Document of The World Bank FOR OFFICIAL USE ONLY Report No: 60589-TD PROJECT PAPER ON A PROPOSED ADDITIONAL CREDIT IN THE AMOUNT OF SDR 9.60 MILLION (US$15.1 MILLION EQUIVALENT) AND A PROPOSED ADDITIONAL GRANT IN THE AMOUNT OF SDR 7.80 MILLION (US$12.3 MILLION EQUIVALENT) TO THE REPUBLIC OF CHAD FOR AN URBAN DEVELOPMENT PROJECT May 11, 2011 Urban and Water Country Department AFCW3 Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective March 31, 2011) Currency Unit = CFA franc (CFAF) CFAF 462 = US$1 US$1 = SDR 0.63 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AF Additional Financing ARAP Abbreviated Ressetlement Action Plan BP Bank Procedure CCP PADUR implementing agency (Cellule de Coordination du Projet) COJO Commission for bids opening and evaluation (Commission d’Ouverture et de Jugement des Offres) EMP Environmental Management Plan ERR Economic Rate of Return ESIA Environmental and Social Impact Assessment ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan FM Financial Management FMA Financial Management Assessment FY Fiscal Year GoC Government of Chad H High IBRD International Bank for Reconstruction and Development IC Individual Consultant ICB International Competitive Bidding IDA International Development Association IFR Interim Un-audited Financial Report IP Implementation Progress ISN Interim Strategy Note LCS Least-Cost Selection MATUH Ministry of Land Planning, Urban Development and Housing (Ministère de l’Aménagement du Territoire, de l’Urbanisme et de l’Habitat) MDG Millenium Development Goal M&E Monitoring and Evaluation MI Medium – High Impact, Low Likelihood ML Medium – Low Impact, High Likelihood MoW Ministry of Water MS Moderately Satisfactory NCB National Competitive Bidding i OP Operational Policy ORAF Operational Risk Assessment Framework PADUR Chad Urban Development Project (Projet d’Appui au Développement Urbain) PDO Project Development Objective PIM Project Implementation Manual PPIAF Public Private Infrastructure Advisory Facility PPP Public Private Partnership PRSEE Chad Critical Electricity and Water Services Rehabilitation Project (Projet de Réhabilitation des Services Essentiels Eau et Electricité) QCBS Quality- and Cost-Based Selection RAP Resettlement Action Plan RPF Resettlement Policy Framework SIL Specific Investment Loan SDR Special Drawing Rights SSS Single-Source Selection STE National Water Company (Société Tchadienne des Eaux) STEE National Water and Electricity Company (Société Tchadienne d’Eau et d’Electricité) ToR Terms of Reference Vice President: Obiageli K. Ezekwesili Country Director: Ousmane Diagana Sector Director: Jamal Saghir Sector Manager: Junaid Kamal Ahmad Task Team Leader: Jan Drozdz ii REPUBLIC OF CHAD URBAN DEVELOPMENT PROJECT ADDITIONAL FINANCING CONTENTS Page Project Paper Data Sheet ..........................................................................................................iv I. Introduction ..........................................................................................................................1 II. Background and Rationale for Additional Financing ..............................................................1 III. Proposed Changes ...............................................................................................................6 IV. Appraisal Summary ........................................................................................................... 12 Annex 1: Results Framework and Monitoring .......................................................................... 17 Annex 2 Operational Risk Assessment Framework (ORAF) ..................................................... 23 Annex 3: Detailed project description ...................................................................................... 31 Annex 4: Detailed project cost table ........................................................................................ 35 Annex 5: Procurement arrangements ....................................................................................... 36 Annex 6: Financial management and disbursement arrangements ............................................. 41 Annex 7: Environmental and social safeguards ........................................................................ 45 Map IBRD 34221.................................................................................................................... 48 iii REPUBLIC OF CHAD URBAN DEVELOPMENT PROJECT ADDITIONAL FINANCING Project Paper Data Sheet Basic Information - Additional Financing (AF) Country Director: Ousmane Diagana Sectors: Water Supply (85%), Flood Sector Director: Jamal Saghir protection (15%) Sector Manager: Junaid K. Ahmad Themes: Access to urban services and Team Leader: Jan Drozdz housing (100%) Project ID: P123501 Environmental category: B (Partial Expected Effectiveness Date: October 31, 2011 Assessment) Lending Instrument: Specific Investment Loan Expected Closing Date: June 30, 2015 Additional Financing Type: Scale-up (US$23.10 million) and cost overruns (US$4.30 million). Basic Information - Original Project Project ID: P072030 Environmental category: B Project Name: Urban Development Project Expected Closing Date: June 30, 2015 Lending Instrument: Specific Investment Loan AF Project Financing Data [ ] Loan [X] Credit [X] Grant [ ] Guarantee [ ] Other: Proposed terms: 40 years with a 10-year grace period for the Credit (US$15.10 million), and Standard for the Grant (US$12.30 million) AF Financing Plan (US$m) Source Total Amount (US$m) Total Project Cost: 27.40 Cofinancing: - Borrower: - Total Bank Financing: - IBRD - 27.40 IDA: New Recommitted Client Information Recipient: Republic of Chad Responsible Agency: Ministry of Land Planning, Urban Development and Housing (MATUH), Implementation Unit within the Urban Department (Cellule de Coordination du Projet) Contact Person: Mr. Abbazene B. Djidda Telephone No.: 235.52.47.10 Fax No.: 235.52.47.11 Email: ccppadur@intnet.td iv AF Estimated Disbursements (Bank FY/US$m) FY 2012 2013 2014 2015 Annual 3.0 6.0 9.2 9.2 Cumulative 3.0 9.0 18.2 27.4 Does the project require any waivers of Bank policies? [ ]Yes [X] No Have these been endorsed or approved by Bank management? [ ]Yes [ ] No Does the project include any critical risks rated “substantial” or “high”? [X]Yes [ ] No Project Development Objective and Description Original project development objective: Increase sustainable access to municipal services for residents in targeted project cities (N’Djamena, Moundou, Sarh, Abéché and Doba). Revised project development objective: Not applicable. Project description:  Component A – Strengthening municipal and urban management capacities (US$0.90 million). Under this component, the project will finance the operating expenditures of the PADUR implementation unit (CCP – Cellule de Coordination du Projet) for three additional years.  Component B – Provision of basic infrastructure and services (US$15.25 million). Under this component, the project will finance (i) the completion of drainage and water infrastructure funded under the original project but facing unanticipated cost overruns in the city of Moundou, Abéché and Sarh, (ii) priority investments in water supply infrastructure to increase access to piped water services in the city of N’Djamena and (iii) a medium -term Investment Plan for the 11 provincial cities where the National Water Company (Société Tchadienne des Eaux – STE) operates and the update of the N’Djamena water supply Master Plan, and (iv) studies, works supervision and audits.  Component C - Strengthening sustainable access to urban water services (US$11.25 million). Under this component, the project will finance (i) a Service Contract with a private operator, (ii) operations improvement and rehabilitation activities, (iii) technical assistance for the recruitment and supervision of the private operator, and (iv) technical assistance to improve financial sustainability and to complete the legal, financial and organizational formation of the STE. 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) [ ]Yes [X] No Projects on International Waters (OP/BP 7.50) [ ]Yes [X] No Projects in Disputed Areas (OP/BP 7.60) [ ]Yes [X] No v Conditions and Legal Covenants: Financing Agreement Description of Condition/Covenant Date Due Reference The Recipient has adopted the revised and updated Project Article IV, Implementation Manual and Project Administrative, Financial Effectiveness 4.01 and Accounting Manual, both in form and substance condition satisfactory to the Association. Article IV, The Recipient has set up the Steering Committee by Arrêté in a Effectiveness 4.01 manner satisfactory to the Association. condition The Recipient shall not make withdrawals under components Schedule 2, C1 and C2 of the Project until a Private Operator has been Disbursement Section IV, B recruited and a Service Contract, acceptable to the Association, condition is in effect. Not later than three months after the Effective Date, the Schedule 2, Dated Recipient shall finalize the transfer of the responsibility of the Section V, A covenant Recipient’s urban water services to STE by Decree. Not later than nine months after the Effective Date, the Schedule 2, Recipient shall enter into a Service Contract with a Private Dated Section V, B Operator, and, at the same time, shall recruit the independent covenant technical auditor of the Service Contract. Not later than twelve months after the Effective Date, the Recipient shall launch the study on water tariff and connection Schedule 2, Dated fee levels and the Recipient shall implement the Section V, C covenant recommendations of such study within a reasonable time period thereafter acceptable to the Association. Not later than nine months after the Effective Date, the Schedule 2, Dated Recipient as sole shareholder of STE, shall have made its Section V, D covenant equity contribution to STE in full. Not later than three months after the Effective Date, the Schedule 2, Recipient shall enter into a delegation and performance Dated Section V, E contract with STE, in form and substance satisfactory to the covenant Association. vi Not later than twelve months after the Effective Date, the Recipient shall: (i) establish a mechanism satisfactory to the Schedule 2, Dated Association for the automatic payment of the amounts owed to Section V, F covenant STE by other public institutions, and (ii) ensure the effective prompt payment of such bills. Not later than nine months after the Effective Date, the Schedule 2, Recipient shall implement a payment option scheme for its Dated Section V, G customers to enable payment of the connection fee in covenant installments. Not later than three months after the Effective Date, the Schedule 2, Dated Recipient shall have updated the accounting software of the Section V, H covenant implementation unit for the purposes of the Project. vii I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an additional credit in an amount of SDR 9.60 million (US$15.1 million equivalent) and an additional grant in the amount of SDR 7.80 million (US$12.3 million equivalent) to the Republic of Chad for the Urban Development Project (Projet d’Appui au Développement Urbain - PADUR). A request for this Additional Financing has been addressed to the Bank by the Government of Chad on September 27, 2010. 2. The proposed Additional Financing would help finance the costs associated with the two following needs consistent with OP/BP 13.20:  Scaling up the impacts of the original project with a focus on increasing sustainable access to water services in targeted project cities (N’Djamena, Moundou, Sarh, Abéché and Doba) by funding additional investments in water supply infrastructure, a Service Contract with a private operator, and by enhancing social accountability to improve the performance and governance of the recently established national water utility STE (US$23.10 million).  Completing drainage and water supply infrastructure in Moundou, Sarh and Abéché funded under the original project that currently face unanticipated cost overruns (US$4.30 million). 3. As per the Government request, major changes under the proposed Additional Financing will include a focus on water supply services and the engagement of an experienced private operator to support the development of the STE. The project also aims at leveraging social accountability to improve the performance and governance of the STE. Institutional, fiduciary and safeguard arrangements will be adjusted accordingly to reflect these changes. 4. Most of the Additional Financing resources (US$23.10 million) will be used to finance investments in the urban water sector and activities to improve the performance and governance of the STE. As a result, main expected outcome of the proposed additional loan will be an increased access to sustainable water services in targeted project cities. The rest of the resources (US$4.30 million) will be used to complete drainage and water investments funded under the original project and facing cost overruns. II. Background and Rationale for Additional Financing 5. Urban water sector context. According to the 2008 estimates of the Joint Monitoring Programme, 67 percent of the Chadian population has access to an improved water source, compared with the 2015 Millennium Development Goal (MDG) of 74 percent. If the sector continues to be supported, it could stay on its trajectory to achieve the MDG. The MDG on the water sector may be the only MDG the country could reach by 2015. 6. Performance and governance of the piped urban water services. Till 2010, piped urban water supply was provided by a national water and electricity company STEE (Société Tchadienne d’Eau et d’Electricité). The service provided by the STEE was unreliable due to insufficient production capacity and frequent power failures. The service provided by the STEE was also not financially sustainable as the utility found itself in a downward spiral of overall 1 poor performance, lack of revenues to cover operational and maintenance costs which, in turn, prevented from expanding coverage. In total, STEE had 33,000 connections across the country, two thirds of which are in N’Djamena, the capital. A large majority of meters are not functioning properly or cannot be read, raising fairness, demand management and performance monitoring issues. Other salient issues include:  Tariff. Water tariff has not been revised since 1984 and is among the lowest of the region. The tariff structure is inadequate as the first subsidized tariff block has a very high maximum consumption (up to 15 m 3/month compared to typically 6 to 10 m 3/month in other Western Africa countries), which means that most households pay a highly subsidized tariff.  Cost of an individual connection. The cost for a new connection amounts a minimum of US$260 equivalent and is an obstacle for households to connect. Those who do not have connections are supplied by vendors which charge a volumetric rate up to 20 times higher than the tariff charged by the utility.  Low accountability to customers. Customers did not have any opportunities to hold STEE to account for service provision. Because of the low tariffs, the utility did not depend much on its customers for its income. No mechanism existed for customers to voice their needs and complaints. 