| Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00004669 IMPLEMENTATION COMPLETION AND RESULTS REPORT < H435-ZR, D102-ZR > ON A GRANT IN THE AMOUNT OF SDR 242 MILLION (US$ 356.1 MILLION EQUIVALENT) TO THE Ministry of Finance FOR THE DRC Urban Water Supply Project February 27, 2022 Water Global Practice Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective {June 30th, 2021}) Currency Unit = Franc Congolais (Fc) FC 1,987.99 = US$1 US$ 1.43 = SDR 1 FISCAL YEAR January 1 - December 31 Regional Vice President: Hafez M. H. Ghanem Country Director: Jean-Christophe Carret Regional Director: Mark R. Lundell Practice Manager: Maria Angelica Sotomayor Araujo Task Team Leader(s): Rebecca Jean Gilsdorf Patrick Goy Ndolo ICR Main Contributor: Yeli Mariam Dakoure Sou ABBREVIATIONS AND ACRONYMS AF Additional Financing AfDB African Development Bank AFO Administrative and Financial Officer AGREE Projet de Gouvernance et d’Accès à l’Electrification, à l’Eau et à l’Assainissement. CAS Country Assistance Strategy CEP-O Project ImplementationUnit (Cellule d’Exécution du Projet) CICOS Commission Internationale du bassin Congo-Oubangui-Sangah COPIREP Steering Committee for the Reform of State-owned Enterprises COVID-19 Corona Virus Disease 2019 CMU Country Management Unit DRC Democratic Republic of Congo EIRR Economic Internal Rate of Return ESIA Environmental and Social Impact Assessment ESMP Environmental and Social Management Plan ESIRT Environmental and Social Incident Response Toolkit FA Financing Agreement FC Franc Congolese FCV Fragile Conflict and Violence FIRR Financial Internal Rate Return FM Financial Management GDP Gross Domestic Product GoDRC Gouvernement of Demoncratic Republic of Congo ICR Implementation Completion and Results Report IO Instance Officielle IRR Internal Rate Return ISR Implementation Status and Results Report M&E Monitoring and Evaluation MC Management Contract MP Minsitere du Portefeuille MS Moderately Satisfactory MU Moderately Unsatisfactory NPV Net Present Value O&M Operations and Maintenance OHS Occupational Health and Safety OI Official Institutions OP/BP Operational Policy / Bank Procedure PAD Project Appraisal Document PAP Project Affected Persons PARP Poverty Reduction Action Plans PDO Project Development Objective PEASU Projet d’Eau d’Assainissement en Milieu Semi-Urbain PEMU Urban Water Supply Project PILAEP Promotion de modalités Innovantes pour L’Accès à I’Eau Potable PIU Project Implementation Unit PPR Procurerment Post Review PRSP Poverty Reduction Strategic Paper RAP Resettlement Action Plan REGIDESO State Water Utility Company – DRC RF Result Framework SC Service Contract SCD Systematic Country diagnostic SDR Special Drawing Right SRP Staff Restructuring Plan SWC Social water connections TOC Theory of Change UNICEF United Nations Children’s Fund USD United State Dollard WASH Water Sanitation Hygiene WB World Bank WSS Water Supply and Sanitation WTP Water Treatment Plant TABLE OF CONTENTS DATA SHEET .......................................................................................................................... 2 1. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 7 A. CONTEXT AT APPRAISAL .........................................................................................................7 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION .............................................................. 10 2. OUTCOME .................................................................................................................... 14 A. RELEVANCE OF PDOs ............................................................................................................ 14 B. ACHIEVEMENT OF PDOs (EFFICACY) ...................................................................................... 14 C. EFFICIENCY ........................................................................................................................... 18 D. JUSTIFICATION OF OVERALL OUTCOME RATING – MODERATELY UNSATISFACTORY ............... 20 E. OTHER OUTCOMES AND IMPACTS (IF ANY) ............................................................................ 21 3. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 22 A. KEY FACTORS DURING PREPARATION ................................................................................... 22 B. KEY FACTORS DURING IMPLEMENTATION ............................................................................. 23 4. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 23 A. QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................ 23 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ..................................................... 25 C. BANK PERFORMANCE ........................................................................................................... 26 D. RISK TO DEVELOPMENT OUTCOME ....................................................................................... 27 5. LESSONS AND RECOMMENDATIONS ............................................................................. 27 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 29 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 42 ANNEX 3. PROJECT COST BY COMPONENT ........................................................................... 45 ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................... 46 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 54 ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) ..................................................................... 62 Page 1 of 69 The World Bank DRC Urban Water Supply Project (P091092) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P091092 DRC Urban Water Supply Project Country Financing Instrument Congo, Democratic Republic of Investment Project Financing Original EA Category Revised EA Category Partial Assessment (B) Partial Assessment (B) Organizations Borrower Implementing Agency COPIREP, REGIDESO, REGIDESO, Democratic Republic of Ministry of Finance Congo, Represented by the Ministry of Finance Project Development Objective (PDO) Original PDO The project objective is to increase sustainable access to water in selected urban areas and the efficiency of REGIDESO. Revised PDO The revised PDO is to increase access to sustainable water services in selected urban areas, and to improve the operationalperformances and viability of the Project Implementing Entity. PDO as stated in the legal agreement to increase sustainable access to water in selected urban areas and improve the efficiency of the Project Implementing Entity Page 2 of 69 The World Bank DRC Urban Water Supply Project (P091092) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 78,000 65,087 65,087 TF-92105 190,000,000 189,278,695 190,543,563 IDA-H4350 166,000,000 123,856,300 120,105,946 IDA-D1020 Total 356,078,000 313,200,082 310,714,596 Non-World Bank Financing 0 0 0 Borrower/Recipient 0 0 0 Total 0 0 0 Total Project Cost 356,078,000 313,200,083 310,714,597 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 18-Dec-2008 13-Jun-2008 19-Nov-2012 31-Mar-2014 30-Jun-2021 Page 3 of 69 The World Bank DRC Urban Water Supply Project (P091092) RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 17-Jul-2012 39.09 Change in Results Framework Change in Loan Closing Date(s) Reallocation between Disbursement Categories Change in Procurement 10-Jul-2013 74.70 16-Oct-2015 171.72 Change in Loan Closing Date(s) Reallocation between Disbursement Categories 03-Feb-2016 186.71 Additional Financing Change in Project Development Objectives Change in Results Framework Change in Components and Cost Change in Loan Closing Date(s) Change in Disbursements Arrangements Change in Safeguard Policies Triggered Change in Legal Covenants Change in Procurement Change in Implementation Schedule 21-Dec-2018 231.38 Change in Results Framework Change in Components and Cost Change in Loan Closing Date(s) 25-Jun-2019 255.76 Change in Loan Closing Date(s) 05-Jun-2020 284.97 Change in Loan Closing Date(s) 23-Dec-2020 299.35 Change in Loan Closing Date(s) KEY RATINGS Outcome Bank Performance M&E Quality Moderately Unsatisfactory Moderately Satisfactory Substantial RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 18-May-2009 Satisfactory Moderately Satisfactory .76 02 30-Nov-2009 Satisfactory Moderately Satisfactory .98 Page 4 of 69 The World Bank DRC Urban Water Supply Project (P091092) 03 12-Jun-2010 Satisfactory Moderately Satisfactory 2.84 Moderately 04 26-Apr-2011 Moderately Unsatisfactory 17.75 Unsatisfactory Moderately 05 11-Oct-2011 Moderately Unsatisfactory 28.71 Unsatisfactory Moderately 06 12-May-2012 Moderately Satisfactory 33.66 Unsatisfactory 07 24-Oct-2012 Satisfactory Moderately Satisfactory 40.17 08 05-May-2013 Satisfactory Satisfactory 55.44 09 16-Nov-2013 Satisfactory Satisfactory 78.92 10 09-Jun-2014 Moderately Satisfactory Moderately Satisfactory 111.51 11 15-Dec-2014 Moderately Satisfactory Moderately Satisfactory 142.07 12 05-Jun-2015 Moderately Satisfactory Moderately Satisfactory 156.88 13 04-Sep-2015 Moderately Satisfactory Satisfactory 167.35 14 18-Jan-2016 Moderately Satisfactory Satisfactory 186.71 15 31-Oct-2016 Satisfactory Satisfactory 191.34 16 05-Jun-2017 Moderately Satisfactory Moderately Satisfactory 206.38 17 23-Jan-2018 Moderately Satisfactory Moderately Satisfactory 208.04 18 03-Aug-2018 Moderately Satisfactory Moderately Unsatisfactory 223.51 Moderately 19 08-Feb-2019 Moderately Unsatisfactory 235.90 Unsatisfactory 20 09-Aug-2019 Moderately Satisfactory Moderately Unsatisfactory 259.58 21 05-Feb-2020 Moderately Satisfactory Moderately Satisfactory 277.67 22 05-Aug-2020 Moderately Satisfactory Moderately Satisfactory 288.50 23 03-Feb-2021 Moderately Satisfactory Moderately Satisfactory 300.54 Page 5 of 69 The World Bank DRC Urban Water Supply Project (P091092) SECTORS AND THEMES Sectors Major Sector/Sector (%) Water, Sanitation and Waste Management 100 Water Supply 95 Public Administration - Water, Sanitation and Waste 5 Management Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Private Sector Development 0 Public Private Partnerships 10 Public Sector Management 0 Public Administration 24 Transparency, Accountability and Good 24 Governance Urban and Rural Development 0 Urban Development 76 Services and Housing for the Poor 76 ADM STAFF Role At Approval At ICR Regional Vice President: Obiageli Katryn Ezekwesili Hafez M. H. Ghanem Country Director: Marie Francoise Marie-Nelly Jean-Christophe Carret Director: Inger Andersen Mark R. Lundell Maria Angelica Sotomayor Practice Manager: Eustache Ouayoro Araujo Rebecca Jean Gilsdorf, Patrick Task Team Leader(s): Franck Bousquet Goy Ndolo ICR Contributing Author: Yeli Mariam Dakoure Sou Page 6 of 69 The World Bank DRC Urban Water Supply Project (P091092) 1. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL Context 1. At the time of appraisal of the PEMU project, the Democratic Republic of Congo (DRC) was in a post-conflict situation. The country was among the poorest countries in the world, with a GDP per capita of US$139 (CAS, 2007). Despite economic growth, which restarted in 2001, 94.3 percent of the population lived on less than $1.9 per day in 2004. In addition, the infrastructure suffered from a lack of maintenance, considerable physical damage, and weak governance, which exacerbated the poor quality of social services delivery and reduced access to the poorest part of the population. 2. The Water Supply and Sanitation (WSS) sector was particularly affected during and after the conflict. In 2008, only 22 percent of the total population had access to safe drinking water. The country needed to provide an additional 45 million people access in order to meet the Millennium Development Goal target of 71 percent access by 2015, which represented a significant challenge. In addition, the service delivery in urban areas was inefficient. From 1990 to 2006, the rate of water supply services coverage in urban areas fell from 68 percent to 35 percent, due to combined effects of the war, lack of investment and maintenance, suspension of aids, commercial and technical inefficiency of the national water utility, REGIDESO, and population growth. 3. The commercial, technical and managerial inefficiency of REGIDESO was particularly challenging and needed to be addressed to ensure a sustainable water service provision. At the time of appraisal, Water services ceased to function in more than 30 of the 94 urban centers supplied by REGIDESO, and many neighborhoods of the remainder, including the capital city, Kinshasa, faced long-lasting service interruptions. The dearth of REGIDESO services led many communities to install autonomous water networks, particularly in peri-urban areas of major cities, but those efforts were insufficient to avoid the decline of the coverage rate of urban water supply (UWS) services. Whereas in the 1980s, REGIDESO was one of the best-performing African water utilities, later its key performance indicators (non-revenue water [NRW], collection rate, and staff productivity) significantly deteriorated, half of the service connections became inactive, and the water sales decreased markedly. In addition, REGIDESO employed 4,803 staff and had about 247,000 active connections. Benchmarking REGIDESO to other performing water utilities in the region at that period and using any classic ratios (staff/connections, turnover/staff, and sales per m3 per staff) clearly indicated that the utility was overstaffed. Theory of Change (Results Chain) 4. The Project Appraisal Document (PAD) did not require a Theory of Change (TOC) or Results Chain. Therefore, an ex-post TOC was constructed based on the PDO, the results indicators, and the PAD description. Figure 1 summarizes the reconstructed TOC underlying the Project. The different changes throughout the project implementation (see section B.), including the additional financing, did not change the TOC as the PDO and long-term outcomes remain similar. Page 7 of 69 The World Bank DRC Urban Water Supply Project (P091092) Figure 1: Theory of change ISSUES ACTIVITIES OUTPUTS INTERMEDIATES PDO LONG TERM OUTCOMES OUTCOMES OUTCOMES Construct new Km of distribution network Number of new/ 1 Very low level of water distribution networks constructed rehabilitated household coverage and access in 2 connections Construct/rehabilitate 1 m3/day of water production urban areas Increase access to water treatment plant increased Number of new stand post sustainable water Design and implement a services in selected Weaknesses on the O&M Increase availability rate of repair and rehabilitation urban areas capacities of water water production Improve water availability treatment plants program and service continuity Design and implement a Percentage of the non- Important network revenue Water Improved health non-revenue water 1 losses (20 m3/day/km) outcomes linked to reduction plan Private and public Percentage of metered provision of sustainable connection not equipped Install/renew water connection meters on private and water supply services or equipped with broken water metered public connections Bill collection percentage Improve private and Accumulation of private Initiate regular bill from private connections 3 public bill collection unpaid bills collection operations Share of Instances Accumulation of public Officielles bills in total Program for the billing Improve the institutions (Instance reduction and control 4 operational financial officielles – IO -) unpaid of water consumption number