Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD2340 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT PAPER ON A PROPOSED ADDITIONAL GRANT AND RESTRUCTURING IN THE AMOUNT OF SDR 14.6 MILLION (US$20 MILLION EQUIVALENT) FROM CRISIS RESPONSE WINDOW RESOURCES TO THE REPUBLIC OF HAITI FOR A SUSTAINABLE RURAL AND SMALL TOWNS WATER AND SANITATION PROJECT June 1, 2017 Water Global Practice Latin American and the Caribbean Region This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank’s policy on Access to Information. CURRENCY EQUIVALENTS (Exchange Rate Effective April 30 2017) Currency Unit = Haitian Gourde (HTG) 68.88 HTG = US$1 0.73 US$ = SDR 1 FISCAL YEAR October 1 – September 30 ABBREVIATIONS AND ACRONYMS AECID Spanish Agency for International Development Cooperation AF Additional Financing CAEPA Comité d’Approvisionnement en Eau Potable et Assainissement (Drinking Water Supply and Sanitation Committee) CERC Contingent Emergency Response Component CNMP Commission Nationale des Marchés Publics (National Public Procurement Commission) CPF Country Partnership Framework CRW Crisis Response Window DaLA Damage and Loss Assessment DINEPA Direction Nationale de l’Eau Potable et de l’Assainissement (National Water and Sanitation Directorate) DPC Direction de la Protection Civile (Civil Protection Directorate) DPEM Direction de la Passation et de l'Exécution des Marchés (DINEPA’s procurement department) DRM Disaster Risk Management DSA Debt Sustainability Analysis EIRR Economic Internal Rate of Return EPAR Programme Eau Potable et Assainissement en Milieu Rural (Haiti Rural Water Supply and Sanitation Project, previous Bank-financed operation) ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan FIRR Financial Internal Rate of Return FM Financial Management GoH Government of Haiti GBV Gender-based Violence GDP Gross Domestic Product GHG Green House Gas GRS Grievance Redress Mechanism IDA International Development Association IDB Interamerican Development Bank IP Implementation Progress NPF New Procurement Framework NPV Net Present Value O&M Operation and Maintenance OP Opérateur professionnel (Professional Operator) Offices Régionaux d’Eau Potable et Assainissement (Regional Water and OREPA Sanitation Offices) Project Development Objective PDO PMU Project Management Unit PPDO Project Procurement Development Objective PPSD Project Procurement Strategy for Development RAP Resettlement Action Plan RPF Resettlement Policy Framework SDR Special Drawing Rights STEP Systematic Tracking and Exchanges in Procurement UNFCCC United Nations Framework Convention on Climate Change WASH Water, Sanitation and Hygiene WSS Water Supply and Sanitation Vice President: Jorge Familiar Country Director: Mary A. Barton-Dock Senior Global Practice Director: Guang Zhe Chen Practice Manager/Manager: David Michaud Task Team Leader: Jean-Martin Brault, Carl Christian Jacobsen REPUBLIC OF HAITI SUSTAINABLE RURAL AND SMALL TOWNS WATER AND SANITATION PROJECT TABLE OF CONTENTS Page Project Paper I. Introduction……………………………………………………..................................... 1 II. Background and Rationale for Additional Financing…………………………………. 1 A. Country Context……………………………………………………......................... 1 B. Situation of Urgent Need of Assistance or Capacity Constraint……........................ 2 C. Sectoral and Institutional Context………………………………………………….. 3 D. Higher Level Objectives To Which the Project Contributes………………………. 4 E. Parent Project Background……………………………………………………......... 5 F. Status of Implementation……………………………………………………............ 5 G. Rationale for Additional Financing and Additional Benefits……………………… 6 H. Policy Waiver……………………………………………………............................. 9 III. Proposed Changes …………………………………………………………………….. 9 IV. Appraisal Summary ……………………………………………….…………………. 17 V. World Bank Grievance Redress……………………………………………………….22 Annexes Annex 1: Revised Results Framework and Monitoring Compensation……………………… 23 Annex 2: PPSD – Executive Summary for Procurement Plan……………………………….. 31 ADDITIONAL FINANCING DATA SHEET Haiti Sustainable Rural and Small Town Water Supply and Sanitation Additional Financing ( P163194) LATIN AMERICA AND CARIBBEAN Water Global Practice Basic Information – Parent Parent Project ID: P148970 Original EA Category: B - Partial Assessment Current Closing Date: 30-Sep-2021 Basic Information – Additional Financing (AF) Additional Financing Project ID: P163194 Scale Up Type (from AUS): Regional Vice President: Jorge Familiar Proposed EA Category: Expected Effectiveness Country Director: Mary A. Barton-Dock 31-Oct-2017 Date: Senior Global Practice Guang Zhe Chen Expected Closing Date: 30-Sep-2021 Director: Practice David Michaud Report No: PAD2340 Manager/Manager: Jean-Martin Brault, Carl Team Leader(s): Christian Gyde Jacobsen Borrower Organization Name Contact Title Telephone Email Ministry of Economy and Jude Alix Patrick 011-509-2992- jsalomon@mefhaiti.g Minister Finance, MEF Salomon 1010 ouv.ht Project Financing Data - Parent ( HT Sustainable Rural and Small Towns Water and Sanitation Project-P148970 ) (in USD Million) Key Dates Approval Effectiveness Original Revised Project Ln/Cr/TF Status Signing Date Date Date Closing Date Closing Date P148970 IDA-D0680 Effective 26-May-2015 21-Jul-2015 16-Dec-2015 30-Sep-2021 30-Sep-2021 Disbursements % Disburse Undisbu Project Ln/Cr/TF Status Currency Original Revised Cancelled Disburse d rsed d i P148970 IDA-D0680 Effective XDR 36.30 36.30 0.00 5.21 31.09 14.34 Project Financing Data - Additional Financing Sustainable Rural and Small Town Water Supply and Sanitation Additional Financing ( P163194 )(in USD Million) [ ] Loan [ ] Grant [X] IDA Grant [ ] Credit [ ] Guarantee [ ] Other Total Project Cost: 20.00 Total Bank Financing: 20.00 Financing Gap: 0.00 Financing Source – Additional Financing (AF) Amount IDA Grant 0.00 IDA Grant from CRW 20.00 Total 20.00 Policy Waivers Does the project depart from the CAS in content or in other significant No respects? Explanation Does the project require any policy waiver(s)? Yes Explanation In light of Haiti’s high level of debt distress and situation of urgent need following Hurricane Matthew, this Project Paper seeks the approval of the Executive Directors to provide SDR 14.6 million (US$20 million equivalent) from the IDA Crisis Response Window CRW (CRW) for this proposed additional financing in the form of a grant, rather than on Haiti’s current IDA terms. Haiti is a yellow light country, eligible for a mix of grants and credits in FY17 under its regular allocation and under any CRW allocation. However, the post-disaster Joint Debt Sustainability Analysis (DSA) for Haiti, circulated to the Executive Directors on November 16, 2016, finds the country at high risk of debt distress following Hurricane Matthew. The provision of financing in the form of all grants for the proposed operation is appropriate, as the provision of credits would further heighten Haiti’s risk of debt distress at a time of urgent need. On the basis of the November 2016 DSA, in FY18, Haiti will become eligible again for 100 percent grant financing from IDA. Has the waiver(s) been endorsed or approved by Bank Management? Yes Explanation The waiver was endorsed by Bank Management on May 13, 2017 and would be considered and approved by the Executive Directors in the context of their consideration of and approval of this Board package. Bank Staff Name Role Title Specialization Unit Jean-Martin Brault Team Leader Sr Water & Water & Sanitation GWA05 ii (ADM Sanitation Spec. Responsible) Carl Christian Gyde Team Leader Sr Water & Water & Sanitation GWA03 Jacobsen Sanitation Spec. Rose Caline Procurement Procurement Procurement GGO04 Desruisseaux-Cadet Specialist (ADM Specialist Responsible) Aboubacar Procurement Consultant Procurement GGO04 Magassouba Specialist Fabienne Mroczka Financial Sr Financial Financial GGO22 Management Management Management Specialist Specialist Alejandro Neira Team Member Temporary Water & Sanitation GWA04 Zavala Asli Gurkan Safeguards Senior Social Social Development GSU04 Specialist Development Specialist Eliana Jimenez Rico Team Member Program Assistant GWA04 Faly Diallo Team Member Finance Officer WFALA Felipe Jacome Safeguards Consultant Social Development GSU04 Specialist Isabella Micali Counsel Senior Counsel Legal LEGLE Drossos Lydie Madjou Team Member Financial Financial GGO22 Management Management Specialist Maria Del Carmen Team Member Senior Operations Operations GWASO Minoso Officer Ntombie Z. Siwale Team Member Operations Analyst Operations GWA03 Nyaneba E. Nkrumah Safeguards Sr Natural Resources Operations GEN04 Specialist Mgmt. Spec. Paul Eliz Viannica Team Member Team Assistant Country Office LCC8C Jean-Jacques Support Virginie Laroche Team Member Consultant Water & Sanitation GWA03 Zael Sanz Uriarte Team Member Water & Sanitation Water & Sanitation GWA03 Specialist Extended Team Name Title Location Locations iii Country First Administrative Location Planned Actual Comments Division Haiti Departement du Sud Departement du X Sud Haiti Departement du Departement du X Nord-Ouest Nord-Ouest Haiti Departement de la Departement de la X Grand’Anse Grand’Anse Haiti Departement de Departement de X Nippes Nippes Institutional Data Parent ( HT Sustainable Rural and Small Towns Water and Sanitation Project-P148970 ) Practice Area (Lead) Water Contributing Practice Areas Additional Financing Sustainable Rural and Small Town Water Supply and Sanitation Additional Financing ( P163194 ) Practice