7. Formation of a new national water supply utility STE. The urban water sector experienced a major institutional reform in May 2010 with the dissolution of the national water and electricity company STEE and establishment of the national water utility STE (Société Tchadienne des Eaux) constituted at the initiative and by decision of its sole shareholder, the Government of Chad (GoC). At the time of the GoC’s decision to dissolve STEE, the GoC also took the initiative to prepare and finance a social plan that would benefit all STEE staff without seeking the Bank’s involvement in such decision nor the implementation thereof as this decision was not related to any Bank project or involvement at the time. The STE is currently responsible for providing water services in 11 cities and towns1. The process of formation of the STE is managed by the GoC with the help of a consultancy firm financed from government internal resources. There is a political will from the GoC to make a fresh start in the urban water sector and to provide real autonomy to the new utility. GoC is currently in the process of updating various laws and regulations to finalize the set-up of STE, such as a decree transferring the responsibility for urban water services to STE. The signature of the decree is a dated covenant. STE will be a corporatized utility with certain autonomy from the GoC. The arms-length relationship between the GoC and STE is being defined through a delegation and performance contract that is currently being finalized and that will notably specify: the assets granted by the GoC to the STE for the operation of urban water services, STE performance targets, service quality standards, the financing of the investments and the remuneration of the STE. The completion of the delegation and performance contract is a dated covenant. The GoC has to date made 25% of its equity payment to STE (equivalent to US$1,000,000) but the remaining balance is still outstanding. The payment of the equity in full by the GoC is a dated covenant. Other ongoing critical actions to make STE fully operational include (a) assets identification and evaluation, debt transfer, preparation of initial balance sheet, and (b) preparation of an organizational chart, identification of the human resources requirements, recruitment of the staff 1 The STE is currently operating water supply systems in N’Djamena and 10 provincial cities: Mao, Moussoro, Bongor, Fianga, Gounou-Gaya, Kélo, Moundou, Doba, Sarh, Abéché. At the time of the project appraisal, the STE was expected to become responsible for urban water services in an 11 th provincial center: Faya. 2 on a competitive basis, transfer of the customer service database, moving of STE management to the utility premises. A new mechanism for the payment of the water bills from public institutions needs to be set up. Water consumption by public institutions represent approximately one third of the total amount billed by the utility. In the past, these payments were made to STEE through an annual subsidy from the government to cover the purchase of fuel for thermal power generators. This subsidy scheme is not applicable to the newly established STE. 8. The formation of the STE offers a window of opportunity. The GoC is currently focusing on the institutional set up of the utility. However, technical, commercial capacities of the new utility will also need to be enhanced to improve its technical, commercial and financial performance. The proposed Additional Financing will provide STE with tools for operational management and build capacity to use them. The combination of institutional reforms and capacity building will significantly enhance the sustainability of the on-going water investments under the original project. 9. Leveraging private sector expertise to improve the performance of the STE. GoC has expressed its interest to consider the participation of a private operator to strengthen the performance of the newly created STE. The Government requested the assistance of the World Bank through the PPIAF2 to identify the most suited strategy for the involvement of the private sector in a letter addressed by the Ministry of Water on June 17, 2010. A workshop held in N’Djamena in March 2011 concluded that a service contract would be the preferred option to leverage the expertise of an experienced operator for a few years in order to establish a viable, corporatized public water utility. The Terms of Reference of the Service Contract were discussed during a second workshop held in April 2011. The objective of the service contract will be to improve the technical, financial, commercial management and accountability of the STE, as well as to build the capacity of the staff to address the challenges inherited from the STEE. 10. Original project. The PADUR (US$27 million equivalent including US$15 million from IDA) was approved on March 6, 2007 and became effective on May 1, 2007. The project development objective (PDO) is to increase sustainable access to municipal services for residents in targeted project cities (N’Djamena, Moundou, Sarh, Abéché and Doba). The results sought by the project linked to the two components of the project are:  Strengthened capacity of the local governments in N’Djamena, Moundou, Sarh, Abeché and Doba to plan and manage the development and delivery of infrastructure and urban services and to increase their financial resources to maintain existing and new infrastructure (Component A – US$4.96 million plus contingencies).  Increasing availability of urban infrastructure (Component B – US$18.42 million plus contingencies3). 11. Performance of the original project. The project is steadily progressing with regard to achieving its development objective. The likelihood the Project achieves its PDO remains high. The project has experienced a slow start due to a large extent to the deterioration of the security situation in Chad, but encouraging implementation progress has been recorded for the last eighteen months. Since June 2010, the project has been rated Moderately Satisfactory (MS) for 2 PPIAF: Public Private Infrastructure Advisory Facility 3 The original project included US$3.62 of physical and financial contingencies that added to components A and B 3 both progress towards achievement of the PDO and for Implementation Progress (IP). Progress made on both components is summarized below. At the envisaged date of approval (June 2011), the PADUR will have been rated MS for 12 months for both progress towards achievement of the PDO and for IP. As of May 10, 2011, the commitment rate exceeds 90 percent and the disbursement rate has reached 60 percent (disbursed amount: SDR6.11 million out of the grant amount of SDR10.0 million), and it is expected to grow rapidly over the coming months as awarded contracts get executed.  Implementation of Component A. After initial implementation delay, Component A is being implemented satisfactorily. Local governments have benefited from the numerous training and technical assistance activities (on financial management and accounting, collection of municipal taxes, transfer of competences) to increase municipalities’ own revenue, and to adopt and use transparent and efficient budget management procedures. The study on improvement of resource mobilization and financial management for the 5 communes is currently being carried out and will be completed in September 2011. Urban development plans for 16 targeted cities are being completed and will be validated and adopted by key stakeholders by May 2011.  Implementation of Component B. All contracts for rehabilitation/expansion of water/drainage infrastructure and for supervision under component B have been awarded4. Labor-intensive activities have created about seven hundred unskilled and semi-skilled jobs (about 560,000 man-days of work cumulated, compared to incremental end of project target of 610,000 man-days). As a result, significant progress has been made in the construction of potable water network in Moundou and Sarh (about 70 percent of the works are done so far and are expected to be completed by May 2011). This would provide access to drinking water to an additional 63,500 people. Road works to provide access to city center have started and would be completed by June 2012. This would provide access to about 10,000 people at the end of the project. An additional 50,000 people in targeted cities are already protected from periodic flooding (compared to incremental end-of-project target of 72,096). In addition, the rehabilitation of the slaughterhouse at Abéché has been nearly completed.  Safeguard policies. The overall safeguards compliance rating has been recently upgraded from Moderately Satisfactory to Satisfactory, as the revised Resettlement Action Plan (RAP) for the cities of Doba, Sarh, Moundou and Abéché has now been found satisfactory by the Bank.  Procurement. Procurement continues to be rated Satisfactory, as majority of bidding documents and contracts have successfully been processed by the implementing agency, and no major bottlenecks have been identified.  Financial management. Financial management is rated Satisfactory. The recent recruitment of a new accountant should continue to improve the fiduciary environment. There is currently no outstanding audit on the project. 4 However, some cost overruns mainly for drainage infrastructure have been induced by changes made during the construction compared to the original design to take into account the spatial development and densification of the urban areas addressed by the drainage infrastructure that have occurred since the design of the project. These cost overruns will be addressed by the Additional Financing. 4  Monitoring & Evaluation. Monitoring & Evaluation of the project results has recently improved, is rated Moderately Satisfactory but will be strengthened further.  Counterpart funding. Counterpart funds were provided by the Government in 2010. An allocation of CFA francs 3.2 billion to co-finance the project in 2011 was approved by the Government, and the related disbursements have already started.  Legal covenants. The original project has complied with all legal covenants.  Closing date. The current closing date of the original project is October 30, 2012. 12. Government requests for Additional Financing. The Bank has approved in November 2010 a request from the Government of Chad for an Exceptional Retroactive Extension of the Critical Electricity and Water Services Rehabilitation Project (PRSEE) in order to allow the payment of outstanding bills under the project and the use of remaining funds (US$27.4 million equivalent) for an Additional Financing of the Chad Urban Development Project in the w ater sector. 13. Rationale for Additional Financing. The Additional Financing (US$27.4 million) will address the following needs consistent with OP/BP 13.20:  Scaling up the impacts of the project with a focus on increasing sustainable access to water services in targeted project cities by funding additional investments in water supply infrastructure, a Service Contract with a private operator, and by enhancing social accountability to improve the performance and governance of the recently established national water utility STE (US$23.10 million).  Completing drainage and water supply infrastructure in Moundou, Sarh and Abéché funded under the original project that currently face unanticipated cost overruns (US$4.30 million). 14. Scaling-up the project. Approximately 85 percent of the Additional Financing will be used to scale-up the impacts of the project. The institutional arrangements have been established and have sufficient capacity to implement a larger project. The Additional Financing will help to scale up the impacts of the project with a focus on urban water supply in accordance with Government requests. This will be achieved through investments in production, storage and distribution facilities in N’Djamena to expand access to piped water services in the Eastern part of the city, through a Service Contract with a private operator to improve the technical, financial, commercial performance and accountability of the STE, technical assistance to improve the financial sustainability and to complete the formation of the STE. At closing of the Additional Financing it is notably expected more than 215,000 people will be provided with sustainable access to "improved water sources" under the project in the targeted cities (as compared to a target of 63,600 under the original project). 15. Cost overruns. Approximately 15 percent of the Additional Financing will be used to cover cost overruns to complete the works for drainage and water supply funded under the original project in the cities of Moundou, Sarh and Abéché. Cost overruns for drainage infrastructure (approximately $3.20 million) are mainly due to the changes to the original project design made during the construction. Modifications to the original project design were required to take into account the spatial development and densification of the urban areas addressed by the drainage infrastructure that have occurred during the five years separating the preparation of the detailed design studies (2005) and the beginning of the works (2010). Cost overruns for 5 water supply infrastructure (approximately $1.10 million) in the cities of Moundou, Sarh and Abéché are required to finance some activities that were not included in the design of the original project but are required to allow for the achievement of the objectives of the project. 16. Alternatives to Additional Financing. The proposed Additional Financing is increasing the funding to an established operation. The institutional arrangements have been in place for several years and are functioning. Therefore the use of a streamlined processing instrument such as Additional Financing was viewed by the Government and the Bank as the preferred instrument to address cost overruns and scaling-up. The alternative to Additional Financing would have been the preparation of a new project but it would have taken longer than Additional Financing to prepare and could have created a slowing down of the benefit stream and a delay in the mobilization of the resources needed to support the development of the new national water utility being established. 17. Consistency with the Interim Strategy Note5. The Interim Strategy Note (ISN) has highlighted the impact of the water sector on poverty reduction. Moreover, the water sector is one of the main pillars of Axis 2 of the Strategy (Improving livelihoods and access to key social services). The Note also indicates that the water sector is eligible for new lending as past records of water sector have demonstrated impact can be achieved. The ISN notes that important progress has been made towards the achievement of the MDGs in the water sector and commends the recent policy reforms in the sector, notably the dissolution of the STEE and the creation of two separate water and electricity companies. III. Proposed Changes 18. Project Development Objective. Under the Additional Financing, PDO will remain the same, i.e. to increase sustainable access to municipal services for residents in targeted project cities (N’Djamena, Moundou, Sarh, Abéché and Doba). 19. Design and scope. The Additional Financing will use a strategic incremental approach. This approach recognizes that the urban water sector in Chad faces many challenges and a risky environment. The approach responds to the strong Government willingness to open the door to incremental change. The Additional Financing will finance incremental steps to improve water services and to address obstacles as and when they emerge rather than a traditional big bang reform approach using a deeper private sector participation model. Strategic tools include social accountability, a Service Contract focused on building a viable public utility, and an emphasis on financial sustainability and enhancing connections. The project will start to address financial sustainability of the sector but recognizes that service delivery improvements will have to be tackled before tariffs can be increased, and that in term, a functioning utility has to be set up as a condition for service improvements. 