of staff/1000 Share of labor cost on performances and bills by public institutions connections 5 O&M cost viability of REGIDESO 4 Overstaffing at REGIDESO Design and implement a Strengthen REGIDESO’s Improve the governance Staff restructuring Plan governance and autonomy and institutional Weak governance and Provide technical capacities of the water lack of autonomy of 4 assistance and training in Strengthen the water sector REGIDESO vis-vis the REGIDESO and water sector’s key actors’capacity Component A Component B State ministry Critical Assumptions 3. Customers (new and existing) are able and willing to pay for service 1. REGIDESO has the necessary engineering and management expertise (including expertise for non 4. The Government is committed to the infrastructure priorities and reform needs within REGIDESO – revenue water management )to make performance improvements and oversee construction 5. Voluntary departures (initiated as part of the staff restructuring plan) make it possible to reduce 2. Water resources and energy are not limited in the project zones high-paying positions in order to significantly reduce the labor cost. Page 8 of 69 The World Bank DRC Urban Water Supply Project (P091092) Project Development Objectives (PDOs) 5. The original PDO defined in the Financing Agreement (FA) is "to increase sustainable1 access to water in selected urban areas and improve the efficiency of the Project Implementing Entity." Key Expected Outcomes and Outcome Indicators 6. The original PDO defined in the FA was structured around two objectives, unpacked with corresponding outcome indicators below: Objective 1: increase sustainable access to water in selected urban areas, corresponding to the outcome: (i) "greater access to basic water supply services, mainly through household connections and standposts," measured by the percentage of people in the targeted cities with access to potable water. Objective 2: improve the efficiency of the Project Implementing Entity. This objective has two outcomes: (i) "reduced losses and higher productivity" and (ii) "improved financial position of REGIDESO." Unfortunately, there was no PDO indicator to measure the first outcome at approval. Still, three intermediate indicators were used to measure this outcome: percentage of non-revenue water, increased water production, and index of network losses. The second outcome is measured by the percentage of annual REGIDESO operation & maintenance (O&M) costs covered by revenues. Components 7. As described in the PAD of the parent Project (P091092, US$190 million) and the Additional Financing (AF) (P155266, US$166 million), the Project is organized into two components that covered three urban areas: Kinshasa, Lubumbashi, and Matadi. Component A - Water supply services in major urban centers: (cost at appraisal US$101.6 M; increased to US$257.85 million after the additional financing; actual cost at completion US$215.85 million2). REGIDESO implemented the component through an internal PIU (CEP-O). The component had two types of activities: • improve water production capacity toward (i) the rehabilitation and expansion of production facilities, mainly in Lubumbashi and Matadi; (ii) the rehabilitation of pumping stations (all cities) and (iii) the rehabilitation/construction of storage tanks in Lubumbashi. • improve the distribution system (both secondary and tertiary networks) and finance individual connections and collective distribution through (iv) the rehabilitation of distribution pipes and household connections (all cities); (v) the construction of new household connections and standposts (all cities); and (vi) the provision and installation of water meters (all cities) Component B – Support to sector reform, capacity building, and improved governance: (cost at appraisal US$88.4 M; increased to US$98.15 million after AF; actual cost at completion US$98.15 million). The component was envisioned to be implemented by COPIREP (Comité de pilotage de la réforme des entreprises publiques), a national Steering Committee created to implement the reform of State-owned enterprises. The component was designed based on an in-depth assessment of the REGIDESO's technical and commercial performances (described in para 3). It includes the following activities: (i) A Management Contract with a private operator, (ii) a repair and rehabilitation fund, (iii) a staff restructuring Plan (SRP) for REGIDESO, (iii) a program for the reduction and control of water consumption by public institutions (instances officielles, IO). These activities aimed to address the issues described in the TOC (figure 1) in order to achieve the PDO2. 1 There is a difference between the FA and the PAD PDO: The PDO in the PAD doesn't mention the sustainability dimension of the water access. It is limited "to increase access to water in selected urban areas and increase the efficiency of REGIDESO 2 Partial grant cancellation, see para 16. Page 9 of 69 The World Bank DRC Urban Water Supply Project (P091092) B. SIGNIFICANT CHANGES DURING IMPLEMENTATION Revised PDOs and Outcome Targets 8. The PDO was revised in February 2016 restructuring as follows: "to increase access to sustainable water services in selected urban areas, and to improve the operational performances and viability of the Project Implementing Entity." 9. This restructuring was linked to an additional financing aiming to scale up the original project objective 1. Therefore, the target of its outcome indicator, "the number of people provided with access to sustainable water services supply, " increased from 1,205,000 to 2,600,000 people to reflect the additional activities. The change in PDO also further clarified the performance improvement expected for REGIDESO. Revised PDO indicators 10. The PDO indicator associated with the first outcome was revised twice respectively during the restructurings of July 2012 and February 2016: • The first change was: people in urban areas provided with access to "Improved Water Sources" under the project. The indicator value shifted from percentage to number to align with the current practice and wording for sector indicators. • The second change was: people provided with access to "Improved Water Sources" under the project. The word "urban" was removed to include some beneficiaries in peri-urban areas of the targeted cities. Revised Components 11. On July 2012 restructuring, the scope and activities of three sub-components under the component B were revised as follow: • Sub-component B.1 (Management Contract – MC-) was renamed "Services Contract-SC-." • Sub-component B.2 (Repair, Replacement, and Rehabilitation Fund) was renamed "Repair, Replacement, and Rehabilitation and Operational Support Fund." • The scope of Sub-component B.3 (Staff Restructuring Plan) was reduced, leading to cost-saving. Other Changes 12. In July 2012 restructuring, the intermediate indicators were streamlined. During the preparation of the SC scope of work, the intermediate indicators were streamlined in order to: (i) align the sector related indicators with current practice updated vocabulary, (ii) align the PAD list of indicators with the list provided in the Financing Agreement3, and (iii) streamline the number of Intermediate Results indicators (18), which was not only excessive but also already reflected in the Performance Contract (PC) signed between the GoDRC and REGIDESO. Overall, several indicators were revised to refine the language and ensure consistency across documents, and eight indicators judged redundant with the PC were dropped. Annex 6 (Table I) shows a summary of the specific changes. 13. The AF, in February 2016, revised the scope of the project by adding the city of Kindu as new beneficiaries of water facilities funded under component A. The December 2018 restructuring then reduced the scope of the Project by removing activities scheduled for the city of Kindu. Therefore, some intermediates outcomes targets were reduced to reflect the changes, but it did not impact the outcome target of the PDO 1. 14. During the twelve years of the project implementation, seven extensions of its closing date occurred, in addition 3 Financing Agreement, Grant NUMBER H435-ZR, January 19, 2009 Page 10 of 69 The World Bank DRC Urban Water Supply Project (P091092) to the initial length of 64 months. The first closing date of the project was April 31st, 2014. The different extensions are summarized below: • Restructuring of July 2012: 21-month extension, new closing date December 31, 2015 • Restructuring of October 2015: 4-month extension, new closing date April 15, 2016 • Restructuring of February 2016: 36-month extension, new closing date December 31, 2018 • Restructuring of December 2018: 6-month extension, new closing date December 30, 2019 • Restructuring of June 2019: 6-month extension, new closing date June 30, 2020 • Restructuring of June 2020: 6-month extension, new closing date December 31, 2021 • Restructuring of December 2020: 6-month extension, new closing date June 30, 2021. 15. During three of the Project restructurings, cost savings were found and used to finance the next activities, namely: • After the SRP, 446 employees opted for separation, against a PAD estimate of about 1,000 people. Consequently, in July 2012, a first cost saving of US$5 million was reallocated to finance six months of chemicals needed for REGIDESO's operations. • Two others cost-saving occurred, respectively, as part of the July 2013 restructuring (US$44.46 million) and October 2015 restructuring (SDR 14.57 million). They were reallocated to component A activities to increase water production and the number of people accessing water. The July 2013 savings were due to lower than anticipated costs for certain works (as during preparation in 2008, unit costs of activities were based on estimates). 16. Partial grant cancellation before closing: By the project’s closing date two major activities (the Ozone Water Treatment Plant -WTP- and N'djili intake plant, included in rehabilitation works) were not achieved. It was decided that these activities would be financed instead by a new project (Kin Elenda, P171141. The committed amount for these works was 29,500,000 SDR (approximately US$ 42 million). This amount was canceled through the last project restructuring of June 2021, and funds from the new project (Kin Elenda) were allocated to cover the remaining construction costs. Rationale for Changes and Their Implication on the Original Theory of Change 17. Restructuring of July 2012. Two years after the project's effectiveness, there was no significant progress in the project implementation, except the SRP completion. The progress toward the PDO and the implementation were rated Moderately Unsatisfactory because both components A and B faced significant setbacks described below: 18. For component A, infrastructure investments, the bidding documents for Kinshasa were delayed by about 20 months, which necessitated the first extension of the project closing date. 19. For component B, sector reform, the MC bidding failed to attract qualified operators. This high-risk bidding process occurred in a context of institutional fragmentation and poor governance of the sector that hampered the DRC water reform. After the unsuccessful bidding process, the objectives of the MC were transferred to REGIDESO through a performance contract signed with GoDRC. Three years of Service Contract (SC) was also signed with a private operator to help REGIDESO reach its objectives under the performance contract. As mentioned above, several changes occurred in the project's intermediate indicators and in some of its components to reflect the evolving realities seen during implementation. 20. The scope of the Service Contract remained the same as for the Management Contract, with two series of activities: (i) a number of assessments and action plans to improve REGIDESO's commercial, technical, and human resource Page 11 of 69 The World Bank DRC Urban Water Supply Project (P091092) performances and the preparation of a tariff study; and (ii) management assistance, including strategy formulation, water production and distribution, and commercial, human resource, and financial management. However, the Services Provider did not carry out full managerial responsibilities. The private operator does not take on decision- making nor fiduciary responsibilities for the water utility. The utility remains exclusively in the hands of the utility's own management structure. This approach allowed the Project to attract qualified firms but limited the scope of improvements that could be achieved through the SC. 21. Restructruing and Additional Financing of October 2015. The project’s closing date was extended from December 2015 to March 2016 to incorporate the additional financing. Three years after the in-depth restructuring of July 2012, the project was on track to achieve its PDO as the works scheduled in component A were almost completed, providing access to improved water sources to about 1,248,420 people (i.e., 100 percent of the end-of-project objective). The progress in component B was also satisfactory since the operating cost ratio reached 101.2 percent (with a 104 percent end-of-project target). Based on these results and in response to a Government request, the World Bank approved an additional financing for the project. The additional financing aimed to scale up the development effectiveness and impact of the project by delivering additional results through the implementation of new activities in line with the original project objective. 22. Restructuring of February 2016. This restructuring revised the PDO to emphasize the "Services" dimension of component B, associated with the "sustainable water access of component A, and to replace the word "efficiency" in the original PDO with "operational performances and viability" as areas of efficiency expected from the Project Implementing entity. Therefore, the wording of the PDO indicators was revised accordingly to reflect these changes. In addition, the GoDRC requested to enhance the scope of the infrastructure component by adding Kindu as a new targeted city. The infrastructure in this city concerned a new water treatment plant, the rehabilitation and expansion of water transmission, storage, and distribution facilities, and the construction of 1,000 social connections (i.e. subsidized connection fees) and 50 standposts. Several existing outcomes and outputs indicators targets (mainly in the infrastructure component) were also increased to reflect the impact of the AF activities. The design studies of these investments have been prepared during the parent project. The AF will then prepare the detailed design studies. The overall structure of the project components did not undergo significant changes. (Table I. Annex 6). The project was also extended by three years to implement the scale-up activities in the infrastructures component and continue the water sector reform. 