KIRIBATI: SOUTH TARAWA SANITATION PROJECT (STSP) IMPLEMENTATION SUPPORT MISSION June 3-5, 2024 AIDE MEMOIRE Contents I. INTRODUCTION 1 II. MAIN MISSION FINDINGS AND AGREEMENTS 2 III. IMPLEMENTATION STATUS AND ACTIONS 3 IV. PROJECT MANAGEMENT, COMPLIANCES, RISK MANAGEMENT, SECTOR MANAGEMENT 5 V. KEY ACTIONS 5 Annex-1: List of Persons Met and Workshop Participants 7 Annex-2: Sanitation Pilot Implementation Update 8 Annex-3: Updated implementation plan of STSP, prepared by the PMU 9 Annex-4: Safeguards, Fiduciary, Legal Covenants and Compliances Error! Bookmark not defined. KIRIBATI: SOUTH TARAWA SANITATION PROJECT (STSP) (P176478) IMPLEMENTATION SUPPORT MISSION June 3-5, 2024 AIDE MEMOIRE I. Introduction 1. The World Bank (Bank) conducted an implementation support mission1 for the South Tarawa Sanitation Project (STSP) from June 3-5, 2024. Apart from the regular task team, the mission also consisted of the Practice Manager of the Water Global Practice of the World Bank (WB), East Asia Pacific Region, Ms. Maria Angelica Sotomayor, and a consultant with global experiences on City Wide Inclusive Sanitation (CWIS), Mr. Martin Gambrill. The objectives of the mission were to: (i) review the implementation progress of the project, specifically with respect to the actions agreed in the previous missions; and (ii) identify key implementation challenges and agree on the measures needed to address these. 2. The mission met with the Project Management Units (PMUs) of the STSP and STWSP, the Kiribati Fiduciary Services Unit (KFSU), the Ministry of Finance and Economic Development (MFED), the Ministry of Infrastructure and Sustainable Energy (MISE), and the Public Utilities Board (PUB). The mission took the opportunity to also meet the Honorable Minister MISE Mr. Willie Tokataake; Deputy Secretary of MFED Ms. Maaman Ioakim; Officer in Charge of the Ministry of Health (MoH), Dr. Revite Kirition; along with the Secretary, MISE; to envision the future of Kiribati, connecting water and sanitation in a multi-sectoral approach. The new vision underscores a vibrant green, blue transformed island for economic growth, environmental and social resilience, addressing the current water and sanitation sector challenges in a holistic manner. The partnership with the World Bank on this front aligns with the Bank’s new vision of ‘world free from poverty on a livable planet'. The Hon. Minister and the representatives of the ministries were motivated to work towards the vision. 3. The mission also visited PUB offices to understand the status of their Information Management Systems developed under the Kiribati Utilities Reforms Program (KURP) financed under the New Zealand (MFAT) funding; explain to them the project interventions (both South Tarawa Water Supply (STWSP) and South Tarawa Sanitation Project (STSP); discuss and clarify the roles of MISE and PUB, under the Memorandum of Cooperation (MoC) that both parties are supposed to enter into under STSP, on the lines done under STWSP2. The mission has also presented various Technical Assistance (TA) initiatives that the WB mobilized3 to complement the project, and global experiences on Citywide Inclusive Sanitation (CWIS) and Connecting the Unconnected4. The mission undertook field visits to various sites in South Tarawa, to understand the existing water and sanitation service status. A wrap-up meeting was held with the Secretary and officials of MISE, the Senior Assistant Secretary of MFED, the Officer in Charge of PUB, the officials of KFSU, and the PMUs of STWSP and STSP on June 5, 2024. The mission would like to thank the Government of Kiribati (GoK) and the officials of the institutions listed above for the support provided. This Aide Memoire summarizes the mission findings, agreements 1 Mission members include Raghava Neti (Task Team Leader), Eric Lucien Vanweydeveld, (Sanitation Consultant), Mark Ellery (Sanitation Consultant), Ilaisa Gabirieli Rokotuisiga (Financial Management Consultant), Myat Kline (Procurement Specialist), Rosie Davey (Senior Environment Specialist), Joyce Onguglo (Senior Social Development Specialist) and Liam Murtagh-Fraser (Team Assistant). In addition, the Practice Manager of Water Global Practice of the World Bank, Ms. Maria Angelica Sotomayor, and consultant on Citywide Inclusive Sanitation Mr. Martin Gambrill, and other staff of the World Bank in the East Asia Pacific, Ms. Shona Fitgerald, Senior Water Supply and Sanitation Specialist also joined the mission. 2 The MoC was signed after the mission. 