Area (Lead) Water Contributing Practice Areas Consultants (Will be disclosed in the Monthly Operational Summary) Consultants Required? Consultants will be required iv I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an additional grant in an amount of SDR 14.6 million (US$20.0 million equivalent) to the Republic of Haiti for the Sustainable Rural and Small Town Water Supply and Sanitation Project (P148970). The proposed Additional Financing (AF) would be financed by IDA’s Crisis Response Window (CRW)1, as part of a package of a US$100 million of support from the World Bank to help the Government of Haiti (GoH) recover and rebuild after Hurricane Matthew, which struck the country on October 4, 2016. This event was described and the proposed Word Bank response outlined in the Crisis Window Response Paper circulated to the Executive Directors on January 22, 2017 and considered at a technical briefing held on January 26, 2017. In this context, Management underlined that funding from ongoing projects was mobilized to respond to immediate needs in the affected areas and proposed providing funding in the form of grants for the above-mentioned package, consisting of four additional financing operations in the Transport and Disaster Risk Management (DRM) sectors, the Health Sector, the Water Sector, and the Agricultural Sector to be financed from the CRW. An estimated US$2.2 billion are needed for reconstruction and rehabilitation. The proposed AF would significantly expand the scope and impact of the Parent Grant by scaling up activities under all components of the project to support post-Hurricane Matthew recovery and reconstruction in the most affected departments of Haiti. 2. Concurrently, the Sustainable Rural and Small Town Water Supply and Sanitation Project would be restructured to: (i) reallocate Grant proceeds between disbursements categories to align the respective disbursement and outstanding commitment amounts for each category; (ii) update the Results Framework to include additional project beneficiaries resulting from the activities to be financed under this AF; and (iii) amend the Project Financing Agreement to include the financing of resettlement compensation. II. Background and Rationale for Additional Financing A. Country Context 3. Haiti remains extremely vulnerable to natural disasters with more than 90 percent of the population at risk. On October 4, 2016, category 4 Hurricane Matthew struck Haiti’s south-west coast, affecting over 2 million people, about 20 percent of the country’s population. The Directorate of Civil Protection (Direction de la Protection Civile, DPC) of the GoH reported 546 deaths, 128 missing, 439 injured, 175,500 people living in temporary shelters, and immediate humanitarian assistance needs for 1.4 million people (about 12.9 percent of the population, including 750,000 requiring safe water for drinking, cooking, and personal hygiene). The passage of Hurricane Matthew also led to an increase of reported cholera cases in the southern peninsula, accounting for 67 percent of total reported cases, and 82 percent of deaths during the first week of October 2017. This natural catastrophe comes less than seven years after the devastating January 12, 2010 earthquake of magnitude 7.0 struck 25 km west of Port-au- Prince, Haiti’s capital, which killed 220,000 people and displaced 1.5 million. 1 Management informed the Executive Directors of its intention to allocate an indicative amount of US$100 million equivalent to support Haiti’s response to the impact of the Hurricane Matthew at a technical briefing on January 26, 2017. See the note entitled "I DA Crisis Response Window Support for the Republic of Haiti Emergency Recovery and Reconstruction Following the Impact of Hurricane Matthew” for additional information. 1 4. Reconstruction needs were assessed at 25 percent of Gross Domestic Product (GDP) (US$2.2 billion)2. The agriculture and housing/urban sectors were the hardest hit. Up to 90 percent of crops and livestock were lost in coastal areas, including stable food crops, but also cash and tree crops such as coffee, cocoa and vetiver. Thousands of structures were damaged and 75 percent of structures in the heaviest-hit communities in Grand’Anse3 were entirely destroyed. More than 100,000 houses were heavily damaged or destroyed, half of which were in Grand’Anse. Key roads and bridges were washed away. The area’s already limited water, sanitation, and energy infrastructure was damaged. Although damages and losses appeared more modest in the education and health sectors, the population was significantly affected by the damage and destruction of schools and the interruption of services at damaged or destroyed health centers. Over 450,000 children were estimated to remain out of school, the vaccine cold chain was destroyed, and a sharp increase in suspected cholera cases has been recorded in affected departments (the number of cases has since dropped but the risk of cholera spikes remains high). 5. This latest disaster has compounded Haiti’s preexisting development challenges, increasing poverty and vulnerability, threatening livelihoods, and hampering already weak service delivery and human development outcomes. It also exacerbated Haiti’s underlying socioeconomic drivers of poverty, such as social divisions and inequity, fragility of political mechanisms, the Government’s weak capacity, risks of political instability, and persistent volatility. Almost 60 percent of Haiti’s population, or 6.3 million people, remain poor,4 and 24 percent (2.5 million) are extremely poor, with poverty highest in rural areas. The poorest regions, which are also the furthest from the capital, show extreme poverty rates exceeding 40 percent and have very limited access to basic services. B. Situation of Urgent Need of Assistance or Capacity Constraint 6. The proposed operation meets the criteria of OP 10.00 Paragraph 12 (Projects in Situations of Urgent Need of Assistance or Capacity Constraints) and was processed through condensed procedures because: (i) Hurricane Matthew caused a national disaster and emergency; (ii) Haiti faces severe capacity constraints with under-resourced response systems in the Disaster Risk Management and Transport sectors which have limited ability to respond to all aspects of the disaster; and (iii) the shock caused by Hurricane Matthew threatens to deepen already widespread and entrenched poverty of the affected areas, among the poorest in the country. 7. Hurricane Matthew, the first hurricane of this magnitude to make landfall in Haiti in 52 years, has caused large-scale disaster mostly in the southern part of the country. The hurricane’s high wind speeds, heavy rainfall, and devastating storm surge resulted in flooding, landslides, and extensive destruction of infrastructure and livelihoods, especially in the southern departments of Grand’Anse, Nippes, and Sud, where 80 percent, 66 percent, and 65 percent of people, respectively, are poor (under the national poverty line of US$2.41 per day) and 36 percent, 30 percent, and 26 percent, respectively, are extremely poor (under the national extreme poverty line of US$1.23 per day). Lesser damage was seen in coastal areas in other parts of the country. 8. The GoH Damage and Loss Assessment (DaLA) of October 2016 estimated total losses and damages equivalent to 22 percent of the GDP (US$1.9 billion). This figure was later evaluated to be 2 October 24, 2016: Rapid Damage and Loss Assessment of Hurricane Matthew, the Government of the Republic of Haiti with joint support from the World Bank and the Inter-American Development Bank. 3 Communities of Maniche, Camp Perrin, Chantal, Beaumont, Duchity, Moreau, and Chambellan. 4 Under the Haitian poverty line of US$1.98 per day based on consumption. 2 32 percent of GDP by the Post-disaster Needs Assessment (PDNA)5, with damage and losses specific to the water and sanitation sector estimated at US$59.32 million. In light of the magnitude of these damages and losses as well as Matthew’s impact on the GoH’s already limited capacity and resources and the urgent need for support in responding to the crisis, the use of expedited procedures to prepare this proposed AF is appropriate. C. Sectoral and Institutional Context 9. Access to and the sustainability of improved water services 6 in Haiti are particularly vulnerable to natural disasters. Basic services are already lacking with only 58 percent of Haitians having access to water (48 percent in rural areas) and 28 percent to improved sanitation facilities (19 percent in rural areas),7 and water points as well as gravity-fed pipes systems, which are used for water supply in small towns and rural communities of Haiti, are typically rendered either temporarily or permanently dysfunctional because of heavy rains or floods. The October 2016 DaLA estimated that nearly 90 out of 130 water supply systems, water catchments, kiosks, and clarification systems in the Southern Peninsula were affected to varying degrees by the hurricane, ranging from the need to reconnect pipes and chlorinators or protect sources to the need for full system rehabilitation. In addition, the National Water and Sanitation Directorate (DINEPA) reported that many small rural agglomerations affected by the passage of the hurricane particularly suffered from the large distances to water sources, requiring new solutions such as the construction of on-site boreholes to improve resilience in times of inclement weather, particularly in agglomerations which are more isolated or which lack all-weather connectivity to the national road network. Finally, actors involved in the emergency response after the passage of Hurricane Matthew highlighted the weaknesses in procuring and distributing chlorine across Haiti to ensure drinking water quality at the point of use (in dispersed rural areas) or at the point of distribution (small towns and urban areas). 