Document of The World Bank FOR OFFICIAL USE ONLY Report No: 68606-NG PROJECT PAPER ON A PROPOSED ADDITIONAL CREDIT IN THE AMOUNT OF SDR 77.5 MILLION (US$120 MILLION EQUIVALENT) TO THE FEDERAL REPUBLIC OF NIGERIA FOR A SECOND NATIONAL URBAN WATER SECTOR REFORM PROJECT May 23, 2012 Urban and Water Unit Sustainable Development Department Country Department AFCW2 Africa Region This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank’s Policy on Access to Information. CURRENCY EQUIVALENTS (Exchange Rate Effective April 30, 2012) Currency Unit = Nigerian Naira (NGN) NGN 157.15 = US$1.00 SDR 1 = US$1.55 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AF Additional Financing AFD Agence Française de Développement (French Development Agency) ARAP Abbreviated Resettlement Action Plan CMD Cubic Meters per Day CRSWBL Cross River State Water Board Limited DCA Development Credit Agreement DSR Dam Safety Report ESIA Environmental and Social Impact Assessment ESMF Environmental and Social Management Framework FGN Federal Republic of Nigeria FM Financial Management FMWR Federal Ministry of Water Resources FPIU Federal Project Implementation Unit IDA International Development Association JMP Joint Monitoring Program LSWC Lagos Water Corporation MDG Millennium Development Goal NGN Nigerian Naira NUWSRP National Urban Water Sector Reform Project PAD Project Appraisal Document PDO Project Development Objective PFMU Project Finance Management Unit PPP Public Private Partnership RPF Resettlement Policy Framework SDR Special Drawing Rights SEEDS State Economic Empowerment and Development Strategy SPIU State Project Implementation Unit Regional Vice President: Makhtar Diop Country Director: Marie Françoise Marie-Nelly Sector Director: Jamal Saghir Acting Sector Manager: Alexander E. Bakalian Task Team Leader: Hassan Madu Kida ii FEDERAL REPUBLIC OF NIGERIA ADDITIONAL FINANCING FOR THE SECOND NATIONAL URBAN WATER SECTOR REFORM PROJECT CONTENTS Additional Financing Data Sheet .................................................................................... iv I. Introduction .................................................................................................................. 1 II. Background and Rationale for Additional Financing of US$ 120 million.............. 2 III. Proposed Changes .................................................................................................... 12 IV. Appraisal Summary ................................................................................................. 15 Annexes Annex 1: Results Framework and Monitoring ........................................................... 20 Annex 2: Operational Risk Assessment Framework (ORAF) .................................... 28 Annex 3: Project Description ........................................................................................ 30 Annex 4: Implementation Plans of delayed components ............................................ 41 iii FEDERAL REPUBLIC OF NIGERIA SECOND NATIONAL URBAN WATER SECTOR REFORM PROJECT ADDITIONAL FINANCING DATA SHEET Basic Information - Additional Financing (AF) Country Director: Marie Françoise Marie-Nelly Sectors: Sustainable Development Sector Director: Jamal Saghir Themes: Water Supply Acting Sector Manager: Alexander E. Bakalian Environmental category: B, Partial Team Leader: Hassan Madu Kida Assessment Project ID: P115658 Expected Closing Date: May 31, 2016 Expected Effectiveness Date: October 2012 Joint IFC: n/a Lending Instrument: SIL IDA Credit Joint Level: n/a Additional Financing Type: Financing Gap/ Scaling Up Basic Information - Original Project Project ID: P071391 Environmental category: B, Partial Assessment Project Name: Second National Urban Water Current Closing Date: May 31, 2016 Sector Reform Project Lending Instrument: SIL Joint IFC: n/a Joint Level: n/a AF Project Financing Data [ ] Loan [ X ] Credit [ ] Grant [ ] Guarantee [ ] Other: Proposed terms: Standard IDA with 40 year maturity AF Financing Plan (US$ m) Source Total Amount (US$ m) Total Project Cost: 197.7 Cofinancing: 77.7 Borrower: 0 Total Bank Financing: 120 IBRD 0 IDA 120 New 120 Recommitted 0 Client Information Recipient: Federal Republic of Nigeria Responsible Agency: Federal Ministry of Water Resources Contact Person: Benson Ajisegiri Telephone No.: +234 (0) 8033737149 Fax No.: + 234 (09) 2342895 Email: bajisegiri@yahoo.com iv IDA AF Estimated Disbursements (Bank FY/US$ m) FY 2012 2013 2014 2015 2016 Annual 0 25 35 45 15 Cumulative 0 25 60 105 120 AFD Estimated Disbursements (Bank FY/US$ m) Annual 0 10 20 30 17.7 Cumulative 0 10 30 60 77.7 Project Development Objective and Description Original project development objectives: The original Project’s development objectives are to: (i) improve reliability of water supply produced by the water treatment works in Lagos; (ii) increase access to piped water networks in four cities in Cross River State; and (iii) improve commercial viability of the urban water utilities in Cross River and Lagos States. Revised project development objective: The updated PDOs are to: (i) improve the reliability of water supply produced in Cross River and Lagos States; (ii) increase access to piped water networks in Lagos State and in seven cities in Cross River State; and (iii) improve commercial viability of the urban water utilities in Cross River and Lagos States. Project description: The project has the following four components: (1) Rehabilitation and Pipe Network Expansion: This component includes the engineering and civil works for the water supply network expansion executed in Lagos and Cross River States, as well as rehabilitation of Obudu Dam and heavy rolling stock for the Utilities (US$ 96 million IDA, US$ 75.7 AFD). (2) Public-Private Partnership (PPP) Development: This component supports (i) the design, tendering and fees under the management contract for the Lagos Treatment Works, (ii) studies and assistance related to ensuring smooth operation of that contract in Cross River State, and (iii) setting up and staffing a “help desk” for the distribution service area operators in Lagos and Cross River States (US$ 5 million IDA). (3) Service Sustainability and Project Management: This component assists the utilities to function at increasing efficiency and self-sustainability and provides subsidies for energy and chemicals, supports stakeholder outreach programs, and supports the functioning of the Project Implementation Units (US$ 4 million IDA). (4) Policy Reform and Institutional Development: Support under this component is for expert technical assistance for the utilities and the FMWR, staff training, river basin planning and MDG tracking (US$ 15 million IDA, US$ 2 AFD). A summary of the consolidated project description (including both the original and additional financing) is indicated in Annex 1. v Safeguard and Exception to Policies Safeguard policies triggered: Environmental Assessment (OP/BP 4.01) [X] Yes [ ] No Natural Habitats (OP/BP 4.04) [ ] Yes [X] No Forests (OP/BP 4.36) [ ] Yes [X] No Pest Management (OP 4.09) [ ] Yes [X] No Physical Cultural Resources (OP/BP 4.11) [ ] Yes [X] No Indigenous Peoples (OP/BP 4.10) [ ] Yes [X] No Involuntary Resettlement (OP/BP 4.12) [X] Yes [ ] No Safety of Dams (OP/BP 4.37) [X] Yes [ ] No Projects on International Waterways (OP/BP 7.50) [X] Yes [ ] No Projects in Disputed Areas (OP/BP 7.60) [ ] Yes [X] No Does the project require any waivers of Bank policies? [ ]Yes [X] No Have these been endorsed or approved by Bank management? [ ]Yes [ ] No Conditions and Legal Covenants: Financing Agreement Description of Condition/Covenant Date Due Reference Article V, Section The Co-financing Agreement has been Condition of effectiveness 5.01(b) executed and delivered and all conditions precedent to its effectiveness or to the right of the Recipient to make withdrawals under it (other than the effectiveness of this Agreement) have been fulfilled. Section I.A.4, The Recipient has, through FMWR, Condition of effectiveness Schedule 2; Article updated the Project Implementation V, Section 5.01(c) Manual for the purposes of the Additional Credit, in a manner satisfactory to the Association. Section I.C, Schedule The Recipient and each Participating Condition of effectiveness 2; Article V, Section State have executed a Subsidiary 5.01(a) Credit Agreement in accordance with the provisions of Section I.C of Schedule 2 to this Agreement. Section I.A.1-3, Provisions requiring the maintenance Throughout the project Schedule 2 of relevant Project management implementation structures at federal and state levels i.e. FPIU, SPIU Section I.A.5, Obligation to prepare and implement Not later than November 1 Schedule 2 the annual work plans and budgets for of each year during project the project, as approved by the Bank. implementation vi Section I.B, Schedule Obligation to carry out the Project in Throughout project 2 accordance with the ESMF and RPF, implementation including the preparation of ESIAs/RAPs as required under the ESMF & RPF, and obligation to carry out the Obudu dam rehabilitation in accordance with appropriate engineering and dam safety practices Section IV Schedule No withdrawal shall be made for Condition of disbursement 2 payments made: (a) prior to the date of the Development Credit Agreement, with respect to amounts of the Original Credit; (b) prior to the date of this Agreement, with respect to amounts of the Additional Credit, except that withdrawals of the proceeds of the Additional Credit up to an aggregate amount not to exceed $4,000,000 equivalent may be made for payments made prior to this date but on or after June 30, 2012, for Eligible Expenditures; and (c) in respect of any project expenditures by AFD under components s 1.1 (b), 1.2 (b) and 4.5 of the Project. vii I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to (i) provide an additional credit in an amount of US$120 million equivalent to the Federal Republic of Nigeria (FGN) for the Second National Urban Water Sector Reform Project (NUWSRP II) (Project ID number: P071391; Credit number: IDA 4086-UNI); (ii) provide a three-year extension of the initial project’s closing date from May 31, 2013 to May 31, 2016; and (iii) restructure the project, including the revision of the PDOs. 2. The French Development Agency (Agence Française de Développement – AFD) has agreed to provide parallel co-financing to the project (US$77.7 million exclusive of taxes). For this purpose, a Bank-AFD co-financing agreement, including a Fee-Based Service arrangement, is currently being prepared. 3. The proposed additional financing (AF) would help finance the costs associated with (i) the cost overrun for two cities (Ikom, Ogoja) in Cross River State and in two distribution areas of Lagos (Surulere, Victoria Island) due to a financing gap between current project costs and the original costs estimated in 2005, (ii) scaling up and restructuring the project scope by supporting the rehabilitation of three additional water supply systems in Cross River State (Itigidi, Obubra, Okpoma), and (iii) restructuring and scaling up institutional strengthening and policy reform activities in the water sector. The additional funds would ensure the full financing of activities defined in the PAD and DCA under the Cross River and Lagos State portions of the project and support the expansion of the scope of these activities to three new geographic areas in Cross River State. 4. AFD’s financing will support discrete water supply activities in Obubra and Okpoma in Cross River State as well as in two distribution areas of Lagos, and some specific institutional support activities in Lagos. AFD’s Board has approved the commitment but their loan agreement with FGN has yet to be signed.1 AFD’s negotiations with the FGN were completed on May 17, 2012. AFD will be extending and disbursing its loan directly to the FGN, but is seeking the application of the Bank's fiduciary and safeguard policies and supervision services for the administration of its loan. The Borrower will maintain separate designated accounts for the AFD and the IDA financings. 