23. Restructuring of December 2018. Two years after the approval of the AF, the progress towards achievement of the PDO was rated Moderately Satisfactory (MS). However, the project implementation was rated Moderately Unsatisfactory (MU) since many activities planned would not be achieved by the end of the project’s closing date (December 2018). Three major activities were particularly of concern: (i) the construction of the WTP at Ozone in Kinshasa, delayed due to procurement challenges and the anticipated two-year construction timeline; (ii) the private connection works, delayed by procurement process to equip the private connections and, (iii) the Kindu works, also delayed due to preparation of detailed design studies, which have just been finalized at the project initial closing date. Considering the overall ten years of implementation of the PEMU project and the anticipated six months for the bidding process, it was decided to cancel all the activities in Kindu. The scope of component A and some output indicators targets were reduced to reflect the cancellation (Table I. Annex 6). The project’s closing date was extended by six months to ensure satisfactory completion of Ozone WTP works, which were already started. Page 12 of 69 The World Bank DRC Urban Water Supply Project (P091092) 24. The six-month extension (December 2018 restructuring) did not provide enough time to procure and complete the construction of the Ozone WTP. Therefore, it was decided that these activities would be financed through a new project (Kin Elenda, P171141). Because preparation of the new project took longer than anticipated three additional estructurings (2019, 2020, and 2021) were needed to extend the closing date by six months each time. Page 13 of 69 The World Bank DRC Urban Water Supply Project (P091092) 2. OUTCOME A. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating Rating: High 25. The Project's objectives remain highly relevant regarding its consistency with (i) the country development priorities4 , (ii) the most recent country partnership strategy,5 and (iii) the country's commitments to regional6 and international agendas7. 26. The PDO is still fully aligned with the Government Poverty Reduction Strategic Paper (PRSP, 2011-2015). Its third Pillar contains a specific focus area on "improving access to potable water, hygiene, and sanitation." This focus area underpins the sub-sector of drinking water in urban areas and provides two recommendations in line with the Project's two components. First, in line with Component A, the PRSP aims to "increase access to drinking water in urban centers…through vast programs of rehabilitation and extension of infrastructure and the construction of new systems." Secondly, in line with component B, the following recommendation is mentioned: "the reform of the Potable Water sub-sector in urban areas should include the transformation and recovery of REGIDESO, following the decentralization and disengagement laws of the State." 27. The last Systematic Country Diagnostic (SCD, 2018) identified the major bottlenecks that hampered the water sector reform and, consequently, the sustainable access to drinking water. It particularly pointed out the low water supply coverage in urban areas and recalled the weak financial viability of the water utility due to the uncontrolled increased salaries and the public arrears on water bills. The SCD also mentioned the poor governance of the sector as the main obstacle to the ongoing institutional reform. All these issues highlight the continued importance of the PDO. The Country Partnership Framework is still under preparation,8 but the current draft includes significant continued investments in the Water sector, given the continued priority the Government is putting on increasing access to water supply. B. ACHIEVEMENT OF PDOs (EFFICACY) Split-rating based assessment of each Objective/Outcome achievement 28. The PDO has two objectives. The first objective (PDO1) has one outcome: greater access to basic water supply services, mainly through household connections and standposts. The second objective (PDO2) has two outcomes: (i) reduced losses and higher productivity and (ii) improved financial position of REGIDESO. The operational performance of REGIDESO is reflected in the first outcome of PDO2. In addition, the two outcomes of PDO2 are designed to ensure the sustainability of water service targeted in PDO1. 29. The wording of the original PDO was revised to better reflect the targeted outcomes without changing the TOC. Nevertheless, the project underwent four majors restructuring which, streamlined the indicators (2012 4 DRC’s Growth and Poverty Reduction Strategy Paper, Second Generation 2011-2015 (Volume 1) – IMF country report NO 13/126, October 2011 5 Systematic Country diagnostic (SCD, 2018) - Report No. 112733-ZR 6 Africa Water Vision for 2025 7 Millennium Development Goals 2015-2030, Goal 6 Page 14 of 69 The World Bank DRC Urban Water Supply Project (P091092) restructuring), increased several targets as well as the scope by adding one additional city (2016 restructuring), and finally removed the last city added and decreased some targets that have been previously increased (2018 restructuring). 30. A split rating was used to assess the objectives. The split-rating is justified the significant changes in the outcome's targets. Accordingly, the efficacy rating was split into four parts representing the original outcomes and targets at effectiveness without any restructuring and the revised targets after the three restructurings (2012, 2016, 2018) mentioned above. Annex 6 (Table II) presents the split rating detailed results. 31. PDO1: Increase sustainable access to water in selected urban areas. This objective was measured by one outcome indicator: people provided with access to improved water sources under the Project (number). • From effectiveness in November 2009 to July 2012 ( targets before restructuring) - Rating: Negligible: the project did not showcase any progress in the achievement of the PDO indicator, nor in the intermediate indicators (see Table II, in annex 6). The reasons for poor achievement justify the first restructuring of July 2012. (see para 12). • From July 2012 to December 2015 (Targets of July 2012 restructuring) - Rating: High: during this period, the project showcased excellent performances by providing safe drinking water to 1,653,060 people, surpassing the target of 1,205,000. To reach this outcome, all the intermediate indicators described in the TOC (i.e., the secondary and tertiary network, community water points, and new household connections) were above their respective target values. • From February 2016 to December 2018 (targets of February 2016 restructuring) - Rating: Substantial: this period reflects the AF achievement according to its initial closing date (December 2018). The project provided safe drinking water to 1,893,630 people, below the target value. Indeed, the Ozone water treatment plant's delayed construction negatively impacted the water productivity (36 % of achievement) and the network construction (57% of achievement), which in turn did not allow to achieve the targeted 2,600,00 people having access to safe drinking water. However, significant progress was made to rehabilitate 116,265 private connections (105 percent of achievement), and the new connections indicator also showed substantial progress with 63 % of achievement. • January 2019 to June 2021, end of the project (targets of December 2018 restructuring) - Rating: High: at the end of the project, 3,071,430 people had access to safe drinking water, representing 118% of the target. The project has been proactively restructured to readjust the water productivity and the network construction targets based on the actual progress observed on these activities. In addition, an intensive communication campaign allowed to boost the number of new household connections. As a result, 88,881 households benefited from new connections (121 % of achievement), and 153,490 connections were rehabilitated (139 % achievement). In addition to the new connections, 9020 others (inactivated for more than five years) were reactivated and considered as new connections9. The beneficiaries include many of the most vulnerable and poor households that would otherwise not have access to drinking water at home due to the high connection fees. 8 Delivery is expected in FY22. 9 The DRC standards are: 1 private connection for 30 people and 1 standpipe for 300 people. Page 15 of 69 The World Bank DRC Urban Water Supply Project (P091092) 32. PDO2: Improve the operational performance and viability of the Project Implementing Entity (i.e., REGIDESO). This PDO2 contains two outcomes that need to be assessed: (i) reduced losses and higher productivity and (ii) improved financial position of REGIDESO. However, there is only one PDO indicator: "Operating cost coverage ratio in utilities targeted by the project," which assesses the second outcome related to the financial position of REGIDESO. Therefore, to evaluate the first outcome, three intermediate indicators were used: The non-revenue water (to assess the reduction in losses) and the additional water production and the availability rate of water production (to assess the increase in productivity). • From effectiveness in November 2009 to July 2012 (targets before restructuring) - Rating: Negligible: the financial viability remained weak as evidenced by the operating cost ratio, which did not show any achievement. However, the bill collection rate of private connections increased significantly (92% achievement), and thanks to the successful completion of the staff restructuring plan, the number of employees per 1,000 active connections decreased, leading to progress on this indicator (37% achievement). Operational performance had not improved either. The non-revenue water was at 6.7 percent of its target achievement, due to the significant loss of water in the network, and the lack of additional water produced due to the delays observed in construction works. • From July 2012 to December 2015 (Targets of July 2012 restructuring) - Rating: Modest: the financial viability of REGIDESO showed meaningful progress: the operating cost ratio reached 82.5 percent of its target. This good result was mainly due to the payment of public connection bills (91 percent of the achievement) and the number of staff per 1000 active connections, whose indicator achievement had steadily increased to reach 79 percent of the target. Furthermore, the existing water production plants were fully available (131 percent of achievement). But, the non-revenue water achievement remained low (12.5% of indicator target), meaning that the NRW is mainly driven by the network's physical water losses rather than the commercial losses due to unpaid bills. So, despite good performances on the financial viability, the operational performance was modest. • From February 2016 to December 2018 (targets of February 2016 restructuring) - Rating: Negligible: The financial viability of REGIDESO has significantly regressed. The operating cost ratio was at 60%, lower than the baseline10. This poor performance was due to several factors: a low collection rate of public and private connections, which were respectively at 65 % and -11.5 % of their achievements. In addition, the inactive connection percentage was still high (36 percent, for a target value of 20 percent). Furthermore, the operational performance kept the same trend of modest achievement: the availability rate of water production steadily increased, but the additional water production reached only 36 percent of its targeted value, and the non-revenue water indicator achievement remained negligible. • From January 2019 to June 2021 end of the project (targets of December 2018 restructuring) Rating: Negligible: The financial viability has continued to decline and currently stands just below the baseline. This poor performance was reflected in the steady decline in collection rates of private and public bills combined with the human resource cost that did not reduce despite the staffing ratio improvement. The reasons for this appeared to be: (i) continued implementation of costly benefits packages; (ii) salary increases that exceeded inflation (3.4% salary increases against 2.6% inflation); and (iii) an increase in consultants to replace 10This indicator is defining as: Total annual operational revenues/Total annual operating costs (PAD) but the terms “operational revenues” and “operating costs” were not defined. This led to successive discrepancies that persisted until the end of the pr oject. Page 16 of 69 The World Bank DRC Urban Water Supply Project (P091092) the decreased full-time staff (Tribeche, 2015)11. Finally, if water productivity and available water production plants had significantly increased at the project completion (respectively 124 and 109 percent of achievement), the non-revenue water indicator did not show any progress throughout the project implementation, which drove a modest achievement in the operational performance. Justification of Overall Efficacy Rating 33. The project's overall efficacy rating is split into four periods (see Table 3 below). For each period, the rating is driven by the achievement level of the two objectives of the PDO. The first objective was almost fully achieved (except for the first period). In contrast, the project barely achieved its second objective related to the water utility's operational performances and financial viability, leading to a majority of negligible ratings. Table 3: Efficacy assessment based on split rating From From July 2012 From February From January effectiveness to December 2016 to 2019 to June in November 2015 (Targets December 2018 2021, the end of 2009 to July of July 2012 (targets of the project 2012 (targets restructuring) February 2016 (targets of before restructuring) December 2018 restructuring) restructuring) PDO1. increase access to sustainable water services in selected urban areas PDO1. Ind. Number of people in urban areas provided with access to Improved Negligible High Substantial High Water Sources under the project PDO1 rating Negligible High Substantial High PDO2. Improve the operational performances and viability of the Project Implementing Entity (percent) PDO2. Ind. Operating cost coverage Negligible High Negligible Negligible ratio in utilities targeted by the project Water production capacity installed Negligible NA Moderate High under the project m3/day Availability rate of water production NA High High High plants % Non-revenue water in targeted cities Negligible Negligible Negligible Negligible (percent) PDO rating 2 Negligible Modest Negligible Negligible Efficacy (PDO) Negligible Substantial Negligible Modest 11Evolution institutionnelle du secteur de l’eau en milieu urbain en RDC - Investigations préliminaires – version approuvée juin 2015 – French report on Institutional Evolution of the Urban Water Sector in DRC - Preliminary Investigations - Approved version of June 2015 Page 17 of 69 The World Bank DRC Urban Water Supply Project (P091092) C. EFFICIENCY Assessment of Efficiency and Rating (substantial) 34. The impact of PEMU on the financial management of REGIDESO. This impact is assessed based on the elements of the operating account and the cash flow account contained in REGIDESO's financial statements (the detailed methodology is described in Annex 4). 