20. The project will support expanded activities under Components A and B of the original project as well as new activities under an added Component C. The following activities will be financed under each of those components (a detailed description of the project is presented in Annex 3): 5 “International Development Association Interim Strategy Note for the Republic of Chad for the period June 2010 to June 2012, May 25, 2010.” Report No. 54335-TD. 6 Component A – Strengthening municipal and urban management capacities (US$0.90 million) Component A.2 – Strengthening the capacity of the central administration and deconcentrated ministries to support the municipalities (US$0.90 million). Under this component, the project will finance the operating costs of the PADUR Implementing Agency (CCP) for three additional years. Component B – Provision of basic infrastructure and services (US$15.25 million) Component B.1 – For the city of N’Djamena (US$8.57 million). Under this component the project will finance the construction of new storage tanks and pumping station, the construction and equipments of boreholes, the expansion of the water distribution network and the procurement of connection fittings to expand piped water services to the districts of Diguel and Ndjari located in the Eastern part of the city. Components B.2, 3, 4 – For the city of Moundou (US$1.33 million), Sarh (US$1.60 million), Abéché (US$1.37 million). Under this component the project will finance the completion of drainage and water supply investments funded under the original project but facing cost overruns. Component B.6 – M&E, studies, supervision of works and audits (US$2.38 million). Under this component, the project will finance, for the works funded under Component B: (i) the preparation of engineering studies and bidding documents; (ii) the preparation of environmental / social studies; (iii) supervision of the works; (iv) the preparation of a medium-term investment plan covering the 11 provincial cities where the STE operates; (v) the update of the Master Plan for N’Djamena water supply; and (vi) financial audit of the project. Component C – Strengthening sustainable access to urban water services (US$11.25 million) Component C.1 – Service Contract (US$5.00 million). Under this component, the project will finance a 3-year performance-based Service Contract with a private operator to improve the technical, commercial, financial performance and accountability of the STE and build capacity of the new public utility. Component C.2 – Operations improvement and rehabilitation (US$5.45 million). Under this component, the project will finance the procurement and replacement of meters, the rehabilitation of networks, connections and boreholes customer census and update of the customer database, the set-up of a Geographical Information System, and improved customer service and consumer accountability tools. Component C.3 – Technical assistance for the recruitment and supervision of the private operator (US$0.30 million). Under this component, the project will fund technical assistance for the preparation of bidding documents and data room for the Service Contract, for the management of the recruitment process of the private operator and for the technical audit of the performance of the private operator. Component C.4 – Technical assistance for the financial sustainability and formation of the STE (US$0.50 million). Under this component, the project will finance (i) a comprehensive study on water consumption tariff and connection fees; (ii) technical assistance for the design and implementation of a mechanism of payment of public institutions bills; and (iii) technical assistance for the completion of the legal, financial and organizational formation of the STE. 7 Table 1: Cost table of original grant and Additional Financing Original Proposed Revised Project Additional Total Cost Components Financing Financing (US$ million (US$ million (US$ million equivalent) equivalent) equivalent) A. Strengthening municipal and urban management capacities 4.96 0.90 5.86 A.1 Strengthening urban and municipal management capacities 2.28 - 2.28 A.2 Strengthening the capacity of the central administration and deconcentrated ministries to support the municipalities 2.68 0.90 3.58 B. Provision of basic infrastructure and services 18.42 15.25 33.67 B.1 For the city of N’Djamena 0.62 8.57 9.19 B.2 For the city of Moundou 3.75 1.33 5.08 B.3 For the city of Sarh 5.16 1.60 6.76 B.4 For the city of Abeché 5.31 1.37 6.68 B.5 For the city of Doba 1.95 - 1.95 B.6 M&E, Studies, Supervision, and Audits 1.64 2.38 4.02 C. Strengthening sustainable access to urban water services 11.25 11.25 C.1 Service Contract 5.00 5.00 C.2 Operation improvement and rehabilitation 5.45 5.45 - C.3 Technical assistance for the recruitment and supervision of the private operator 0.30 0.30 C.4 Technical assistance for the financial sustainability and formation of the STE 0.50 0.50 Physical contingencies (10%) 1.80 1.80 Financial contingencies (8%) 1.82 1.82 Total 27.00 27.40 54.40 21. Institutional implementation arrangements. The institutional implementation arrangements of the Additional Financing will largely remain the same. The PADUR implementation agency (CCP - Cellule de Coordination du Projet) of the MATUH will be responsible for the day-to-day management of the Additional Financing, focusing on the following main functions: (i) coordinating the overall implementation of the project ; (ii) ensuring availability of funds in a timely manner; (iii) managing project activities at the central level; (iv) maintaining the books and accounts of project activities and producing financial reports; (v) monitoring and evaluating implementation and impacts of the program ; and (vi) reporting results to various stakeholders. Some adjustments pertaining to the functioning of the CCP will be made to reflect the revised design and focus on increased access to sustainable water services of the proposed Additional Financing:  For activities addressing cost overruns under the original project (Component s B2, 3 and 4): roles and responsibilities of the CCP will remain the same as the original project. 8  For all other water-related activities funded under Component B (Components B1 and B6) and for all activities funded under Component C: while the CCP remains responsible for the overall management of the activities including for fiduciary matters, the STE (or the operator in the case of the Component C.2) will be responsible for all technical specifications of the bidding documents and for the preparation of the Terms of Reference for the selection of consultants, as well as for validating submitted bills before transmittal to the CCP for payment processing.  A Steering Committee for the oversight of the implementation of the Additional Financing will be created. It will be made up of representatives from the Ministry of Economy and Planning, MATUH, MoW, Ministry of Environment and STE. The CCP will act as secretary of the Committee. The Steering Committee will supplement the Inter-Ministerial Committee created under the project original financing, involving a larger number of stakeholders and that will focus on sector-wide urban development issues. The creation of this Committee aims at setting up a steering body involving a significantly smaller number of stakeholders and that can therefore be mobilized more frequently. The Committee will be in charge of the overall coordination and supervision of the Additional Financing. In particular, the Committee will review the annual program of activities of the project, review progress made on a regular basis, and assess the quality of the project. The Project Implementation Manual and the Project Administrative, Financial and Accounting Procedures Manual will be revised to reflect the proposed changes. The table below summarizes the respective responsibilities of the CCP, STE and private operator for the implementation of the various components: Table 2: Institutional implementation arrangements Overall Responsibilities responsibilities for to provide the Responsibilities Procurement implementation technical Components to validate categories6 including procurement specifications and submitted bills and financial Terms of management Reference Component A.2 OC CCP N/A N/A Component B.1 W/G CCP STE STE Component B.2-4 W CCP CCP CCP Component B.6 CS CCP STE STE Component C.1 CS CCP STE STE Component C.2 W/G/CS CCP Private Operator Private Operator Component C.3 CS CCP STE STE Component C.4 CS CCP STE STE 22. Scope of the Service Contract. The 3-year performance-based service contract will leverage the expertise of an experienced operator in order to establish a viable, corporatized public water utility. The service contract will aim at improving the technical, commercial, financial performance and accountability of the STE. The focus is on capacity building and 6 W: Works, G: Goods, CS: Consulting Services, OC: Operating Costs 9 putting in place systems that can be used after the operator has left rather than on replacing certain functions of the STE. The operator will be in charge of improving: (i) commercial performance by implementing a comprehensive census of customers, replacing all non functioning or non readable meters, updating the customers database, and implementing procedures for customer services; (ii) technical performance by undertaking priority networks, connections and boreholes rehabilitation works, setting up a Geographical Information System; (iii) financial performance by organizing the finance and accounting department, preparing auditable financial statements, and preparing procedures for financial management; (iv) accountability by implementing a comprehensive meters replacement program, establishing a call center, and implementing customers’ satisfaction survey or report cards, and communication campaign; (v) human resources management, by carrying out an audit of skills, identifying and delivering a structured training program; and(vi) monitoring and evaluation of the performance of the STE by assisting the utility in data collection and publication. These objectives were discussed during the March 2011 consultative workshop on the scope of the service contract involving the STE and the Ministry of Water. These objectives have been operationalized through the preparation of Terms of Reference, definition of the geographical scope for each activity, definition of performance indicators, preliminary contract outlines during a workshop held in April 2011 in N’Djamena as part of the PPIAF-funded strategy for private sector participation. The recruitment of the private operator under a Service Contract is a dated covenant. 23. Financial sustainability. At present, the financial sustainability of the newly created STE is hampered by (i) overall poor efficiency; (ii) low water tariffs; and (iii) the lack of mechanism for the payment of the water bills by public institutions. The financial sustainability is a critical issue to guarantee the quality of the service provided by the STE. However, full financial sustainability for the sector can only be achieved in the medium term. The challenge is to change the downward spiral of bad services, low tariffs and non-payment into a virtuous cycle of service improvements and increased revenues. In this respect, the Additional Financing will support a series of activities for each of the four following pillars:  Increasing water sales. The project will help to increase billed water sales in several regards, including increased production, expansion of the distribution networks, new connections and leakage repairs. Also the Service Contract will help decreasing commercial losses through the census of connections, which will not only include currently connected households but also those households that are not formally connected but close to the network (with a high likelihood of having an illegal connection).  Improving efficiency and lowering costs. The Service Contract will help STE to increase its operational efficiency and identify and implement cost saving measures. The current ongoing process of competitively hiring staff for STE will also help to increase efficiency.  Ensuring payment of bills from the public institutions. The project will finance Technical Assistance to design and implement a mechanism to calculate government bills through annual budgetary allocation at year N based on anticipated consumption throughout year N+1 and adjusted a posteriori on the basis of the actual metered consumption at the end of year N+1. The implementation of this mechanism is a dated covenant.  Adjusting tariffs along with improved service delivery to increase equity and financial sustainability. The current incremental block tariff structure is obsolete and needs to be 10 amended to lower the maximum volume of the first subsidized block. The current high connection fees represent an obstacle for poorer households to connect. The p roject will finance a comprehensive study addressing both water consumption tariffs and connection fees. This study will be an important analytical and political tool to feed the dialogue on water tariff revision. The launch of the study is a dated covenant. Overall guiding principle for water consumption tariff is first exhibiting some improvements before showing the cost of these improvements on the water bills. 24. Enhancing consumer accountability to improve the performance and governance of the STE. The implementation of the project as well as the on-going institutional reforms offer a window of opportunity to introduce accountability tools to make STE more accountable to their customers. This will help in improving the performance and governance of the STE fostering transparency, preventing political capture, holding the utility accountable for services, and better addressing customer needs and complaints. The Additional Finance will support several accountability tools as described hereafter.  Increased transparency through the publication of performance data. A performance contract is currently being developed by the GoC to define the respective roles, responsibilities and targets of the Government and STE. The contract will include a set of performance indicators and annual targets against which the STE (and the Government) will be held responsible. The private operator will assist the STE to collect good quality performance data and to disseminate them among concerned parties, as well as to publish them in the public domain in an easy to read format.  Increase outreach and dialogue with customers. Under the Service Contract, the operator will also assist the STE to implement a communication campaign to inform their customers about the actions in place to improve the service delivery, about the performance of the STE and to promote good practices for water use. The communication campaign will also be used to develop a two-way dialogue with the existing customer association on the changes in governance and priority investment programs.  Carry out independent survey / report card on service quality and customer satisfaction. The project will finance an annual report card on service quality and customer satisfaction that will be carried out by an independent third party (e.g. an NGO). This will help monitoring the evolution of the satisfaction of the service provided by the STE at different times of the project. The satisfaction surveys will help to understand and address the needs of the customers.  Better customer service. One of the spear points of the Service Contract will be to improve customer care. This will include setting up a basic customer complaint system, improving communications through the set-up of a call center, systematic metering to strengthen transparency, expanding the number of ways customers can pay for bills.  Appoint customer association representatives in the Board of the STE. As part of the technical assistance for the legal, financial and organizational formation of the STE , the project will support activities to assess the feasibility and relevance of appointing customer association and municipality representatives in the Board of the utility and/or the establishment of a customer advisory board in order to prevent political capture and foster transparency. 11 25. Connection fee. The high connection fee is an obstacle for households to connect to the network. However, it is noted unconnected households who pay a much higher volumetric rate for water supplied by vendors and households will benefit from lower costs in the medium term by connecting to the network. Lack of affordability of individual connections could undermine the achievement of the PDO. The project takes a multi-track approach to increase the affordability of connections and thus increase the uptake of connections in the area served by the STE. The project will support an option of paying the connection costs by installments which will decrease the lumpiness of the expenditure for a household. The implementation of a payment option scheme for its customers to enable payment of the connection fee in installments is a dated covenant. The project will also finance a comprehensive study addressing both water consumption tariffs and connection fees. The study will provide an accurate assessment of affordability and actual connection costs in order to enable the STE to make informed choice to revise the connection fee structure. The launch and implementation of the study on water consumption tariff and connection costs is a dated covenant. 