5. If the co-financing agreement is not signed by December 1, 2012, the project will need to be restructured to strip out the AFD funding and activities, and make the necessary adjustments to the results framework. Given that the AFD support is focused purely on discrete scale-up and cost overruns investments, as well as institutional activities support to Lagos, a restructured IDA- only financed project would be able to proceed without hindrance. 1 The AFD and IDA bilateral financing agreements with Nigeria will have cross-effectiveness conditions, and the co-financing agreement between AFD and IDA will become effective contingent upon Board approval of the additional financing and the effectiveness of the bilateral agreements. 1 6. A project extension of three years from the current closing date is proposed, so that the project would close on May 31, 2016.2 It is considered that 44 months (starting with effectiveness on October 2012) will be needed to prepare the bidding documents for the works, select contractors, and complete the works. II. Background and Rationale for Additional Financing of US$ 120 million The Nigeria Urban Water Sector Challenges 7. The state of water services in Nigeria is one of the poorest in sub-Saharan Africa. Historically, Nigeria’s water supply and sanitation sector has been characterized by the absence of policies that could enable efficient and sustainable services to be provided. Specifically, water tariffs do not reflect the cost of services; there are no autonomous state water boards; perpetual operating deficits deprive the state water boards of funds for maintenance and new investments, while power shortages cause intermittent water services and damage to electromechanical equipment. 8. According to the WHO/UNICEF Joint Monitoring Program (JMP), access to reliable water sources in Nigerian urban areas has declined from 79 percent in 1990 to 74 percent in 2010 (JMP 2012). Developing countries’ urban water coverage is on average 94 percent compared to Nigeria’s 75 percent. While the JMP concludes that the world is on track to meet the urban water supply Millennium Development Goals (MDGs), this does not seem to be the case for Nigeria. Considering that Nigeria accounts for nearly 47 percent of the West African population, this sub- region’s success in meeting MDGs in urban water may be compromised. 9. In the Nigerian urban water sub-sector, flat rate water tariffs are the norm, and the revenues collected from them only represent a small portion of the cost of production and distribution. In Lagos State, for example, 99 percent of the customers rely on a monthly flat rate of NGN 2,400 and the remaining 1 percent on a per cubic meter cost of NGN 24. While difficult to measure in the absence of metering, unaccounted for water is considered to be very high, estimated at 50 percent or more. Lack of financial autonomy is at the heart of the poor performance of all water utilities, coupled with frequent changes in management. Overstaffing in water utilities is also a problem. Ogun and Kaduna States had more than 35 staff per 1,000 active water connections in 2007, and revenue covered only 45 percent of the operation and maintenance costs, while billing efficiency was at a low 55 percent. Worse still, countrywide, house connections to urban water supplies have declined from an average of 32 percent in 1990 to only 8 percent in 2010 (JMP 2012). 10. The Government’s strategy for urban water supply is embedded in each State Economic Empowerment and Development Strategy (SEEDS) and stresses that increasing access to potable water is key to achieving health outcomes and sustained poverty reduction. This is also affirmed in the Government of Nigeria’s water supply policy. The water policy states that the overall objective of the urban water supply is to “improve the public health and economic well being of 2 The original credit closing date was June 30, 2011, and was extended in March 2011 to May 31, 2013 in order to complete ongoing project activities. Upon approval of the additional financing, the proposed new closing date of May 31, 2016 would cover the entire project including the original and the additional financing. 2 urban populace through provision of adequate, safe and sustainable water for domestic, commercial and industrial purposes in a planned and coordinated manner, at reasonable cost to enable water operators breakeven. Urban sanitation is generally not included in the State water utilities activities. 11. The current disbursement for the original IDA Credit 4086 stands at 64 percent. The project is making satisfactory progress towards meeting its objectives. In Lagos State rehabilitation of the major water works producing about 150 million gallons per day (mgd) is in progress and will be completed by the end of the year. The rehabilitation of the network distribution in two service areas (Ikeja and Lagos Island) is completed. A customer help desk has been established for the service areas, but the customer feedback system to promote citizens participation and transparency is still very weak. The service sustainability that is required for Lagos Water Corporation (LSWC) to be self sustaining is the major problem currently. LSWC is envisaging taking a number of measures that will improve this situation, namely: decentralizing to give more power to the area managers (which should improve billing and collection ratio), providing bulk and household meters, conducting a customer enumeration, and giving a higher role to the private sector by promoting public-private partnerships (PPPs). In Cross River, billing/collection efficiency has improved at 78/87 percent. It is worth noting that all connections in Cross Rivers State are metered. Objectives and Progress of the Project (NUWSRP-II) 12. The original Project (NUWSRP-II), with an IDA credit of US$ 200 million (IDA Credit Number 4086-UNI), was approved on July 15, 2005 in order to address some of the above deficiencies in water supply services. The Project's Development Objectives were to (i) improve reliability of water supply produced by the water treatment works in Lagos State; (ii) increase access to piped water networks in four cities in Cross River State; and (iii) improve commercial viability of the urban water utilities in Participating States. The project was made up of four components: (a) rehabilitation and network expansion, (b) public private partnership development, (c) service sustainability and project management, and (iv) policy reform and institutional development. The proceeds of the original credit are allocated to each disbursement category as listed below (this corresponds to the latest reallocation as of March 31, 2011): Category Amount Amount % of Allocated Allocated Expenditure (XDR) (US$) to be Financed 1. Works 100 Federal account 4,820,000 Lagos account 68,090,000 Cross River account 25,055,000 Total 97,965,000 149,886,450 2. Goods 100 Federal account 640,000 Lagos account 3,210,000 Cross River account 2,250,000 3 Total 6,100,000 9,333,000 3. Consultancy Services 100 Federal account 2,890,000 Lagos account 10,600,000 Cross River account 3,855,000 Total 17,345,000 26,537,850 4. Training, Study Tours & Workshops 100 Federal account 385,000 Lagos account 965,000 Cross River account 1,030,000 Total 2,380,000 3,641,400 5. Incremental Operating Costs 100 Federal account 900,000 Lagos account 1,160,000 Cross River account 900,000 Total 2,960,000 4,528,800 6. Critical Treatment Plant inputs 100 Lagos account 3,200,000 Cross River account 1,930,000 Total 5,130,000 7,848,900 7. Refund PPF 180,500 275,400 8. Unallocated 639,500 978,435 Total 132,700,000 203,029,8353 13. Progress towards achieving the project objectives is to be measured by (i) increase in operating capacity and hours of operation of the Lagos water treatment works; (ii) increase in the number of connections to the piped water system in Cross River State; and (iii) the degree to which operating costs are recovered from water sales revenue in Cross River and Lagos States. 14. For Lagos State, the target has been to attain 85 percent of the total capacity of the three treatment plants currently under rehabilitation under the project, which have an overall installed capacity of 540,000 cubic meters of water per day (cmd). For Cross River State, it has been to increase the distribution system in Calabar to meet 90 percent of the city’s population, raise the number of connections to the Cross River systems from 1,000 to 50,0004 and meet 100 percent of the operation and maintenance costs of the utility in Calabar. 3 This figure differs from the US$ 200 million of the original credit due to exchange rate fluctuations. 4 This figure has been raised to 75,000 as can be seen in the Results Framework of this AF. 4 15. The hours of operation of the Lagos water treatment have increased from 6 to 12 hours per day after the Independent Power Producer (IPP) power supply intervention (520,000 cmd) and minor rehabilitation of treatment works were completed in March 2010, and this is expected to increase to 18 hours. The original production target will be reached after on-going major rehabilitation works are completed. Revenue has continued to increase on a monthly basis due to the fact that people are getting more water as a result of, first, the rehabilitation work done within the distribution network in service areas 1 and 4 and, second, the employment of a consultant who is helping the LSWC improve billing, collection and distribution. Revenue figures have risen from NGN 56 million in January 2011 to NGN 104 million in September 2011. This trend is continuing and it is expected that by the time the rehabilitation work on the treatment plants are completed, revenues should be able to cover the cost of treatment from water sales. 16. For Cross River State, the number of water connections in Calabar has risen from 1,000 to 31,000, and is expected to increase to 35,000 by the time of completion of the on-going network densification works. Estimated connections for the other three original city water supplies (Ikom, Ogoja and Obudu) are about 20,000. When these are completed, the project will exceed its original objective of 50,000 connections in the State. Realization of the original results is, however, dependent on the availability of AF to complete the water supplies of two of the three other cities (Ikom and Ogoja). Operating cost coverage from water sales revenue has also increased substantially (from 9 percent in 2005 to 33 percent in 2010) but still needs to be supported by the preparation and implementation of a viable business plan. 17. Lagos was supposed to have at least one PPP contract in place by now but has not done so. However, the LSWC has expressed an interest in launching a PPP contract to manage production with a starting date between 2012 and 2013. In Cross River, a private operator is in place in Calabar in partnership with the State Government for both production and distribution. This PPP is scheduled to elapse in August 2012 - has achieved positive results, e.g. increase in revenue, improvement in data management, rise of number of connections, and reduction of unaccounted for water. Since the project has still not intervened in other cities in Cross River, currently no PPP model is in place in smaller urban towns. 18. The development objectives rating had been satisfactory for two years until it was downgraded to moderately satisfactory in the last Implementation Status and Results Report (December 2011) because of the lack of information on the evolution of the commercial viability objective in Lagos. However, as described above, the LSWC has since taken clear steps to improve the situation and provided quantitative evidence of the improvements. Implementation progress rating has remained moderately satisfactory since 2007 due to the slow pace of award of key contracts that was caused by the need to carry out detailed design studies, but this situation has clearly improved in the recent months with commitments of 92 percent as of today. Even though total project disbursements are at 64 percent, they are rising and have now reached an average of US$9 million per quarter. Current total commitments on the Cross River portion of the project are at 71 percent while disbursements are at 52 percent. Further disbursements in Cross River State are limited by inadequate funds to contract further civil works, and in the case of Obudu, by the need to wait for the finalization of the Obudu’s dam full development . The commercial viability in Cross River will most likely be achieved, as a good management system with PPP is in place, and studies have shown that the breakeven point will be around 45,000 connections, which will be achieved in the framework of this project. 