10. To secure safe, reliable, resilient and continuous water supply services to Haiti’s population, including those directly affected by Hurricane Matthew, DINEPA’s country-wide program of professional operators (OP) should be continued. This service delegation approach deployed as part of the Rural Water Supply and Sanitation Program (EPAR) jointly financed by the World Bank and Inter- American Development Bank from 2009 to 2014 has helped improve the ability of service providers to cover operation and maintenance (O&M) costs. These results are the basis on which the ongoing Project was developed. In parallel, the AF will use lessons and recommendations from an ongoing evaluation of the performance of and institutional environment in which OPs are providing services,8 to continue scaling up this management model in Haiti. 11. In order to continue efforts to stem water- and excreta-related diseases in the areas affected by Matthew, as well as across the country, the national response also needs to focus on constructing 5 February 6, 2017: Post-Disaster Needs Assessment, the Government of the Republic of Haiti with joint support from the European Union, the Inter-American Development Bank, the United Nations agencies, and the World Bank. 6 Access to water and sanitation has been identified as one of 17 of the United Nation’s Sustainable Development Goals, and is defined as the access to an adequate amount of safe drinking water located within a convenient distance from the user’s dwelling. 7 Progress Report on Sanitation and Drinking Water - Update. WHO-UNICEF, 2015. Improved sanitation is defined as likely to ensure hygienic separation of human excreta from human contact. 8 This evaluation is part of the “Enabling local private sector participation in water and sanitation service delivery in rural areas and small towns of Haiti” (P159767) activity financed by the Public -Private Infrastructure Advisory Facility (PPIAF). 3 and rehabilitating sanitation facilities in schools, health facilities and public markets. Access to sanitation in rural areas and small towns remains low in Haiti,9 and the passage of the hurricane particularly affected public institutions and spaces in that regard: more than 700 schools and numerous health facilities suffered damage, including to their existing sanitation infrastructure, compounding the high risk of cholera and infectious disease outbreaks. To create a mode conducive institutional environment to tackling the low access rates to sanitation facilities across the country, DINEPA has recently taken important strategic steps, including: (i) holding the Sanitation Sector Dialogue in May 2016 with all financial and technical partners active in Haiti, and presenting its sanitation roadmap focusing on behavior change, education and sanitation promotion, as well as on the provision of institutional sanitation; (ii) signing, in February 2016, a memorandum of understanding with the ministries of Health and Environment, defining their responsibilities with regards to sanitation and hygiene and paving the way for joint action in this sub-sector; and (iii) adopting a programmatic approach to sector planning, with its deconcentrated Regional Water and Sanitation Offices (OREPAs) playing a key role in its operationalization. Nevertheless, in order for the deconcentration to become fully effective, ownership of the planning tools developed in the last year needs to be further anchored at the regional level, and capacity in sanitation, as well as in social mobilization and fiduciary aspects needs to be reinforced. 12. Given the difficult setting under which Haiti’s WSS sector operates, the implementation of the proposed AF is key to tackle the challenges exposed above and enable further development of reliable access to water, improved sanitation solutions, and stronger institutions. Proposed works, which include and are not limited to small repairs to water supply systems, newly-constructed latrine blocks for public institutions and spaces, and an increased number of piped household water connections, will allow for unimproved access to water and sanitation rates to decrease, while providing the Haitian population with improved health and a clean environment. In addition, the proposed AF will be an opportunity to explore ways to increase the resiliency of WSS infrastructure and services in the face of inclement weather in Haiti. D. Higher Level Objectives To Which the Project Contributes 13. The proposed AF contributes to the achievement of the World Bank Group’s twin goals of ending extreme poverty and boosting shared prosperity by increasing access to basic services in the poorest rural areas of Haiti, particularly for communities affected by Hurricane Matthew. It is consistent with the National Plan for the Elimination of Cholera in Haiti10as well as the recently developed mid-term 2016-2018 Cholera Elimination Plan, which was presented to the United Nations’ High Level Committee on Cholera on August 30, 2016, by contributing to the elimination of cholera and other water and excreta related diseases. 14. The proposed AF is fully aligned with the World Bank Group’s Country Partnership Framework (CPF) for FY16-19 discussed by the Executive Directors on September 29, 2015. Activities to be financed under the proposed AF would support the Human Capital focus area, specifically Objective 7: 9 25 percent of the Haitian population relies on individual on-site sanitation solutions, such as self-excavated or mason- constructed latrines, as sustainable collection and treatment of sewage are practically non-existent. In addition, due to low access to improved sanitation facilities, open defecation is frequent, particularly in rural areas where it stands at 35 percent. The GoH has adopted a no-subsidy policy for household sanitation. 10 a 10-year strategy to address the cholera epidemic and achieve universal access to WSS and health services, 4 Cholera Control in Priority Communes; as well as the cross-cutting objective of institutional capacity strengthening needed to underpin sector policies based on sustainable models of service delivery. E. Project Background 15. Parent Grant (D0680). The Sustainable Rural and Small Towns Water and Sanitation Grant in the amount of SDR 36.3 (US$50 million equivalent) was approved on May 26, 2015, became effective on December 16, 2015, and is scheduled to close on September 30, 2021. The Project Development Objectives (PDOs) are to: (i) increase access to improved WSS in targeted rural areas and small towns in zones affected by cholera; (ii) strengthen the Recipient’s water and sanitation service delivery mechanism at the deconcentrated level; and (iii) improve the Recipient’s capacity to respond promptly and effectively to an Eligible Emergency. The achievement of the PDOs is supported by the following project components: (1) Institutional Strengthening, Capacity Building and Project Management; (2) Water Supply and Sanitation; and (3) Contingent Emergency Response. The proposed AF will support all components of the project, as described in the Financing Agreement. F. Status of Implementation 16. The implementation of the Sustainable Rural and Small Towns Water and Sanitation Project is proceeding well, with the implementation progress (IP) rated “Moderately Satisfactory” while the achievement of PDOs is rated “Satisfactory”. The Project is well-performing, it has been rated Moderately Satisfactory consistently over the last 12 months and is likely to achieve the PDO indicators. In particular, the Project has succeeded in providing 20,000 people with access to improved water sources (out of a target of 150,000), including in one community in which a cholera outbreak had been reported. Additionally, three Professional Operators (Opérateurs professionels – OPs) have now been selected to operate piped systems sustainably (out of a target of 20). 17. The Project has also demonstrated compliance with key loan covenants, including audit and financial management reporting requirements. To date, the Project has disbursed 14.3 percent of the grant’s proceeds and total disbursements are expected to reach close to 20 percent by July 2017 based on works planned to be initiated in the coming months. Overall, the Project is on track to meet its development objectives within the project lifespan. The Project has complied with World Bank environmental, social, and fiduciary safeguard requirements. There are no outstanding audit reports and all audit reports are satisfactory to the World Bank. 18. Component 1: Institutional Strengthening, Capacity Building, and Project Management . Under this component, DINEPA’s deconcentration efforts have advanced with the transfer of a procurement specialist to one of the 4 OREPAs, and the upcoming recruitment of three more for the remaining OREPAs. Progress is further evidenced by the fact that DINEPA’s general director has recently signed a delegation of authority allowing regional directors to manage their regional, departmental and communal payrolls. Furthermore, four of the five tools to be developed in support of DINEPA’s national programming mechanism for deconcentrated service delivery are already well advanced - namely: (i) a national WSS baseline; (ii) a roadmap for universal WSS coverage by 2030; (iii) a Medium Term Expenditure Framework for the sector; and (iv) a 3-year rolling consolidated Program Budget. This progress in deconcentration efforts can be further illustrated by the implication of 5 DINEPA’s structures, particularly at the departmental and communal levels, in identifying small towns in need of repairs after Hurricane Matthew. 