26. Results framework. The revised Results Framework will present progress made under the original PADUR as well as the revised targets under the proposed Additional Financing. Changes have been proposed: (i) to comply with the latest Bank template of Results Framework; (ii) to update the end-of-project target values taking into account the expected impacts of the Additional Financing; (iii) to reflect new and scaled-up activities funded by the Additional Financing such as the Service Contract with a private operator and additional investments in production, storage and distribution water infrastructure; and (iv) to ensure consistency with the Bank-wide core indicators. At closing of the Additional Financing it is notably expected more than 215,000 people will be provided with access to "Improved Water Sources" under the project in the targeted cities (as compared to a target of 63,600 under the original project) and more than 365,000 people will be protected from periodic flooding. The updated Results Framework is presented in Annex 1. 27. Closing date and implementation. The Additional Financing will be used within three years of the closing date of the original project. The expected closing date is June 30, 2015. IV. Appraisal Summary 28. Technical appraisal of the water investments. Proposed investments in N’Djamena (US$8.57 million) have been derived from the 2007 Master Plan for the water supply of N’Djamena. The Master Plan provides robust technical planning and cost estimates. The costing for the proposed investment is based on the costs provided by the Master Plan after application of a discount rate to reflect price changes since the completion of the Master Plan. The detailed design studies and bidding documents for all these investments will be prepared under a single contract that will also include the supervision of the works. In Moundou, Sarh and Abéché, the water activities proposed to be financed (US$1.10 million) are required to allow for the achievement of the objectives of the original project. 29. Technical appraisal of the drainage investments. Drainage investments proposed under the Additional Financing aim at addressing the cost overruns mainly due to the changes to the original project design made during the construction. Modifications to the original project design were required to take into account the spatial development and densification of the urban areas addressed by the drainage infrastructure that have occurred between the preparation of the 12 detailed design studies and the construction phase. The relevance of the proposed investments and the amount of the cost overruns have been appraised after a field visit in the three cities and on the basis of the unit price of the original contracts. 30. Technical appraisal of the Service Contract. As part of the PPIAF-funded study requested by the Government to identify the most suited strategy for the involvement of the private sector, several options for the participation of the private sector have been compared. The timeframe of the project as well as the overall poor performance of the STE that does not allow the private sector for taking commercial or financial risks have conducted to limit the comparison to the three following forms of private sector participation: (i) Management Contract; (ii) Service Contract; and (iii) Technical Assistance. The Service Contract has been preferred to Technical Assistance because the former includes financial incentives to perform as the remuneration of the operator partly depends from the achievements of performance targets. On the other hand, the implementation of a Management Contract has been deemed not feasible because of the anticipated lack of risk appetite of private operators to manage a water utility whose legal, financial and organizational formation is still incomplete. Also, an operator under a Management Contract would take over more of the responsibilities of STE, decreasing the likelihood of the public utility to establish itself. The STE has also clearly expressed its reservations to engage in a Management Contract following the early termination of a similar public private partnership in 2004. Since the Service Contract is the lowest risk form of public private partnerships and as the remuneration of the private operator will be independent from the revenues stream of the STE (it is directly financed by the project), it is expected that a service contract will attract more interested operators in a challenging environment such as Chad. The implementation of the Service Contract will complement the current process of formation of the STE. The objectives of the Service Contract were discussed during the first consultative workshop held in N’Djamena in March 2011. Terms of Reference, definition of the geographical scope for each activity, definition of performance indicators and preliminary contract outlines were also discussed and comments incorporated during a workshop hel d in April 2011 in N’Djamena as part of the PPIAF-funded strategy for private sector participation. 31. Economic appraisal. Economic benefits of the current project include both measurable benefits through expanded water supply, including to under-served and unserved areas, and less easily quantifiable benefits such as higher hours of service, increased reliability, and improved customer service, enabled by rehabilitation and replacement of less efficient parts of existing facilities. The investments under the Additional Financing include scaled-up mix of rehabilitation/replacement of some facilities and expansion of water supply, and would have substantial economic benefits similar to the current project. Benefits of provision of urban services are expected to improve the quality of life of the residents in the targeted areas. Economic analyses were undertaken for the physical investments financed through the Additional Financing – i.e., for the drainage investments to be undertaken in Abéché, Sarh, and Moundou, taking into account the additional costs, and for the investment in water supply to be undertaken in N’Djamena.  Economic analysis for drainage investments. For the analysis of drainage investments, the original economic analysis was used as a base, with costs updated accordingly. The investment period was increased by one year, and therefore the period in which benefits would begin to be received was accordingly delayed by one year. Estimated benefits were augmented as the number of the population increased overtime. Benefits include 13 estimates of (i) reduced flood damage; (ii) reduced loss of income and medical expenses; and (iii) business development. The economic rate of return (ERR) for each of the drainage investments is estimated respectively at 11.9 percent for Sarh, 13.3 percent for Abéché, and 16.1 percent for Moundou.  Economic analysis for water supply investments. Physical water supply investments financed under this Additional Financing are mainly focused on N’Djamena, and are expected to increase treated water production by approximately 21,000 m 3/day. Assuming household consumption of 6 m 3/month, this is expected to serve approximately 100,000 households. Total capital investments proposed for the N’Djamena area are approximately US$12.9 million (CFAF 5.9 billion equivalent), taking into account an economic benefit to consumers of approximately CFAF 630 per m 3, which is based on an average price consumers are willing to pay for tanked water, ERR is estimated to be 19.2 percent. 32. Procurement arrangements. Procurement under the original project is rated Satisfactory. The Additional Financing will capitalize on the performance of the existing entities under the original project. As per original design, all procurement activities will be carried out by the implementation unit (CCP) within the Ministry of Land Planning, Urban Development, and Housing (MATUH). However, concerning the scaled-up water-related activities within the components B1, B6 and C, while the CCP within the MATUH remains responsible for the management of procurement activities, the STE (or the private operator in case of the Component C.2) will be responsible for all technical specifications of the bidding documents and the preparation of the Terms of Reference for the selection of consultants. For all procurement matters related to Components B.1, B.6 and C: (i) the director general of STE and the secretary general of the MoW shall be members of the COJO (Commission d’Ouverture et de Jugement des Offres – COJO) that exists in the MATUH; (ii) the secretary general of the MoW shall preside the COJO for the determination of the temporary attribution of such contracts, and shall set up, together with the other members of the COJO, the technical sub-commission for the evaluation of bid proposals; and (iii) the procurement specialist and engineer within the implementation unit shall act as secretary for the COJO for the opening, review and attribution of such contracts. The overall project risk for procurement is rated High because of the country conditions. Some provisions of the Country national procurement code have limitations which are not acceptable with regard to the IDA procurement procedures. These limitations are likely to have a negative impact on the processing of approval of bid evaluation reports, contract signature and approval. With regards to those provisions, the Government is willing to amend the particular procurement regulations during the project execution in order to improve the public service delivery. An initial assessment of the capacity of the MATUH to implement the procurement actions was carried out in accordance with the Procurement Services Policy Group (OPCSPR) guidelines. A post procurement review was carried out in September 2010 by the Bank and assessed as satisfactory. The implementation of contracts already awarded is proceeding in accordance with the procurement plan. However, in order to mitigate the procurement risk and facilitate the implementation of the activities of the Additional Financing the assessment has recommended the following measures: (i) reinforcement of the procurement team with a civil engineer already recruited and familiar with the World Bank procedures; this would help raise the profile of the current procurement assistant and improve the service delivery; (ii) training and development of all technical staff involve in the procurement activities; (iii) reorganization of the project filing system in order to better keep procurement documents 14 and reports; (iv) preparation and updating of the procurement plan in close collaboration with all the technical entities involved; and (v) revision of the Project Implementation Manual. Procurement associated with the project activities supported through the additional financing will be carried out in accordance with the World Bank’s “Guidelines for Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers, dated January 2011”, “Guidelines for Procurement of Goods, Works and Non-Consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers dated January 2011”, and “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants” dated October 15, 2006 and revised in January 2011. 33. Financial management and disbursement. Financial Management (FM) under the original project is rated Satisfactory. In accordance with the new Financial Assessment Principles, the FM arrangements of the implementing agency (CCP) were reviewed to determine whether it is acceptable to the Bank. The proposed Additional Financing would make use of the existing financial management and disbursement frameworks currently in place and operational under the original Project. The CCP currently implementing the PADUR has an established organizational structure, financial and administrative procedures, and computerized financial management system. The CCP will have overall financial management responsibility of the Additional Financing for all the components of the project. The Additional Financing will utilize the existing fiduciary staff of the PADUR, comprising of a Financial Manager and an Accountant. The last financial management supervision found the overall financial management capacity satisfactory. A desk review of the financial management arrangements was originally carried out as part of the preparation of the project, followed by a field visit of the project in N’Djamena in February 2011. The conclusion of the Financial Management Assessment (FMA ) is that the overall project arrangements are adequate and satisfy the Bank’s requirements under OP/BP 10.02 to provide, with reasonable assurance, accurate and timely information on the status of the execution of the project. As a result of the FMA, the overall project risk has been assessed as Medium – Low Impact, High Likelihood. As of April 2011, there are no overdue audits or report under the responsibility of the management of the CCP. The Project will provide for the possibility for retroactive financing up to SDR 1,300,000 for payments made after May 1st, 2011. 34. Environmental and social safeguards. Environmental and Social safeguards under the original project are rated Satisfactory. Like the original project, the Additional Financing triggers OP/BP 4.01 (Environmental Assessment) and OP/BP 4.12 (Involuntary Resettlement). None of the additional activities included in the proposed Additional Financing affect s the environmental category which remains at Category B. The two environmental safeguards instruments prepared by the original project, the Environmental and Social Management Framework (ESMF) and the Resettlement Policy Framework (RPF) have been updated, and disclosed at the Bank’s Infoshop as well as in country on April 11, 2011. The implementation of all environmental and social safeguards-related tasks will remain the responsibility of the CCP that has an environmental and social specialist. In addition of the existing institutional arrangements under the PADUR, the STE will be reinforced by an environmental and social staff for a day by day follow up of mitigation measures regarding the additional funding focusing on STE with the main objective to create a long term culture of environmental and social management concerns in this newly created company. As part of the general formation and capacity building of the STE, the Bank has recommended that environmental and social staff be 15 hired within STE, as part of its general recruitment and staffing process, preferably no later than mid-2012. 35. Risks. Overall the risk is assessed as Medium – High Impact, Low Likelihood for the following reasons: (i) the overall simple and focused design of the project and the limited size of the STE; (ii) the interest of the Government and of the STE to finance a Service Contract which is the lowest risk form of public private partnership and that can be implemented in parallel with the process of formation of the STE; (iii) the inclusion of social accountability tools to improve the performance and governance of the utility that will further supplement the expected impacts of the Service Contract; (iv) the satisfactory implementation capacity already in place that will be even more strengthened by targeted technical assistance funded under the project for the implementation of the investments, for the recruitment and supervision of the operator, and for the formation of the STE; (v) the clarification received on the detailed institutional implementation arrangements involving the PADUR implementing agency (CCP), the STE and the operator; (vi) the mechanisms being considered by the Government to address the issue of financial sustainability of the STE. A detailed risk analysis is presented in the ORAF (Annex 2). 36. Legal covenants. In order to reflect key progress accomplished to complete the reform of the urban water supply sector, a series of legal covenants has been discussed and agreed during the negotiations. The legal covenants represent milestones along the path towards improvement of the performance and accountability of the STE through: (i) the completion of the legal set-up of the STE (transfer of responsibilities by Decree, delegation and performance contract); (ii) the allocation of financial means to the STE (payment of equity contribution to STE in full, design and implementation of a mechanism for the payment of the water bills from public institutions, implementation of the recommendations of the study on water tariffs); (iii) a partnership with a private operator (Service Contract); and (iv) the decrease of the lumpiness of the expenditure for households wishing to apply for a connection (implementation of a mechanism for the payments of the connection fees in installments and study on connection fees). The agreed deadline associated with each of the legal covenant is based on a realistic assessment. Supervision mission will closely monitor all legal covenants will be met without delay. 