5 19. Project financial management arrangements for the Cross River and Lagos portions of the project are premised on the respective State PFMUs - which in the case of Cross River is a multi- donor and multi-project financial management (FM) platform that features strong and robust systems and controls. The computerized accounting and reporting system in place is adequate and allows for production of timely and reliable financial information required for the management and monitoring of project activities. These arrangements will remain unchanged. Consistent with Bank policy and procedures, the project FM arrangements are continuously reviewed through supervision missions and periodic reports. Outstanding issues such as ineligible expenditures, inadequate supporting documentation, and un-retired advances which earlier rendered the project’s FM performance moderately unsatisfactory have been addressed, and, the rating is now moderately satisfactory and expected to be satisfactory soon. There is no outstanding audit report or ineligible expenditures under Bank projects being implemented by the benefiting entity. 20. A number of activities have suffered from implementation delays (e.g. PPP contract) and underfunding (e.g. Millennium Development Goal - MDG tracking system). An implementation plan of these has been developed and agreed with the client on the way forward (see Annex 6). 21. The project remains consistent with the Nigeria Country Partnership Strategy by supporting non-oil growth, is compliant with legal covenants, and has satisfactory monitoring and evaluation arrangements. Social and environmental safeguards performance is satisfactory and all site specific and disclosed. Justification and Scope of Additional Financing 22. Disbursements under the project have witnessed some delays with respect to the original forecasts. However, disbursements under the project as of May 2012 have reached 64 percent of the original credit. Moreover, the total value of contracts already awarded is more than US$162 million (81 percent of original credit). Finally, almost all the remaining financial resources correspond to contracts under procurement as indicated in the table below. Almost all the original Credit has been committed, and both Cross River and Lagos States have requested additional financing (AF) to address State priorities. The current status of large contracts under procurement is described in the table below: Description of Activity Package number Estimated Status of Amount (USD) procurement Rehabilitation of Obudu Dam NUW2SRP/WKS/1/ 7,500,000 Bids are being in Cross River ICB/02/09 evaluated Rehabilitation of Obudu CR/11NUWSRP/O 18,000,000 Bidding in progress Water supply Scheme BUCWKS/ICB/001 bids will be opened in May 2012 Rehabilitation of Distribution LSWC/2NUWSRP/ 4,500,000 Bid received and Network in Area 2&3 with WKS//057 being evaluated installation of house hold meters 6 Rehabilitation and Expansion LSWC/2NUSWRP/ 4,500,000 Bid evaluation in of Distribution network in WKS/091 progress. Area 4 Oshodi TOTAL 34,500,000 23. The proposed AF will finance both cost-overruns and additional scale-up investments to improve access to water and sanitation services, as well as institutional strengthening and reform activities. These investments would permit the scale-up of the project’s impact and development effectiveness. In Cross River State, the detailed engineering studies of the new investments are ready, and the bidding documents are being finalized, while the preliminary engineering design studies are being developed for the two Lagos distribution areas. The recipient is committed to scaling up the project activities, and processing an additional credit would bring procedural and other cost-effectiveness gains for the recipient, as compared to preparing a new project. Moreover, the scale-up of activities can be easily accommodated in the context of the ongoing project, as implementation will rely on the Recipient’s existing capacity and existing project arrangements – both at the Federal level and for Cross River and Lagos States. This AF will also bring the opportunity to lay the ground work for a future water sector reform project for which the recipient has expressed a strong interest. Discussions are currently underway for the preparation of a project that would accompany reform of the water sector in a number of selected States. 24. The additional activities will not raise the environmental category of the original project (category B) or trigger any new safeguard policies. Several changes to the project’s key performance indicators are proposed for the original project to reflect the Bank’s core indicators and the new activities, including the corresponding to AFD’s co-financing. 25. The proposed AF is fully consistent with OP/BP 13.20. As indicated above, project has had moderately satisfactory ratings in the Implementation Status and Results (ISR) report over the most recent 12 months for both implementation progress and achievement of development objectives. The project is in substantial compliance with the key loan covenants, including audit and financial management reporting requirements. 26. The proposed AF disaggregated by component is the following: Component Original cost Changes Source Revised cost with AF 1. Rehabilitation and pipe 155.55 171.7 IDA (96) 327.25 network expansion AFD (75.7) 2. Public-Private Partnership 7.45 5 IDA 12.45 development 3. Service sustainability and 14.55 4 IDA 18.55 project management 4. Policy reform and institutional 10.95 17 IDA (15) 27.95 development AFD (2) TOTAL 188.5 197.7 IDA(120) 386.2 AFD (77.7) 7 27. The breakdown of the US$120 million additional financing is as follows: - cost overrun of US$66.7 million, which will support the water supply systems of Ikom and Ogoja in Cross River State (originally included in Component 1); - scaled-up and restructured activities of US$53.3 million, comprising US$29.3 million for the water supply system of Itigidi (new town added for IDA financing under Component 1), US$4 million of continued operational support (Component 3) and PPP operator support (Component 2) for Cross River State, and US$20 million of support to the FMWR for ongoing operating costs (Component 3) and institutional strengthening and policy reform activities (Component 4). - Furthermore, US$77.7 million from the AFD loan to the FGN will be used to finance the water supply systems of Obubra and Okpoma in Cross River State (i.e. scaled-up activities in these two new towns), and Surulere and Victoria Island in Lagos (originally planned for IDA financing under Component 1 but yet unfunded). The AFD loan will also provide a US$2 million institutional support to LSWC. 28. The factors contributing to the need for scale-up of activities in this AF to cover the Itigidi, Obubra and Okpoma water supply systems in Cross River State under Component 1, and the additional activities under Components 2, 3, and 4) are: (i) The need to take advantage of the established implementation momentum and capacity to scale up project outcomes by including other implementation-ready activities that lack the necessary funding. (ii) The opportunity to provide institutional support in other States to embrace water sector reforms. Component 1: Rehabilitation and Network Expansion (US$ 171.7 million, of which US$ 75.7 from AFD) 29. The original cost of works in the four towns of Cross River was substantially underestimated when costed in 2005, and as such, the contracts for two of the four towns (Calabar, Ikom, Ogoja and Obudu) whose systems were to be rehabilitated/expanded could not be processed. The estimated costs of construction of the two town water supplies which were estimated to be US$7 million for Ogoja and US$8 million for Ikom are now USD$66.7 million for Ogoja and US$34.6 million for Ikom, including supervision services. This is the amount required to reach the original production and distribution objectives for the Cross River State Water Board Limited (CRSWBL). The original plan under the Lagos Component was to rehabilitate five service areas but the estimate was substantially underestimated, and only two service areas (Ikeja and Lagos Island) could be covered within the US$ 115.6 million available in the original project. With the AFD US$ 33.8 million it is expected to rehabilitate and expand the water distribution network in two of the original five distribution areas, namely Surulere and Victoria Island. The factors contributing to the cost overrun in this AF (Ikom, Ogoja, and Surulere and Victoria Island in Lagos) are: 8 (i) A higher than anticipated scope of systems rehabilitation arising from the fact that existing equipment requires total replacement and the existing pipe network and treatment works are well beyond economic repair; (ii) Global increase in the prices of electromechanical and electrical equipment, as well as the cost of civil works, which has resulted in cost overruns on rehabilitation of production and distribution works; (iii) Cost of rehabilitation requirements that did not originally include augmentation of production works and pipe network extension to un-served areas drastically limiting the extent to which the project would meet its service extension targets and denying the project the potential to have a bigger impact on the achievement of MDGs, and; (iv) No detailed studies existed in 2005, and when those were commissioned, a number of extensions were done for each of the towns, which brought the costs up. 30. CRSWBL has carried out design and preparation of tender documents for three other water systems in Itigidi, Obubra, and Okpoma that they intend to construct and have requested that these be considered under the AF. Itigidi’s cost is estimated at US$ 29.3 million, Obubra’s at US$ 23.1 million, and Okpoma’s at US$ 20.8 million. . Taking advantage of the existing project momentum and capacity, it is proposed to finance the construction of Itigidi water supply using the IDA credit, while AFD’s loan will finance Obubra, Okpoma and the two Surulere and Victoria Island in Lagos State. LSWC has launched the contracts for the preliminary engineering designs for the works to be undertaken in Surulere and Victoria Island (areas 2 and 8). These studies are expected to be finalized by the end of 2012. Component 2: Public-Private Partnership Development (US$ 5 million) 31. Supporting Public Private Partnerships is critical to sustainable provision of water services and will require additional funding of up to US$2.5 million for Cross River while cost recovery (a long process) is taking place. This brings the total AF required for Cross River to US$143.9 million. For Lagos State there is some funding made available under the Cr. 4086 which is to contribute to the operator fees of the future PPP contract in Lagos. Component 3: Project Management and Service Sustainability (US$ 4 million) 32. A provision of US$ 1.5 million has been allocated to Cross River for training (US$ 0.5 million), PIU operating costs (US$ 0.5 million), and basic IT equipment (US$ 0.5 million), while Lagos will use the balance under the original credit. 