3 Global Water Security and Sanitation Partnership (GWSP) funded GIS mapping, and climate resilient sanitation systems planning TA, Problue funded TA for water quality monitoring across land and marine waters. 4 how best to ensure house connections to sewers for those who can be connected, and how best to ensure sanitation services to others, who can’t be connected. 1 reached, and the next steps. Targets for the key actions agreed are detailed in Table 2. The list of officials met by the mission is in Annex 1. II. Main Mission Findings and Agreements 4. The implementation vision for the Sanitation Pilot has been further refined, including implementation modalities. The household survey in three previously proposed pilot areas – the unsewered areas of Betio, Bairiki, and Teaoraereke village have been completed, and the village is being resurveyed to refine data. The collected data is analyzed, which provided a good understanding of the gaps in services. Selection criteria for locations where interventions are to be provided are discussed and suggestions provided by the mission for strengthening. Since the last mission, the pilot's implementation plan has been simplified to address the risks. The mission also envisaged – instead of spreading thinly across the proposed three pilot areas, focusing on the holistic transformation of a single area (say a village), providing all the related interventions -- including water supply5, sanitation, grey-water management, solid waste management, drainage, greenery development, making the village an open defecation-free, maintaining cleanliness and visible transformation into a livable area, with continued efforts and partnerships. The Hon. Minister, Secretary MISE and the officials of Ministry of Finance and Economic Development and Ministry of Health and Medical Services agreed with this vision laid out by the WB and proposed that a village somewhere in the middle of South Tarawa be selected for demonstration effect. The agreed actions are in Table 2. 5. The overall project implementation delay is 2 years, which is likely to backlog efforts until the end of the project. The mission explained the project's current status vs. its impact on disbursements in the graphic below, and it highlighted the need to expedite the project implementation pace. 6. The PMU of STSP continues its efforts to mobilize the remaining staff but lost the Project Manager. The current staff includes a Deputy Project Manager, a Social Safeguards Specialist, and a Community Engagement Specialist. The Project Manager position fell vacant due to MISE's termination of the international staff position, citing performance issues. MISE wants to readvertise this position and ask for support through the WB through a Short-Term Consultant (STC) for guidance on implementation. Mobilization of the rest of the staff, i.e., the Environmental Management Officer and the Sanitation Engineer, has not yet been completed. MISE also plans to hire an IT Helpdesk Officer to support MISE on IT administration work and is coordinating with PUB on the capacity required for GIS data management. Agreed actions are a) advertising the Engineer’s position regionally; b) preparing interns 5 From South Tarawa Water Supply Project (STWSP) 2 at KFSU to take on the role of Environmental Officer, subject to their qualifying the requirements for the job. The Bank will consider options for extending implementation support. 7. The PUB confirmed its readiness and partnership to help implement the project, supporting MISE. However, the PUB is staff and resource-constrained, which needs to be addressed. PUB agreed to share the ArcGIS platform that it has developed for recording and managing the project-related information – rather than establishing another parallel platform at MISE, welcomed the plan discussed to complement and build on the IMS systems developed under KURP, and signed the MoC6 after a retreat planned for MISE and PUB in June 2024. PUB has also advanced in addressing its historic financing management gaps by strengthening its systems over the last two years. However, the mission found that PUB needs supplementary resources and staffing to help advance project implementation and take over the huge ensuing O&M responsibilities of the assets being created for water and sanitation. PUB has agreed to prepare a proposal. In response to PUB’s concern whether the data has to be transferred to MISE, the mission clarified to the PUB that it is not transferring any data to MISE; rather, it remains with PUB and partners with MISE for project implementation via the modalities described in the MoC. Now that the MoC is signed, PUB can procure the necessary equipment for sewer maintenance as the disbursement condition is fulfilled. The agreed actions are in Table 2. 