37. Policy Exceptions and Readiness. The proposed Additional Financing does not require any exceptions to Bank policies. The Additional Financing complies with the regional criteria for readiness for implementation. The project has two conditions of effectiveness. The first condition of effectiveness consists of satisfactorily updating and adopting the existing Project Implementation Manual and Project Administrative, Financial and Accounting Manual of the PADUR in order to reflect the few institutional changes induced by the Additional Financing and presented in the Project Paper. The second condition of effectiveness is the satisfactory set up of a Steering Committee by Arrêté. During the negotiations, the GoC has confirmed the establishment of the Steering Committee should be rapidly processed. Under these conditions, the team is confident the effectiveness of the Additional Financing will not be delayed. 16 Annex 1: Results Framework and Monitoring Revisions to the Results Framework Comments/ Rationale for Change PDO Current (PAD) Proposed Increase sustainable access to municipal services for residents in Continued - targeted project cities (N’Djamena, Moundou, Sarh, Abéché and Doba) PDO indicators Current (PAD) Proposed change* People in targeted cities protected Continued - from periodic flooding People in targeted cities having People in urban areas provided with access to drinking water (based on access to “Improved Water Sources” Use of core indicator users per standpipe and per under the project individual connection) People having access to the city People in urban areas provided with center via roads that are usable all access to all-season roads within a Use of core indicator year 500 meter range under the project Annual increase in municipalities’ own revenue (municipal taxes and Continued - revenue from municipal assets) Performance targets under the New indicator for a new - Service Contract being achieved by component the private operator Direct Project beneficiaries, of which - Use of core indicator females Intermediate Results indicators Current (PAD) Proposed change* Annual budget allocation and expenditure on routine road and Continued - drainage maintenance within appropriate range Indicator found difficult to properly evaluate. Sustainability of Technical review shows satisfactory the maintenance of the maintenance of infrastructure Dropped infrastructure already captured by financed under the project the previous indicator on budget allocation / expenditure for the road and drainage maintenance. Municipalities having adopted and using transparent, standardized, and Budget management and efficient budget management administrative procedures manual Initial indicator found too difficult procedures as specified in developed and adopted by to properly evaluate. administrative management municipalities in targeted cities. procedures manual. Service satisfaction surveys carried Continued - out and published in targeted cities. Urban development and investment Continued - plans developed and adopted by key 17 Revisions to the Results Framework Comments/ Rationale for Change local stakeholders in targeted cities. Man-days of work cumulated Continued - Kilometers of newly constructed/rehabilitated drainage Continued - works Kilometers of newly constructed Continued - /rehabilitated water supply network New piped household water - connections that are resulting from New core indicator the project intervention Improved community water points Newly constructed water standpipes constructed or rehabilitated under Use of core indicator the project Kilometers of roads rehabilitated in Roads rehabilitated Use of core indicator Doba Slaughterhouses rehabilitated in Continued - Abéché New indicator to capture progress Investment Plan for the 11 STE water - made to plan investment needs in supply systems approved by the STE all cities where the STE operates. New indicators to reflect the - Meters replaced under the project related activities financed under component C2. New indicators to reflect the Households visited under customer - related activities financed under census component C2. Mechanism for the payment of the New indicators to reflect the - water bills from public institutions in related activities financed under established component C4. Study on water tariff and connection New indicators to reflect the - fee completed and results of the study related activities financed under implemented component C4. New indicators to reflect the Report card published and discussed - related activities financed under in the Board of STE component C2. Audited annual performance data published and disseminated within New indicators to reflect the - four months after the end of the related activities financed under calendar year in the local press and component C2. to the customers and line Ministries 18 REVISED PROJECT RESULTS FRAMEWORK Project Development Objective (PDO): Increase sustainable access to municipal services for residents in targeted project cities (N’Djamena, Moundou, Sarh, Abéché, Doba) Baseline Cumulative Target Values Progress Original Responsibility Core To Date Data Source/ PDO Level Results Indicators UOM Project Frequency for Data Comments (March 2012 2013 2014 2015 Methodology Start Collection 2011) (2007) 1. People in targeted cities Survey of Implementation Number 203,878 253,878 330,878 342,460 354,445 366,850 Annual protected from periodic flooding served areas Unit 2. People in urban areas provided Survey of Implementation with access to “Improved Water Number 0 44,520 87,450 130,380 173,310 216,240 Annual served areas Unit Sources” under the project 3. People in urban areas provided with access to all-season roads Survey of Implementation Number 0 0 10,056 10,056 10,056 10,056 Annual within a 500 meter range under the served areas Unit project 4. Annual increase in municipalities’ own revenue (*) The study assessing (municipal taxes and revenue from the improvement of the municipal assets) Implementation financial management FCFA Municipal -N’Djamena 983 1,081 1,103 1,125 1,147 Annual Unit and of the 5 municipalities million budgets -Moundou 42 46 47 48 49 municipalities is on-going and will be -Sarh 35 (*) 38 39 40 41 delivered in September -Abéché 57 63 64 65 66 2011. -Doba 23 25 26 27 28 Performance targets will be later defined in 5. Performance targets being the contract of the Independent operator. The bonus of achieved by the private operator % - - - 85% 85% 85% Annual technical STE the operator will be under the Service Contract auditor report linked to the achievement of the performance targets. 19 Beneficiaries Direct project beneficiaries, Number - 298,398 428,384 482,896 537,811 593,146 Annual Survey of Implementation Sum of indicators #1, served areas Unit #2 and #3. Survey of Implementation Of which females (beneficiaries) % - 51 51 51 51 51 Annual served areas Unit Intermediate Results and Indicators Baseline Target Values Progress Unit of Original Responsibility To Date 2012 2013 2014 2015 Data Source/ Intermediate Results Indicators Measur Project Frequency for Data Comments Core (March Methodology ement Start Collection 2011) (2007) Intermediate Result 1: Strengthening municipal and urban management capacities 1. Annual budget allocation and expenditure on routine road and (*) The study assessing drainage maintenance within the improvement of the appropriate range % of Implementation financial management of total Municipal -N’Djamena 3% 3-5% 3-5% 3-5% 3-5% Annual Units and the 5 municipalities is annual budgets -Sarh <2% 3-5% 3-5% 3-5% 3-5% Municipalities on-going and will be budget -Moundou <2% (*) 3-5% 3-5% 3-5% 3-5% delivered in September -Abéché <2% 3-5% 3-5% 3-5% 3-5% 2011. -Doba <2% 3-5% 3-5% 3-5% 3-5% 2. Budget management and Report on 5 At mid- technical Implementation The final version of the administrative procedures manual (draft term and Number 0 5 5 5 5 assistance in Unit and manuals will be developed and adopted by report project municipal municipalities delivered by end 2011. municipalities in targeted cities. only) completion finance 3. Service satisfaction surveys At mid- Verification term and Implementation carried out and published in Number 0 3 6 8 10 10 project of publication Unit targeted cities. of surveys completion 4. Urban development and (*) all draft final reports investment plans developed and Workshop Implementation Number 0 16(*) 16 16 16 16 Annual have been delivered are adopted by key local stakeholders report Unit under review. in targeted cities. 20 Intermediate Result 2: Providing basic urban infrastructure and services Contractors’ work Implementation 1. Man-days of work cumulated Number 0 560,000 610,000 650,000 892,500 1,135,000 Annual execution Unit reports 2. Kilometers of newly On-site Implementation constructed/rehabilitated drainage Km 0 10.9 15.0 15.0 15.0 15.0 Annual survey Unit works 3. Kilometers of newly constructed On-site Implementation /rehabilitated water supply Km 0 27 40 50 65 80 Annual survey Unit network 4. New piped household water On-site Implementation connections that are resulting from Number 0 1,200 3,900 7,200 10,400 13,600 Annual survey Unit the project intervention 5. Improved community water points constructed or rehabilitated 0 103 127 127 127 127 under the project On-site Implementation Number Annual -Moundou 0 64 64 64 64 64 survey Unit -Sarh 0 39 39 39 39 39 -Abéché 0 0 24 24 24 24 On-site Implementation 6. Roads rehabilitated Km 0 0 6.5 6.5 6.5 6.5 Annual survey Unit In Doba 7. Slaughterhouses rehabilitated in On-site Implementation Number 0 1 1 1 1 1 Annual Abéché survey Unit 8. Investment Plan for the 11 STE water supply systems approved by Yes/No No No No No Yes Yes Annual - STE the STE 21 Intermediate Result 3: Strengthening sustainable access to urban water services 1. Meters replaced under the On-site Number - - 0 8,000 16,000 24,000 Annual Private Operator project survey Household census aiming at visiting all households in streets where pipes are laid to 2. Households visited under Operators’ Number 0 0 0 10,000 50,000 70,000 Annual Private Operator identify illegal customer census record collection, identify meters replacement needs and clean up customers database. 3. Mechanism for the payment of STE financial the water bills from public Yes/No No No Yes Yes Yes Yes Annual accounts STE institutions established 4.Study on water tariff and connection fee completed and Yes/No No No No Yes Yes Yes Annual - STE results of the study implemented Report from 5. Report card published and NGO that number 0 0 1 2 3 4 Annual PPC discussed in the Board of STE implements report card 6. Audited annual performance data published and disseminated within four months after the end of number 0 0 1 2 3 4 Annual Presence of STE the calendar year in the local press reports, press to the customers and line Ministries. 22 ANNEX 2 OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) Project Development Objective(s) Increase sustainable access to municipal services for residents in targeted project cities (N’Djamena, Moundou, Sarh, Abéché, Doba) PDO Level Results 1. People in targeted cities protected from periodic flooding Indicators: 2. People in urban areas provided with access to “Improved Water Sources” under the project 3. People in urban areas provided with access to all-season roads within a 500 meter range under the project 4. Annual increase in municipalities’ own revenue (municipal taxes and revenue from municipal assets) 5. Performance targets being achieved by the private operator under the Service Contract 6. Direct project beneficiaries, of which females Risk Risk Category Risk Description Proposed Mitigation Measures Rating Project Stakeholder Risks M-I Borrower. The Government and the Bank Borrower. Transparent dialogue between the Bank and the have aligned interests, objectives and Government will continue. motivation for PADUR in general, as well as the processing of the requested Additional Financing. The Additional Financing is consistent with the Bank’s Interim Strategy Note. 23 Donors. All donors engaged in the urban Donors. Transparent dialogue between the Bank and other water sector in Chad have been approached donors will continue throughout the implementation of the to ensure coordination. Project design and project. objectives of the projects have been discussed and opportunities for synergies have been identified. STE management and staff. The Service STE management and staff. Under the service contract, the Contract supported by the project may private operator will not be in charge of the management raise some concerns among STE staff on the of the STE that will remain public. impacts of the participation of a private operator on the management of the utility. The PPIAF-funded study has organized workshops Internal opposition could slow down or involving STE representatives. prevent the implementation of the Service Contract. The objective of the Service Contract is to improve the operational, commercial and financial performance of the STE. Performance improvement of the STE will in turn benefit to the staff and management. Under the Service contract, the operator will be responsible for the delivery of a training program that will enhance the skills of the staff. Direct beneficiaries. Existing STE Direct beneficiaries. The strategy regarding tariff increase customers or citizens wishing to be is to first exhibit service improvements before the costs of connected will benefit from the improved these improvements appear on the water bills. sustainability and reliability of the service provided as a result of the project. Besides Improved reliability and sustainability of the water service the project will enhance social provided by the STE will translate in a decrease of coping accountability to improve the performance costs for alternative supply sources not mentioning and governance of the STE. Some concerns economic benefits associated with healthier continuous may however be expressed regarding tariff supply. Paying for an improved service will also make the increase induced by the participation of a STE accountable for the service provided as the customers private operator. can voice their needs and complaints. The move to systematic metering will also improve 24 fairness and transparency since the customers will be charged for their actual consumption. Implementing Agency M-L The Implementing Agency of the project The Bank team will closely supervise the implementation Risks has demonstrated overall satisfactory of all aspects of the project M&E has recently improved capacity of implementation and has but will be strengthened further to achieve the best satisfactory records in handling fiduciary standards for M&E. The recruitment of the accountant is responsibilities. It will remain in charge of now effective. implementing all the activities of the project. This will require a strengthened The Project Implementation Manual and the Project coordination with the STE and operator. Administrative, Financial and Accounting Manuals will be revised to reflect the proposed changes and clarified the coordination between the CCP, the STE and the operator. Overall Implementing Agency capacity. Chad Overall Implementing Agency capacity. The Additional faces overall limited capacity to implement Financing will continue funding the operating costs of the donors-financed projects. However the CCP. The Bank team will closely track any weakness in the Implementing Agency of the project has staffing or processes of the CCP during supervision demonstrated satisfactory capacity of missions. implementation and will remain in charge of implementing all the activities of the Additional Financing. Capacity to recruit and supervise a private Capacity to recruit and supervise a private operator. Under operator. The STE and the Implementing component C.3, the project will finance technical assistance Agency have limited experience to prepare to the STE for the recruitment and the supervision of the the bidding documents for a Service private Operator. An independent audit of the performance contract, to manage the recruitment of the Operator will also be funded. process of the private operator and low capacity to monitor its performance and maintain good working relationships. Capacity to supervise works. Capacity to supervise works. Under the revised institutional Works supervision by engineering consultancies will be implementation arrangements, the STE is financed by the project. On top of that it is expected one of 25 responsible to oversee the works for water- the missions of the private Operator under the Service related investments under component