33. At the Federal level, a provision of US$ 2.5 million has been allocated for training, PIU operating costs, and basic IT equipment. Component 4: Policy Reform and Institutional Development (US$ 17 million, of which US$ 2 from AFD) 34. A Federal level institutional support provision of US$3 million will be used for follow up on just concluded WBI workshop on utility reforms with the 36 State Utilities of Nigeria which took place in Abuja in January 2012, following which utilities were be asked to prepare a reform 9 business plan. This process could lead to the selection of those utilities that are more reform minded to be included in a potential following-up project. Part of the AF will be used to support selected states to initiate the reform process like carrying out tariff studies, customer enumeration and development of financial management systems. These studies could become an input for an important water sector reform operation between the FGN and States for the near future. 35. The Federal Ministry of Water Resources (FMWR) has recently set up a PPP unit within the Ministry, which will be given a US$2.5 million to provide capacity building, transaction advisory services, furniture, and equipment to the newly established unit. 36. A Federal provision of US$ 5.5 million will be used for consultancy services to carry out studies contributing to the improvement of service delivery and water governance in selected States. Comprehensive water sector reform will focus on making institutional changes (such as increasing the independence of the operator), improve the policy environment, introduce more efficient and professional management of the utility, introduce changes to the utility’s financial structure (including tariffs reforms), and establish robust sector governance to make utilities more accountable. The studies will be developed for the following areas: (i) background and initial situations of interested States in reforming their water sector, (ii) assessment of tariffs and subsidies, and necessary steps to make utility viable, (iii) financial analysis of water utilities, (iv) structure of utilities, and potential reform structures (number of utilities, how to share the market, etc), (v) labor law and potential for reform, (vi) policy and legal framework studies, and (vii) regulatory context studies. Wastewater sector challenges are also likely to form subjects of study. These studies will rely on a sound partnership between the Federal and selected States Government. It is estimated that around six States will participate. The activities will be demand-driven. A formal request from the State to the FMWR will form the basis of selection by FMWR to the activities. The activities will be formally procured and executed by the FMWR, but will be undertaken in close partnership with the States through, for example, including State representatives in the bid evaluation committee and preparation of the Terms of Reference and in management of the consultants. 37. An amount of US$ 1.5 million is to be used for the reinforcement of the National Water Supply and Sanitation training network, which will consist of actions to reinforce the Water Resources Capacity Building Network. 38. The original MDG tracking system for water supply and sanitation of US$1 million has been reinforced with US$ 5 million. So far, the initial baseline survey was collected and workshops held to discuss it. The new funds will be used to expand it, by establishing offices to be located in the already existing River Basins offices, equip them and train some personnel to carry out the monitoring in collaboration with the State Water Utilities. These offices will centralize regional data and feed the national data system. 39. A US$ 2 million institutional support subcomponent to Lagos will be financed by AFD. Specifically, this subcomponent will finance the following activities: update of the asset register, a tariff study, customers’ enumeration of Lagos metropolitan area (except Victoria Island and Surulere), an organizational and management study of business processes, and an IT component with its software. 10 40. The table below summarizes the scope of the AF described above and the sources: Source Activity US$ 000 Component Ikom Water Supply (CRSWBL) 34,600 1 - Works 29,410 - Contingencies 3,460 - Supervision 1,730 Ogoja Water Supply 32,100 1 (CRSWBL) - Works 27,285 - Contingencies 3,210 - Supervision 1,605 Itigidi Water Supply 29,300 1 (CRSWBL) - Works 24,905 - Contingencies 2,930 - Supervision 1,465 Cross River PPP operator fees 2,500 2 Cross River training, PIU 1,500 3 IDA operating costs and IT equipment FMWR training, PIU operating 2,500 3 costs and IT equipment Water supply improvement and 3,000 4 investment plans for selected states Support to PPP unit of FMWR 2,500 2 Improvement of service delivery 5,500 4 and water governance in selected States National WSS training network 1,500 4 MDG tracking for WSS and 5,000 4 establishment of water resources databank Sub-total 120,000 Obubra Water Supply 23,100 1 AFD (CRSWBL) - Works 19,635 - Contingencies 2,310 - Supervision 1,155 11 Okpoma Water Supply 20,800 1 (CRSWBL) - Works 17,680 - Contingencies 2,080 - Supervision 1,040 Surulere Water Supply, Lagos 20,100 1 (LSWB) - Works 17,400 - Contingencies 1,900 - Supervision 800 Victoria Island Water Supply, 11,700 Lagos (LSWB) - Works 9,900 - Contingencies 1,100 - Supervision 700 Institutional support to LSWB 2,000 4 Asset register 350 Tariff study 150 Customer’s enumeration 400 Business process 300 IT 800 Sub-total 77,700 Total 197,700 III. Proposed Changes Project Objective and Scope 41. The project development objectives were to: (i) improve reliability of water supply produced by the water treatment works in Lagos State; (ii) increase access to piped water networks in four cities in Cross River State; and (iii) improve commercial viability of the urban water utilities in Cross River and Lagos State. Revised project development objective 42. The updated PDOs are to: (i) improve the reliability of water supply produced in Cross River and Lagos States; (ii) increase access to piped water networks in Lagos State and in seven cities in Cross River State; and (iii) improve commercial viability of the urban water utilities in Cross River and Lagos States. The project scope is expanded to cover three extra cities (Itigidi, Obubra, Okpoma) making a total of 7 cities in Cross River State. The revised overall project description reflecting the expanded project scope (i.e. including both the original and additional financings) is indicated in Annex 1. 12 Disbursement Categories and Procedures 43. Below are the revised allocations of amounts to each category of eligible expenditures to be financed out of the proceeds of both the original and additional IDA credits, as well as the AFD loan. Disbursement of the IDA credit will be transaction-based and will use the current designated account established under the original credit. Category Original IDA AFD TOTAL amount Additional Additional allocated Financing Financing (US$ 000) (US$ 000) (US$ 000) (US$ 000) 1. Works Federal account Lagos account 30,200 Cross River account 81,600 37,315 Total 149,886 81,600 64,615 296,101 2. Goods Federal account 5,500 Lagos account 200 Cross River account 500 Total 9,333 6,000 200 14,533 3. Consultancy Services Federal account 12,000 Lagos account 5,495 Cross River account 7,300 2,195 Total 26,538 19,300 5,495 52,833 4. Training, Study Tour & Workshops Federal account 1,500 Lagos account Cross River account 500 Total 3,641 2,000 0 5,641 5. Incremental Operating Cost Federal account 1,000 Lagos account Cross River account 500 Total 4,529 1,500 0 6,029 6. Critical Treatment Plant inputs Lagos account Cross River account 13 Total 7,849 0 0 7,849 7. Refund PPF 275 8. Unallocated 978 9,600 7,390 17,968 Total 203,029 120,000 77,700 400,729 Changes in Results Framework 44. The revised results framework and monitoring indicators table are given in Annex 2. The main changes in outcome will be in the number of water connections in Cross River and Lagos States, as well as a change in the indicator that looks at the commercial viability of LSWC. PDO Indicator Original target Changes with AF Revised target Lagos Treatment Works operate at 85% None 85% 85% of capacity Number of new active connections 50,000 +25,000 75,000 in Cross River State Number of new active connections 10,0005 +14,000 24,000 in Lagos State by 30,000 by project end. Number of hours of water supply per / / 18 day in Lagos State Number of hours of water supply per / / 18/18 day in Calabar/ other Cross River State towns % of O&M costs in Lagos recovered / / 90% from revenue by project end % of O&M costs in Calabar 100% None 100% recovered from revenue by project end Direct Beneficiaries (Bank core / / 990,000 indicator) % of female beneficiaries (Bank / / 50% core indicator) Other Changes 45. The closing date will be extended from May 31, 2013 to May 31, 2016 in order to complete ongoing and planned activities necessary to meet the Project’s development objectives. The need for this extension arises from the fact that for the towns in Cross River state for which its water supply system will be built (both the two corresponding to cost overruns and the three 5 There was no baseline on number of new connections in Lagos. However, 10,000 new connections have been an output of the project so far in areas 1 and 4 of Lagos (and the +14,000 corresponds to the expected new active connections in areas 2 and 8). 14 corresponding to a scaling-up), the finalization of some studies, the procurement process and the contractualization, and the construction phase are altogether expected to last slightly less than four years (July 2012 to May 2016). Implementation will be based on the existing arrangements for the Second National Urban Water Sector Reform Project. There are no changes in the main disbursement arrangements, and the specific requirements for the AF will be detailed in the Disbursement Letter. 46. The implementation arrangements will remain the same as in the original project. The executing agency of the federal component is the FMWR, the executing agency of the Cross River component is the CRSWBL, and the executing agency of the Lagos State component is LSWC. The Federal Project Implementation Unit (FPIU) and Cross River State and Lagos State Project Implementation Units (SPIUs) are already in place and operational. For the US$13 million for institutional and reform studies (part of Component 4), the FPIU will handle the procurement process and will be the contractual party, but the States will be leading the content of the studies and of the consultants’ work. The FPIU will continue to provide support and technical assistance throughout the process. IV. Appraisal Summary Economic and Financial Analysis 47. The original CRSWBL economic analysis in the PAD was done only for the city of Calabar. The only benefit used at the time emanated from the tariffs revenue. A similar model has been used for this economic analysis, but the usual benefits of time savings and productivity increases due to better health conditions have been included. The economic analysis has been conducted for the five towns of Cross River State included in the proposed AF6. 48. The table below summarizes the rounded results of the economic analysis of the towns included in this AF. The overall economic internal rate of return is higher than the assumed 10% cost of capital, so the project is economically viable. However, the EIRRs of these towns differ and go from 6.2% to 19.1%. Name town NPV (million US$) EIRR (%) % Capital cost recovery Ikom 3.2 12.1 23.0 Ogoja 16.1 18.8 42.2 Itigidi -4.9 6.2 -16.9 Obubra 1.3 11.2 6.1 6 The economic analysis is not conducted for Calabar and Obudu as no financial resources are allocated to these two towns of Cross River State as part of this additional financing. As far as Lagos State is concerned, see paragraph 50 below. 15 Okpoma 11.5 19.1 48.6 49. A discount rate of 10 percent has been used and the time horizon after project completion has been of 15 years. Three types of benefits have been considered: (i) from tariffs and connection fees, (ii) from households’ time savings, and (iii) from productivity gains due to households’ health improvements with access to improved water sources. Two types of costs have been included: (i) investment costs, and (ii) operation and maintenance costs (including electricity & fuel, chemicals, maintenance, management fee). Other assumptions used are: average unskilled wage was of NGN 600 per day, electricity cost of NGN 33 per m3, chemical cost of NGN 24 per m3, and maintenance cost of NGN 5 per m3. 