35. REGIDESO's financial state over the project's life shows a series of deficits, with an average value of -33.6 billion FC (-16.8 million USD) per year, this average increases to -31.3 billion FC (-15.6 million USD) per year over the period of the project additional financing. This slight positive evolution remains insufficient to make a real recovery of the financial viability of REGIDESO. The driving factors of this deficit are, on the one hand, the low rate of collection of the public bills (named Official Institutions [OIs] bills) and private bills, which constitutes a real shortfall in REGIDESO's revenue. On the other hand, the staff cost remained high despite the staff restructuring plan and reduction in total staff, which contributes to the high operating costs. The OIs receivables are particularly significant in the deficit. From 2013 to 2015, the cumulative receivables of the OIs amounted to 220.814 billion FC (110 million USD), i.e., an average of 44.16 billion FC (23 million USD) per year. This amount mainly covers (i.e., 3.7 times) the average gap in REGIDESO's net cash position. Consequently, it is undeniable that the current situation of unpaid IOs invoices jeopardizes REGIDESO's solvency. 36. FIRR and NPV. The project's financial internal rate of return (FIRR, calculated solely based on sales revenue) is 7.2%, and the net present value (NPV) is USD 17.5 million at a discount rate of 6%. 37. The PEMU and the financial viability of REGIDESO. The PEMU was implemented in a challenging context where the operational and commercial performances, as well as the self-financing capacity of REGIDESO, were structurally degraded by an inefficient productive capital, disproportionate operating costs, an approximate control of the water market (supply, consumption, price, collection) and an environment that did not allow the public power to be empowered. All these things limited the project's impact on the financial viability of REGIDESO despite the progress made. 38. The Economic Analysis section updates the cost-benefit analysis to assess the Internal Rare Return (IRR) and NPV of all activities under the original project and the additional financing. The analysis was based on the actual implementation of the PEMU at the completion date and the impact of its activities. 39. The methodology used in the PAD was applied and complemented by the identification of the benefits brought by the project. Calculations are made over 20 years, and the NPV at appraisal was calculated as 12% (see PAD, page 104, §4.). Benefits include "increased water consumption," "consumer surplus," which corresponds to beneficiaries that have shifted from other non-potable water sources to connections or standpipes, and "cost savings" resulting from improved operational performance within REGIDESO. 40. The baseline assumptions (Parent Project and AF) were updated to reflect current values of per capita consumption, average water revenues (for REGIDESO), prices (at the consumer level), and operating costs contained (see Annex 4, Table 2). 41. Overall economic benefit of the PEMU. The updated and completed analysis results in table 4 indicate that the PEMU is economically profitable with an IRR of 28.7 percent and an NPV of USD 70.9 million. The significant Page 18 of 69 The World Bank DRC Urban Water Supply Project (P091092) benefits are distributed among REGIDESO, which increases its productive capital and business volume; the beneficiary households benefit from improved access to drinking water and surplus water consumption; and the state, which saves substantially on health costs. The investments were more massive and diversified in Kinshasa, which presents a more satisfactory IRR of 37.2%, and NPV that contributes to 82.5% of the overall NPV of the PEMU. The two other centers also have positive returns, exceeding the discount rate of 12%. The allocation of resources to these centers is economically relevant. Table 4: Cost-effectiveness indicators for the PEMU Economic profitability of water centers targeted in the PEMU project Center Net Present Value (NPV) @12% Internal Return Rate (IRR) (M$) (%) Kinshasa 58.5 37.2 Lubumbashi 7.7 19.8 Matadi 4.7 17.7 Total 70.9 28.7 Using Original project 132 41 assumptions Using updated 20.9 13.7 assumptions at AF 42. The project results become most important if a lower discount rate (10% or 6%) is used, which is generally recommended for Water Supply and Sanitation (WSS) projects. Indeed, if the discount rate used is 10%, the NPV of the project increases from USD 70.9 million to USD 98.5 million. The NPV rises to a very significant 189.1 million USD if the discount rate increases to 6%. The assumptions used at the beginning of the project (table 4) were very optimistic, whereas those used at the time of the additional financing were reduced because the project's impacts were not sufficiently visible to be integrated into the analysis. At the end of the project, the indicators are between the two analyses, with an NPV representing 53% of that obtained in the PAD and 3.35 times that retained in the additional financing. 43. The economic results of the PEMU are very robust. A sensitivity test was carried out on the indicators to assess the effects of a 10% change in network efficiency, a 10% change in recovery rate, and a 10% increase in average water price separately. The results in table 5 indicate that the economic indicators are more sensitive to water price, followed by collection rate performance and then network efficiency. However, the overall results remain broadly stable, with IRRs around 29% and NPV evolving in a narrow range from USD 73.5 million to USD 75.4 million (Table 5). Table 5: Sensitivity testing of profitability indicators Sensitivity test Centers Network efficiency Private connections bills Average water price improved by 10% collection rate improved by increased by 10% 10% NPV @ 12% IRR NPV @ 12% IRR NPV @ 12% IRR Page 19 of 69 The World Bank DRC Urban Water Supply Project (P091092) % Kinshasa 60.9 38.2 60.6 38.2 61.6 38.2 Lubumbashi 7.3 19.5 8.4 20.5 8.36 20.6 Matadi 5.3 18.4 5.1 18.2 5.2 18.3 Total 73.5 29.2 74.1 29.5 75.4 29.5 Justification of Efficiency Rating – substantial 44. The project brought high economic profitability to millions of people living in Kinshasa, Lubumbashi, and Matadi, and GoDRC throughout several sectors (water, gender promotion, education, and health). However, the project was not able to improve the financial management of REGIDESO to the extent envisioned. For these reasons, the overall effectiveness of the project is considered substantial. D. JUSTIFICATION OF OVERALL OUTCOME RATING – MODERATELY UNSATISFACTORY 45. The Project was and remains highly relevant. However, its efficacy is split-rated with two periods out of four, judged negligible (table 6), and its efficiency is rated substantial. Therefore, the overall rating of the Project is deemed Moderately Unsatisfactory (Table 6). Table 6: Final outcome rating based on efficacy split-rating From From July 2012 From February From January effectiveness in to December 2016 to December 2019 to June November 2009 2015 (Targets of 2018 (targets of 2021, the end of to July 2012 July 2012 February 2016 the project (original targets) restructuring) restructuring) (targets of December 2018 restructuring) Relevance of PDO High Efficacy (PDO) Negligible Substantial Negligible Modest Efficiency Substantial Moderately 1. Outcome ratings Unsatisfactory Satisfactory Unsatisfactory Unsatisfactory 2. Numerical value of outcome ratings* 2 5 2 3 3. Disbursement - million US$ 39.09 147.62 44.67 124.62 4. Share of disbursement 11% 41% 13% 35% 5. Weighted value of the outcome rating (row 0.22 2.07 0.25 1.05 3.59 Final outcome rating Moderately Unsatisfactory Page 20 of 69 The World Bank DRC Urban Water Supply Project (P091092) E. OTHER OUTCOMES AND IMPACTS (IF ANY) Gender 46. The project has benefited nearly 1.5 million girls and women who have access to safe water through private connections or standpipes closer to their homes. This has significantly improved the living conditions of these people in several ways: (i) the reduction or elimination of water collection, an activity mainly carried out by women (47%) and girls (33%), for which the average collection time has decreased from 142.7 minutes12 per day to 30 minutes per day (see Annex 4 on efficiency analysis); (ii) an improvement in water quality and hygiene, which provides benefits, especially for maternal and child health (see Annex 4 on efficiency analysis); (iii) improvements for the safety of women and girls in charge of water collection, as having a private connection at home eliminates the need to fetch water (sometimes very early in the morning or late at night) over a long distance. This gives women more time to perform higher value-added activities and girls more time to devote to learning at school and even to a better quality of life through improved sleeping hours. Institutional Strengthening 47. The water reform component planned a specific sub-component aiming to strengthen the institutional capacity of REGIDESO, the Ministère du Portefeuille (MP), and the Ministry of Environment (who is charged with overseeing sanitation, among other technical areas). Under this sub-component, several key outputs were delivered to strengthen the water and sanitation sectors. 48. REGIDESO benefited from management training in human resources, marketing, and procurement. The Project also strengthened the training capacity of the water utility through the rehabilitation and equipment of the water training center of Lubumbashi. 49. The MP and the COPIREP benefited from technical assistance on the Private Sector Participation and sector quality assurance through the management contract and the service contract executed under the Project. 50. The Ministry of Environment's Department of Sanitation (DAS) was supported under the PEMU to develop a new institutional framework for the sanitation sector, as reflected in a road map for the development of the sector and a National Sector Strategy. 51. The PEMU has supported the Government in preparing a set of relevant decrees that aim to, inter alia: provide further clarity on the institutional arrangements and mandates of institutions at various levels and detail the types of Public Private Partnership arrangements envisioned for the sector. 52. The project has also financed the hydraulic master plan of the city of Kananga. The proposed inviestments in the plan will now be financed under the new Electricity & Water Access and Governance Project (P173506). 12 Baseline Survey for the Impact Assessment of the PILAEP 2 Project (April-May 2018) Page 21 of 69 The World Bank DRC Urban Water Supply Project (P091092) Mobilizing Private Sector Financing – (non applicable) Poverty Reduction and Shared Prosperity 53. The Project provided 82,88013 subsidized household water connections, providing direct, reliable water access to more than 200,000 vulnerable people in Kinshasa, Matadi, and Lubumbashi. Customers paid US$50 to get a new connection under the project, which is five times less than the actual cost of US$265. This program reduced the inequality between rich and poor households in accessing a private household connection. Other Unintended Outcomes and Impacts 54. To reduce cholera outbreaks, the PEMU AF constructed twenty standpipes, two tanker trucks (10 m 3 each), and a water reservoir of 250 m3 in several peri-urban sites in Kinshasa chosen based on cholera hotspot mapping. In 2018, 346 cases of cholera with 11 deaths (lethality: 3.17%) were reported in 21 health zones out of the 35 in the city province of Kinshasa. According to data from the national surveillance system, in 2017, the DRC reported a cumulative total of 55,000 cases with 1,190 deaths (case fatality: 2.1%). The standpipes and reservoir were achieved in September 2020. The action mobilized a total of 598,549.78 USD to reach 10,800 direct beneficiaries14. 55. As part of the GoDRC's coronavirus (COVID-19) pandemic response, the Project constructed, at the request of GoDRC, an additional 20 water points (10 m³ storage tanks, supplied by tanker trucks, with taps). The population targeted by this emergency activity is from areas of Kinshasa that the existing network cannot serve. The number of beneficiaries is estimated at 215,000 inhabitants. The Project also mobilized funds to support the emergency procurement of chlorine for Kinshasa, as during the lockdown in March/April 2019, border closures resulted in a significant delay in REGIDESO's expected shipment. Given the utility's acute financial crisis, worsened by COVID-19 and the Government's announcement of two months of free water supply, the utility did not have the funds on hand to make the necessary emergency procurement. 56. The project supported the setting up of the REGIDESO call center with extensible positions that can receive all REGIDESO subscribers online. This has contributed to REGIDESO’s ability to respond to and resolve complaints amnd queries received from customers related to the project and ongoing service provision. 3. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A. KEY FACTORS DURING PREPARATION 57. At appraisal, the Project identified clear and realistic objectives that reflected very ambitious targets based on defined needs in the urban water sector. The Project design was based on existing studies, assessments, previous sectoral lessons learned, and technical meetings, which informed the project objectives, components, and institutional arrangements. At that time, the country was in a post-conflict context with an urgent need to extend and rehabilitate water infrastructures in the main centers of REGIDESO. Governance of the water sector was also 13 PEMU Activity report 44. January - March 2021 14 PEMU activity report 42, June-September 2020 Page 22 of 69 The World Bank DRC Urban Water Supply Project (P091092) fragile and required strong and ambitious reform to ensure sustainable access to water services through investment in infrastructure. The PAD described this situation and evaluated the risk categories appropriately. 58. The preparation of the AF did not sufficiently utilize the lessons learned from the implementation phase of the parent project to readjust the project objectives. In the infrastructure component, more attention could have been paid to reducing non-revenue water (through a dedicated sub-component) to ensure better performance on this critical indicator that did not show sufficient progress at AF appraisal. In the sector reform component, the preparation of the AF could also have used stronger incentive mechanisms to increase the Government's political will to pay the bills of official connections (e.g., through performance-based disbursements) and handle other needed reform. Those indicators significantly impacted the efficacy of the project at completion. B. KEY FACTORS DURING IMPLEMENTATION 59. Fiduciary and procurement challenges slowed the implementation of the project. The detailed design and bidding documents for Kinshasa construction work planned in the parent project suffered from twenty months of delays, mainly due to the firm's poor performance and a lack of proactivity and coordination within the PIU's system of contract management. This delay resulted in the need to extend the project by 21 months. Similarly, during the implementation of the PEMU AF activities, the design processes in Kindu took too long and resulted in dropping the interventions in the entire city.Still during the PEMU AF, the changes in the leadership of the project management negativement impacted the preparation of the bidding documents for the construction of the Ozone water treatment plant. 60. Two months of free water supply (provided in response to COVID-19) have significantly adversely impacted several core financial indicators, such as the bill collection rate from private connections. Though the indicators have slightly rebounded since the start of 2020, REGIDESO is still struggling to attain its pre-pandemic billing and collection efficiency. 