ser aceptados si previamente no se hacen los estudios de suelo, topográficos, etc. Además, las entidades contratantes deben ser más rigurosas en seleccionar la alternativa de diseño más eficiente técnicamente y racionalmente más económica. Esto evita muchas enmiendas en los montos contractuales y en los periodos de ejecución. Y además se reducen las reclamaciones de los Contratistas y Consultores. The designs of the works cannot be accepted if the soil, topographic, etc. studies are not previously done. In addition, contracting entities must be more rigorous in selecting the most technically efficient and rationally economical design alternative. This avoids many amendments related to contractual amounts and in the execution periods. It should also reduce the claims of Contractors and Consultants. 7. La gestión de los contratos, por parte de las Unidades Ejecutoras, debe ser más fuerte y exigente con los Consultores. Y poder contar con el apoyo del Banco; en nuestro caso para el Diseño y Supervisión del Emisario Submarino, primero advertimos lo desacertado que fue vincular Diseño con Supervisión, porque las firmas Consultoras conocen que lo inmediato de ese tipo de Contrato es la primera parte el Diseño y para ello colocan en sus ofertas los precios verdaderamente del mercado, y saben que la Supervisión se estima sobre una cantidad de hombre-mes, que realmente se sabrá cuando se haga el Diseño, entonces, subestiman ese precio, sabiendo que es posterior a la adjudicación de la obra y que transcurre un tiempo entre el Diseño y la Construcción, para luego iniciar un proceso de reclamación por inflación y otros motivos. Lo mejor es separar un proceso de otro, Diseño es una parte y la Supervisión otra. En el caso de Egis, el PASCT solicitó en dos (2) ocasiones prescindir de la Supervisión, debido al desastroso desempeño en la ejecución de la primera del Contrato de Diseño y el Banco argumentando aspectos legales (a nuestro entender sin base, porque se tenían todos los elementos legales para rescindirlo), se opuso y esos nos representó en adición al incremento de un 105% del costo de Supervisión, también a unos ocho (8) meses de tiempo perdido; finalmente el Banco aceptó la terminación de ese Contrato con la Egis. The management of the contracts, by the Executing Units, must be stronger and more demanding with the Consultants, and they need to be able to count on the Bank's support. In our case, for the design and supervision of the submarine outfall, we first noticed how unfortunate it was to link the contract for the design Page 54 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) with supervision. The consulting firm knows that the priority of that type of contract is the design component and offer true market prices. They also know that the supervision component is estimated on a quantity of man-month, which will only really be known when the design is done. As a result, they underestimate the supervision price only to ask for amendments later increasing the costs. In our case it would’ve been best to separate design from supervision. The PCU requested two times to cut the supervision component due to the disastrous performance in the execution of the first of the design contract. The Bank argued that it reasonable to drop the supervision component, which we disagreed with. In our opinion resulted in a 105% increase in the cost of supervision, and also about eight months of lost time. Ultimately the Bank accepted our request to terminate contract with the firm. 8. Las evaluaciones del impacto final de los Proyectos son imprescindibles para determinar los resultados y analizar las lecciones aprendidas. Es menester contratar una buena firma consultora que se encargue de estos trabajos. Evaluations of the final impact of the Projects are essential to determine the results and analyze the lessons learned. It is necessary to hire a good consulting firm that is responsible for these jobs. 9. Las auditorias técnicas deben fiscalizar a las Unidades Ejecutoras, en todo el trayecto de los Proyectos, de esa manera se pueden evitar situaciones que afecten el manejo de los contratos y así evitar sobrecostos, retrasos en los tiempos de ejecución. The technical audits must supervise the Executing Units, throughout the Project journey, in this way you can avoid situations that affect the management of the contracts and thus avoid cost overruns, delays in the execution. Page 55 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) ANNEX 10. CONSUMER FEEDBACK SURVEY CONDUCTED BY CORRAAPPLATA CORAAPPLATA’s Department of Planning and Development Consumer Survey Results Degree of satisfaction with the service received (August 2018) What was the reason for the visit? Number of surveys 489 Type Quantity Percentage Request 114 23% Claim 120 25% Complaints 102 21% Others 153 31% Total 489 100% How was the quality of the customer service received? Number of surveys 489 Type Quantity Percentage Excellent 221 45% Good 124 25% Fair 91 19% Poor 40 8% Total 476 97% How do you rate the time in which the customer service was provided? Number of surveys 489 Type Quantity Percentage Poor 182 37% Moderate 212 43% Good 61 12% Total 455 93% How do you rate the sales representative's treatment regarding the requested service? Number of surveys 489 Type Quantity Percentage Excellent 242 49% Good 130 27% Fair 79 16% Poor 23 5% Total 474 97% Page 56 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) Did the customer service representative, acknowledge of the subject? Number of surveys 489 Type Quantity Percentage Excellent 223 46% Good 144 29% Fair 85 17% Poor 20 4% Total 470 97% How would you rate the operational services provided by the institution? Number of surveys 489 Type Quantity Percentage Excellent 86 18% Good 81 17% Fair 170 35% Poor 126 26% Total 463 95% Page 57 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) ANNEX 11. MAPS AND PICTURES OF PROJECT Page 58 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) Wastewater Pre-treatment Plant Solid Waste Screen in Pre-Treatment Plant Page 59 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) Registry of Wastewater Flows at the Wastewater Pre-treatment Plant Backup emergency generator Chlorination Tanks Page 60 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) Control Valves at Pre-treatment Plant Paved Streets Where Sewerage was Installed Air Valves Installed Along Outfall Before it Enters the Sea Page 61 of 62 The World Bank Water and Sanitation in Tourist Areas ( P054221 ) Micro-Meters in CORAAMOCA Page 62 of 62