B. Contract will consist of assisting the STE and the CCP to The STE has limited capacity to perform implement the investment program funded by the project. this responsibility. Decision-making and accountability. The Decision-making and accountability. The detailed STE and the private Operator will be implementation arrangements have been discussed and involved in the preparation of the bidding agreed between concerned stakeholders. The Project documents and in the validation of the Implementation Manual and the Project Administrative, submitted bills for water-related activities Financial and Accounting Manuals will be revised to reflect implemented during the project. While this the proposed changes (Effectiveness condition). mechanism aims at enhancing technical quality and improving coordination, this may raise potential decision-making and accountability issues. Fiduciary responsibility. The Implementing Fiduciary responsibility. Fiduciary aspects of the project Agency has satisfactory records in handling will be solely managed by the CCP that will be held fiduciary responsibilities. There was no accountable for all procurement and financial management incident of fraud or corruption reported activities. under the implementation of the project. The contract value thresholds have been reduced compared to Region’s average to mitigate procurement- related risks. The Bank team will continue to closely monitor the compliance with the fiduciary guidelines during supervision. Project Risks M-I  Design Financing a Service Contract with a Private Financing a Service Contract with a Private Operator. The Operator. Mobilizing a professional private PPIAF-funded study has identified the Service Contract as Operator underpins the achievement of the the most appropriate form of private sector participation project objective to strengthen sustainable in the Chad urban water sector. Service Contract is the access to urban water services. Recent lowest risk form of PPP. It is therefore expected to attract 26 experience in other comparable countries a larger number of capable bidders. has shown the partnership with the private Operator needs to be carefully designed to The relatively small size of the STE (around 250 attract capable bidders and to benefit from employees, 33,000 connections) is also likely to attract the support of the key stakeholders. more bidders that are expected to consider the operations manageable. The partnership with the private Operator is designed to raise significant interests among the professional Operators community. However in the unlikely case interest from the private Operators is not sufficient, technical assistance provided by engineering consultancies will be alternatively considered. The Government and the STE have expressed their interest for a Service Contract that has been discussed throughout the preparation of the project. Unlike other forms of PPP, the Service Contract can be implemented even if the STE is not yet fully operational since the Operator is not responsible to manage the utility but shall deliver specific outputs. The early termination of the PPP in 2004 was predominantly linked to the power side of the activity. The creation of the STE focusing on the delivery of water services will prevent such a scenario occurs again. Coordination with Government-financed Coordination with Government-financed water works in water works in N’Djamena. The project will N’Djamena. The STE will liaise with the Ministries of address the financing gaps for the Energy and Infrastructure to get the last updates on the completion of the first phase of commitment and level of advancement of the works. The investments identified by the Master Plan list of investments proposed to be financed by the project for the water supply of N’Djamena. The will be adjusted accordingly. rest of the investments will be funded by the Government, raising coordination and commitment issues. 27 Cost of an individual connection. The cost Cost of an individual connection. Several options to address for a new connection remains an obstacle the issue of high connection costs have been discussed for a large number of households. Those with the STE. It was agreed the STE will offer the option of who are not benefiting from individual paying the connection costs by installments to its connections are supplied by vendors customers to decrease the lumpiness of the expenditure fetching water from standpipes at a for a household. Setting up this option of payment by volumetric rate up to 20 times higher than installment is a dated covenant of the project. the tariff charged by the STE. The project will finance investments in The ESMF and RPF prepared under the original project drainage and water supply infrastructure. have been updated and disclosed in Infoshop, on April 11, Customary impacts associated with these 2011. The frameworks will be used to assess/mitigate the investments need to be assessed and impacts of the works financed by the projects. mitigated. Instruments used under the  Social and original project to assess environmental The CCP has followed the recommendations made by the Environmental and social risks and mitigate them will be Bank team to further enhance the implementation of the updated to reflect the revised scope of the environmental and social safeguard policies. Additional Financing. The Bank team will keep monitoring the quality of the management of environmental / social impacts during supervision and training will be organized as needed. The preparation of the Additional The Consultant in charge of preparing the PPIAF-funded  Program and Donor Financing relies on various studies whose studied is being supervised by the Bank team that will timely implementation is required to avoid ensure proper coordination and phasing with the delays. preparation processing of the Additional Financing.  Delivery Quality Sustainability of the service provided by the Sustainability of the service provided by the STE. The STE. Several issues currently prevent the Service Contract aims at improving the technical, newly created STE to provide a sustainable commercial and financial performance and efficiency of the service, namely: (i) overall poor efficiency, STE. (ii) low water tariff, (iii) lack of 28 mechanisms for the payment of the water Re. tariff, the STE and the MoW are fully aware of the issue bills from public institutions. and are committed to revise the tariff level and structure to better reflect the actual operational costs. The Strategy discussed with the Government consists of exhibiting the improvements in service delivery and efficiency achieved under the project before the costs of those improvements appear on the water bills, rather than raising the tariff level upfront. Re. the payment of the bills by the public institutions, the STE and the Government are considering implementing a new mechanism through annual budgetary allocation based on anticipated consumption and adjusted a posteriori on the basis of the actual metered consumption. Quality of the participation of the private Quality of the participation of the private Operator. The Operator. Achieving the objective of the choice of the Government to finance a Service Contract, project will require an improvement of the which is the lowest risk PPP approach, is expected to operational performance of the STE. The attract more bidders from the private Operators Service Contract is the main tool for that. community. The public-private partnership will therefore need to be designed to attract The remuneration of the private Operator under the professional Operators and to create Service Contract will be performance-based in order to incentives to succeed. create incentives to perform. Performance of the private Operator will be monitored by an independent auditor. Quality of the design and works. The Quality of the design and works. The project has been capacity of the local private sector for designed to allow packaging of studies and construction engineering and construction works is works in large lots in order to spur competition among limited. This may affect the quality of the large national companies and international firms. The design and the quality of the construction project will also finance works supervision contracts with being funded by the project. international consultancies. 29 Overall Risk Rating at Preparation Overall Risk Rating During Implementation Comments M-I M-I Overall the risk is assessed as Medium – High Impact, Low Likelihood Impact for the following reasons: (i) the overall simple and focused design of the project and the limited size of the STE; (ii) the interest of the Government and of the STE to finance a Service Contract which is the lowest risk form of public private partnership and that can be implemented in parallel with the process of formation of the STE; (iii) the inclusion of social accountability tools to improve the performance and governance; (iv) the satisfactory implementation capacity already in place that will be even more strengthened by targeted technical assistance; (v) the clarification received on the detailed institutional implementation arrangements; (vi) the mechanisms being considered by the Government to address the issue of financial sustainability of the STE. 30 Annex 3: Detailed project description The design and scope of the proposed Additional Financing will reflect the objectives of the project, namely (i) the completion of drainage and water infrastructure in Moundou, Sarh and Abéché and (ii) the scaling up of the impacts of the project with a focus on increasing sustainable access to water services in targeted project cities by funding additional investments in water supply infrastructure, a Service Contract with a private operator, and by enhancing social accountability to improve the performance and governance of the recently established national water utility. The project will support expanded activities under Components A and B of the original project as well as new activities under an added Component C as follows: Component A – Strengthening municipal and urban management capacities (US$0.90 million) Component A.2 – Strengthening the capacity of the central administration and deconcentrated ministries to support the municipalities (US$0.90 million). Under this component, the project will finance the operating costs of the PADUR implementing agency (CCP) for three additional years. Component B – Provision of basic infrastructure and services (US$15.25 million) Component B.1 – For the city of N’Djamena (US$8.57 million). Under this component, the project will finance the completion of the first phase of the investment program identified in the Master Plan for the water supply of N’Djamena prepared in 2007. The first phase of the investment program aims at expanding the water supply to the districts of Diguel and Ndjari located in the Eastern part of the city through network expansion, construction of storage facilities and new boreholes. The first phase of the investment program was partly implemented under Bank and Government financing. The Additional Financing will fund the completion of the first phase of the investment program including: (i) the construction of an elevated storage tank of 2,000m 3, a 2,500m 3 storage tank and associated pumping station at Palais des 15; (ii) the construction and equipments of two new boreholes supplying the 2500m 3 storage tank at Palais des 15, one tapping the Quarternaire aquifer (125m 3/h), the other one tapping the Pliocène aquifer (250m 3/h); (iii) the equipment and connection to the network of two existing boreholes GD 28 Taiwan and GD 29 Patte d’Oie; (iv) the expansion of the primary network already laid in the targeted districts to connect it to the main water network (3km); (v) the extension of secondary and tertiary networks in the targeted districts (50km); and (vi) the procurement of connection fittings for 1,500 new connections. Components B.2-4 – For the city of Moundou (US$1.33 million), Sarh (US$1.60 million), Abéché (US$1.37 million). Under this component, the project will finance the completion of drainage (US$3.20 million for the three cities) and water supply infrastructure (US$1.10 million for the three cities) funded under the original project but facing cost overruns. Cost overruns for drainage infrastructure are mainly due to the changes made during the construction compared to the original design. Modifications were required to take into account the spatial development and densification of the urban areas addressed by the drainage infrastructure that occurred during the 5 years between the preparation of the detailed design studies (2005) and the beginning of the works (2010). The project will finance the following additional quantities: (i) 206m of storm water drains; (ii) 146 bridges for pedestrians; (iii) 137 bridges for cars; (iv) 1,500m of bank 31 strengthening; and (v) 1 spillway. Besides, the project will finance some activities in the cities of Moundou, Sarh and Abéché not included in the design of the PADUR but that are needed to achieve the objectives of the investments carried out under the original project. Component B.6 – M&E, Studies, Supervision of Works and Audits (US$2.38 million). Under this component, the project will finance for the works funded under Component B: (i) the preparation of engineering studies and bidding documents; (ii) the preparation of environmental / social studies; (iii) supervision of the works; the project will also finance (iv) the preparation of a medium-term Investment Plan covering the 11 provincial cities where the STE operates7; the Investment Plan will aim at identifying a phased investment program for the rehabilitation and expansion of the water supply infrastructure in the systems operated by the STE and that could be financed by the Government or donors beyond the implementation of the PADUR Additional Financing; it is expected the identified investments will be studied up to the feasibility stage; (v) the update of the Master Plan for N’Djamena water supply; and (vi) financial audit of the project. Component C – Strengthening sustainable access to urban water services (US$11.25 million) Component C.1 – Service Contract (US$5.00 million). Under this component, the project will finance a 3-year performance-based Service Contract with a private operator to improve the technical, commercial, financial performance and accountability of the STE and build capacity of the newly set up public utility. The performance of the operator will be monitored by an independent technical auditor (financed under component C3) and will be used to determine the remuneration of the operator. The recruitment of the technical auditor is a dated covenant. The 3-year performance-based service contract will leverage the expertise of an experienced operator for a few years in order to establish a viable, corporatized public water utility. The focus is on capacity building and putting in place systems that can be used after the operator has left rather than on replacing certain functions of STE. The operator will be in charge of improving: (i) commercial performance by implementing a comprehensive census of customers, replacing all non functioning or non readable meters, updating the customers database, and implementing procedures for customer services; (ii) technical performance by undertaking priority networks, connections and boreholes rehabilitation works, setting up a Geographical Information System; (iii) financial performance by organizing the finance and accounting department, preparing auditable financial statements, and preparing procedures for financial management; (iv) accountability by implementing a comprehensive meters replacement program, establishing a call center, and implementing customers’ satisfaction survey and communication campaign; (v) human resources management, by carrying out an audit of skills, identifying and delivering a structured training program; and (vi) monitoring and evaluation of the performance of the STE by assisting the utility in data collection and publication. These objectives were discussed during the March 2011 consultative workshop on the scope of the Service Contract involving the STE and the Ministry of Water. These objectives have been operationalized through the preparation of Terms of Reference, definition of the geographical scope for each activity, definition of performance indicators, preliminary contract outlines during a workshop held in April 2011 in 7 The STE