8. The consultancy firms ((Project Implementation Assistance Consultant (PIAC) and Behavior Change Consultant (BCC)) procurement is progressing to award by Quarter 3 of 2024. Proposals were received for both consultancies. MISE is evaluating the first one, completed the evaluation for the second one and submitted it for Bank’s clearance. Constraints for delays in evaluation include – non-availability of evaluators, extended time for KFSU to produce draft evaluation reports, and approvals within MISE. However, once these firms come on board, the capacity of MISE to implement the project will be boosted. PMU to ensure compliance to agreed timelines. 9. Procurement of STSP investments (sewerage connections and onsite sanitation systems) is delayed until Quarter 1 of 2025. While the PMU collected some data related to the sewerage connections contract from PUB, progress toward the contracting (community engagement, identifying data gaps, finalizing the bid document, etc.) was slow. PUB has also presented the need to rehabilitate parts of the existing sewerage systems, which must be factored in. The project includes a nominal amount of US$1.49 million for such needs. There is no progress related to the onsite systems contract. The reasons are partly due to the vacancies at PMs and engineers' positions, continued concerns between MISE and PUB about cooperation before signing the MoC, and the lack of capacity for detailed planning of implementation steps. A revised implementation plan presented by the PMU is in Annex 2. The agreed actions are in Table 2. 10. The current risks to implementation include the potential for: (i) delays related to elections likely to be scheduled in August 2024; (ii) continuing capacity gaps at the PMU; (iii) potential disagreements with the incoming CEO of PUB, on the plans agreed; and (iv) lack of capacity and GoK’s traction on the new concept for Sanitation Pilot. The mitigation measures are listed in Annex 4. III. Implementation Status and Actions Sanitation Pilot 11. Progress on the latest Action Plan: Following the implementation plan shared by the WB after the last mission, MISE deliberated internally and proposed another version. The WB shared comments on that, with further guidance on implementation. During the mission, looking at the field conditions of 6 After the mission, MISE and PUB signed the MoC on June 14, 2024 3 the villages regarding water and sanitation, the mission proposed a holistic transformation of at least one demonstration village under the Pilot. 12. Component 5 of STWSP aims to pilot simplified systems for sanitation in South Tarawa that are climate resilient, technically appropriate, scalable, sustainable, culturally acceptable, affordable, and have enhanced community ownership. PMU of STSP is managing this component on behalf of PMU of STWSP. Since the last mission, the approach to implementation of this component was discussed and agreed. Building on this, during the STWSP MTR mission, it was discussed and agreed that the PMU would also envisage holistic development of select pilot area, addressing issues of water, sanitation, solid waste, drainage, and greenery development, with complementary activities to reduce, recycle and recover (RRR) wastes from the areas, and complete behavior change of the communities. This holistic development aims to demonstrate visible, influential, socially, and economically impactful results that can lay the foundations for green, blue, and transformative island development in Kiribati. The idea was discussed with the Minister, MISE, the Secretary of MISE, the Deputy Secretary of MFED, and the Officer-in-Charge of MHMS, all of which welcomed the idea. MISE also has recognized the importance of engaging other key Ministries, including the Ministry of Environment, Lands, and Agriculture Development (MELAD), Ministry of Culture and Internal Affairs (MCIA), Ministry of Women, Youth, and Sport and Social Affairs (MWYSSA), Ministry of Health and Medical Sciences (MHMS) and Ministry of Education (MOE), during the initial consultations on the concept. All these ministries are represented in the National Water and Sanitation Steering Committee (NWSSC), and it was agreed that this national mechanism should be used as a vehicle to advocate and promote this concept. PMU STSP agreed to prepare a concept note on this approach and the area to be selected to initiate the work. The select area will be located somewhere in the middle of South Tarawa, for maximum visibility. The PMU of STSP will identify and propose that area. Based on the plans, the STWSP may require restructuring to allow for other kinds of physical interventions (e.g., solid waste management, drainage, etc), which were not envisaged originally. 