61. REGIDESO has taken little ownership of the reform and the improvement in operational and financial performance, which had a negative impact on the overall achievement of the PDO. The REGIDESO has put in place an internal structure to pilot an action plan to improve their operational and financial performance, but this initiative did not allow the achieve the expected results targeted in the projet. The reform efforts were also hindered by a series of short-term closing date extensions at the end of the project. The 6-month extensions were motivated by the long duration of the project and external factors, but this approach limited the type and number of actions that could be taken in support of the REGIDESO reform agenda. 4. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 62. The Project's results framework (RF) mainly focused on constructing the water supply infrastructure investments and implementing the water sector reform. Therefore, despite the absence of a theory of change not required at the time of appraisal, the RF described the link between most of the PDO and intermediate indicators and their corresponding project components, baseline, end target, data sources, and parties responsible for data collection. Nonetheless, the RF underwent a significant adjustment during June 2012 restructuring (para 12 and the Table I in Page 23 of 69 The World Bank DRC Urban Water Supply Project (P091092) annex 6), which was useful in streamlining the RF, but still resulted in a long list of indicators, particularly on Component B. This long list made it more difficult to prioritize actions during implementation. 63. The M&E framework could have been strengthened as follow: (i) including a more specific indicator (at PDO level) to better track the sustainability dimension of water access mentioned in the PDO, to help further define "sustainable"; and (ii) deleting some indicators which provide similar/overlapping information (e.g., "Proportion of bills owed by IO in total billing" provides the same type of information as "Proportion of volumes owed by IO in total volumes owed") or information not likely to change throughout the project implementation (e.g., "number of a water utility that the project is supporting"). M&E Implementation 64. The M&E implementation arrangements were straightforward. The overall coordination, validation, and production of the M&E framework were handled by CEP-O (REGIDESO's PIU) with inputs from REGIDESO centers and departments and from COPIREP, especially for data related to the water sector reform. CEP-O also verified and ensured the quality of the data. 65. The M&E framework was streamlined and revised over the life of the Project to better monitor current activities and scale-ups. However, redundancy and relevancy persisted in the intermediates indicators that could have been removed during the restructurings. 66. The M&E framework could have benefited from the development of a comprehensive Water Sector Information System (SIS) to monitor and evaluate the water asset. Indeed, the processing and archiving of the collected data remain relatively simple, especially since the data collected from field surveys is done manually. Data retention is not guaranteed without a centralized database that could be transferred to REGIDESO after the Project. However, the Project has financed a database in Kinshasa to manage better customer service that could be considered the first step toward an integrated SIS for the entire assets of REGIDESO. M&E Utilization 67. The M&E data on results progress was periodically reported, used, and incorporated in the Implementation Status and results Reports (ISRs). M&E was used to inform project management and decision-making, especially when preparing restructurings (2016 and 2018) to revise indicators' targets and to track the household connections program. For example, the 2016 restructuring for the PEMU AF used the parent project indicators achievements to demonstrate the good performances of the water investment component and the relevancy to scale up these results. Nevertheless, the 2016 restructuring should also have been an opportunity to add a PDO indicator to assess REGIDESO's operational performance. This indicator was missing throughout the implementation of the project and, therefore, negatively impacted the efficacy assessment of PDO2 at the project completion. 68. The PIU used the GEMS tool to monitor the "Social Connections" Operation and the GRM. In addition, the results of the PEMU in the World Bank's portfolio in DRC are also registered in GEMS. 69. The PIU, name CEP-O in French acronym, used the M&E data to inform the quarterly report of the Project but also more regularly used the information to target problems and bottlenecks in implementation in different cities. For instance, the household connection program was more efficient in Kinshasa, in part due to the possibility of weekly tracking, so the model of field supervisors was replicated in the other cities. Justification of Overall Rating of Quality of M&E - Substantial 70. Throughout the project, the results framework was improved to align with the evolution of activities and the Page 24 of 69 The World Bank DRC Urban Water Supply Project (P091092) consequences of subsequent restructuring. However, a better rationalization of the indicators could have been done, on the one hand, to eliminate redundancies and irrelevant indicators, and on the other hand, to add indicators essential to a better monitoring of the PDO2 outcomes. As a result, although the M&E system remained a reliable tool for informing project decision-makers and monitoring project performance, some shortcomings in the design persisted during the implementation, which led to a substantial rating. B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 71. Environmental and social safeguard compliance. The original Project triggered two safeguard policies: Environmental Assessment (OP/BP 4.01) and Involuntary Resettlement (OP/BP 4.12), and two others were added for the PEMU AF regarding the physical Cultural Resources (OP/BP 4.11) and projects on International Waterways (OP/BP.7.60) (linked to the plans for the Ozone water treatment plan). 72. To comply with the International Waterways (OP/BP.7.60) policy, a notification referred CAB.MIN-ENRH/NYB 930/MA/15, dated July 7, 2015, from the Government of DRC, was sent to riparian countries through the Commission Internationale du Bassin Congo-Oubangui-Sangah (CICOS). 73. The environmental Category of the Project was rated B. Safeguards compliance for PEMU, and PEMU AF were based on the Environmental and Social Management Framework (ESMF) and the Resettlement Policy Framework (RPF). Therefore, both were disclosed according to the Bank's disclosure policies in the Project selected areas. In addition, when deemed necessary for civil works, Environmental and Social Impact Assessments (ESIAs) and Abbreviated Resettlement Action Plans (ARAPs) and Resettlement Action Plans (RAP) were conducted by CEP-O. 74. At the project closure, all the safeguard policies were rated satisfactory except the Involuntary Resettlement, which was rated Moderately Satisfactory, leading to an overall Safeguard rating as Moderately Satisfactory. This is mainly due to some delay in completing the ARAP and RAP in the three cities, which delayed the disbursement condition for Component A. A RAP in Kinshasa was also implemented without waiting for approval from the WB. The issue was reconciled through a follow-on assessment report of economic loss produced by the governement and deemed satisfactory by the World Bank (WB). All the remaining planned actions were implemented with satisfactorily, and the environmental and social impacts of works were systematically mitigated as per the standards and guidelines included in all contracts under the project. 75. The Contractor's Environmental and Social Management Plans (ESMP) were adjusted to include measures relating to COVID-19 prevention/mitigation, with guidelines from the WB. 76. A Grievance Redress Mechanisms (GRM) was in place from when the PEMU-AF started in early 2018 (in line with World Bank Policy at that time) and was functional across all project locations. The GRM was accessible both to PAPs and anyone wishing to file a complaint or concern related to the Project. In addition, proactive efforts were made to resolve all grievances through trained local complaint management committees and a call center in Kinshasa, with a free number accessible to all for any questions or concerns regarding the Project. At the end of the project, 187 complaints were registered and processed (100% of the processing rate), of which 162 were founded and 25 were unfounded15. 77. The Project has reported 7 Occupational Health and Safety (OHS) incidents since its start . None are classified as severe, six as serious, and one as indicative. All incidents are confirmed accounted through the Environmental and Social Incident Response Toolkit (ESIRT) and closed. The WB team and the PIU regularly checked with 15 PEMU-FA : Final report of social safeguard, juillet 2021 Page 25 of 69 The World Bank DRC Urban Water Supply Project (P091092) relevant contractors and consultants if any OHS incidents occurred and closely followed up the number of incidents and their appropriate handling. Safeguards Corrective Action Plans were prepared and implemented. 78. Procurement. The procurement rating was satisfactory from the beginning of the Project until December 2017, where the rating was downgraded to Moderately Satisfactory until the project closing date. Throughout the project implementation, delays in procurement for the construction of some important infrastructure (Ozone treatment plant, construction work in Kindu) negatively impacted the project implementation, requiring several extensions of the project closing date (see para 22 and 23). In addition, Supervision missions noted problems in some selections reported under post review. The PIU addressed these issues by updating the project implementation manual (PIM) that better clarified the role of the international procurement expert according to the General Procurement Guidelines. This resolution was satisfactory to the World Bank. Procurement Post Reviews (PPR) also identified some issues and provided recommendations to the PIU, which were then appropriately implemented. On the positive side, the Project is considered one of the champions in the DRC portfolio on using STEP for procurement. 79. Financial Management. FM arrangements in place during project implementation were consistently rated as satisfactory and/or moderately satisfactory. In February 2017, a supervision mission had concluded that the Financial Management could be improved, and the PIU addressed a series of recommendations. However, the FM rating was downgraded to Moderately Unsatisfactory in August 2018, mainly because the in-depth review of the transactions identified certain expenses as ineligible. Also, the recruitment process of the administrative and financial officer (AFO) underwent some delays. The ineligible costs were reimbursed to the World Bank, and the recruitment process was finalized, allowing the rating to be upgraded to Moderately Satisfactory until the end of the Project. C. BANK PERFORMANCE Quality at Entry 80. PEMU was designed in a highly challenging context of post-conflict where the sector of Water Supply and Sanitation (WSS) sector was particularly affected. The World Bank team ensured that the design was informed by thorough technical analysis and several preparation missions that allowed exchanges with all relevant local and national stakeholders in DRC, including other donors working in the water and sanitation sector. This contributed to focusing on urban water supply, since others, such as the Africa Development Bank (AfDB) and UNICEF, focused on semi-urban and rural sectors. In addition, the parent project was complementary to the AfDB funded water project, PEASU16, for which joint supervision missions were carried out, and critical documents benefited from the review of both donors. Quality of Supervision 81. The World Bank undertook regular supervision missions (and more frequent missions when needed), including field visits and physical checks of investments. Aide-Mémoires and ISRs were well-drafted and provided a good level of detail on the ongoing activities. The World Bank was also proactive and candid by downgrading the project performance rating and taking swift action in situations threatening to impede the expected progress toward the achievement of the PDO. For instance, The Bank team actively supported the first bidding documents for works in Kinshasa that had been delayed for more than 20 months through an in-depth review that helped 16 French acronym for Water and Sanitatoin Project in Semi-Urban areas Page 26 of 69 The World Bank DRC Urban Water Supply Project (P091092) launch the contract and resumed disbursement. Similarly, the Bank provided rapid and agile responses during the cholera outbreak and COVID-19 pandemic to allow REGIDESO to support the Government's response to each. 82. However, during the final years of PEMU, the implementation of the project was hindered by four separate restructurings to extend the closing date by six months each time. This approach made the achievement of Component B more challenging, as the type of activities that might have driven significant progress on this component would have taken too long to implement. Had a single two-year extension been granted, perhaps a more holistic approach might have been taken and some delays (e.g., linked to the construction of the Ozone WTP or the cancellation of works in Kindu) might have been achieved. Justification of Overall Rating of Bank Performance- Moderately Satisfactory 83. The Quality at Entry is judged satisfactory, but the repetitive short extension of the AF closing date negatively impacted the quality of supervision, so the overall World Bank performance is moderately satisfactory. D. RISK TO DEVELOPMENT OUTCOME 84. The project's development outcomes mainly focused on the significant increase in the number of people that have access to drinking water in the three main cities of DRC. This was possible thanks to the important physical investments in water supply infrastructure. However, the limited progress on Component B and REGIDESO performance improvements threatens the long-term sustainability of these investments. In addition, REGIDESO continues to face significant challenges, especially related to the critical problems linked to high labor costs and non-payment of water bills for official institutions. Both the WB and the GoDRC are aware of these risks and challenges and are committed to carrying on the ongoing activities initiated on the water sector reform under the PEMU project. 85. Nevertheless, at the end of the Project, the water sector has benefited from a more robust institutional framework that offers a range of new opportunities for the sector. For instance, the Kin Elenda project (P P171141) in Kinshasa was based on the experiences with REGIDESO performance improvement activities under PEMU. Therefore, a new approach is being used, in alignment with the Utilities of the Future approach, that focuses first on building REGIDESO ownership of a 100-day plan, and based on internal steps taken and progress made, the project will finance follow on activities. This approach will ensure better ownership of reform and performance improvement and align activities with specific outcomes and key indicators. 