19. Component 2: Water Supply and Sanitation. Works have been completed in three small towns and their OPs are being trained and put in place. Several detailed engineering designs, as well as technical and social feasibility studies are being finalized for over 30 communities in the Centre, Sud, Nippes and Grande Anse departments, including seven communities hosting bi-national markets along the border with the Dominican Republic. The number of studies will largely exceed the available funds under the Project, and the OREPAs are thus now engaged in a prioritization process which should lead to a number of WSS works being launched in May and June of 2017. In addition, the successful completion of the “Dialogue Sectoriel sur l’Assainissement” in May 2016 helped establish a clear vision and intervention principles for the sanitation sector. This, together with consultations undertaken in December 2016 with NGOs active in the sanitation sector, have introduced the concept of results-based contracting in sanitation, paving the way for future sanitation activities under the Project. 20. Component 3: Contingent Emergency Response (CERC). Funding under this component has supported the rehabilitation of the water supply system and sanitation facilities in Anse-a-Pitres (Sud- Est), in response to a cholera outbreak in camps hosting Haitian returnees from the Dominican Republic in late 2015. This component has also helped DINEPA respond to damages resulting from Hurricane Matthew pursuant to the triggering of the CERC on November 3, 2016 to provide over $2 million in emergency financing for small and quick repairs needed to bring roughly 70 water supply systems damaged by Hurricane Matthew back into operation in the southern peninsula. The rehabilitation works are approximately 65 percent completed. This component is also financing ongoing consulting contracts, which have been expanded to include an evaluation of the additional longer-term rehabilitation needs of these systems, including damages caused by Matthew. These evaluations will help identify priority interventions to be financed under the proposed AF. Additional studies have also been initiated in small towns of the Nord-Ouest department, where damages to water supply systems were also reported. G. Rationale for Additional Financing and Additional Benefits 21. Following consultations with the Government, it was agreed that the proposed AF is the most suitable financing instrument to support the GoH in a timely manner. The proposed AF would be a more efficient response than the preparation of a new emergency project. It would benefit from scaling up an existing operation that is aligned with the emergency needs in the sector. The use of expedited procedures for processing the proposed AF would allow quick preparation and mobilization of resources necessary to help DINEPA assess and rehabilitate water supply systems in rural areas and small towns affected by Hurricane Matthew. The consolidation of the proposed AF under the Sustainable Rural and Small Towns Water and Sanitation would maximize potential synergies, particularly from fiduciary, safeguards, and technical support already provided under the parent project, promote efficiencies, and ensure better streamlined overall project management and reporting. The AF will benefit from a fully operational project implementation and fiduciary team and institutional arrangements that are already in place, significantly accelerating the initiation of activities and ensuring continuity between immediate response activities under the Parent Grant and medium-term recovery and reconstruction under the AF. 22. The proposed AF would complement other ongoing World Bank emergency response operations, such as the proposed three other CRW-funded AFs to: (a) Relaunching Agriculture: 6 Strengthening Agriculture Public Services II Project – Additional Financing (P163081); (b) Additional Financing for the Disaster Risk Management and Reconstruction Project (P163199); and (c) Additional Financing for the Improving Maternal and Child Health Through Integrated Social Services Project (P163313). 23. Climate co-benefits for the proposed operation are expected to be significant at 32.3 percent. This corresponds mainly to the use of solar power in water supply systems whenever pumping will be necessary and cost-effective,11 as well as to the inclusion of climate considerations in the engineering design process for water and sanitation systems. In addition, Component 3 would finance urgent repairs following a hydro-meteorological disaster and/or cholera outbreaks, when necessary. Haiti has signed and ratified several Multilateral Environmental Agreements, including the United Nations Convention on Biological Diversity, the United Nations Convention to Combat Desertification and the United Nations Framework Convention on Climate Change (UNFCCC). This commits the country to reducing Green House Gas (GHG) emission by 31 percent in 2030, and Haiti’s commitments focus in several areas, including integrated water and watershed management. 24. In Haiti, the water sources on which rural and small towns rely are often threatened by degradation in their watersheds, and relatively few of these towns have any significant storage infrastructure, nor the ability to treat raw water. As such, they are highly dependent on the regularity and quality of water flows, and inappropriate land uses in these watersheds is resulting in unreliable and low quality water supplies. According to the Global Facility for Disaster Reduction and Recovery’s Think Hazard profile for Haiti, the country is at a high risk for hurricanes as well as for river and coastal floods, possibly due to climate change. Increasing number of extreme weather events, such as hurricanes, and natural disasters also negatively affect the availability of quality water resources. This threatens the well- being of water consumers and the viability of the professional operators the Project is supporting. In order to address these challenges, the AF would continue to support the piloting of innovative approaches for conserving and restoring the watersheds that supply water to the rural and small towns benefitting from project activities (including through reforestation, source protection, rainwater harvesting or water storage, where appropriate) under Component 1. Component 3 will continue to support the client to strengthen its ability to rapidly respond to future emergencies related to climate change and natural disasters. These activities will increase the client’s capacities to adapt to clim ate change risks and vulnerabilities. In addition, most water supply systems will be gravity-fed, but, whenever pumping will be necessary and cost-effective, the Project will give a strong preference to renewable energy, such as solar power. The need for this option will be determined during the engineering design stage. 25. GHG accounting benefits are also expected to be generated under the proposed AF. For both the project and baseline scenarios, water delivery will use gravity-fed systems. In addition, the Project will install solar photovoltaic systems for pumping, when deemed technically and economically appropriate as indicated by engineering designs to be developed. Grid-connected electricity will likely not be used in either scenario because of its poor reliability. If any grid-connected electricity is used, it would be negligible (rounding down to 0 percent of the total energy needs). As a result, both scenarios rely completely on zero-emissions sources (solar, gravity). The net and gross emissions are thus both 0 tCO2-eq over the life of the Project. On average, the Project generates net emissions of 0 tCO2-eq annually. 11 Experience in rural areas and small towns of Haiti shows that this is the case in 10 to 20 percent of the water supply systems. 7 26. The Project by design includes a number of citizen engagement initiatives through its support of Local Drinking Water Supply and Sanitation Committees (CAEPAs). DINEPA’s social mobilizers are in close contact with project beneficiaries to ensure that they are part of the decision-making process for the project activities. Periodic consultations take place and minutes are recorded. These practices will be continued under the AF. In the Project, the Grievance Redress Mechanism falls under the tasks of DINEPA’s social mobilizers who are in charge of carrying out extensive communication and sensitization work with the local community before, during, and after the construction of the water systems. While the main objective of the social mobilizers is to introduce payment for water provision services, their constant presence in the community makes them the de-facto focal point to address any conflicts or grievances that may arise. The documentation and monitoring of grievance redress will be strengthened under the implementation of the AF through the provision of easy to use tools for documenting and monitoring grievances and sensitization on this issue by World Bank during field visits and safeguards trainings. In addition, the Project will continue to build on a DINEPA initiative launched in January 2015 which created a call center for its clients or central hotline called “5959”. 