13. The Pilot interventions discussed thus far for learning will also be implemented in this village. The mission discussed the learning objectives of each pilot intervention planned before. Based on the discussions, PMU will revise the matrix and submit to the Bank. The transformative interventions will continue longer, even as the water supply is provided to the village later through STWSP. However, this transformative effort requires coordination with the other ministries as well, such as MCIA, MHMS and MELAD. Once the Concept Note is prepared, the ideas will have to be discussed with National Water and Sanitation Steering Committee (NWSSC) as well. The PMU’s (both STWSP and STSP) need to think of any additional resource requirements to implement this new concept and make proposals to be funded under STWSP – as ADB had agreed during the STWSP MTR mission to finance such additional resources. South Tarawa Sanitation Project 14. Procurement of contracts under STSP is delayed to Quarter 1 and Quarter 2 of 2025. The status of various actions agreed during the last mission in January 2024, to advance the procurement of main contracts (sewer connections and onsite sanitation systems) is as in the Table below. Due to the delays in these actions, the procurement of main contracts is delayed up to Q1 of 2025 for sewer connections contract, and Q2 of 2025 for onsite systems contract. Table 1: Status of Actions Agreed during the last mission, on sewer connection contract # Action as per the last AM Current Status 1 By March 10, 2024, both PMU and PUB will agree on an action plan to • PMU met PUB and collected basic data, but the address the sewer connection contract implementation issues identified information gaps and validation of it is yet to be done. during the mission. 2 By March 31, 2024, all required changes to the signed South Tarawa • MoC was signed subsequent to the mission. Water Supply Project Memorandum of Cooperation Project will be 4 incorporated, and both parties will sign a similar Cooperation Agreement for STSP, as is required under the STSP Financing Agreement. 3 By March 31, 2024, PUB will identify either a nodal officer within its • PUB is yet to designate nodal person to coordinate team, or a consultant to be hired by the PMU (by April 30, 2024) to work with PMU for project implementation. as a coordinator between both parties. Additional capacity requirements can be supported under the project, based on the PUB’s assessment. 4 The World Bank will organize a Connecting the Unconnected workshop Happened during this mission in mid-March 2024, bringing in global experiences on sewerage connections. 15. Now that the MoC is signed after the mission, PUB and PMU agreed to expedite the work. The action plan presented by the PMU STSP is included in Annex 2. PUB can also start procuring the needed critical equipment for sewer maintenance, as the disbursement condition of signing of MoC is now fulfilled. IV. Project Management, Sector Management, and Compliance 16. Project Management: PMU’s current staffing position and proposals for strengthening are indicated in paragraph 6. PMU is also purchasing a new vehicle. As the PUB is on now board for project implementation assistance, PMU needs to start active collaboration and information sharing with the PUB. The assets proposed under the project, and the analyses being done under the project, can be done using the PUB’s GIS systems. PUB had agreed to share its GIS platform for the project. With the current resources and the additional resources mobilized, the project management capacity seems adequate. PMU has to start field visibility of the project, by engaging with the local communities. 17. Sector Management: The director level position to oversee both the policy and regulatory aspects of the Water Supply and Sanitation (WSS) sector, and the Ministry’s institutional development, with a long-term vision, is now advertised. MISE is also working on the requirements for 2025 Establishment Register (ER2025) and is drawing inputs from the Rapid Review of Institutional Development, done by the WB in 2023. 