5. LESSONS AND RECOMMENDATIONS 86. Ambitious reform agendas, especially in FCV settings, require a more agile approach to implementation that adapts to changing conditions. The management contract foreseen at the beginning of the parent project did not attract the private sector's interest, and the tender was ultimately unsuccessful and was replaced by a less binding service contract, which consequently was not sufficient to carry out a substantive reform of the water sector. The lesson that can be drawn from the failure of the MC is the scope of the reform, which was probably too ambitious at the time when the DRC was in a post-conflict situation and not attractive enough for the private sector. The project should have been restructured to move toward more straightforward, realistic, and achievable objectives that better reflect the change in strategy that occurred after the failure of the MC. By specifically revising the water sector reform objectives, they would have been more modest and achievable in the short term while gradually building trust with the Government on the reform process to achieve more ambitious results in the long term. On these long term results, CEP-O provided the following recommendations: “A partnership formula is needed that allows (i) local management of the drinking water service, (ii) a contribution of fresh capital for the Page 27 of 69 The World Bank DRC Urban Water Supply Project (P091092) realization of new investments with (iii) a targeting of the perimeters to be exploited on the basis of investment plans and adapted operational plans. Among the lessons to be learned from the poor results of the project, we should also point out the lack of involvement of the State in the recovery of REGIDESO (non-payment of consumption by official institutions and beneficiaries, lack of public funding for the water sector)” (See borrower comments in Annex 5). 87. High-level sustained Government championing is required to ensure systemic changes. At the end of the project, REGIDESO continues to have significant financial challenges linked to public arrears/non-payment and Human Resource. Without addressing these two issues, significant performance improvements will not be sustainable. However, these reforms require high-level sustained engagement from several Government partners. Given the FCV nature in DRC and the change in Government seen during the project, this support was not sufficient to reach the level of change initially targeted. Therefore, understanding the political economy and local context not only at appraisal but all along with the project implementation, is an essential success factor as the FCV nature of the country require to considerer 10% technical and 90% political economy17 in the project design and implementation (i.e., during restructurings). Other Bank instruments, such as the DPO, are also needed to accompany the reforms. 88. Procurement delays and Contract Management System Performance. The lack of sound engineering design studies before Board approval of the Original Project and the AF resulted in significant delays and successive extensions of the project closing date. As a lesson learned, the project PIU should include at the early stage of project preparation, the completion of the engineering design studies, and the bidding document. This would allow all bidding procedures to begin as soon as the project is approved. Finally, technical assistance or capacity building for the PIU in contract management would also have made it possible to complete the civil works on time and thus avoid successive postponements of the project closing date. .Eventually Eventually 17 Note- Customs reforms in fragile conflict violent and low capacity situations (P166870) – World Bank Page 28 of 69 The World Bank DRC Urban Water Supply Project (P091092) ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS A. RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: Number of people in urban areas provided with access to Improved Water Sources under the project Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of people in urban Number 0.00 1,205,000.00 2,600,000.00 3,071,430.00 areas provided with access to Improved Water Sources 25-Apr-2014 03-Feb-2016 03-Feb-2016 30-Jun-2021 under the project Comments (achievements against targets): Objective/Outcome: Operating cost coverage ratio in utilities targeted by the project Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Operating cost coverage ratio Percentage 88.00 104.00 42.22 Page 29 of 69 The World Bank DRC Urban Water Supply Project (P091092) in utilities targeted by the 18-Nov-2008 18-Nov-2008 30-Jun-2021 project Comments (achievements against targets): A.2 Intermediate Results Indicators Component: Water supply services in major urban centers Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Secondary and tertiary water Kilometers 0.00 651.00 1,100.00 1,236.00 networks constructed 18-Nov-2008 18-Nov-2008 21-Dec-2018 30-Jun-2021 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Water production capacity Cubic 0.00 179,000.00 69,000.00 85,920.00 installed under the project Meter(m3) 28-Nov-2008 03-Feb-2016 21-Dec-2018 30-Jun-2021 Comments (achievements against targets): Page 30 of 69 The World Bank DRC Urban Water Supply Project (P091092) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Improved community water Number 0.00 400.00 450.00 455.00 points constructed or rehabilitated under the 18-Nov-2008 18-Nov-2008 03-Feb-2016 30-Jul-2020 project Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion New piped household water Number 0.00 41,000.00 73,500.00 88,811.00 connections that are resulting from the project 18-Nov-2008 18-Nov-2008 21-Dec-2018 30-Jun-2021 intervention Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Piped household water Number 0.00 110,000.00 153,490.00 Page 31 of 69 The World Bank DRC Urban Water Supply Project (P091092) connections that are 18-Nov-2008 03-Feb-2016 30-Jun-2021 benefiting from rehabilitation works undertaken by the project Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Direct project beneficiaries Number 0.00 1,205,000.00 2,600,000.00 3,071,430.00 18-Nov-2008 12-Jul-2012 03-Feb-2016 30-Jun-2021 Female beneficiaries Percentage 0.00 602,500.00 1,300,000.00 1,535,715.00 Comments (achievements against targets): Component: Sector reform, capacity building & improved governance Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Citizen engagement Percentage 26.00 56.00 83.47 satisfactory complaints resolution by REGIDESO 29-Jan-2016 03-Feb-2016 30-Jun-2021 Page 32 of 69 The World Bank DRC Urban Water Supply Project (P091092) Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Citizen engagement: Percentage 0.00 75.00 98.00 Surveyed beneficiaries who know at least two of their 29-Jan-2016 03-Feb-2016 30-Jun-2021 responsibilities regarding their access to water Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of water utilities Number 1.00 1.00 1.00 that the project is supporting 18-Nov-2008 18-Nov-2008 30-Jun-2021 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Page 33 of 69 The World Bank DRC Urban Water Supply Project (P091092) Services contract is bid, Yes/No No No Yes signed and under implementation 18-Nov-2008 18-Nov-2008 30-Jun-2021 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of other water Number 0.00 0.00 0.00 service providers that the project is supporting 18-Nov-2008 18-Nov-2008 30-Jun-2021 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Preparation of water Number 0.00 3.00 4.00 12.00 sanitation strategies and programm 18-Nov-2008 18-Nov-2008 03-Feb-2016 30-Jun-2021 Comments (achievements against targets): Page 34 of 69 The World Bank DRC Urban Water Supply Project (P091092) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Availability rate of Percentage 87.60 94.00 94.60 production plants 18-Nov-2008 18-Nov-2008 30-Jun-2021 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Non-revenue water Percentage 45.00 29.00 45.72 18-Nov-2008 18-Nov-2008 30-Jun-2021 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Rate of inactive connections Percentage 36.00 20.00 30.95 per city 25-Apr-2014 18-Nov-2008 30-Jun-2021 Comments (achievements against targets): Page 35 of 69 The World Bank DRC Urban Water Supply Project (P091092) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Metering distribution rate Percentage 33.00 88.00 90.00 70.74 25-Apr-2014 18-Nov-2008 03-Feb-2016 30-Jun-2021 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Bill collection rate from Percentage 73.00 98.00 97.00 68.71 private connections 25-Apr-2014 18-Nov-2008 03-Feb-2016 30-Jun-2021 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of staff/1000 active Number 17.70 9.60 8.11 connections (after severance plan) 25-Apr-2014 18-Nov-2008 30-Jun-2021 Comments (achievements against targets): Page 36 of 69 The World Bank DRC Urban Water Supply Project (P091092) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Rate of labor costs versus Percentage 40.00 27.00 36.00 operational costs 25-Apr-2014 18-Nov-2008 30-Jun-2021 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Submission of previous years' Text NA Yes yes audit reports to clients by May 15 of following year 18-Nov-2008 18-Nov-2008 30-Jun-2021 (yes/no) Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Proportion of volumes owed Percentage 21.00 20.00 33.88 by "Instances Officielles" in 25-Apr-2014 03-Feb-2016 13-Apr-2020 Page 37 of 69 The World Bank DRC Urban Water Supply Project (P091092) total volumes owed Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Proportion of bills owed by Percentage 42.00 20.00 35.93 "Instances Officielles" in total billing 18-Nov-2008 18-Nov-2008 30-Jun-2021 Comments (achievements against targets): Page 38 of 69 The World Bank DRC Urban Water Supply Project (P091092) B. KEY OUTPUTS BY COMPONENT Objective/Outcome 1 : Increase sustainable access to water in selected urban areas 1. Number of people in urban areas provided with access to Improved Outcome Indicators Water Sources under the project 1. Secondary and tertiary water networks constructed 2.Water production capacity installed under the project 3. Improved community water points constructed or rehabilitated under the project 4. New piped household water connections that are resulting from the Intermediate Results Indicators project intervention 5. Piped household water connections that are benefiting from rehabilitation works undertaken by the project. 6. Direct project beneficiaries 6.1 Female beneficiaries 1) 3,1 million people provided with access to improved water under the project, as direct beneficiairies. 1.1) 1.5 million of female among direct beneficiaries 2) 1,236 km of secondary and tertiary water networks constructed Key Outputs by Component 3) 85,920 m3 of water production capacity installed (linked to the achievement of the Objective/Outcome 1) 4) 455 improved community water points constructed or rehabilitated 5) 88,811 new piped household water connections constructed 6) 153,490 Piped household water connections from rehabilitation works Objective/Outcome 2: Improve the operational performance and viability of the Project Implementing Entity Outcome Indicators 1. Operating cost coverage ratio in utilities targeted by the project Page 39 of 69 The World Bank DRC Urban Water Supply Project (P091092) 1. Citizen engagement satisfactory complaints resolution by REGIDESO 2. Citizen engagement: Surveyed beneficiaries who know at least two of their responsibilities regarding their access to water 3. Number of water utilities that the project is supporting 4. Services contract is bid, signed and under implementation 5. Number of other water service providers that the project is supporting 6. Preparation of water sanitation strategies and programm 7. Availability rate of production plants 8. Non-revenue water Intermediate Results Indicators 9. Rate of inactive connections per city 10. Metering distribution rate 11. Bill collection rate from private connections 12. Number of staff/1000 active connections (after severance plan) 13. Rate of labor costs versus operational costs 14. Submission of previous years' audit reports to clients by May 15 of following year (yes/no) 15. Proportion of volumes owed by "Instances Officielles" in total volumes owed 16. Proportion of bills owed by "Instances Officielles" in total billing 1) 83.47 percent of satisfactory complaints resolved by REGIDESO 2) 93 percent of beneficiaries know at least two of their responsibilities regarding the access to water Key Outputs by Component 3) 94.6 percent of availability rate of production plants (linked to the achievement of the Objective/Outcome 2) 4) No achievement on the Non-revenue water reduction 5) 31 percent rate of inactive connections per city 6) 71 percent of metered distribution rate 7) 69 percent of bill collection rate from private connections Page 40 of 69 The World Bank DRC Urban Water Supply Project (P091092) 8) 8 staffs/1000 active connections, after severance plan 9) 36 percent of labor costs versus operational costs 10) 34 percent of water volumes owed by "instances Officielles" in total volumes owed Page 41 of 69 The World Bank DRC Urban Water Supply Project (P091092) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Role Preparation Parent project Franck Bousquet Task Team Leader(s) Gilles Veuillot Sr. Counsel, LEGAF Madio Fall Sr. Water Supply & Sanitation Specialist, WSP Jean Doyen Water Supply & Sanitation Specialist-Consultant, WSP Aissata Zerbo Procurement Analyst, AFTU2 Philippe Mahele Procurement Specialist, AFTPM Jeff Ramin Sr. Operations Officer, AFTRL Serigne Mbaye Seye Communications Specialist, WSP Nestor Coffi Sr. Financial Management Specialist, AFTFM Jean.-Charles. Kra Sr. Financial Management Specialist, AFTFM Abdoul-Wahab Seyni Sr. Social Development Specialist, AFTCS Paul Martin Sr. Environmental Specialist, AFTEN Ernestina Attafuah Sr. Program Assistant Supervision/ICR Rebecca Jean Gilsdorf, Pierre Francois-Xavier Boulenger, Task Team Leader(s) Patrick Goy Ndolo Jean-Claude Azonfack, Cheick Traore, Clement Tukeba Procurement Specialist(s) Lessa Kimpuni Lydie Madjou Financial Management Specialist Bella Diallo Team Member Rahmoune Essalhi Team Member Madio Fall Team Member Maximilian Leo Hirn Team Member Page 42 of 69 The World Bank DRC Urban Water Supply Project (P091092) Lucie Lufiauluisu Bobola Procurement Team Richard Everett Social Specialist Koho Francine Takoy Procurement Team Alice Museri Procurement Team Patricia Komina Dele Team Member Joelle Nkombela Mukungu Environmental Specialist Yeli Mariam Dakoure Sou ICR main contributor B. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY06 31.641 188,668.43 FY07 14.523 49,169.32 FY08 21.038 125,423.39 FY09 23.192 193,132.95 FY10 0 0.00 FY18 .200 543.76 FY19 .150 457.26 FY20 .200 609.68 Total 90.94 558,004.79 Supervision/ICR FY09 0 2,116.22 FY10 30.898 247,535.23 FY11 30.030 224,309.17 FY12 17.751 139,411.11 FY13 23.725 258,874.53 Page 43 of 69 The World Bank DRC Urban Water Supply Project (P091092) FY14 37.861 204,660.72 FY15 20.446 148,741.34 FY16 15.197 132,623.69 FY17 10.554 73,735.65 FY18 22.287 179,380.39 FY19 38.580 213,597.72 FY20 35.969 191,675.71 Total 283.30 2,016,661.48 Page 44 of 69 The World Bank DRC Urban Water Supply Project (P091092) ANNEX 3. PROJECT COST BY COMPONENT Amount at Approval Actual at Project Percentage of Approval Components (US$M) Closing (US$M) (US$M) Water supply services in 101.6 215.85 84% major urban centers Sector reform, capacity building & improved 88.4 98.15 100% governance Total 190.00 356.00 88% Page 45 of 69 The World Bank DRC Urban Water Supply Project (P091092) ANNEX 4. EFFICIENCY ANALYSIS 1. The objective of the PEMU Project and its Additional Financing was to increase sustainable access to safe drinking water in three cities18 of Democratic Republic of Congo (DRC), and to improve the efficiency of the country water utility, REGIDESO. The areas of improvement of the REGIDESO efficiency were (i) an investment, expansion and rehabilitation program, and (ii) a program to support REGIDESO's reform, capacity building and sector governance. 2. The major project beneficiaries were urban communities based on the mains urban center of the countries: Kinshasa, Lubumbashi and Matadi. At appraisal the number of beneficiaries was estimated to be 1,205,000 and later increased to 2,600,000 at the additional financing. 3. Cost of the project. The Project was financed through an IDA credit amounting to USD 199 million. USD 101.6 million were allocated for water supply services in the three targeted cities while USD 88.4 million were allocated in the water sector to support reforms, enhance capacity building, and improve governance. An additional financing amounting to USD 166 million was later approved to scale up the water supply services in the same cities and carry on the sector reform. 4. Project approval, effectiveness, and duration: The initial project was approved on December 18th, 2008 and became effective on November 3rd, 2009. The parent project initial closing date was on April 31st, 2014. A first restructuring occurred in July 2012, to extend the project closing date by 21 months, until December 31, 2015. A second restructuring occurred in October 2015, recording a 4-month extension of closing date April 15th, 2016, to provide time for signing of the Credit Agreement for the Additional Financing. The Additional Financing (AF) was approved on February 25th, 2016, with an original closing date on December 31st 2018. The AF PEMU project closing date was extended four times (to 6 months at each restructuring) to allow delayed works to be completed. The last 6 months restructuring finally closed the project on June 30th, 2021. 5. An ex-post financial and economic analysis of the project's impacts is conducted in accordance with ICR guidelines to reassess the performance of the project at completion stage. The assessment is done against the targets of the results indicators specified in the PAD. In this regard, the various analyses were revisited to: (i) update the data, parameters and hypotheses used to establish the level of financial and economic criteria and (ii) broaden the scope of analysis of the project's economic impacts in light of the results recorded. The analysis approach is based essentially on the various steps described in the Annex 9 of the PAD and Annex 5 of the Additional Financing (AF) relating to the economic and financial analysis of the PEMU project. The present analysis has three parts: (i) a section on REGIDESO's financial viability; (ii) a section on the financial impact of the project; and (iii) a section on the economic analysis of the project. 6. The economic and financial evaluation shows that: (i) overall, the PEMU has generated a satisfactory internal Rate Return (IRR) and a Net Present Value (NPV), which are well above the forecasts mentioned in the additional financing PAD. At the level of the centers, the results remain positive, but the most significant impacts are recorded in the city of Kinshasa, then in Lubumbashi and finally in Matadi. Regarding the situation of REGIDESO, it appears that although the project has contributed to improve some of the utility's operational performance, its financial viability remains structurally dependent on (a) the low rate of collection of public's bills, (b) the high percentage of unbilled water volume, (c) the average price of water sales, and (d) the low self- financing capacity of the utility. 18 Kinshasa, Lubumbashi and Matadi Page 46 of 69 The World Bank DRC Urban Water Supply Project (P091092) A - REGIDESO's financial viability 7. The financial analysis aims to evaluate the results of the PEMU on (a) the improvement of REGIDESO's management and administration (i.e., its operational and commercial performances), (b) REGIDESO's financial situation, and (c) the sustainability of REGIDESO's financial viability. 8. Impacts of PEMU on the operational and commercial performance of REGIDESO. Several actions under the water reform component were carried out to improve the operational and commercial performance of REGIDESO, including a) the repair, replacement and rehabilitation fund and support for operations, b) the staff optimization plan, c) the communication plan, and d) the implementation of an action plan to reduce and control the consumption of official institutions. All these actions had direct effects on the following indicators: (i) network performance, (ii) percentage of unbilled water, (iii) staff productivity, (iv) rate of collection of bills and debts of IOs, and (v) rate of collection of private bills. 9. The PEMU did not reduce the non-revenue water (graph 1). In contrast, the first graph shows that since 2012, there is a tendency to the decrease of network efficiency. However, the number of staff per 1000 connections decreased since the beginning of the project to reach its target in 2020. Unfortunately, this achievement did not reduce the wage bill. The average annual cost per agent of USD 20,155 noted in 2016 increased to USD 20,550 in 2017. Page 47 of 69 The World Bank DRC Urban Water Supply Project (P091092) Graph 1. REGIDESO operational performances during the PEMU implementation Performance of the Number of staff per 1000 REGIDESO network connections 70% 30 60% 50% 20 40% 10 30% 20% 0 10% 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Number of agents per 1000 active subscribers Network performance Target Business performance 120.00% 100.00% 80.00% 60.00% 40.00% 20.00% 0.00% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Percentage of unbilled water (NRW) Collection rate for private customers OI bill collection rate 10. REGIDESO's commercial performance. The graph 1 shows that the commercial performances are penalized by the almost constant weight of the volume of unbilled water, combined with a strong propensity of the official institutions (Instances Officielles IO in french, meaning the public customers) to accumulate very important payment arrears. The balance of these arrears amounts to USD 239 million. This situation inhibits the efforts made by REGIDESO to redress the collection rate of private connection, which rose from 61% in 2013 to 96.20% in December 2020. 11. The impact of PEMU on the financial management of REGIDESO. This impact is assessed based on the elements of the operating account and the cash flow account contained in REGIDESO's financial statements. The data in Table 1 for the period 2015-2019 update the forecasts made on REGIDESO's financial management during Page 48 of 69 The World Bank DRC Urban Water Supply Project (P091092) the additional financing phase and presented in the interim completion report19. The table 1 shows the relevant parameters of REGIDESO's financial management and highlights the annual values of the working capital and the financing requirement that best reflect the fragility of REGIDESO's cash flow. Table 1: financial data and some indicators over the project period. (Unit in billion FC, current price) Parameters 2009 2012 2013 2014 2015 2016 2017 2018 2019 Operating cost 121.3 138.3 141.9 162.9 139.0 160.1 221.0 249.4 231.2 Disbursed operating expenses 161.9 120.2 127.4 130.1 156.4 132.4 190.6 197.4 258.7 Of which, staff costs 31.9 45.5 50.7 50.9 59.3 66.1 81.3 101.9 116.7 Operatinf expenses 188.6 170.4 180.6 173.8 201.3 182.5 259.5 255.0 306.2 Operating results - 67.3 - 32.2 - 38.8 - 10.9 - 17.0 10.7 7.1 - 18.3 - 52.9 Net result - 95.4 - 32.7 - 40.6 - 11.4 - 30.4 - 20.2 - 22.9 - 21.5 - 60.5 shareholders' equity 1,200.8 1,296.6 1,802.3 1,890.1 1,916.7 Working capital 26.6 52.9 65.9 61.6 44.2 working capital requirement - 33.0 - 59.5 - 72.8 - 76.3 - 68.7 Net cash flow 7.63 - 4.64 - 3.87 0.09 - 6.32 - 6.58 - 6.96 - 14.70 - 24.57 Indicators Operating expense rate 64.3 81.1 78.5 93.7 77.71 72.54 73.45 77.40 84.48 Share of labour costs 16.9 26.7 28.1 29.3 29.5 36.2 31.3 40.0 38.1 Sources: period 2009 to 2014 (without 2011 and 2012), taken from the AF (§11, table 5.5) period 2015 to 2019 update based on REGIDESO's financial statements. 12. The revenue situation. REGIDESO's revenue situation was gradually consolidated under the combined effect of the increase in the volumes of water sold and the continuous increase in the average price of water (private), which rose from 819.02 FC/m3 (0.41 USD/m3) in 2016 to 1139 FC/m3 (0.57 USD/m3) in 2017. In 2019, the average water price stands at 1286.11 FC/m3 (0.65 USD/m3) with a stronger increase in the average water price at the standpipe level than at the private connection level. 13. The situation of expenses. The incompressible expenses of REGIDESO remain very important and support the structural deficit noted at the level of the operating result of the company. These expenses represent over the period 2015-2019, 77% of the total operating expenses of which 36.4% of the expenses are attributable to personnel costs. 14. The net result. The series of deficits recorded over the entire project period shows an average value of -33.6 billion FC (-16.8 million USD) per year, this average increases to -31.3 billion FC (-15.6 million USD) per year over the period of the project additional financing. This slight positive evolution remains insufficient to make a real recovery of the financial viability of REGIDESO. 15. Net cash flow. The financial resources released each year by REGIDESO to finance its short-term activities are insufficient. In fact, from 2015 to 2019, REGIDESO's financing needs averaged 62.1 billion FC (31.2 million USD) against an average working capital of 50.2 billion FC (25.2 million USD). The cash balance evaluated on average at 11.82 billion FC (59.2 million USD) constitutes a gap covered by recourse to bank loans. REGIDESO's net financial debt stands at 146.4 billion FC (73.5 million USD) in 2019. 16. The significant contribution of IO receivables. From 2013 to 2015, the cumulative receivables of the IOs amounted to 220.814 billion FC (110.8 million USD), i.e., an average of 44.16 billion FC (22.2 million USD) per 19Table 17 of the interim completion report of the client, in French: Elaboration du Rapport d'Achèvement de l'Emprunteur (RAE) – Projet d’alimentation en eau potable en milieu rural (PEMU). Ministère de l’Energie et des Ressources Halieutiques République Démocratique du Congo. 65p – Juillet 2019 Page 49 of 69 The World Bank DRC Urban Water Supply Project (P091092) year. This amount mainly covers (i.e., 3.7 times) the average gap in REGIDESO's net cash position. Consequently, it is undeniable that the current situation of unpaid IO invoices cancels out and jeopardizes REGIDESO's solvency. 17. The PEMU and the financial viability of REGIDESO. The PEMU was implemented in a very difficult context where the operational and commercial performances as well as the self-financing capacity of REGIDESO were structurally degraded by an inefficient productive capital, disproportionate operating costs, an approximate control of the water market (supply, consumption, price, collection) and an environment that did not allow the public power to be empowered. All these things limited the impact of the project on the financial viability of REGIDESO despite the progress made. C – Economic analysis 18. The Economic Analysis section of aims to update the cost-benefit analysis carried out for the original project and for the additional financing by taking into account the actual implementation of the PEMU at the completion date and the impact of its activities. 19. Methodology. The cost-benefit analysis has been updated to assess the IRR and NPV of all activities under the original project and the additional financing. The methodology used in the PAD was applied and complemented by the identification of the benefits brought by the project. Calculations are made over a 20-year period and the NPV is calculated at a rate of 12% (see PAD, page 104, §4.) to allow comparison with the results contained in the PAD and additional financing. Benefits include “increased water consumption”, “consumer surplus”, which corresponds to beneficiaries that have shifted from other non-potable water sources to connections or standpipes, and “cost savings” resulting to improved operational performance. The analysis also includes the avoided cost in time related to the reduction of water collection as a positive impact of the project. Project costs include capital costs composed of 100% of the costs of the initial project activities and the AF, incremental operating costs (energy and chemical costs, commercial costs related to new customers and maintenance costs) and renewal costs. 20. Updated baseline assumptions. The baseline assumptions (Parent project and AF) are updated to reflect the project outcome with respect to current values of per capita consumption, average water revenues (for REGIDESO) and prices (at the consumer level), and operating costs, contained in Table 2. Page 50 of 69 The World Bank DRC Urban Water Supply Project (P091092) Table 1- Water Consumption, Prices and Operating Costs Water consumption and prices Income Number of people Specific consumption Average price served (L/pers./day) (FC/m3) [US$/m3] With the project Regular connection 30 40 458 [0.23] Social connection 30 40 458 [0.23] Standpipes 300 15 500 [0.25] Without the project Standpipes 15 500 [0.25] Resellers 10 1000 [0.50] Operating cost Kinshasa Lubumbashi Matadi Energy consumption kWh/m3 produced 0.405 0.304 1 FC/m3 produced 63.6 47.7 156.6 [US$/m3] 0.032 0.024 0.079 Chemicals FC/m3 produced 15.7 5 24.3 [US$/m3] 0.0079 0.0025 0.012 Commercial cost Operating connection (FC/connection) 277,500.00 [US$/connection] 139.29 Social connection (FC/connection) 46,250.00 [US$/connection] 23.21 21. REGIDESO's performance indicators. The revenues and additional costs of the PEMU were adjusted by considering the overall performance of REGIDESO, which is the beneficiary of the investments. In this sense, the following three main indicators were used, namely indicators relating to the overall performance of REGIDESO, its commercial performance and the overall productivity of its personnel. Table 3: REGIDESO performance indicators 2009 2010 2011 2012 2013 2014 Percentage of Non-Revenue Water (NRW) 47.80% 43.80% 44.20% 41.20% 44.30% 44.00% Private connection bills collection rate 73.00% 77.00% 71.00% 75.00% 61.00% 61.00% Number of staff/1000 connections 19.5 18.2 18.1 17.2 16.5 16.2 2015 2016 2017 2018 2019 2020 Percentage of Non-Revenue Water (NRW) 43.00% 45.00% 47.00% 43.30% 45.28% 40.39% Private connection bills collection rate 63.40% 63.40% 67.20% 72.49% 74.50% 96.90% Number of staff/1000 connections 11.3 14.6 13.9 12.2 10.25 8.43 Page 51 of 69 The World Bank DRC Urban Water Supply Project (P091092) 22. The contribution of PEMU to the reduction of water collection. Survey results from the PILAEP 2 project20 showed that without the project, the time to collect water is estimated at 142.7 minutes for a quantity of 83 liters of water collected. With the project, the same amount of water is collected in less than 30 minutes. The Avoided Time Cost (ATC) is calculated based on the shadow water price differential of US$0.05 before the project and US$0.0003 after the project, with the time savings valued at the opportunity cost of ordinary labor (US$0.027 per hour). 