27. The proposed AF will continue activities implemented under the Parent Grant in alignment with the World Bank Group’s gender strategy by addressing gaps between men and women in priority strategic areas of: (i) voice and agency, and (ii) endowments. To this date, the Project has completed a gender qualitative assessment (July 2016) and is currently conducting a complementary random, gender-disaggregated household survey (since April 2017), after which a workshop will be organized to discuss results with DINEPA staff. 28. Voice and Agency. The qualitative assessment revealed that women’s representation in CAEPAs was low and their voice was weakened by their lower socio-economic status and heavy reproductive responsibilities. It also found that along the border with the Dominican Republic, gender-based violence (GBV) persists, and women’s trading activities are curtailed by banditry and violence. Actions to be taken under the Project, including the AF, are:  Reduce gaps in women’s participation and representation in water and sanitation decision making by involving women in project implementation activities. A national gender indicator on women’s representation in the CAEPA will be considered with DINEPA for nation-wide monitoring;  Women form 30 percent of beneficiaries engaged in project orientation and consultations of each new project, benefit from training opportunities and are an active part of the professional operator (OP) management model, either as the OP or as a member of the management team, including in water, sanitation and hygiene (WASH) for public markets;  Target GBV by engaging women in ‘security committees’ to ensure that they can have a voice in the management of market services including security, and that they have a voice in positioning water kiosks and public toilets at points that are safe. 29. Endowments. The qualitative assessment highlighted gaps between girls and boys in education, influenced by weaknesses in WASH in schools. In separate discussions with girls in schools, the adolescent girls explained that they left school if they had their menses. Absence of doors meant absence of privacy on toilets, and combined with the lack of water was a constraining factor to their full 8 participation during the school day. Potential actions to be taken in collaboration with Education and Health are:  WASH in schools: (i) incorporate participatory designs generated by girls and boys for school WASH. The Project will test and scale suitable toilet construction and water supply in schools in partnership with other actors in the Center department; (ii) include hygiene promotion activities, including education on menstrual hygiene management for girls; and (iii) adopt Facility Management Plans by school administrations to ensure that toilets do not fall back into unhygienic conditions, but demonstrate standards that enable sustained access;  WASH and Health: (i) generate appropriate WASH and cholera prevention messages to women, men, boys and girls, traders and health professionals; and (ii) address challenges faced by women in the supply chain and marketing of water treatment products. H. Policy Waiver 30. In light of Haiti’s high level of debt distress and situation of urgent need following Hurricane Matthew, this project document seeks the approval of Executive Directors to provide IDA resources from the CRW (US$20 million equivalent) for this proposed additional financing in the form of all grants, rather than on Haiti’s current IDA terms. Haiti is a yellow light country, eligible for a mix of grants and credits in FY17 under its regular allocation and under any CRW allocation12. However, the post-disaster Joint Debt Sustainability Analysis (DSA) for Haiti, circulated to Executive Directors on November 16, 2016, finds the country at high risk of debt distress following Hurricane Matthew. The provision of financing in the form of all grants for the proposed operation is appropriate, as the provision of credits would further heighten Haiti’s risk of debt distress at a time of urgent need. On the basis of the November 2016 DSA, in FY18, Haiti will become eligible again for 100 percent grant financing from IDA. III. Proposed Changes Summary of Proposed Changes The proposed AF would scale up the Project’s development impact by expanding the scope and financing of activities under each of the three components by: (i) financing small repairs to bring water supply systems back into operation; and (ii) rehabilitating water supply systems in rural areas and small towns affected by Hurricane Matthew. The level II restructuring will entail: (i) reallocating grant proceeds between disbursements categories to align the respective disbursement and outstanding commitment amounts for each category; (ii) updating the Results Framework to include additional project beneficiaries resulting from the activities to be financed under this AF; and (iii) amending the Project Financing Agreement to include the financing of resettlement compensation. Change in Implementing Agency Yes [ ] No [ X ] Change in Project's Development Objectives Yes [ ] No [ X ] Change in Results Framework Yes [ X ] No [ ] 12 Under the CRW’s implementation framework for IDA17, the terms of assistance for CRW financing are identical to those under which regular IDA assistance is provided to a particular country. 9 Change in Safeguard Policies Triggered Yes [ ] No [ X ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ X ] No [ ] Change in Legal Covenants Yes [ ] No [ X ] Change in Loan Closing Date(s) Yes [ ] No [ X ] Cancellations Proposed Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ X ] No [ ] Change in Disbursement Estimates Yes [ X ] No [ ] Change to Components and Cost Yes [ X ] No [ ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ ] No [ X ] Change in Procurement Yes [ ] No [ X ] Change in Implementation Schedule Yes [ ] No [ X ] Other Change(s) Yes [ ] No [ X ] Development Objective/Results PHHHDO Project’s Development Objectives Original PDO The proposed objectives of the Project are to: (i) increase access to improved water supply and sanitation in targeted rural areas and small towns in zones affected by cholera; (ii) strengthen the Recipient ’s water and sanitation service delivery mechanism at the deconcentrated level; and (iii) improve the Recipient’s capacity to respond promptly and effectively to an Eligible Emergency. Change in Results Framework PHHCRF Explanation: The Results Framework will be adjusted to reflect the intended outcomes of repairs and rehabilitation works under Component 2. It is estimated that approximately 385,000 people will benefit from small repairs to and rehabilitation of water supply systems and improved water sources through new household connections and water kiosks. This increase is reflected in the “Direct Project Beneficiaries” PDO Indicator, where it is further disaggregated by gender. Expected results to be achieved by the AF are additional to the benefits of the Parent Grant, and are included in the Results Framework, where relevant. A detailed list of these additional results is included below: • 300,000 people to benefit from small and quick repairs to water supply systems; • 85,000 people gaining access to improved water sources through new household connections and water kiosks, as a result of rehabilitation works; • At least 5 additional professional operators trained under the AF; • At least 20 latrine blocks for public institutions or spaces constructed or rehabilitated with management and maintenance arrangements in place. Compliance PHHHCompl 10 Other Changes to Safeguards PHHOCS Explanation: The proposed AF will include expenditures that may occur due to possible involuntary resettlement, and an amendment to the Financing Agreement of the Parent Grant will also be made to reflect this change. As part of the Parent Grant and the AF's water supply systems rehabilitation efforts, it is foreseen that small pieces of land will be used for the placement of new kiosks or fountains, or for small tanks or wells. Resettlement costs resulting from these activities are proposed to be included as part of the project due to insufficient local government resources and bureaucratic difficulties in the central government for channeling resources to the local level. Such costs could include replacement or repair costs for lost or damaged infrastructure, restoration or repair costs of community infrastructure, and compensation of business interruption and loss of economic income. Following the Preparation of Investment Project Financing and OP/BP 10.00 instructions, the Bank approved on May 1, 2017 the financing of Resettlement Compensation of up to US$200,000 under the Parent Project and AF. An amendment to the Parent Grant’s Financing Agreement will be made to include these expenses. Covenants - Additional Financing ( Sustainable Rural and Small Town Water Supply and Sanitation Additional Financing - P163194 ) Source of Finance Description of Funds Agreement Date Due Recurrent Frequency Action Covenants Reference To facilitate the carrying out of the Project, the Recipient shall make the proceeds of the Financing available