50. Based on financial analysis simulations undertaken by the LSWC, the utility could reach its breakeven by the end of the project. However, this is based in a number of strong assumptions, such as an important tariff increase in 2013 or metering all connections and significantly improving revenue collection. Project Risks 51. The overall risk rating remains moderate as originally assessed at appraisal. Specific risks with corresponding mitigation measures can be found in Annex 3. Procurement and Financial Management 52. Procurement and financial management reviews carried out as a part of the mid-term review and during recent missions confirm that procurement and financial management has been moderately unsatisfactory but has improved to moderately satisfactory and there are no serious irregularities and the systems in place are adequate for project implementation. The project will continue to adopt the same rigorous approach to fiduciary due diligence to reduce any risks that may occur. 53. The proposed additional financing will use the same financial management (FM) arrangements in place for the original credit. The Finance Department (FD) of the Federal PIU, Finance and Accounts Department (FAD) of LWSC and Project Financial Management Unit (PFMU) in Cross River will be responsible for handling FM for the additional financing. These Units will amongst other things, be responsible for ensuring compliance with the financial management requirements of the Bank and the government, including submission of the quarterly Interim Financial Reports (IFRs) and audited annual financial statements to IDA. The Internal Audit Section of the Federal PIU, LSWC and PFMU will perform necessary modern internal audit functions for the Project. Consistent with Bank policy and procedures, the project FM arrangements will continuously be reviewed using a risk-based FM approach and desk review of periodic reports. There is neither outstanding external audit report nor IFR for any of the implementing entities. The existing Designated Accounts (Das) for the original credit will be maintained for the additional financing and the project will continue to use the transaction-based disbursement procedure. The overall project risk from a FM perspective is assessed as moderate. 16 54. The general procurement arrangement would be the same as the arrangements under the Second National Urban Water Sector Reform Project. However, the updated World Bank’s “Guidelines: Procurement of Goods, Works and Non-consulting Services Under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011 will apply to all goods and works contracts financed under the project going forward. Similarly, procurement of consultant services will be governed by the "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011. The procurement plan has been updated for this AF. The anti-corruption guidelines that will apply to this additional financing are the “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loands and IDA Credits and Grants” dated October 15, 2006 and revised in January 2011. The overall project risk from a procurement perspective is assessed as moderate. Financial Terms and Conditions for Additional Financing 55. Terms for IDA lending are the same as for the original credit, with a maturity of 40 years and a 10 year grace period. The AFD loan is of 20 years with a 7-year grace period. 56. The IDA original credit and this IDA AF will be treated as a consolidated pool of activities. Therefore, the two IDA credits will use the same designated account. The AFD loan will be disbursed through a parallel designated account. Safeguards 57. The Safeguard compliance of the original project is satisfactory. The AF will not trigger new safeguards policies or lead to changes in the EA category. In addition, the proposed activities under the AF are similar to those under the original project, and are therefore not expected to lead to any significant environmental and social impacts that transcend what was envisaged in the original project. During the preparation of the original project, an ESMF and RPF were prepared and disclosed in 2005 since the specific project sites were not known at the time. During implementation the client has prepared and disclosed site specific ESIAs. The implementation of these safeguards instruments has been satisfactory. The purpose of the additional financing is to cover cost over-run and scale up to include three additional towns (Itigidi, Obubra, Okpoma). In addition to the ESIAs prepared and disclosed under the original project for the original towns of Lagos, Calabar, Ogoja, Ikom and Obudu (see table below), an ESIA was prepared and disclosed for the three new towns of Itigidi, Obubra, and Okpoma (prepared in December 2010, consulted upon, updated and disclosed in January 2012). An Abbreviated RAP for the three new towns was also prepared, consulted upon and disclosed in March 2012. A RAP for Ogoja, Ikom and Obudu will be prepared and disclosed if and when necessary. The scaled-up activities are of the same type as those under the original project and therefore the potential adverse impact will not go beyond what was anticipated in the original project. In particular, the site specific ESIAs show the impacts will be: minor, site specific, non cumulative, easy to mitigate, and consistent with category B projects. In addition to the safeguard support and oversight provided by the Bank, the Borrower has demonstrated adequate capacity to satisfactorily comply with World Bank safeguard policies and Nigeria EIA law. A summary table of the safeguard instruments prepared under the original project and the additional financing is provided below. 17 Safeguard instrument Project site (when relevant) Disclosure date ESMF April 2005 RPF April 2005 EIA Iju Idaya water treatment plant July 2005 (Lagos) Reviewed EIA Iju Idaya water treatment plant December 2007 (Lagos) ESIA Calabar distribution systems (Cross May 2007 River) ESIA Ogoja, Ikom, Obudu (Cross River) June 2010 ESIA Obubra, Okpoma, Itigidi (Cross January 2012 River) ARAP Obubra, Okpoma, Itigidi (Cross March 2012 River) 58. OP/BP 4.37 on Safety of Dam: The original credit (Cr.4086) is funding the rehabilitation of the Obudu Earth Dam (which is below 12 m height). The dam safety report (DSR) prepared for NUWSRP1 covered the dam regulating water supply to Lagos, but none in Cross River State. Thus during the preparation of NUWSRP2, the NUWSRP1 DSR was extended to include Cross River State (since the Owelobudu Dam that regulates water supply for Obudu does need remedial works). The revised Dam Safety Report including Owelobudu dam was completed and disclosed to the public in May 2005. A recent assessment of the dam (February 2010) did not indicate any risk significant enough to foreclose or alter the Bank’s involvement in the planned rehabilitation of the dam. The works to be carried out comprise provision of enhanced flood discharge works, intake control, crest re-profiling and erosion protection. The features of the Dam include (i) a reservoir surface area of 0.92km2, (ii) total storage capacity of 4.25 mcm, (iii) catchment area of 20 Km2, minimum surface yield of 4.8 mgd (22,000 m3/day), and (iv) live storage of 4.2 mcm. These remedial works have not been carried out due to cost overruns. The remedial works will be carried out in accordance with sound engineering and dam safety practices as provided in OP 4.37 and specified in the legal agreement. It is important to point out that with regard to dam safety issues, whether under the NUWSRP 2 or the AF, the Owelobudu is the only associated dam. The other towns such as Ikom, Ogoja, Itigidi, and Obubra will extract relatively small amounts of water from nearby rivers and are not regulated by or dependent on any dam. 59. OP/BP 7.50: Projects on International Waterways was triggered by the original project, since Ikom town draws its water from the Cross River which rises in Cameroon – though the extractions from the international river are minimal. The scaled-up activities will not adversely change the quality or quantity of water flows to the other riparian and will not be adversely affected by the possible riparian water use. Specifically, under the AF, the scale up activities will include Obubra and Itigidi, which are also situated by the Cross River. However, it is the team's assessment that as in the case of Ikom, the extractions from the river for the water supply systems in these towns will also be minimal. The scale-up activities - rehabilitation on existing schemes - fall within the provisions of paragraph 7(a) of OP 7.50. Consequently, no new riparian notification is required. 18 19 Annex 1: Results Framework and Monitoring Results Framework Revisions to the Results Framework Comments/ Rationale for Change PDO Current (PAD) Proposed Revised. 1. To improve reliability of To improve the reliability of water supply water supply produced by the produced in Cross River and Lagos States. water treatment works in Lagos 2. To increase access to piped Revised. The cities of Itigidi (IDA), Obubra water networks in four cities in To increase access to piped water networks (AFD), and Okpoma (AFD) are Cross River State. in seven cities in Cross River State and new as they were not considered at Lagos. the beginning of the project. 3. To improve commercial No changes proposed. viability of the urban water utilities in Cross River and Lagos States. PDO indicators Current (PAD) Proposed change* Lagos Treatment Works Revised. Original indicator has been operate at 85% of capacity for 1. Lagos Treatment Works operation considered to be unclear. Values 80% of the time (by June 30, capacity (water produced / water that have been removed from the 2008) would be produced if using the plant at indicator itself. 100% capacity 24/7). Number of connections in Revised. Cross River State increases 2. Number of new active connections in from 1,000 to 50,000 by Cross River State attributable to the project end. project. New. There was no PDO indicator 3. Number of new active connections in related to connections in Lagos in Lagos State attributable to the project. the original results framework. 100% of Lagos treatment costs Dropped. The indicator was deemed to be recovered from sales to unclear, as there is currently no distribution operator distribution operator. New. Attempt to measure the reliability 4. Number of hours of water supply per aspect of PDO 1. day in Lagos State New. Attempt to measure the reliability 5. Number of hours of water supply per aspect of PDO 1. day in Calabar / other Cross River State towns7 100% of O&M costs recovered Revised. from revenue in Calabar by 6. % of O&M costs recovered from project end revenue in Calabar 7 The other Cross River State towns are: Obudu, Itigidi, Obubra, Okpoma, Ikom, and Ogoja. 20 Revisions to the Results Framework Comments/ Rationale for Change New. 7. % of O&M costs recovered from revenue in Lagos New. Bank core indicator. 8. Direct beneficiaries. New. Bank core indicator. 