23. Overall economic profitability of the PEMU. The results of the updated and completed analysis clearly indicate that the PEMU is an economically profitable project with an IRR of 28.7% and an NPV of USD 70.9 million. The significant benefits are distributed among REGIDESO, which increases its productive capital and business volume, the beneficiary households, which improve their access to drinking water and generate surplus water consumption, and the State, which saves substantially on health costs. Table 4: Cost-effectiveness indicators for the PEMU Economic profitability of water centers targeted in the PEMU project Center Net Present Value (NPV) @12% (M$) Internal Return Rate (IRR) (%) Kinshasa 58.5 37.2 Lubumbashi 7.7 19.8 Matadi 4.7 17.7 Total 70.9 28.7 24. Economic profitability by center. The investments were more massive and diversified in Kinshasa which presents a more satisfactory IRR of 37.2%, its NPV contributes to 82.5% of the overall NPV of the PEMU. The two other centers which respectively show an IRR of 19.8% in Lubumbashi and 17.7% in Matadi also have very interesting returns because they are higher than the discount rate of 12%. The allocation of resources to these centers is economically relevant. 25. The PAD and additional funding forecasts. The table 5 extracted from the additional financing PAD of the PEMU shows that the assumptions used at the beginning of the project were very optimistic and that those used at the time of the additional financing were also reducing because the impacts of the project were not sufficiently visible to be integrated in the analysis. At the end of the project, the profitability indicators are between the two analyses with an NPV representing 53% of that obtained in the PAD and 3.35 times that retained in the additional financing. 20PILAEP = Promotion de modalités Innovantes pour L’Accès à I’Eau Potable in French. A project funded by French Development Agency to set up sustainable drinking water supply systems for the populations of the peri-urban areas of Kinshasa and Bas Congo not served by the national water distribution company (REGIDESO) Page 52 of 69 The World Bank DRC Urban Water Supply Project (P091092) Table 5: NPV and EIRR forecasts and actuals values Unit Original project Original Project and and results AF (updated results) Net Present Value US$ 132.0 20.9 (NPV) @ 12% Economic internal % 41.0 13.7 rate of return (EIRR) 26. The economic results of the PEMU are very robust. A sensitivity test was carried out on the profitability indicators to assess separately the effects of a 10% change in network efficiency, a 10% change in recovery rate and a 10% increase in average water price. The results in table 6 indicate that the economic indicators are more sensitive to water price, followed by collection rate performance and then network efficiency. However, the overall results remain broadly stable with IRRs around 29% and NPV evolving in a narrow range from USD 73.5 million to USD 75.4 million. Table 6: Sensitivity testing of profitability indicators Sensibility test Centers Network efficiency Private connections bills Average water price improved at 10% collection rate improved increased at 10% at 10% NPV @ 12% IRR % NPV @ 12% IRR NPV @ 12% IRR Kinshasa 60.9 38.2 60.6 38.2 61.6 38.2 Lubumbashi 7.3 19.5 8.4 20.5 8.36 20.6 Matadi 5.3 18.4 5.1 18.2 5.2 18.3 Total 73.5 29.2 74.1 29.5 75.4 29.5 27. The project results become more important if a lower discount rate (10% or 6%) is used, which is generally recommended for WSS projects. Indeed, if the discount rate used is 10%, the NPV of the project increases from USD 70.9 million to USD 98.5 million. The NPV rises to a very significant 189.1 million USD if the discount rate is increased to 6%. Page 53 of 69 The World Bank DRC Urban Water Supply Project (P091092) ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS The 7 attached pages present the comments made by the project implementation unit (CEP-O) on the completion report. The client also prepared an ICR at an earlier stage in the project (before the final extensions were granted). This version of the Borrower ICR does not reflect all of the final achievement of the project, but is included given the context, storyline, and other details are all relevant to the final evaluation of the project. In light of the received comments, the following clarifications are provided: • On the General Observation : The realization of the ICR took place during the period of sanitary restrictions related to the COVID-19 so that all work for the ICR was completed virtually. The main author of the ICR conducted an introductory meeting to present the objectives of the ICR to CEP- O; participated in the last virtual supervision mission of the project (November 9-20, 2020) during which a session was dedicated to the ICR; and conducted focus group meetings with the fiduciary, safeguard and monitoring-evaluation teams respectively. Apart from these formal meetings, additional communication with CEP-O was ongoing particularly with the monitoring-evaluation team, to obtain the necessary data for the project evaluation. • On the observation related to the efficacy rating : Before sharing the ICR report with the Client, a meeting was held to present the results of the report, including the split-rating methodology that led to the project efficacy rating. It should be recalled here that the final outcomes rating of the project's is not based on an average of the ISR ratings, but on the split-rate, in accordance with the World Bank's guideline for ICR. • On the comment 3 regarding the PDO2 indicators. We decided to retain the PDO level Indicator 2 (i.e. Operating cost coverage ratio in utilities targeted by the project) for the efficacy rating assessment because this indicator was consistently reported using the same methodology throughout the project. In addition, despite the eight restructurings that took place during the project, none of them called into question the reliability of this indicator. The others intermediate indicators mentioned by CEP-O are mainly expected to contribute to the improvement of the operating cost coverage ratio (see TOC in para 4) Page 54 of 69 The World Bank DRC Urban Water Supply Project (P091092) Page 55 of 69 The World Bank DRC Urban Water Supply Project (P091092) Page 56 of 69 The World Bank DRC Urban Water Supply Project (P091092) Page 57 of 69 The World Bank DRC Urban Water Supply Project (P091092) Page 58 of 69 The World Bank DRC Urban Water Supply Project (P091092) Page 59 of 69 The World Bank DRC Urban Water Supply Project (P091092) Page 60 of 69 The World Bank DRC Urban Water Supply Project (P091092) Page 61 of 69 The World Bank DRC Urban Water Supply Project (P091092) ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) Table I: Summary of changes on the result framework Original (PAD) Restructuring of July 2012 Restructuring of February Restructuring of 2016 December 2018 PDO to increase sustainable [Revised] increase access access to water in selected to sustainable water urban areas and improve services in selected urban the efficiency of the Project areas, and to improve the Implementing Entity operational performances and viability of the Project Implementing Entity Component A - Water supply services in major urban centers Objective 1 increase sustainable access to water in selected urban areas Outcome 1.1 greater access to basic water supply services, mainly through household connections and standposts Outcome 1.1 indicator the percentage of people in [Revised] Number of people [Ind + EOPT Revised] [baseline; EOPT] the targeted cities with in urban areas provided people provided with access to potable water with access to "Improved access to "Improved Water [42% - 55%] Water Sources" under the Sources" under the project project [0 – 2,600,000] [0 – 1,205,000] Outputs 1.1 indicators 1.1.1 Km of secondary and [EOPT Revised] secondary [EOPT Revised] secondary [baseline; EOPT] tertiary water network and tertiary water network and tertiary water network constructed Constructed under the Constructed under the Page 62 of 69 The World Bank DRC Urban Water Supply Project (P091092) [0 – 651] project [0 – 1390] project [0 – 1100] 1.1.2 Additional number of [Revised] Improved [EOPT Revised] Improved functioning stand posts community water points community water points [0 – 400] constructed or rehabilitated constructed or under the project [0 – 400] rehabilitated under the project [- - 450] 1.1.3 Additional number of [Revised] New piped [EOPT revised] household [EOPT revised] household households with new piped household water water connections that are water connections that are water connections connections that are resulting from the project resulting from the project [0 -41,000] resulting from the project intervention intervention intervention [0 -41,000] [- -87,000] [0 -73,500] 1.1.4 [New] Piped household water connections that are benefiting from rehabilitation works undertaken by the project [- -110,000] 1.1.5 [New] Direct project beneficiaries [0 – 2,600,000] 1.1.6 [New] Direct female project beneficiaries [0 – 1,300,000] Outcome 1.2 Reduced losses and higher productivity Outcome 1.2 indicator - Not available - - Not available - - Not available - - Not available - Outputs 1.2 indicators - Not available - - Not available - [New] Water production [EOPT revised Water capacity installed under production capacity the project m3/day installed under the project [- -179,000] m3/day [0 -69,000] Component B - Support to sector reform, capacity building, and improved governance Page 63 of 69 The World Bank DRC Urban Water Supply Project (P091092) Objective 2 Improve the efficiency of the Project Implementing Entity Outcome 2.1 Improved financial position of REGIDESO Outcome 2.1 indicator percentage of annual REGIDESO Operation & Maintenance cost covered by revenues [88% - 104%] Outputs 2.1 indicators 2.1.1 A five-year Management [Revised] Services contract [baseline; EOPT] Contract, is bid, signed and is bid, signed and under under implementation implementation [NA – effective] [No – Yes] 2.1.2 Percentage of non-revenue [Revised] Non-revenue Water [45%-29%] water in targeted cities [45%-29%] 2.1.3 Bill collection rate from Bill collection from private private connections connections in targeted [90% - 98%] cities [73% - 97%] 2.1.4 Index of network losses m3/d/km [29-25] 2.1.5 Preparation of water [EOPT revised] preparation sanitation strategies and of water sanitation program in project cities strategies and program in [1 – 3] project cities [1 – 4] 2.1.6 Rate of inactive [Baseline updated] Inactive connections per city connections in targeted [46% - 20%] cities Page 64 of 69 The World Bank DRC Urban Water Supply Project (P091092) [36% - 20%] 2.1.7 Metering rate per city Dropped [Baseline and EOPT [43% - 88%] updated] Metered connections in targeted cities [33% - 90%] 2.1.8 Proportion of bills owed [Revised] Proportion of Share of IO in total billing by IO (Instances sales billed to IO/ Instances [42% - 20%] Officielles) Officielles [42% - 20%] [42% - 20%] 2.1.9 Number of staff/1000 [EOPT REVISED] Number of active connections (after staff/1000 active severance plan) connections (after [13.5-9.6] severance plan) [17.7-9.6] 2.1.10 Rate of labor costs vs. Dropped Share of labor costs in operational costs O&M costs [35% - 27%] [40% - 27%] 2.1.11 Qualitative Staff Dropped Management (a) Capacity building strategy [No – Yes] (b) Evaluation system for Managers [No – Yes] (c) Reward and recognition Program [No – Yes] (d) Ability to recruit and dismiss staff [No – Yes] 2.1.12 Submission of previous Dropped years' audit reports to Page 65 of 69 The World Bank DRC Urban Water Supply Project (P091092) clients by May 15 of following year. [NA – Yes] 2.1.13 [New] Availability of chemicals to ensure proper water treatment and continued water services [Yes – No] 2.1.14 [New] Citizen engagement: satisfactory complaints resolution by REGIDESO [26% - 56%] 2.1.15 [New] Citizen engagement: surveyed beneficiaries who know at least two of their responsibilities regarding their access to water [- - 75%] 2.1.16 [new] Number of water utilities that the project is supporting [- -1] 2.1.17 [new] Number of other water service providers that the project is supporting [- - 0] 2.1.18 [mentioned as dropped] Proportion of volumes consumed by IO in total water consumption 2.1.19 [New]Payment arrears on water bills of IO 9months of billing [- - 6] Page 66 of 69 The World Bank DRC Urban Water Supply Project (P091092) Table II : Overall outcome rating through split rate of efficacy From From July effectiveness 2012 to in November Achievement Achievement Achievement Achievement December Baseline Target 2009 to July Baseline Target value percentage value percentage 2015 (Targets 2012 of July 2012 (original restructuring) targets) PDO1. increase access to sustainable water services in selected urban areas PDO1. Ind. Number of people in urban areas provided with access to 42 55 0 0 Negligible 0 1205000 1653060 137.2 High Improved Water Sources under the project PDO1 rating Negligible High PDO2. Improve the operational performances and viability of the Project Implementing Entity (percent) PDO2. Ind. Operating cost coverage ratio in 88 104 88 0 Negligible 88 104 101.2 82.5 High utilities targeted by the project Page 67 of 69 The World Bank DRC Urban Water Supply Project (P091092) Water production capacity installed under 202231 277757 0 0 Negligible NA NA NA NA NA the project m3/day Availability rate of water 87.6 94 NA NA NA 87.6 94 96 131.3 High production plants % Non-revenue water in 45 30 44 6.7 Negligible 45 29 43 12.5 Negligible targeted cities (percent) PDO rating 2 Negligible Modest Efficacy (PDO) Negligible Substantial From From January February 2016 2019 to June to December 2021 end of Achievement Achievement Achievement Achievement Baseline Target 2018 (targets Baseline Target project (targets value percentage value percentage of February of December 2016 2018 restructuring) restructuring) PDO1. increase access to sustainable water services in selected urban areas PDO1. Ind. Number of people in urban areas 26000 26000 provided with access to 0 1893630 72.8 Substantial 0 3071430 118.1 High 00 00 Improved Water Sources under the project Page 68 of 69 The World Bank DRC Urban Water Supply Project (P091092) PDO1 rating Substantial High PDO2. Improve the operational performances and viability of the Project Implementing Entity (percent) PDO2. Ind. Operating cost coverage ratio in 88 104 60.0 -175.0 Negligible 88 104 42.22 -286.1 Negligible utilities targeted by the project Water production 17900 capacity installed under 0 64000 35.8 Modest 0 69000 85920 124.5 High 0 the project m3/day Availability rate of water 87.6 94 98.2 165.6 High 87.3 94 94.6 109.0 High production plants % Non-revenue water in 45 29 43.2 11.3 Negligible 45 29 45.72 -4.5 Negligible targeted cities (percent) PDO2 rating Negligible Negligible Efficacy (PDO) Negligible Modest Page 69 of 69