18. Compliance: Procurement Management: Currently the procurement is much delayed under the project affecting the overall project implementation and disbursements. The need is to actively pursue designated activities to ensure progress towards contract award. The procurement rating of the project is moderately unsatisfactory. Financial Management (FM): There are no Interim Financial Reports (IFRs) due under the project. The FM team is undergoing training, which facilitates better FM Management. (see details in Annex 3). Environmental and Social Risk Management: The E&S issues have to be planned before the implementation of works start, during the assessment stage. Legal Covenants: Having a Project Manager in place is a legal covenant that is currently non-compliant. The other key legal covenant related to the MoC to be signed between MISE and PUB, is now complied with. PMU has to follow up on the other legal covenant related to signing of Memorandum of Agreements with the other ministries. V. Key Actions 19. The following table sets out the key actions agreed during the mission and in the wrap up meeting. Table 2: Key Actions Responsib # Para ref. Action Date ility Prepare a revised concept note for Sanitation Pilot, along with an implementation plan 1 4,12 PMU Aug 31 and cost estimates 2 12 Identify the village for implementation of Sanitation Pilot, with the renewed scope PMU Aug 15 3 13 Prepare a revised matrix on learning objectives of the Pilot PMU done 4 13 Prepare a proposal for resource requirement to implement the Pilot PMU Aug 15 5 5 6 Complete recruitment of interns for Env Management Officer position PMU Aug 15 6 6 Complete recruitment of Sanitation Engineer, through regional advertisement PMU Aug 15 7 18 Complete filling up of the vacancy of Project Manager MISE Aug 31 8 6 Decide on the need and scope for IT officer for MISE MISE Aug 31 9 6 WB to extend implementation support to the PMU till the PM is hired WB Aug 15 Prepare a proposal for supplementary staffing and resources for the PUB to extend 10 7, Tab 2 PUB Aug 31 implementation and coordination support to and the PMU 11 7, 15 Prepare a proposal for procuring essential equipment for sewer maintenance PUB Aug 15 12 8 Complete procurement of PIAC and BCC and sign the contracts MISE Aug 15 13 Anx 3 Submit the IFRs for Jun 30 ending PMU Aug 15 PUB and PMU to sit together to identify data gaps and implementation actions PUB and 14 9, Tab. 2 (assessments, community engagement etc) to progress towards bidding; Address the Aug 31 MISE sewer connections and contract implementation issues 15 12 MISE to engage with the other ministries to implement the Pilot, through NWSSC MISE Ongoing 16 18 Draft the MoUs between MISE and the other ministries PMU Aug 31 Improve the field visibility of the project interventions, working closely with the local 17 16 PMU Ongoing communities 6 Annex- 1 List of officials met during the mission Name Title/Organisation Email Reea.Binataake. Aluta SSO/KFSU-MFED rbaluta@mfep.gov.ki Matea Aaran SSS/MISE-STSP matea.aaran@mise.gov.ki Anne Tebeaa PUB Ioata Tamaroa PUB Ioata.tamaroa@pub.com.ki Katarina Botioa ESJPO/MISE-STSP katarina.botioa@mise.gov.ki Ruuta James WMO/MISE wmo@mise.gov.ki Mereani Naisara CFO/PUB mereani.naisara@pub.com.ki Chris Nixon ADB TA/MISE chris.nixon@mise.gov.ki Areke Alexander Tiareti DPM/MISE-STSP a.tiareti@mise.gov.ki Robert Mathews TL/PUB-KURP robmatt.au@gmail.com David Drake Advisor/PUB-KURP Daviddrake3o@gmail.com Kirita Aaron OIC/PUB kirita.aaron@pub.com.ki Teeri Witemwa ACSA/PUB teeri.witemwa@pub.com.ki Itienang Timona WEM/PUB itienangtimona@pub.com.ki Karen Bray High Commissioner, Australian High Commission, Kiribati Brenton Kanowski First Secretary & Deputy Consul- Brenton.Kanowski@dfat.gov.au General, Australian High Commission, Tarawa Annex- 2 Action Plan of PMU STSP on the two major contracts – Sewer Connections and Onsite Sanitation Systems Sewer Connections Onsite Systems 1 Annex- 3 Procurement and Financial Management Issues Procurement The mission team assessed the progress of the project's procurement implementation. The PMU terminated the international project manager in May 2024 and requested the Bank's retroactive no objection through STEP in the first week of June, which was cleared after the mission. The project manager position is critical for implementing the project in accordance with the obligations of the financing agreement, so the PMU will recruit a replacement once the termination process is completed. With the overall disbursement rate at 5%, which is very low after two years of project implementation, and no large-value critical procurement activity having been signed, the PMU needs to expedite procurement implementation. The updated status and agreed actions for the large-value contracts are as follows: 1. Project Implementation Assistance Consultant (PIAC) (US$ 1.0 m) and Behavior Change Communication Campaign (US$ 1.7 m) – the Technical Evaluation Report (TER) was cleared for both the consultancies, and the combined financial evaluation is ongoing. These contracts are critical for the project and are scheduled to be signed in Q3 of 2024. 