9. % of female beneficiaries. Intermediate Results indicators Current (PAD) Proposed change* Network in 5 distribution Revised. districts in Lagos are 1. Distribution districts of Lagos for which rehabilitated by project end the network is rehabilitated The existing distribution Revised. network in Calabar reaches 2. % of Calabar’s / other Cross River State 90% of the city’s population towns’ population covered by the by project end distribution network New. The new indicator is a core 3. New piped household water connections indicator for the World Bank that are resulting from the project intervention (number) New. The new indicator is a core 4. Piped household water connections indicator for the World Bank affected by rehabilitation works undertaken under the project (number) New. 5. Number of meters installed. One PS contract for operation Revised. of the treatment works in 6. PS contracts for operation of the Lagos by MTR treatment works in Lagos PPP model piloted for one Dropped. In the lifespan of the project the smaller urban town in Cross physical investment will be River by MTR feasible, but not the PPP participation which may come at a later stage Lagos treatment plants Revised. increase capacity from 60 to 7. Lagos treatment plants capacity 180 million m3/year attributable to the project Communications and Revised. Dialogue with CSOs and consumer outreach programs 8. Communications and consumer outreach consumers is ongoing. operational in Cross River and programs operational in Cross River and Lagos by project end Lagos. MDG tracking system for Revised. This indicator has not been access to potable water & 9. MDG tracking system for access to achieved so far sanitation established and potable water & sanitation established and operational in the FMWR by operational in the FMWR. MTR National utility training plan Revised. FMWR and National Water conceived and implemented by 10. National utility training plan conceived Resources Institute are working on project end and implemented. it and coordinating contributions to this goal from different donors, including the EU. 21 Revisions to the Results Framework Comments/ Rationale for Change New. 11. Billing collection rate of LSWC New. 12. Billing collection rate of CRSWBL New. The new indicator is a core 13. Water utilities that the project is indicator for the World Bank supporting (number) 22 Project Development Objectives (PDOs): 1. To improve the reliability of water supply in Cross River and Lagos States 2. To increase access to piped water networks in seven cities in Cross River State and Lagos 3. To improve commercial viability of the urban water utilities in Cross River and Lagos States Baseline Cumulative Target Values Progress Original Responsibility To Date 2012 2013 2014 2015 2016 Data Source/ PDO Level Results Indicators Core UOM8 Project Frequency for Data Comments (March Methodology Start Collection 2012) (2005) PMU Progress PMUs, World 1. Lagos Treatment Works % 33% 45% 55% 65% 70% 75% 85% Annually Reports, Bank, External operation capacity Utility Audit Auditors Reports Increasing the original PMU indicator by 2. Number of new active Progress PMUs, World 25,000 connections in Cross River Number 1,000 35,000 40,000 50,000 60,000 65,000 75,000 Annually Reports, Bank, External connections is State attributable to the project Utility Audit Auditors the result of Reports adding new cities of Cross River State. PMU 3. Number of new active Progress PMUs, World connections in Lagos State Number 0 10,000 10,000 13,000 17,000 20,000 24,000 Annually Reports, Bank, External attributable to the project Utility Audit Auditors Reports PMU Progress PMUs, World 4. Number of hours of water Number 6 12 14 16 16 18 18 Annually Reports, Bank, External supply per day in Lagos State Utility Audit Auditors Reports PMU 5. Number of hours of water Progress PMUs, World supply per day in Calabar / Number 6/NA 12/0 12/0 14/0 14/12 16/12 18/18 Annually Reports, Bank, External other Cross River State towns Utility Audit Auditors Reports 8 UOM = Unit of Measurement. 23 PMU Progress PMUs, World 6. % of O&M costs recovered % 55% 60% 66% 70% 80% 90% 100% Annually Reports, Bank, External from revenue in Calabar Utility Audit Auditors Reports PMU Progress PMUs, World 7. % of O&M costs recovered % 25% 28% 55% 70% 75% 80% 90% Annually Reports, Bank, External from revenue in Lagos Utility Audit Auditors Reports Beneficiaries PMU Progress PMUs, World 8. Direct beneficiaries, Number 10,000 450,000 500,000 630,000 770,000 850,000 990,000 Annually Reports, Bank, External Utility Audit Auditors Reports PMU Progress PMUs, World 9. Of which female % 50% 50% 50% 50% 50% 50% 50% Annually Reports, Bank, External (beneficiaries) Utility Audit Auditors Reports 24 Intermediate Results and Indicators Baseline Target Values Progress Data Unit of Original Responsibility To Date 2012 2013 2014 2015 2016 Source/ Intermediate Results Indicators Measu Project Frequency for Data Comments Core (March Methodolo rement Start Collection 2012) gy (2005) Intermediate Result 1: Rehabilitation and Network Expansion It has already been PMU done in 2 districts, 1. Distribution districts of Lagos Progress 4 PMUs, World and the AFD Reports, for which the network is Number 0 2 2 2 4 4 Annually Utility Bank, External component for rehabilitated Auditors Lagos will do it in Audit 2 further districts, Reports giving a total of 4. 2. % of Calabar’s / other Cross PMU River State towns’ population Progress 90/90% PMUs, World 75/25 80/40 Reports, covered by the distribution % 20/10% 70/10% % % 85/55% 90/70% Annually Utility Bank, External network Auditors Audit Reports PMU 3. New piped household water Progress PMUs, World 55,000 Reports, connections that are resulting Number 0 25,000 25,000 35,000 45,000 45,000 Annually Utility Bank, External from the project intervention Auditors Audit Reports PMU 4. Piped household water Progress PMUs, World connections affected by 44,000 Reports, Number 0 20,000 25,000 28,000 32,000 40,000 Annually Bank, External rehabilitation works undertaken Utility Auditors under the project Audit Reports PMU Progress PMUs, World 55,000 Reports, 5. Number of meters installed. Number 0 25,000 25,000 35,000 45,000 45,000 Annually Utility Bank, External Auditors Audit Reports 25 Intermediate Results and Indicators Baseline Target Values Progress Data Unit of Original Responsibility To Date 2012 2013 2014 2015 2016 Source/ Intermediate Results Indicators Measu Project Frequency for Data Comments Core (March Methodolo rement Start Collection 2012) gy (2005) Intermediate Result 2: Public-Private Partnership Development PMU PMUs, World The original target Progress 6. PS contracts for operation of Bank, of this indicator has Number 0 0 0 0 1 1 1 Annually Reports, the treatment works in Lagos External not been achieved Utility Audit Auditors so far. Reports Intermediate Result 3: Service Sustainability & Project Management PMU 7. Lagos treatment plants PMUs, World Progress Million Bank, capacity attributable to the m3/yr 60 115 130 150 160 170 180 Annually Reports, External project Utility Audit Auditors Reports 8. Communications and PMU PMUs, World Progress consumer outreach programs Bank, Yes/No No No No No No No Yes Annually Reports, operational in Cross River and External Utility Audit Lagos Auditors Reports Intermediate Result 4: Policy Reform and Institutional Development PMU 9. MDG tracking system for Progress PMUs, World access to potable water & Numb 1 Reports, 0 0 0 0 1 1 Annually Bank, External sanitation established and er Utility Auditors operational in the FMWR Audit Reports PMU Progress PMUs, World 10.National utility training plan Yes/N Yes Reports, No No No No Yes Yes Annually Bank, External conceived and implemented o Utility Auditors Audit Reports 26 Intermediate Results and Indicators Baseline Target Values Progress Data Unit of Original Responsibility To Date 2012 2013 2014 2015 2016 Source/ Intermediate Results Indicators Measu Project Frequency for Data Comments Core (March Methodolo rement Start Collection 2012) gy (2005) PMU Progress PMUs, World 11. Billing collection rate of 80 % Reports, % NA 38 % 45 % 55 % 65 % 75 % Annually Bank, External LSWC Utility Auditors Audit Reports PMU Progress PMUs, World 12. Billing collection rate of 95 % Reports, % NA 80 % 80 % 85 % 90 % 90 % Annually Bank, External CRSWBL Utility Auditors Audit Reports PMU Progress PMUs, World 13.Water utilities that the project Numb 6 Reports, 0 2 2 6 6 6 Annually Bank, External is supporting er Utility Auditors Audit Reports 27 Annex 2: Operational Risk Assessment Framework (ORAF) Stage: Board 1. Project Stakeholder Risks Rating: Low Description: Water sector institutions participating in the Risk Management: Training will be offered periodically on the Bank’s procurement guidelines project may not be able to manage significant new and Environmental and Social Safeguards to ensure that all new staff are familiar with the Bank’s responsibilities in line with Bank procurement guidelines and guidelines and policies, and that longer-term staff are able to deepen their knowledge of them. Environmental and Social Safeguard Policies. Resp: WB country Stage: All Due Date : Continuous Status: Ongoing team and Government Risk Management: Bank staff will regularly visit sub-project sites to ensure that Environmental and Social Safeguards are being followed, as agreed. The Bank’s procurement specialists will provide feedback on procurement actions. Resp: WB country Stage: All Due Date : Continuous Status: Ongoing team and Government 2. Implementing Agency Risks (including fiduciary) 2.1 Capacity Rating: Moderate Description: The CRSWBL implementing the Additional Risk Management: The CRSWBL project will contract more staff, if required, to handle any Financing in 7 towns of Cross River does not perform increased workload related to the Additional Finance. adequately. Resp: CRSWBL Stage: Implementation Due Date : Continuous Status: Ongoing Description: The FMWR implementing institutional and Risk Management: The FMWR project will contract more staff, if required, to handle any reform component of the Additional Financing does not perform increased workload related to the Additional Finance. adequately. Resp: FMWR Stage: Implementation Due Date : Continuous Status: Ongoing 2.2 Governance Rating: Moderate Description : State governments do not allow the SWAs to act Risk Management: Push for sector policies that emphasize and encourage autonomous and self- in a sufficiently autonomous manner to sustain reliability of sufficient utilities. investments and maintain adequate cash flow Resp: SWAs Stage: All stages Due Date : Continuous Status: Ongoing Risk Management: Strengthening SWAs’ commercial capacity through targeted PPP contracts. Resp: SWAs Stage: All stages Due Date : Continuous Status: Ongoing 3. Project Risks 3.1. Design Rating: Moderate Description: All of the investments detailed designs have been Risk Management: The Bank and the implementing agencies will consult regularly with respect to completed. design issues. 28 Resp: WB and Stage: Preparation and Due Date: Continuous Status: Ongoing implementing agencies Implementation 3.2. Social & Environmental Rating: Moderate Description: The project could have negative environmental Risk Management: ESIAs and RAPs have been prepared during project implementation. In and social impact. addition, an ESIA and Abbreviated RAP for the works in the three new towns being financed by the AF have been prepared. The Bank’s project team will closely supervise implementation of the project’s environmental and social management framework, and re settlement policy framework. Resp: WB Stage: Implementation Due Date: Continuous Status: Ongoing 3.3. Program & Donor Rating: Moderate Description: Insufficient coordination among development Risk Management: The Bank, AFD, and the implementing agencies will maintain a close partners involved with the same three water services boards dialogue throughout project preparation and implementation to ensure its smooth implementation. could lead to inefficient use of resources. Resp: WB, AFD, and Stage: All Due Date: Continuous Status: Ongoing implementing agencies. 3.4. Delivery Monitoring & Sustainability Rating: Moderate Description: The interventions in smaller towns than Calabar, Risk Management: The Bank and the implementing agencies will consult regularly with respect to the capital of Cross River State, may pose challenges to the monitoring and evaluation issues in Ikom, Ogoja, Itigidi, Obubra, Okpoma, and Obudu. close monitoring of the project by the CRSWBL. Resp: WB and Stage: All Due Date: Continuous Status: Ongoing implementing agencies. Description: Inadequate management and revenue collection Risk Management: Once underway, the CRSWBL will regularly review its financial performance could lead to unsustainable water supply and sanitation services. and take action to ensure sustainability, either by raising revenues or by managing costs, or both. Resp: CRSWBL Stage: Implementation Due Date: Not yet due Status: Ongoing Implementation Risk Rating: Moderate Comments: The overall risk rating remains moderate as originally assessed. 