currently operates the water supply systems in 10 provincial cities and towns. It is however expected the STE will become responsible for urban water services in an 11 th provincial town, Faya. 32 N’Djamena as part of the PPIAF-funded strategy for private sector participation. A tentative timetable for the recruitment of the private operator is provided hereafter: Table 3: Timetable for the recruitment of the private operator  Finalization of the Terms of Reference of the operator April/ May 2011  Expression of Interests September 2011  Short-listing and Request for Proposals October 2011  Field visit and pre-bid meeting November 2011  Proposal evaluation January 2012  Negotiation and contract award Mars 2012  Service Contract kick-off May 2012 Component C.2 – Operation improvement and rehabilitation (US$5.45 million). Under this component, the project will finance the procurement of works, goods and consulting services to provide the private operator with the means to achieve the performance targets, including (i) the procurement of 25,000 meters; (ii) the replacement of the meters; (iii) the rehabilitation of 20 km of networks and 3,500 connections; (iv) the rehabilitation of boreholes; the provision of technical assistance for (v) customers census addressing 70,000 households and update of the customer database; (vi) the set-up of a Geographical Information System; and (vii) improved customer service and consumer accountability tools, including the equipment for a call center and customer complaint system, a communication campaign and a series of report card that surveys quality of service and consumer satisfaction of water services provided by STE. Component C.3 – Technical assistance for the recruitment and supervision of the private operator (US$0.30 million). Under this component, the project will finance the provision of technical assistance for (i) the preparation of bidding documents and data room for the Service Contract; (ii) the management of the recruitment process of the private operator, including for drafting the Expression of Interest, short listing operators, reviewing the bidding documents, evaluating the technical and financial offers and negotiating contracts; and (iii) the independent technical audit of the performance of the private operator to assess actual performance of the operator against the indicators defined in its Contract; the technical auditor shall be selected not later than the award of the Service Contract; the audit will be used to calculate the performance- based component of the operator’s remuneration; the mission of the auditor might be broadened to also address the evaluation of the performance of the STE against the targets defined in the performance contract between the Government and the utility. Component C.4 – Technical assistance for the financial sustainability and formation of the STE (US$0.50 million). Under this component, the project will finance a comprehensive study to review the current consumption tariff structure and levels as well as connection fees. The level and structure of water tariff are unchanged since 1984 and are among the lowest in the Region. The revision of the tariff will take into account the operational and capital expenditures of the 33 STE, the ability and willingness to pay of the customers and performance targets. The connection fees – in contrast – are very high, which provides an obstacle for households to connect. The study will be complementary to planned studies financed by the French Development Agency. The component will also finance technical assistance for the design and implementation of a mechanism of payment of public institutions bills. Public institution water consumption represents approximately 30% of the total billed amount. The study will look at annual budgetary allocation at year N based on anticipated consumption throughout year N+1 and adjusted a posteriori on the basis of the actual metered consumption at the end of year N+1. The study will also look at how bills can be paid (e.g. centralized by the Ministry of Finance or by each public institution itself) for different kind of public institutions, such as ministries, semi- autonomous agencies, and sub-sovereign governments. The study will pay special attention to the payment between utilities (e.g. from electricity to water utility and vice versa). Finally, the component will finance technical assistance to complete the legal, financial and organizational formation of the STE. This technical assistance will be complementary to the consultancy services that the government has engaged from their own resources. 34 Annex 4: Detailed Project Cost Table Components US$ million Component A – Strengthening municipal and urban management capacities 0.90 Component A.2 – Strengthening the capacity of the central administration and 0.90 deconcentrated ministries to support the municipalities Component B – Provision of basic infrastructure and services 15.25 Component B.1 – For the city of N’ Djamena 8.57 Elevated storage tank 2000m3 Palais des 15 3.40 Storage tank 2500m3 Palais des 15 1.60 Pumping station Palais des 15 0.79 Equipment boreholes GD 28 Taiwan and GD 29 Patte d'Oie 0.16 Construction and equipment borehole Palais des 15 aquifer Pliocène 0.70 Construction and equipment borehole Palais des 15 aquifer Quaternaire 0.12 Extension primary network and connection boreholes 0.37 Extension secondary and tertiary networks 1.28 Connection fittings 0.15 Component B.2 – For the city of Moundou 1.33 Drainage infrastructure cost overruns 0.98 Water infrastructure cost overruns 0.35 Components B.3 – For the city of Sarh 1.60 Drainage infrastructure cost overruns 0.98 Water infrastructure cost overruns 0.62 Components B.4 – For the city of Abéché 1.37 Drainage infrastructure cost overruns 1.24 Water infrastructure cost overruns 0.13 Component B.6 – M&E, Studies, Supervision of Works and Audits 2.38 Medium term investment plan 11 cities 0.80 Engineering, environmental, social studies, bidding documents, works supervision 1.38 N'Djamena water supply Master Plan 0.12 Financial audit 0.08 Component C – Strengthening sustainable access to urban water services 11.25 Component C.1 – Service Contract 5.00 Service Contract 5.00 Component C.2 – Operating and rehabilitation fund 5.45 Customers census and customer database update 0.30 Meters procurement 0.75 Meters replacement 1.00 Rehabilitation networks and connections 2.50 Rehabilitation boreholes and electrical equipment 0.58 Geographical Information System 0.15 Call center 0.02 Communication campaign 0.10 Customers satisfaction survey 0.05 Component C.3 – Technical assistance for the recruitment and supervision of the 0.30 private Operator Preparation of bidding documents and data room 0.05 Management of the recruitment process of the Operator 0.05 Technical audit 0.20 Component C.4 – Technical assistance for the financial sustainability and formation 0.50 of the STE TOTAL PROJET 27.40 35 Annex 5: Procurement arrangements 1. Procurement Implementation Arrangements. Procurement under the original project is rated Satisfactory. The Additional Financing will capitalize on the performance of the existing entities under the initial project. As per original design, all procurement activities will be carried out by the implementation unit (CCP) within the Ministry of Land Planning, Urban Development, and Housing (MATUH). However, concerning the scaled-up water-related activities within the components B1, B6 and C, while the CCP within the MATUH remains responsible for the management of procurement activities, the STE (or the private operator in case of the Component C.2) will be responsible for all technical specifications of the bidding documents and the preparation of the Terms of Reference for the selection of consultants. For all procurement matters related to Components B.1, B.6 and C : (i) the director general of STE and the secretary general of the MoW shall be members of the COJO (Commission d’Ouverture et de Jugement des Offres – COJO) that exists in the MATUH; (ii) the secretary general of the MoW shall preside the COJO for the determination of the temporary attribution of such contracts, and shall set up, together with the other members of the COJO, the technical sub-commission for the evaluation of bid proposals; and (iii) the procurement specialist and engineer within the implementation unit shall act as secretary for the COJO for the opening, review and attribution of such contracts. The overall project risk for procurement is rated High because of the country conditions. Some provisions of the Country national procurement code have limitations which are not acceptable with regard to the IDA procurement procedures. These limitations are likely to have a negative impact on the processing of approval of Bid evaluation reports, contract signature and approval. With regards to those provisions, the Government is willing to amend the particular procurement regulations during the project execution in order to improve the public service delivery. An initial assessment of the capacity of the MATUH to implement the procurement actions was carried out in accordance with the Procurement Services Policy Group (OPCSPR) guidelines. A post procurement review was carried out in September 2010 by the Bank and assessed as satisfactory. The implementation of contracts already awarded is proceeding in accordance with the procurement plan. However, in order to mitigate the procurement risk and facilitate the implementation of the activities of the Additional Financing the assessment has recommended the following measures: (i) reinforcement of the procurement team with a civil engineer already recruited and familiar with the World Bank procedures; this would help raise the profile of the current procurement assistant and improve the service delivery; (ii) training and development of all technical staff involve in the procurement activities; (iii) reorganization of the project filing system in order to better keep procurement documents and reports; (iv) preparation and updating of the procurement plan in close collaboration with all the technical entities involved; and (v) revision of the Project Implementation Manual. 36 Schedule of Risk Mitigation Action Plan to be carried out Action Plan for Strengthening Procurement Capacity Ref. Tasks Responsibility Due date Reinforcement of the procurement team with a 1 civil engineer already recruited and familiar CCP Done with the World Bank procedures Training and development of all technical Before 2 STE/CCP staff involve in the procurement activities effectiveness Reorganization of the project filing system in Before 3 order to better keep procurement documents CCP effectiveness and reports Before Preparation and updating of the procurement effectiveness and 4 plan in close collaboration with all the STE/CCP during project technical entities involved implementation Revision of the Project Implementation Before 5 STE/CCP Manual effectiveness 2. Use of Bank Guidelines. Procurement associated with the project activities supported through the additional financing will be carried out in accordance with the World Bank’s “Guidelines for Selection and Employment of Consultants under IBRD Loans and IDA C redits and Grants by World Bank Borrowers, dated January 2011”, and “Guidelines for Procurement of Goods, Works and Non-Consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers dated January 2011”. Bank’s standard bidding documents and evaluation report forms will be used. The Project Implementation Manual (PIM) will describe in details the procurement arrangement and the specific Methods. All other procurement related arrangements of the original project will apply to the Additional Financing. 3. Procurement plan. The Recipient has developed a procurement plan for the first 18 months of the project implementation with the basis for the procurement methods for each component. The procurement plan has been reviewed during negotiations, and, upon approval of the Credit, the plan will be published on the Bank’s public website and the Recipient’s intranet website. Once approved, the procurement plan shall be updated in agreement with the Project team on an annual basis or as required, to reflect the actual project implementation needs and improvements in institutional capacity. 4. Fraud and corruption. All procuring entities, as well as bidders, suppliers, and contractors shall observe the highest standard of ethics during the procurement process and execution of contracts financed under the project in accordance with paragraph 1.16 of the Procurement Guidelines and paragraph 1.23 of the Consultant Guidelines. Procurement under the Additional Financing will also be carried out in accordance with the “Guidelines on 37 Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants” dated October 15, 2006 and revised in January 2011. 5. Publication of the Award of Contract. Contract Awards done through ICB procurement method shall be consistent with Paragraph 2.60 of the Guidelines: Procurement under IBRD Loans and IDA Credits and Grants by World Bank Borrowers, dated January 2011. Within two weeks of receiving the World Bank “no objection” to the recommendation of contract award, the Borrower shall publish in UNDB online and in dgMarket the results identifying the bid and lot numbers and the following information:  Name of each bidder who submitted a bid  Bid prices as read out at bid opening  Name and evaluated prices of each bid that was evaluated  Name of bidders whose bids were rejected and the reasons for their rejection  Name of the winning bidder, and the price it offered, as well as the duration and summary scope of the contract awarded. 38 PROCUREMENT PLAN CHAD URBAN DEVELOPMENT PROJECT – ADDITIONAL FINANCING 1. Goods, works, and non-consulting services (a) List of contract packages, methods and time schedule 1 2 3 4 5 6 7 8 9 Ref Contract Estimated Procure P-Q Domestic Review Expected Comments No. (Description) Cost -ment Preference by Bank Bid-Opening (US$) Method (yes/no) (Prior / Date Post) Additional Financing for Amendment storm drainage 1 3,200,000 N/A N/A N/A Prior review N/A to the ICB works – contract Moundou, Sarh, Abéché Water storage tanks and 2 5,790,000 ICB N/A N/A Prior review May 2012 pumping station in N’Djamena New boreholes 3 820,000 NCB N/A N/A Prior review May 2012 in N’Djamena Equipment for 4 existing 160,000 NCB N/A N/A Post review May 2012 boreholes Water network 5 extensions in 1,645,000 ICB N/A N/A Prior review May 2012 N’Djamena Supply of water September 6 750,000 ICB N/A N/A Prior review meters 2012 Installation of September 7 1,000,000 NCB N/A N/A Prior review water meters 2012 Supply of December 8 connection 150,000 Shopping N/A N/A Post review 2011 fittings Water network November 9 2,500,000 NCB N/A N/A Prior review rehabilitation 2012 Boreholes December 10 580,000 NCB N/A N/A Post review rehabilitation 2012 Supply of December 11 equipment for a 20,000 Shopping N/A N/A Post review 2012 call center (b) Goods, works, and non-consulting services ICB contracts estimated to cost US$5,000,000 and above for civil works, and US$500,000 and above for goods per contract and all direct contracting, will be subject to prior review by the Bank. 39 2. Consulting services (a) List of consulting assignments with short-list of international firms 1 2 3 4 5 6 7 Description of Assignment Review N° Expected Estimated Selection by Bank réf. Proposals Comments Cost (US$) Method (Prior / Submission Date Post) 1 Project financial auditing 80,000 LCS Prior review February 2012 2 Service Contract 5,000,000 QCBS Prior review January 2012 Preparation of bidding 3 50,000 QCBS Post review June 2011 documents and data room Assistance for the recruitment of 4 50,000 IC Post review September 2011 the private operator Technical audit of the private 5 200,000 IC Prior review April 2012 operator and of the STE Update of the Master Plan for N’Djamena water supply and 6 300,000 SSS Prior review June 2011 study on water tariff and connection fees Water investment programs for 7 800,000 QCBS Prior review March 2012 11 cities Design and supervision of water 8 1,300,000 QCBS Prior review September 2011 works in N’Djamena Social and environmental studies 9 200,000 QCBS Prior review December 2011 of water works in N’Djamena Consulting services for the set- 10 up of a Geographic Information 150,000 QCBS Post review September 2012 System 11 Communication campaign 120,000 QCBS Prior review September 2012 12 Customers satisfaction survey 50,000 QCBS Post