2. There are two critical individual consultant positions (Director and Engineer), both of which have been advertised in local media and have not received any applications yet. The project will re-advertise these positions in the local media, on the World Bank's external website, and on UNDB online through STEP. 3. There are three upcoming new procurement activities: Sanitation Pilot – USD 1.2 million under the STWSP project procurement plan, Sewer Connection Contract – USD 5 million, and STSP Onsite Sanitation System Contract – USD 4 million. All these activities are not ready to start due to the lack of terms of reference, technical specifications, and the PIAC firm not yet being on board. Updated implementation plans are prepared and presented to the mission (see Annex 2). 4. Sanitation Pilot activity ($1.2 m) when the implementation plan, technical specifications/design is ready, PMU will need to discuss with the Bank to identify the best procurement approach. If community procurement approach shall be applied, the project may need to be restructured as the current STWSP doesn’t include community procurement provision. 5. PMU needs to review the current IT officer TOR and the available support from PUB. PMU will update the decision of recruiting this position not later than end June 2024. The mission discussed and agreed that the first two consulting firms' contracts are critical for the implementation of the remaining activities and expedited the finalization of these contracts. The team agreed to meet fortnightly to discuss the progress of the project's procurement implementation virtually. Overall, procurement performance remains moderately unsatisfactory due to delays in procurement implementation. The rating will be reviewed once the critical and large-value contracts are signed. 2 Financial Management FM Staffing: The recently hired Project Accountant, who joined the team in November 2023, has successfully finished extensive training in QuickBooks accounting software. This training is expected to refine the processes of recording transactions and facilitate the prompt generation of financial reports. Moreover, the accountant has also concluded internal training on Withdrawal Applications, the preparation of Interim Financial Reports (IFRs), and the internal processes and procedures of the Kiribati Fiduciary Service Unit (KFSU). These additional critical trainings are anticipated to significantly improve the management of the project's financial activities. Annual Work Plan & Budget: The FY2024 Annual Budget and Work Plan was cleared by the WB after the mission. Funds Flow: The Designated Account IDA E0240 remains active, with the most recent withdrawal application processed in March 28, 2024. Overall disbursement remains low at 5% due to a high number of procurement items yet to be completed. Reporting: Currently, there are no overdue Interim Unaudited Financial Reports (IFRs) or audits. Actions: 1. Submit IFR for the period ending June 30 2024, by August 14, 2024. 3 Annex- 4 Risk Management Mitigation Measure Respon # Risk Date sibility Seek all required approvals for bidding 1 Delays related to elections from the current cabinet, prepare a paper PMU with project scope to the new Cabinet Reach out regionally for sourcing capacity, 2 Capacity gaps in the PMU hire interns and train them to be absorbed PMU in the PMU Present the project scope, MoC, PUB’s Ownership of the new CEO of the 3 resourcing to the Board at the earliest, and PUB PUB to the new CEO once on board • Present the Concept Note to the NWSSC • form a Technical Committee represented by different ministries to guide the PMU’s capacity and traction of concept’s implementation 4 GoK on the new concept of the • Include the concept of Sanitation Pilot MISE Pilot and cooperation requirements with the other ministries, in the MoAs to be signed with them. 4