29 Annex 3: Project Description The objectives of the Project are to: (i) improve the reliability of water supply produced in the Participating States; (ii) increase access to piped water networks in Lagos State and in seven cities in Cross River State; and (iii) improve the commercial viability of urban water utilities in the Participating States. The Project consists of the following components: Component 1: Rehabilitation and Network Expansion (US$ 171.7 million AF, of which 96 from IDA and 75.7 from AFD) 1.1. Rehabilitation and expansion of the water supply system in Lagos State, including: (a) Rehabilitation of the water intake facilities and treatment plants at Adiyan, Iju and Isashi. (b) Rehabilitation and expansion of the water distribution network in Surulere and Victoria Island (to be financed by AFD). (c) Rehabilitation and expansion of ground water treatment plants, the water distribution system’s primary transmission main, and selected water transmission and distribution systems in Ikeja and Lagos Island. (d) Strengthening of water distribution systems by establishment of a centralized operational system for monitoring and controlling water flows, water pressure and water allocation. (e) Carrying out of feasibility studies and detailed engineering designs to update network analyses for individual service areas. (f) Carrying out of water quality analysis, quality control, maintenance and other operational duties, including the provision of communication and information technology and other equipment for commercial operations. 1.2. Rehabilitation and expansion of the water system in Cross River State, including: (a) Rehabilitation and expansion of the water supply network in Calabar, Ikom, Ogoja, Obudu and Itigidi, including improvements of the water intake facilities, water treatment plants, water storage, pumping, and transmission and distribution systems. (b) Rehabilitation and expansion of the water supply network in Obubra and Okpoma, including improvements of the water intake facilities, water treatment plants, water storage, pumping, and transmission and distribution systems (to be financed by AFD). (c) Carrying out of water quality analysis, quality control, maintenance and other operational duties, including the provision of communication and information technology and other equipment for commercial operations. 1.3. Carrying out of an assessment of the safety of Obudu dam in Cross River State, and carrying out of civil works for rehabilitation of the said dam. 30 Component 2: Public Private Partnership Development (US$ 5 million AF from IDA) 2.1. Design and tender of, and fees under, private sector operator contracts for the operation of water treatment plants in the Participating States. 2.2. Setting up and operation of a “help desk” for the distribution service area operators in the Participating States. 2.3 Capacity building of the PPP units in the FMWR and provision of transaction advisory services for PPP projects in the water sector. Component 3: Project Management and Service Sustainability (US$ 4 million AF from IDA) 3.1. Carrying out of the day to day administration, financial management and procurement of Project activities at the federal level, and overall coordination, monitoring and evaluation and audit of the Project. 3.2. Carrying out of the day to day administration, financial management, procurement and monitoring and evaluation of Project activities at the State level. 3.3. Carrying out of a program of specific activities to build the capacity of water utilities in the Participating States and other selected states of the Recipient to perform their functions effectively. 3.4. Operation of the water treatment plants in the Participating States, including pumping or storage of treated water, through the provision of electricity, chemicals, consumable spares and fuel to be used for such purposes. 3.5. Development and implementation of public communication programs in the Participating States to raise customer awareness of, and feedback on, the provision of water and sanitation services. Component 4: Policy Reform and Institutional Development (US$ 17 million AF, of which 15 from IDA and 2 from AFD) 4.1. Development of a national training framework for water supply and sanitation, and carrying out of training and workshops in the Participating States based on such framework. 4.2. Development of national millennium development goal tracking capacity for water supply and sanitation. 4.3. Provision of technical assistance to the FMWR and FPIU in selected water sector technical, commercial and management areas. 31 4.4. Establishment and institutional capacity building of water services regulatory agencies in the Participating States. 4.5. Strengthening of the operations of the Lagos Water Corporation through an update of its asset register, carrying out of a water tariff study, enumeration of customers in the Lagos metropolitan area, carrying out of an organizational and management study of its business processes, and an upgrade of information technology equipment and software (to be financed by AFD). 32 Detailed Description of rehabilitation and pipe network expansion activities (Component 1) in Cross River State This section comprises a description of the context and the interventions in 5 towns of Cross River State of this Additional Financing (Ikom, Ogoja, Obubra, Okpoma, Itigidi). CROSS RIVER STATE WATER SUPPLY SYSTEMS 1) Ikom Town  Location: Situated between latitude 50.00 and 5 0.15 North and longitude 8.14 to 8.25 East; and is about 210 kilometers from the Cross River State Capital.  Area: 480 km 2.  Population: about 160,000 people (2006 population census)  Major Clans in the town: Ikom central, Oche Rore, Agbokim, Mgbabor, Ajinjikpo and Ikom South.  Vegetation: The landscape of Ikom is characterized by riverine tropical forest, and the mosaic forest vegetation.  Occupation: The people of Ikom are predominantly farmers and produce mainly cocoa, banana, and food crops such as cassava, yam, maize and plantain. The water supply system process for Ikom is as follows:  Surface water abstraction from River cross by means of intake raw water pumping station;  Raw water pipeline;  Treatment plant;  Underground water reservoir;  Treated water pumping station;  Transmission pipelines and storage; and  Gravity pipeline distribution system Detail characteristics of the Water Supply Process can be seen in the following table: Ikom Treatment Plant & Water Distribution Characteristics ITEM DESCRIPTION RESULT Raw water source Cross River Inlet Pipe size (mm) ND600 Inlet Pipe size length (m) 1475 Metal Ductile Iron Type of Raw Water/Inlet Pipe UPVC PVC Capacity of Raw Water/Intake 5000m3 Tank Capacity of Treatment Plant NA 33 (m3/day) Stage 1 9,300 Stage 2 24,860 Disposed back into the Thickened Sludge Sludge Disposal River Partially Clarified Sludge to be recycled Treated Water Storage Tank 2,500 2500 Capacity  Ikabokon Ground Level 150 Reservoir  Okuni Elevated Water 500 Tank Size of Distribution Pipe: Steel Varies from 75 to 400 (mm) Size of Distribution Pipe: PVC 3,510 (mm) Length of Distribution Pipeline (m) Metal 500 Type of Pipe for Distribution UPVC NA PVC varies from 75 to 315 2) Ogoja Town  Location: Situated between 60 40’N, 80 48’E / 6.6670N, 8.80E;  Area: 420km2.  Population: 171,901 people (2006 population census)  Major Clans in the town: Mbube, Boki, Iyale, Ishibori, Igoli, Abuochichi, Ugaga, Okuku.  Vegetation: The landscape of Ogoja is characterized by riverine tropical forest, and the mosaic forest vegetation.  Occupation: The people of Ogoja are predominantly farmers and produce food crops such as cassava, yam, maize and plantain. The water supply system process for Ogoja is as follows:  Surface water abstraction from River Aya by means of intake raw water pumping station;  Raw water pipeline and access road;  Treatment plant;  Clear water reservoir;  Treated water pumping station;  Transmission pipelines and storage; and  Gravity pipeline distribution system to the consumers. Detail characteristics of Ogoja treatment plant & distribution system: 34 ITEM DESCRIPTION RESULT Raw water source River Aya Inlet Pipe size (mm) ND500 Inlet Pipe size length (m) 900 Metal Ductile Iron Type of Raw Water/Inlet UPVC Pipe PVC Capacity of Raw 10,000m3 Water/Intake Tank Stage 1 8,144 Stage 2 17,480 Disposed back Thickened Sludge Sludge Disposal into the River Partially Clarified Sludge To be Recycled Treated Water Storage Tank Stage 1 (m3) Stage 2 m3) Capacity Ogboja 300 300 + 300 Igoli 1000 700 + 300 + 700 Ugaga 250 250 + 200 Army Barracks 450 450 + 300 Okuku 200 200 + 100 Ugboro 150 150 Ukpah 150 150 Abouchichi 200 200 +200 Size of Distribution Pipe: 500 Steel (mm) Size of Distribution Pipe: Varies from 75 to 400 PVC (mm) Length of Distribution 3,510 Pipeline (m) Metal 500 Type of Pipe for Distribution UPVC NA varies from 75 to PVC 315 3) Obubra scheme Obubra is the headquarters of Obubra Local Government Area. It is situated about 180km north- west of Calabar. Obubra is at almost midway between the northern and southern boundaries of Cross River State and on the south bank of the Cross River. The altitude of areas under Obubra Scheme varies from 10 to 132 m. The Obubra project area comprises of Obubra town, and the communities of Owakande I, Mile I (included in Obubra Town), Ogada II, Apiapum, Ofatura, Ovonum, Ofodua, Ogada I, 35 Iyamoyong, Ohana, Ofukpa, Ofat, Ababene, Obubra Station, Onyedama, Adun Beach, Ofumbongha (including Ofumbongha IA, Ofumbongha IB, Ofumbongha II, Ofumbongha III & Ofumbongha IV), Ochon, Oderigha. Obubra town, the headquarters of the Obubra Local Government Area, is located about 175 km north from Calabar, the State capital. Access to Obubra is through a branch off the main Calabar- Ikom highway, at Apiapum; the road from this junction to Obubra is fairly good. Obubra can be classified as a semi-urban town and it has grown to close the gap between it and some of the surrounding communities and villages. Obubra town has a linear settlement pattern, with houses aligning along the main road and comprised communities such as, Ogada I & II, Obubra station, Obubra village and Mile I. Other big communities to the south of Obubra town are: Adun-Ofatura-Ovonum and Adun Apiapum and Ababene-Oderigha. Communities like Ofumbongha, Ofukpa, Onyedama, Ohana and Owakande are to the north of Obubra Township. Ofat settlements’ pattern is clustered but all the houses are along the main road. It is also serves as the entrance to Ababene-Oderigha, a semi urban community off the main road, with dispersed settlement patter. Most of the communities proposed to be covered in this project, in addition to Obubra, are located not too far away on either side of the main Calabar – Ikom highway. In many cases they are so close together that, even though they bear different names, they have no formal boundaries; an example of this is Ofat and Ababene communities. Ofodua, Ovonum, Ofatura and Apiapum communities located on this highway have grown and almost fused into one settlement, constituting a major commercial centre with shops, filling stations, and other commercial activities. Obubra town has a record of being previously connected to the water board mains. There is an abandoned water scheme, but its adjoining communities have no record of being connected to the water board mains. Obubra town has a history of being connected to the water board mains but no supply. There are numbers of obsolete stand pipes scattered around the town. Motorized boreholes are virtually present in all the communities. One (1) motorized borehole at Ababene has just been completed but yet to be commissioned, other motorized boreholes seen, are either not functioning or under-utilized. Besides, hand-pumping boreholes are seen virtually everywhere within Obubra town and its adjoining communities. All five (5) hand-pumping boreholes in Adun-Apiapum are not functioning; all eleven (11) hand-pumping boreholes in Ofodua see no water coming out of them. Equally, all the seven hand-operated boreholes present in Ababene-Oderigha are not supplying water. Obubra and its communities get water supply from streams, rivers and ponds. The Obubra Water Supply Scheme is no longer in operation. Both the intake works and the treatment plant had been abandoned. The high lift pump station contains disused and broken down parts of pumps, while the standby generator which got burnt shows evidences of vandalism. 