Report No. PIC3394 Project Name Trinidad & Tobago-Water & Sewerage (@+) Privatization Support Project Region Latin America and Caribbean Sector Water Supply and Sanitation Project ID TTPA8107 Borrower Government of Trinidad & Tobago Implementing Agency Water and Sewerage Authority (WASA) Farm Road, St. Joseph Trinidad & Tobago Tel: (809) 662-2301-7 Fax: (809) 662-3584 Environmental Category B Date PID Prepared May 12, 1997 Projected Appraisal Date May 31, 1997 Projected Board Date July, 1997 A. Background. The two islands, Trinidad (4828 km2) and Tobago (300 km2) are located in the southernmost zone of the Caribbean sea and share similar topography, vegetation and climate. Precipitation averages about a high 2,000 mm/year and water resources are plentiful, even during the dry season (January to May). The climate is moderate and the mean temperature is about 27'C. The islands are outside the hurricane belt. In 1994, Trinidad and Tobago had a total population of some 1.3 million inhabitants, of which 96 percent live in Trinidad. About 70 percent of the population is urban. The national capital Port of Spain has a population of about 80,000 inhabitants. Life expectancy is high at 70 years and infant mortality is low at 9.5 per 1000 live births. Nevertheless water related diseases are still widespread and figure among the leading causes of mortality, which is indicative of low water and sanitation service levels. The Economy Over the past two decades, Trinidad and Tobago's economic fortunes have followed closely the world price of its major export commodity - oil. Oil revenue windfalls after 1973 brought unprecedented prosperity, increasing per capita GNP to $6,600 by 1982. But this prosperity was not sustained. Oil prices began to fall in 1982, and growth has been negative in 9 of the last 12 years. By 1994, per capita income had fallen to $3,700, its pre-oil boom level. The length and depth of the economic decline in Trinidad and Tobago can be traced to poor economic management during a decade of oil revenue windfalls and to slow adjustment when the windfalls ended. Only after a further steep decline in the price of oil in 1986 did the Government face the challenge of a fundamental adjustment in economic policy and initiate a program supported by a Bank SAL and an IMF Standby Loan. Trinidad and Tobago is now undertaking the difficult transition from an oil dependent, public sector-dominated economy, to a more diversified, market-oriented, private sector-led one. Water Supply and Sanitation Services. About 92 percent of the population has currently access to water connections (through internal plumbing, yard taps or standpipes. Although service coverage is high, reliability of service is very uneven and water supplies are inadequate. Unaccounted-for-water is in the 50 percent range and stems from: (a) leakage from WASA's system, (b) illegal connections, (c) illegitimate hydrant use, (d) waste at public standpipes and (e) unregistered use. Sewerage systems serve about 30 percent of the total population, mostly in urban areas, while the rest of the urban population and most of the rural population depend on septic tanks and pit latrines. B. Bank Assistance The Bank has provided the Government with assistance to turn around the operations of the Water Supply and Sewerage Company, WASA, by financing of emergency supplies during the transition to private sector management, technical assistance during the privatization process, the preparation of an integrated water resources management strategy, and the design of the rehabilitation of water supply, sewerage and drainage facilities. C. Project Objectives. The objectives of the project are to assist WASA's newly privatized management in achieving: a) to rehabilitate WASA's installations and improve efficiency, b) extend coverage of water supply and sewerage services and c) improve pollution control. The first priority is the rehabilitation of WASA's water supply and sewerage systems and to improve customer services. In the past WASA's maintenance of its systems has been poor and reconditioning of the WASA facilities will be a time consuming job. The second priority will be new investments where major deficiencies are found and to extend system coverage. D. Project Preparation The preparation of the proposed project is taking place under the ongoing Water Sector Institutional Strengthening Project by WASA's private operator Trinidad and Tobago Water Services, owned by Severn Trent/TARMAC, and consultants who are preparing the final design and bidding documents for construction and rehabilitation of WASA's water supply and sewerage installations. E. Project Description and Costs. The project is part of an overall rehabilitation and technical improvement program for the infrastructure of WASA.. - 2- Priority will be given to the rehabilitation of Port of Spain's water distribution system. Specifically, the project would include the updating and upgrading of the consumer cadastre, full metering and leak detection, updating the Water Supply Master Plan for Trinidad and Tobago, including the comprehensive pressure zoning and control system with supporting hydraulic modeling. The rehabilitation of existing waste water treatment facilities, would also be included in the project. Project costs are tentatively estimated at around US$90 million, of which about US$65 million is expected to the financed by the Bank loan, and the remainder by the Government. F. Benefits The proposed project would provide improved water supply and sewerage services to most of the population in Trinidad and Tobago through increasing water supply and sewerage services and improved service reliability. Unaccounted for Water would be reduced, which will have its economic and financial benefit for WASA and the country, as well as through reduced leakage and water conservation measures, it will delay investments in new facilitates. G. Rationale for Bank Involvement Focus of the Bank's involvement in Trinidad & Tobago is detailed in the CAS (March '95) The project is a key part of the Bank's overall assistance program to improve important services in Trinidad & Tobago. The main focus of the project is on support of the new private operator of WASA to ensure a long-term reliable operation. This should establish a sustainable organization through the appropriate combination of WASA's institutional change, financial and physical rehabilitation, to enhance irreversibility of the changes and consolidate improvements in service delivery, reliability and efficiency. The Bank has been closely involved with the whole process of attracting a private operator for WASA. Under the ongoing Water Sector Institutional Strengthening Project it has financed the emergency supplies for WASA , Technical Assistance and the preparation of the proposed Project. The proposed project would be the second step in rehabilitating WASA, by providing the capital to rehabilitate its dilapidated water supply and sewerage systems. H. Project Risks Project success hinges on the government's commitment to support the private operator to achieve WASA's financial solvency by supporting measures, both politically and financially with appropriate tariff measures. Contact Point: Public Information Center The World Bank 1818 H Street N.W. Washington, D.C. 20433 Telephone No.: (202) 458-5454 Fax No.: (202) 522-1500 - 3- Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by the Public Information Center week ending May 23, 1997. - 4 - Annex Environment Aspects The proposed project would fall under Category "B". It is expected to significantly improve the operation of existing systems and thereby improve the urban environment and provide healthier living conditions for the urban population, especially the urban poor. - 5 -