to DINEPA under an DINEPA amended Subsidiary Subsidiary IDWT Agreement Agreement 31-Oct-2017 New (Schedule 2, between the Section I.B.1) Recipient, acting through the MTPTC and the MEF, and DINEPA, under terms and conditions approved by the Association. Financial The Recipient Management, shall not later than Financial six (6) months IDWT Reports and after the Effective 30-Apr-2018 New Audits Date recruit an (Schedule 2, external auditor Section II.B.4) based on terms of 11 reference acceptable to the Association to carry out the annual audits of such Financial Statements referred to in Section 4.09(b) of the General Conditions. Prior to the carrying out of any works under the Project, the Recipient shall cause DINEPA to: (i) carry out an environmental and Safeguards social screening IDWT (Schedule 2, 31-Oct-2017 New and assessment of Section I.G.2) the proposed activities; (ii) carry out a resettlement screening and assessment of the proposed activities, if need be. Prior to the carrying out of any works under the Project, the Recipient shall cause DINEPA to, as applicable, Safeguards prepare plans for IDWT (Schedule 2, 31-Oct-2017 New environmental Section I.G.2) management or resettlement, acceptable to the Association, all in accordance with the ESMF and the RPF. For purposes of Sub-Grants carrying out Part 1 IDWT (Schedule 2, 31-Oct-2017 New (c)(iii) of the Section I.D.1) Project, the 12 Recipient shall cause DINEPA to: (i) select an OP in accordance with criteria and procedures acceptable to the Association, as set forth in the Project Operations Manual; and thereafter (ii) enter into a Sub-grant Agreement with the selected OP under terms and conditions acceptable to the Association. Conditions PHCondTbl Source Of Fund Name Type IDWT Subsidiary Agreement (Article Effectiveness IV, Section 4.01 (a)) Description of Condition The Subsidiary Agreement has been amended on behalf of the Recipient, and DINEPA, on terms and conditions acceptable to the Association. PHCondTbl Source Of Fund Name Type IDWT Project Operations Manual Effectiveness (Article IV, Section 4.01 (b)) Description of Condition The Project Operations Manual has been revised, updated and adopted by the Recipient and DINEPA, in form and substance satisfactory to the Association. Risk PHHHRISKS Risk Category Rating (H, S, M, L) 1. Political and Governance Substantial 2. Macroeconomic Substantial 3. Sector Strategies and Policies Substantial 4. Technical Design of Project or Program Moderate 5. Institutional Capacity for Implementation and Sustainability Substantial 6. Fiduciary Substantial 13 7. Environment and Social Moderate 8. Stakeholders Substantial 9. Other Substantial OVERALL Substantial Finance PHHHFin Loan Closing Date - Additional Financing ( Sustainable Rural and Small Town Water Supply and Sanitation Additional Financing - P163194 ) Source of Funds Proposed Additional Financing Loan Closing Date IDA Grant from CRW 30-Sep-2021 Change in Disbursement (including all Estimates sources of Financing)PHHCD E Explanation: The expected estimates indicated in the table below refer to both the revised Parent Grant and projected AF disbursements. Parent Grant estimates have been revised to reflect the change in pace of implementation due to the passage of Hurricane Matthew as well as to delays in finalizing engineering designs and procuring corresponding works. Expected Disbursements (in USD Million)(including all Sources of Financing) Fiscal Year 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Annual 7.00 13.70 20.50 20.60 8.20 0.00 0.00 0.00 0.00 0.00 Cumulative 7.00 20.70 41.20 61.80 70.00 0.00 0.00 0.00 0.00 0.00 Allocations - Additional Financing ( Sustainable Rural and Small Town Water Supply and Sanitation Additional Financing - P163194 ) Disbursement % (Type Source of Category of Allocation Currency Total) Fund Expenditure Proposed Proposed (1) Goods, works, non- consulting services, IDWT USD consulting services and 18,500,000.00 100.00 Operating costs for the Project Total: 18,500,000.00 (2) Emergency IDAT USD Expenditures under the 1,450,000.00 100.00 CER Part of the Project (3) Resettlement compensation and IDAT USD 50,000.00 100.00 assistance for Displaced Persons under Parts 2 and 14 3 of the Project Total: 1,500,000.00 Reallocation between Disbursement Categories PHHRBDC Explanation: A reallocation is proposed between disbursement categories to align the respective disbursement and outstanding commitment amounts for each category, particularly with regard to disbursements under the CERC. Current Category of Disbursement % (Type Ln/Cr/TF Currency Allocation Expenditure Total) Current Proposed Current Proposed 33,396,000. 32,870,700. IDA-D0680 XDR GP CW NCS CS IOC 100.00 100.00 00 00 Emergency Exp und CER 2,551,000.0 IDA-D0680 726,000.00 100.00 100.00 part 0 2,178,000.0 IDA-D0680 PPF REFINANCING 768,800.00 0.00 100.00 0 IDA-D0680 Designated Account 0.00 0.00 0.00 0.00 IDA-D0680 Designated Account 0.00 0.00 0.00 0.00 Resettlement IDA-D0680 0.00 109,500.00 0.00 100.00 compensation 36,300,000. 36,300,000. Total: 00 00 Components PHHHCompo Change to Components and Cost PHHCCC Explanation: Component 1 - Institutional Strengthening, Capacity Building and Project Management (US$2 million): Under this component, resources will be used to develop hydrogeological studies to help consolidate knowledge on groundwater resources across the country, including the potential impacts of climate change on their recharge, storage and quality, and enable the rehabilitated systems under the AF to be more resilient and robust. In addition, by continuing to strengthen sector planning and deconcentration, the AF will help with building DINEPA’s capacity to mobilize resources in priority areas, including for emergencies such as hurricanes, floods and cholera outbreaks. The AF will also finance a national workshop to reflect on the response of its different deconcentrated structures to Hurricane Matthew and how they can draw lessons from this experience to improve planning and infrastructure and service resiliency, and will continue to support the piloting of innovative approaches for conserving and restoring the watersheds that supply water to the small towns benefitting from project activities. Component 2 - Water Supply and Sanitation (US$14 million): The proposed AF will expand the project 15 area and works financed under Component 2 to zones affected by Hurricane Matthew, including the Nord- Ouest department. These additional funds will focus on small repairs to bring water supply systems back into operation and ensure full rehabilitation of water supply systems in rural areas and small towns affected by the hurricane. Moreover, the construction or rehabilitation of additional latrine blocks for public institutions or spaces will ensure the continued efforts of this component to increase access to safe water and sanitation in schools, health facilities and public spaces such as public markets, to help curb the spread of water- and excreta-related diseases such as cholera in zones hit by the hurricane. In addition, the AF will finance DINEPA's chlorine needs for small town water supply systems across the country and help with consolidating its procurement and distribution. Component 3 - Contingency Emergency Response (US$4 million): Additional funds will be allocated to Component 3 in order to further strengthen the Client's ability to rapidly respond in the event of an eligible emergency. The increased cost for this component comprise additional funds for future emergencies, as well as funds that were committed in response to needs identified by DINEPA following the passage of Hurricane Matthew. The Bank notified the Minister of Economy and Finance, through a letter dated March 29, 2017, that all withdrawal conditions under Category (2), as stated in Section IV, Annex 2 of the Financing Agreement, had been satisfied and therefore all withdrawal operations relative to Category (2) were authorized. Current Component Proposed Component Current Cost Proposed Action Name Name (US$M) Cost (US$M) Institutional Institutional Strengthening, Strengthening, Capacity 17.35 19.35 Revised Capacity Building and Building and Project Project Management Management Water Supply and Water Supply and 31.65 45.65 Revised Sanitation Sanitation Contingent Emergency Contingent Emergency 1.00 5.00 Revised Response Response Total: 50.00 70.00 Other Change(s) PHHHAppS Implementing Agency Type Action Name National Water and Sanitation Directorate Implementing Agency No change (DINEPA Change in Procurement Explanation: Procurement, under the proposed AF, will continue to be carried out by the DINEPA with support from OREPAs at the department level. Procurement will be executed in accordance with the ‘World Bank Procurement Regulations for Borrowers under Investment Policy Financing’ (July 2016) (‘Procurement Regulations’), as well as the provisions stipulated in the Procurement Plan and the Operations Manual. 