36 Obubra scheme:  Construction of a new intake structure in Adun Beach  Supply and installation of vertical pumps for the Intake  Supply and laying of a raw water conveyance pipe between the Intake and the treatment plant  Construction of a new treatment plant in Adun Beach including all process facilities  Construction of a clear water tank (2’500 m³) and an elevated tank (200 m³) in the treatment plant site.  Construction of ground level in Apiapum (1’700 m³) and elevated reservoirs in Ofat (2’500 m³), Ohana (500 m³), Apiapum (1’500 m³) and Mile I (2’500 m³).  Construction of two high lift pumping stations in the TP site (Adun Beach) and in Apiapum connected to the ground level reservoirs, and equipped with vertical and submersible pumps.  Supply and laying of various diameters of conveyance pipelines to supply all reservoirs and tanks under this scheme.  Supply and laying of various diameters of distribution pipelines to supply all communities under this scheme.  Construction of water kiosks and connection of kiosks to distribution network.  Installation of house connections  Construction of access roads 4) Okpoma scheme Okpoma is the headquarters of Yala Local government Area. It is located in the northern senatorial district of the state. The altitude of area under Okpoma Scheme varies between 18 and 133 m. The proposed water supply scheme for this project area will be designed to cover Okpoma, Abachor, Okpinya, Idigbo, Olachor, Adiero, Woleche, Utukpo, Iboko, Udenyina, Itega, Okpodu, Ogojah, Utukpo Ipole and Igbekurekor. Okpoma and its adjoining communities are situated along the road from Ogoja to Abakaliki, with a long stretch of linear settlement pattern along the main road. They are situated approximately 300 km North from Calabar, the state capital. Okpoma town serves as the seat of Yala local government area. Okpoma consists of several towns and villages with virtually no distinct boundary to separate one from another. Apart from the communities mentioned for the water project, Okpoma has some smaller settlements hinterland. Okpoma town, headquarters of the Yala Local Government Area of Cross River State, is located about 20km from Ogoja, on the Ogoja - Abakaliki Road. It is a fairly well developed semi-urban town, with educational institutions, markets, a few shops, but no major businesses or industries. Okpoma and the surrounding communities have a very erratic electricity supply. The major economic activity in the area is farming, with yams being the dominant produce. An intake on the Onwu River at Okpe was initially projected. But other places seemed also convenient to the intake works: to the North, near the Ikpakele community, and to the western 37 side of the area, close to the Udenyina location. The latter possibility seems to be the most relevant as far as the Ikpakele community is not covered by the present project. Initially, Okpoma Township and its adjoining communities slated for this water project have been depending on rivers, streams and ponds. Lately, hand-pumping and motorized boreholes were provided by different government agencies to compliment their water supply consumption. Water in this area is basically used for domestic, and not for any other, purposes. Okpoma town has two motorized boreholes, one of which is functioning, and another one that has packed up. Several hand-pumping boreholes are seen everywhere, but most of them are not functioning. The people in the community complained of buying water from the functioning borehole but protested their high cost for a basin, which, is being sold for N10 per basin. Okpodu, Ochochi and Ochejuo settlement have two hand-pumping boreholes: one is functioning at very low efficiency, while the other is not. Water consumption in this locality is basically for domestic purposes. Idigbo, Abachor-Okpame, Udenyina and Otuche have one functioning overhead tank powered by motorized borehole and six hand-pumping boreholes. However, water coming out from boreholes and wells at Idigbo are salty and not suitable for domestic uses. Standpipes and house connections are proposed as types of connections to the water board mains and metering billing system is proposed. In Oba, Ipole - Adiero, Olachor, Itega, Utukpo- Woleche, Iboko and Ogojah, the boreholes are also not functioning. A motorized borehole is present at Oba with several hand-pumping boreholes in other communities but virtually none is functioning. Ogojah and Utukpo-Woleche recorded the prevalence of guinea worm disease some time ago, because water from the rivers and streams was not treated before drinking. Hence there is a dire need to have treated water from the water board mains. The aim of the project, which is part of the State-Wide Water Supply Project is to provide potable piped water networks to some selected semi-urban and rural communities of the Cross River State. The communities concerned by this project are located within the 2 following areas: Obubra and Okpoma area. A comprehensive program has been developed in order to improve water supply for these 3 schemes. This program consists of: Okpoma Scheme:  Construction of an intake structure on the Onwu River at approved location  Supply and installation of pumps for the Intake  Supply and laying of a raw water conveyance pipe between the intake and the treatment plant.  Supply and laying of raw water conveyance mains from the works to the treatment plant.  Construction of a new treatment plant at approved location including all process facilities  Construction of a clear water tank (1’000 m³) and an elevated tank for service water (50 m³) in the Treatment Plant site.  Construction of elevated reservoirs in Woleche (200 m³), in Oba (1’800 m³) and  Local Government secretariat (300 m³) in accordance with engineering design. 38  Supply and laying of various diameters of conveyance pipelines to supply all reservoirs and tanks under Okpoma scheme.  Construction of one high lift pumping station in the TP site equipped with vertical pumps (to supply the elevated tanks in Woleche, Okpoma and LGA) and submersible pumps (to supply the elevated service water tank).  Supply and laying of various diameters of distribution pipelines to supply all communities under Okpoma scheme.  Construction of water kiosks and connection of kiosks to distribution network.  Installation of house connection  Construction of access roads 5) Itigidi Town The project area of the Itigidi scheme comprises Itigidi town and twelve communities, namely: Adadama, Egboronyi, Emin Ekpon, Anong, Likpoma, Akarefor Esegeh, Akarefor, Ekureku, Agbara, Ngarebe, Akpoha, and Itigeve / Isong Inyang. Itigidi is the headquarter of Abi local government in Cross River State. It is situated in the Central Senatorial District of Cross River State. The altitude of the areas under Itigidi Scheme varies from 7 to 132 m. The town is situated at upper course bank of the Cross River. Abi local government area had a population of 144,317 in 2006 census (NPC, 2009), and the projected population for 2016 is of 197,714 people. It has a clustered settlements pattern with scattering adjourning villages. Access to Itigidi is through the Ugep-Ediba-Itigidi road that branches off the Calabar- Ikom highway at Ugep. Until recently, this road stopped at Ediba, and Itigidi could only be reached by ferry or speed boats; however the recently-commissioned bridge across the Cross River has made it possible to access Itigidi by road. Itigidi accommodates the water pumping station, the treatment plant of the CRSWBL along the Old Park area, and the reservoir along the Hospital road. A majority of the households are currently connected to the water board mains, meaning that the town enjoys portable pipe-borne water. Itigidi town is currently being supplied with water from a water supply project commissioned in 1963. The scheme extracts raw water directly from the Cross River through a submersible pump, mounted on a pontoon, anchored to the bank of the river. The pontoon is in a dilapidated state, and the submersible pump is very unreliable. The treatment process is basically sedimentation and rapid sand filtration. The filters are combined with the clear water tank in one structure. Disinfection is carried out through manual dosing with Chlorine solution. The internal walls of the filters are almost completely covered with thick layers of algae. There are two high- lift pumps in the high-lift pump house located at the water works: one installed in 1985 (capacity unknown), and which was not functioning; the other installed in 1997 (60 cu.m/hr, 72.3 m head) and functioning. Public power supply to the water works is through a PHCN 100 KVA 33/0.415kv substation located within the premises. There is also a 100 KVA standby generator in good working condition. According to the official in charge of the scheme, erratic public power supply, coupled with the high running cost of the standby generator, has been a major constraint to the number of hours that the scheme can pump the little water available to consumers. Treated water is pumped from the clear water tank to a ground level reservoir of about 150m³ capacity located 39 about 2 km, north of the waterworks. From this reservoir, water is supplied by gravity to Itigidi town. There are connections to the water board mains. These are apparent along the Post Office road, Hospital road, Government Primary School road, Saudi road, Senator Liyel Imoke road and in the School of Nursing premises. There is connection from the reservoir to the local government headquarters but no connection to the health centre. Functioning motorized boreholes with overhead tanks were strategically located, one in the health centre and another in the school of nursing but most hand-pumping boreholes present are not functioning. Irregular supply from the flow station was noticed due to the unreliable power supply from PHCN coupled with aged treatment plant equipment. The people therefore are willing to pay new rate, if the supply is regular and consistent. The Itigidi scheme shall have raw water source extracted from Cross River. Cross River originates from Cameroon and flows through, Ediba and finally discharges into the Atlantic Ocean in Calabar. The width of Cross River at Ediba intake works is about 300 m. Generally, the depth of Cross River at Ediba is lowest between the months of December and April and highest between the months of June and November, being the rainy season. A comprehensive program has been developed in order to improve water supply for the Itigidi scheme. This program consists of:  Construction of a new intake structure  Supply and installation of vertical pumps for the Intake  Supply and laying of a raw water conveyance pipe between the intake and the treatment plant  Construction of a new treatment plant in Itigidi including all process facilities  Construction of a clear water tank (1000 m³) and an elevated tank for service water (50 m³) in the treatment plant site.  Construction of ground level reservoirs close to the Local Government (2200 m³), on the heights of Adadama (900 m³), close to the School Road (500 m³), and elevated reservoirs close to the Local Government (200 m³), in Imina (100 m³), in Egboronyi (50 m³), in Emin Ekpon (50 m³) and, in Anong (1100 m³).  Supply and laying of various diameters of conveyance pipelines to supply all reservoirs and tanks under Itigidi scheme.  Construction of one high lift pumping station in the TP site equipped with vertical and submersible pumps and two low lift pumping stations in Adadama and close to the Local Government. All the pumping stations will be connected to the ground level reservoirs next to them.  Supply and laying of various diameters of distribution pipelines to supply all communities under Itigidi scheme.  Construction of water kiosks and connection of kiosks to distribution network.  Installation of house connection  Construction of access roads 40 Annex 4: Implementation Plans of delayed components 41