review September 2012 Technical Assistance for the design and implementation of a 13 mechanism for the payment of 150,000 QCBS Prior review September 2012 the water bills from public institutions (b) Consulting services Consulting services estimated to cost above US$200,000 equivalent per contract for firms, and US$100,000 and above for individuals, and all single source selection of consultants will be subject to prior review by the Bank. Short lists composed entirely of national consultants: Short lists of consultants for services estimated to cost less than US$100,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 40 Annex 6: Financial management and disbursement arrangements 1. Risk assessment and mitigation. The overall residual risk rating after taking into account the mitigation measures completed before effectiveness (as per the new Financial Management Manual) is deemed Medium – Low Impact, High Likelihood (ML). Risk Mitigating Measures Risk after Risk Risk Incorporated into Project mitigation Remarks rating Design measures INHERENT RISK MI MI Country level The country level risks have been assessed under initial project and mitigation measures have H H been proposed. PFM reforms are ongoing and supported by donors community, beyond the scope of the project Entity level Develop the Project The existing implementing STE is not fully functional, Implementation Manual (PIM) entity is performing well. which may hinder the MI capturing STE’s role. MI implementation of project’s activities. Project level Develop a PIM as well as update The project has scaled up the manual of procedures to activities, the project MI MI reflect specifics for the AF. remains as originally designed. CONTROL RISK ML ML Budgeting Budget procedures already ML ML in place and properly utilized. Accounting Sound accounting system is ML ML in place including adequate staffing arrangements. Internal Controls and Internal Finalize the review and update Manual of procedures is Audit of the manual of procedures and currently under review to develop the PIM. reflect the changes Lack of adequate procedures ML pertaining to the AF with to manage all of the new MI the STE. activities. Funds Flow Open at a commercial Bank, one The current manual details MI Designated Account for the key controls over the flow The lack of exposure in WB Additional Financing. of funds of a designated disbursement procedures may account. cause delay in disbursement MI (During Disbursement and FM Units will and ineligible expenditures. implementa continue to provide appropriate Fiduciary team has tion) training on FM & disbursements benefited from multiple procedures. WB training. Financial Reporting MI ML IFR for the initial project 41 Risk Mitigating Measures Risk after Risk Risk Incorporated into Project mitigation Remarks rating Design measures timely submitted and deemed acceptable to the Bank. Auditing Reflect in the ToR of the external auditor to be recruited The ToR of the auditor to ML for FY2011 and beyond; the AF ML be recruited does not in the audit scope. include the AF. OVERALL RISK ML ML 2. Staffing. The CCP is appropriately staffed to handle the Additional Financing transactions. The staff is experienced with World Bank procedures as well as it has attended different Bank’s training in FM and Disbursements. The recruitment of the accountant is now effective. 3. Budgeting. The Additional Financing activities’ of the project have been budgeted and included in the cost table. The project budget, which includes identification and costing of maj or activities to be carried out in the Additional Financing has been drawn up and is included in this Project Paper. The budgeting arrangements will align with those described in the PADUR existing manual of procedures; those arrangements are described in the current manual of procedures. To improve these procedures and take into account the specificities of the Additional Financing with the STE and operator role, PADUR will update the existing manual of procedures. 4. Accounting Policies and Procedures. PADUR accounting policies and procedures are documented in the existing manual of procedures and will be revised to account for the specificities of the Additional Financing as warranted. PADUR will continue to prepare the financial statements using the existing accounting software TOMPRO which will be updated to generate interim financial reports acceptable to the Bank for both the original and additional financing. The CCP will also make use of the existing computerized accounting system to capture the transactions of the project 5. Internal Control and Internal Auditing. The current manual of procedures will be revised to incorporate the specifics of the controls pertaining to STE. The project will take advantage of the current existing structure and arrangements under PADUR for the implementation of the Additional Financing. The internal control procedures are captured in manual of procedures of the CCP, those procedures will be followed. The manual will be modified to highlight the specificities of the Additional Financing pertaining to STE. The CCP will be responsible for implementing all other necessary controls to ensure: (1) that the project funds are used onl y for the intended purposes in an efficient and economical way; (2) the preparation of accurate, reliable and timely periodic financial reports; and (3) that the project’s assets are adequately safeguarded. 42 6. Funds Flow and Disbursement Arrangements. For the Additional Financing, one segregated Designated Account (DA) will be opened at a commercial bank, in N’Djamena, acceptable to IDA and in accordance with the Financing Agreement. Direct payments, will be made to service providers as needed. It will be used to cover expenses incurred by the implementing agency, contractors, suppliers, etc. 7. Method of Disbursement. The current transaction-based disbursement method will apply to the Additional Financing. Upon effectiveness and request from the project, the Bank will deposit the amounts of CFAF 750 million into the Designated Account. The Designated Account will be used for all payments inferior to 20 percent of the authorized allocation and will be submitted on a monthly basis. Deposits by the Bank into the Designated Account will be made against withdrawal applications supported by appropriate documentation. 8. Disbursements by category. The table below sets out the expenditure categories to be financed out of the Credit proceeds. There are no counterpart funds for the Additional Financing. Amount of the Credit Amount of the Grant Percentage of Category Allocated (expressed Allocated (expressed Expenditures to be in SDR) in SDR) Financed (inclusive of Taxes) (1) Operating Costs for 320.000 260.000 100% Component A of the Project (2) Goods for Components 140.000 110.000 100% B, C.3 and C.4 of the Project, (3) Works for Components 4.380.000 3.540.000 100% B, C.3 and C.4 of the Project (4) Services for Components 1.120.000 910.000 100% B, C.3 and C.4 of the Project (5) Goods for Components 270.000 220.000 100% C.1 and C.2 of the Project, (6) Works for Components 1.420.000 1.160.000 100% C.1 and C.2 of the Project (7) Services for Components 1.950.000 1.600.000 100% C.1 and C.2 of the Project TOTAL AMOUNT 9.600.000 7.800.000 9. Financial Reporting and Monitoring. The current content and format of the IFR are deemed acceptable to IDA. The IFR of the AF will use the same format and content. The Interim Un-audited Financial Reports (IFR) of the PADUR will be prepared every quarter and submitted to the Bank (e.g. 45 days after the end of each quarter) in a form and substance that complies with IDA Financial Management requirements. At the end of each fiscal year, the 43 project will prepare annual financial statement with content and format similar to the ongoing initial project. There is no overdue IFR at the time of the preparation of this AF. 10. Auditing. PADUR external auditor for FY 2011 and beyond is not yet recruited; its Terms of Reference will integrate the AF transactions. The audit reports will be submitted to IDA not later than 6 month within the end of each fiscal year. In line with the new access to information policy, project will comply with the Bank disclosure policy of audit reports (e.g. make publicly available, promptly after receipt of all final financial audit reports (includin g qualified audit reports) and place the information provided on its the official website within one month of the report being accepted as final by the team. Action Periodicity By whom Annually CCP Submit audit report within 6 months of period close 11. Implementation Support Plan. The FM implementation support plan will be risk based, and will include: review of quarterly Interim Un-audited Financial Reports (IFRs); review of annual audited financial statements and management letter as well as timely follow up of issues arising; and participation in project supervision missions as appropriate. FM implementation support mission will be combined with initial PADUR project and consistent with a risk -based approach, and will involve a collaborative approach with the entire Task Team. Given a residual risk rating of Medium – Low Impact, High Likelihood at project appraisal, the financial management specialist on-site visits will be twice a year, to be amended as warranted. Time Focus Skills Needed Resource Estimate Partner Role First twelve Ensure risk mitigating measures Financial 3 weeks Coordinate months implemented by project Management mission to effectiveness and that dated enhance covenants are functioning as synergies. intended. Identification of implementation issues early in the life of the project. 12-48 months Review the continuing Financial 9 weeks Coordinate adequacy of the financial Management mission to management arrangements and enhance related risks. synergies. 12. Conclusions of the FM Assessment. The residual control risk is Medium – Low Impact, High Likelihood. The proposed financial management arrangements for this project are considered adequate to meet the Bank’s minimum fiduciary requirements under OP/BP10.02. The assessment recommended among other measures (i) update the Manual of procedures for the additional financing and (ii) develop an Implementation Manual for the Additional Financing with respect to the STE. 44 Annex 7: Environmental and social safeguards 1. Original project. The original project triggered OP/BP 4.01 (Environmental Assessment) and OP/BP 4.12 (Involuntary Resettlement). The two environmental safeguards instruments prepared by the original project, the Environmental and Social Management Framework (ESMF) and the Resettlement Policy Framework (RPF) were disclosed to the public within the country on June 7, 2006 and at the World Bank Infoshop on June 16, 2006. The original project is rated Satisfactory in terms of overall safeguard compliance: environmental safeguards are rated Satisfactory and social safeguards (Involuntary Resettlement) are rated Satisfactory. 2. Environmental category of the Additional Financing. The project development objective will remain the same as for the original project. The Additional Financing will support expanded activities under the components A and B of the original project as well as new activities under an added component C which is to strengthen sustainable access to urban water services. None of the additional activities included in the proposed Additional Financing affect the environmental category of the Project, which remains at Category B. 3. Update and disclosure of the ESMF and RPF. In line with the triggering of the two operational policies cited above and because of the lack of site-specific information about the environmental and social characteristics of future investments in the Additional Financing, the CCP updated the two safeguards instruments, namely the Environmental and Social Management Framework (ESMF), and the Resettlement Plan Framework (RPF) prepared for the original project. The ESMF and RPF set out standard methods and procedures, specifying how sub - projects, whose locations are unknown at this stage, will systematically address environmental and social issues at all stages. These include: sub-project screening, categorization, sitting, design, implementation, operational, and maintenance. At the core of this approach are: (i) the systematic screening of all sub-projects; (ii) procedures for applying the environmental checklist or for conducting Environmental and Social Impacts Assessments (ESIAs)/Environmental and Social Management Plans (ESMPs), Resettlement Action Plans (RAPs) and Abbreviated Resettlement Action Plans (ARAPs) – whichever or combination of which is deemed applicable – for all identified sub-projects; (iii) institutional arrangements for mitigating, preventing, and managing the identified impacts; (iv) typical environmental management planning process for addressing negative externalities in the course of project implementation; (v) a system for monitoring the implementation of mitigation measures; (vi) environmental and social clauses to be inserted in the bidding documents; and (vii) recommended capacity building measures for environmental planning and monitoring of project activities. Given the contemplated Additional Financing, the ESMF and RPF have been updated to take into account the new activities and disclosed at the Bank’s InfoShop and in-country on April 11, 2011. 4. Institutional arrangements. On the institutional part, the Project has an environmental and social specialist who dealt with the implementation of the previous ESMF and RPF under the original project. In addition of the existing institutional arrangements under the PADU R, the STE will be reinforced by an environmental and social staff for a day by day follow up of mitigation measures regarding the additional funding focusing on STE with the main objective to create a long term culture of environmental and social management concerns in this newly created company. As part of the general formation and capacity building of the STE, the Bank 45 has recommended that environmental and social staff be hired within STE, as part of its general recruitment and staffing process, preferably no later than mid-2012. 46 Annex 8: Team Composition World Bank staff and consultants who worked on the project include: Name Title Unit Jan Drozdz Task Team Leader AFTUW Charles Delfieux Water and Sanitation Specialist AFTUW Meike van Ginneken Sector Leader AFTUW Nathalie Munzberg Senior Counsel LEGAF Wolfgang Chadab Senior Finance Officer CTRFC Sekou Keita Financial Management Specialist AFTFM Charles Donang Senior Procurement Specialist AFTPC Aissata Zerbo Procurement Specialist AFTUW Lucienne M’Baipor Senior Social Development Specialist AFTCS Serge Menang Environmental Specialist AFTEN Diego Garrido Martin Monitoring and Evaluation Specialist AFTDE Onur Ozlu Operations Officer AFTUW Connie Kok Shun Senior Program Assistant AFTUW Berthe Tayelim Program Assistant AFMTD Marie Claire Li Tin Yue Senior Program Assistant AFTUW François Lorilleux Water and Sanitation Engineer, Consultant AFTUW 47 Map IBRD 34221 48 IBRD 34221 15E 20E 25E To 0 100 200 300 Kilometers Akhaltsikhe 0 100 200 Miles CHAD L I B Y A Aozou Zouar To 20N Séguédine BORKOU - ENNEDI - TIBESTI NIGER Faya-Largeau ar Fada ow i H ad W Koro Toro Oum-Chalouba ma O Fa B I LT I N E ) KANEM o 15N or (S l za ha Biltine e lG SUDAN hr Ba Mao Salal BATHA LAC Abéché Bol Moussoro Lake Oum Hadjer To Chad Mouzarak Ati Nyala a Bath N´DJAMENA Massaguet Bokoro Mangalmé OUADDAÏ To Mongo Fotokol CHARI- Goz Beïda This map was produced by the Map Design Unit of The World NIGERIA BAGUIRMI Masalasef Abou Deïa Bank. The boundaries, colors, denominations and any other information shown on this map do Massenya n o t i m p l y, o n t h e p a r t o f T h e To World Bank Group, any judgment Am Timan Maroua Gélengdeng Melfi GUERA t on the legal status of any territory, or any endorsement or SALAMAT ma Ch acceptance of such boundaries. ala ari Bongor Bousso S To hr Maroua Ba Fianga Gounou Harazé CHAD MAYO- KEBBI Gaya TANDJILE MO YEN- CHARI Mangueigne To URBAN DEVELOPMENT Kélo Laï Birao Pala L Koumra Sarh Bahr A ouk PROJECT ADDITIONAL FINANCING og LOGONE on e Doba Ba OCC. C A M ER O ON AM OON go PROJECT CITIES n ra Moundou n LOGONE ORIENTAL MAIN CITIES AND TOWNS a Gribingui Vin To Ba Kaga Bandoro m in PREFECTURE CAPITALS gu NATIONAL CAPITAL i To To Bozoum CENTRAL AFRICAN Bossangoa MAIN ROADS Mbakaou Res. REPUBLIC PREFECTURE BOUNDARIES 15E 20E INTERNATIONAL BOUNDARIES MAY 2011