16 Experience to date shows limited procurement capacity of DINEPA in particular in the management of large contracts as confirmed by the procurement capacity assessment carried out in March 2017. To maintain sound procurement processes, procurement transactions of the Parent Grant and the AF for each fiscal year will be audited by independent auditors, acceptable to the World Bank, in accordance with appropriate procurement audit principles. The procurement audit report will be furnished to the World Bank, along with other information concerning procurement records, and documentation and reviews. In accordance with new Procurement practices, a Project Procurement Strategy for Development (PPSD) has been prepared for the AF. It identifies the appropriate selection methods, market approach, and type of review by the World Bank. Most activities under the proposed project will be carried out through either national or international competition. A Procurement Plan, acceptable to the World Bank, has also been prepared. Procurement arrangements are described in the Operations Manual. IV. Appraisal Summary Economic and Financial Analysis Explanation: As the type of interventions to be financed under the AF will be substantially of the same nature as those under the Parent Grant, and as the assumptions and expected impacts used in the Parent Grant's cost- benefit analysis are still valid, there will be no changes made under the AF. The following summarizes the results from the Parent Grant's economic and financial analysis. As in the case of the Parent Grant, the AF will increase sustainable access to water supply and sanitation (WSS) in targeted rural areas and small towns, contributing to the higher level objective of improved health in Haiti, particularly by curbing the spread and severity of cholera in selected zones. The impacts of increased access to WSS on public welfare are multi-faceted and may be indirect; however, by providing better access to improved WSS to poor households, benefits – from the easily identifiable and quantifiable (value of water and willingness to pay for water, cost savings and consumer surplus) to the more intangible and difficult to measure (living standards, health, well-being, environmental protection) can be substantially increased. The assessment of the water benefits was based on, and will continue to be based on: (i) the actual willingness-to-pay as a proxy of the value of water; (ii) the cost savings accruing to beneficiaries; and (iii) the surplus accruing to (previously unconnected) beneficiaries. Water costs include: (i) direct investment costs and an allocated portion of project management costs and institutional support costs; and (ii) incremental operating costs of water facilities. The assessment of sanitation benefits is based on the cost savings accruing to households who would be offered the possibility of adequately emptying their latrines instead of being obliged to build a new latrine. Related costs include the initial investment in sludge handling and removal and the operating costs of facilities. The Economic Internal Rate of Return (EIRR) of the water-related activities was estimated at 11 percent and their Net Present Value (NPV) using a discount rate of 10 percent is estimated at U$1.9 million. The EIRR and NPV of the sludge handling and removal activities were estimated at 11.9 percent and US$0.1 million, respectively. The sensitivity analysis shows that the project outcome is above all sensitive to investment cost overruns. The financial impact of project activities was assessed by the Financial Internal Rate of Return (FIRR) derived from the costs-benefits analysis. Financial calculations were carried out from the perspective of DINEPA and OPs and take into account the financial revenues and costs in the with/without project situations, including taxes and excluding non-cash generating benefits. The FIRR was estimated at 1.8 percent, which evidences the need to continue to subsidize the development of the rural water supply sector. The difference between the EIRR and the FIRR is attributable to the substantial portion of economic benefits that accrue to the consumers (cost savings and consumer surplus), which amount to one 17 third of total economic benefits. Improvements in sustainability of service development and delivery will result from: (i) the increased predictability of sectoral resources that would be facilitated by the shift to a programmatic approach. By planning ahead under this approach, adequate resources for investments, staff and O&M costs can be secured to achieve sector objectives and consolidate progress; and (ii) the enhanced and socially- acceptable O&M cost recovery policies that would be implemented by the OPs. This policy seeks to break the vicious circle of declining service quality for lack of dedicated management (as opposed to community management widely perceived as having failed at being sustainable for rural water supply in Haiti) and maintenance, reduced willingness to pay and further reduction of funds available for repairs and expansions. Technical Analysis Explanation: Similar to the Parent Grant, the AF will rely on approaches, methodologies, technical designs and technologies appropriate for the Haitian context, as reflected in DINEPA’s 2013 WSS technical guidelines. These include: Water supply. The Project will meet water supply needs through: (i) spring-fed gravity piped networks; and/or (ii) individual or collective boreholes (using hand pumps, or solar or electric power) depending on the specific conditions in each community. DINEPA is familiar with these technical options which offer high quality water with a minimum of complexity and treatment, and, as operating costs and maintenance requirements are minimal, are thus suitable for management by local OPs and Water and Sanitation Committees (CAEPAs). Management of water supply systems. As under the Parent Grant, CAEPAs will enter into delegation contracts with OPs who will operate and maintain the water supply system and collect payments. The OP program is at the heart of the Project, and this focus on cost recovery, commercial performance and capacity to set dedicated maintenance funds aside will help DINEPA improve sustainability and resilience of water service delivery in rural areas and small towns, including in those affected by the hurricane. In addition, the AF will finance a workshop to reflect on DINEPA’s emergency response mechanisms and their efficiency, and to draw lessons from this experience with Hurricane Matthew to improve design, as well as rehabilitation and construction of water supply infrastructure. This workshop will help improve DINEPA’s technical guidelines by recommending complementary physical and non-physical measures to improve infrastructure and service resiliency in the face of inclement weather. These recommendations will be taken into account for the designs and works to be financed under the AF. Institutional sanitation. Latrine blocks to be built in schools and markets will follow DINEPA’s technical guidelines and take into account gender-specific needs. DINEPA will also provide technical guidance to the MSPP in equipping health facilities in WSS in the selected communities. Management of institutional sanitation facilities by OPs will also be tested. In addition, the post-Matthew assessments conducted with the GoH and field visits conducted jointly by the Haiti water team and DINEPA have provided important information in the identification of communities in the southern peninsula and along the northwest coast which require repairs and rehabilitation. While the AF will focus on small towns, other partners have focused on rural areas (UNICEF and multiple NGOs, for example) and on larger urban areas (IDB and AECID). Four tenders are under preparation both for the South and North regions. This includes two drilling campaigns for around 100 boreholes, launched as open tender for both geophysical studies and drilling. Small repairs and extensions for damaged piping systems are under preparation and will be launched with quotation requests 18 (Quality and Cost-Based Selection). Finally, it is estimated that by the end of July 2017, DINEPA will have close to 30 detailed engineering designs for water systems ready for bidding, and gradually launch construction of these systems by the end of 2017. Social Analysis PHHASSA Explanation: Thus far, the Project has not had any adverse social impacts, no involuntary resettlement impacts have been identified, no Resettlement Action Plans (RAPs) have been prepared and no voluntary land donation has occurred to date. The proposed AF involves an amendment to the Financing Agreement of the Parent Grant to include expenditures that may occur due to possible involuntary resettlement due to the placement of new kiosks or fountains, or for small tanks or wells, in currently inhabited or occupied areas. Resettlement impacts may also occur as a result of the rehabilitation of water supply systems in rural areas and small towns affected by Hurricane Matthew. The existing Resettlement Policy Framework (RPF) was updated, consulted and disclosed on DINEPA's website before appraisal (on May 3, 2017). Following these consultations, an updated version including an account of the feedback provided during consultations was disclosed on the Bank's website on May 5, 2017. During project implementation, the involuntary resettlement impacts will be screened upfront through a checklist as part of the sub-project Environmental and Social Management Plans (ESMPs). If impacts are detected, RAPs or abbreviated RAPs will be prepared and implemented before the start of works. The Project has a good presence in the field via social mobilization teams, and by design includes a number of citizen engagement initiatives through its support of local water and sanitation committees (CAEPAs). Social mobilizers are in close contact with project beneficiaries to ensure that they are part of the decision-making process for the project activities. An emphasis will be placed on improving the participation of women in CAEPAs. These practices will be continued under the proposed AF. The documentation and monitoring of grievance redress will also be strengthened under the proposed AF. Because activities to be financed under the proposed AF are similar in nature and impact as the ones under the Parent Grant, the proposed AF will be covered by the current RPF. Environmental Analysis PHHASEnvA Explanation: Environmental safeguards under the Parent Grant are currently assessed as Moderately Satisfactory due to long delays for the finalization of the Environmental and Social Management Framework (ESMF). Beyond this, safeguard implementation has been smooth. Two ESMPs were developed for works in the Sud-Est and Ouest departments and were disclosed on the Bank's and DINEPA's websites, and have been satisfactorily implemented under the supervision of a capable environmental specialist recruited by DINEPA. The ESMPs covered the following types of works: repairs to and rehabilitation of water supply systems, installation of chlorination points, pipe works, and the construction of latrine blocks. Current works under the Parent Grant have not resulted in any influx of labor. The AF will finance similar works, but particularly in areas hit hard by Hurricane Matthew (Sud, Grande and Nippes, as well as the Nord-Ouest department). Similarly, these works will repair or rebuild existing water transport infrastructure as well as sanitation infrastructure in schools, health centers, and markets. The proposed AF will also set aside funding to finance DINEPA’s chlorine needs for small towns in all departments of Haiti, and support DINEPA in its procurement, distribution and storage of the product. The list of localities to benefit from rehabilitation and repair activities will be finalized during implementation. The proposed AF is slated as a Category B project, similar to the Parent Grant and will be covered by the current ESMF, due to the similar nature of the proposed activities. To ensure best practice, as well as reflect the new project areas, the existing ESMF was updated, consulted and disclosed on DINEPA's website on May 3, 2017. Following these consultations, an updated version including an account of the 19 feedback provided during consultations was disclosed on the Bank's website on May 5, 2017. As needed, ESMPs will also be developed once the detailed designs are complete and the exact sites determined. Projects on International Waterways (OP/BP 7.50). This policy was triggered for the Parent Grant which fell under the exception to the notification requirement under OP 7.50 because it only finances and will continue to finance ongoing schemes (water supply systems) that: (i) will not adversely change the quality or quantity of water flows to the Dominican Republic; and (ii) will not be adversely affected by the Dominican Republic's possible water use. Under the proposed AF, the Project will intervene only in areas affected by Matthew (Sud, Nippes, Grande Anse and Nord-Ouest departments), and will not involve the use of water or potential pollution on any international waterway. Risk PHHASRisk Explanation: The overall risk rating of the proposed AF is commensurate with the overall risk to implementation of the Project and is assessed as “Substantial”, driven mainly by: (i) Political and Governance risk is rated as “Substantial”: Haiti's fragility and high degree of political instability continue to present a risk for the Project. The Bank will continue to work closely with partners on the ground to identify ways to deliver results. (ii) Macroeconomic risk is rated as “Substantial”: As economic growth continues to decelerate, revenue mobilizations remain weak in the wake of Hurricane Matthew when more needs have arisen, macroeconomic risk remains of high significance to the Project. (iii) Sector Strategies and Policies risk is rated as “Substantial”: Haiti has now taken important steps towards establishing a clear vision and intervention principles for the sanitation sector (“Dialogue Sectoriel sur l’Assainissement” in May 2016 and consultations in December 2016 with NGOs active in the sanitation sector), but the operationalization of this vision has yet to happen. This may continue to delay the implementation of sanitation-related activities. The Bank is pursuing discussions with DINEPA and financial and technical partners in order to jointly develop a strategy and action plan to scale up gender- sensitive sanitation and hygiene interventions in rural areas and small towns. These discussions include the piloting of results-based contracts to roll out sanitation activities in the Centre Department. (iv) Institutional Capacity for Implementation and Sustainability risk is rated as “Substantial”: Although DINEPA’s deconcentration efforts have generally advanced (for example, a procurement specialist was transferred to one of the 4 OREPAs, and 3 more are being recruited for the remaining OREPAs), DINEPA continues to have limited capacity in sanitation, social mobilization and financial management at the deconcentrated level. Component 1 will continue to strengthen these aspects, and additional consultants will be hired when needed. (v) Fiduciary risk rated as “Substantial”: Financial Management risks continue to exist at the country level and there is a capacity risk associated with the devolution of FM responsibilities to DINEPA's deconcentrated structures. The Project will continue to use the existing FM framework in place at DINEPA for on-going projects financed by the Inter-American Development Bank, Spanish Agency for International Development Cooperation, UNICEF and the Swiss Agency for Development and Cooperation. (vi) Stakeholders risk is rated as “Substantial”. Multisectoral aspects: The lack of collaboration between WSS and health actors may put at risk the achievement of the objectives related to sanitation and hygiene activities. The Project will build on existing collaboration mechanisms at the local level and provide joint 20 training for these actors. Communities: The lack of up-front buy-in by communities for new WSS management models, as well as the existence of different models or tariffs in neighboring communities may put at risk the sustainability of volumetric billing and the viability of the OP model. The Project recognize the importance of social mobilization to collaborate and communicate with communities before, during and after works are executed. Additionally, a number of communities considered under the previous operation, but which had originally rejected the principles of intervention, have since observed the improved level of service in the EPAR beneficiary communities and have requested support to implement the OP model. In parallel, the Project will also use lessons and recommendations from an ongoing evaluation of the performance of and institutional environment in which OPs are providing services, to continue scaling up this management model in Haiti, including considerations for citizen engagement and communication. (vii) Other risk rated as “Substantial” is associated with sector sustainability given DINEPA's dependency on external assistance, which remains relevant for the AF. The Project will continue to work with DINEPA, Ministry of Public Works, Transportation and Communications, Ministry of Economy and Finance, as well as other ministries and FTPs to address the long-term sustainability of the current DINEPA structure. The Project has taken important steps towards this long-term goal as evidenced by recent progress on developing tools in support of DINEPA’s national programming mechanism for deconcentrated service delivery, including (i) a national WSS baseline; (ii) a roadmap for universal WSS coverage by 2030; (iii) a Medium Term Expenditure Framework for the sector; and (iv) a 3-year rolling consolidated Program Budget. Climate and disaster risks. An assessment of the potential exposure of AF activities to climate and geophysical hazards performed using the Climate and Disaster Risk Screening Tool established that current and future potential impact due to exposure from climate and geophysical hazards on project subsector/components will pose moderate risks to the Project. The exposure to climate and geophysical hazards at the project location can be summarized as follows: (i) moderate risk for current extreme temperatures based on actual increments of 0.45 °C, and high risk for future extreme temperature based on an expected increase of annual average temperature by 0.5 °C to 2.3 °C by 2060; (ii) moderate risk for current extreme precipitation and flooding given that mean annual rainfall has decreased by 5mm per month per decade since 1960, and low risk for the future as rainfall projections are expected to decrease; (iii) moderate risk for current droughts as these are frequently experienced in the Nord-Ouest, Artibonite, Nord-Est and Centre departments due to erratic rainfall patterns coupled with limited water management infrastructure; (iv) moderate risk for strong winds associated with hurricanes and tropical storms. The wind speed from tropical cyclones is expected to increase but estimates are highly uncertain; (v) moderate risk for current landslides as years of deforestation have left the upper reaches of the western basins bare; (vi) and high risk for other hazards such as hurricanes and cyclones given that Haiti has been hit by 6 hurricanes over the last 30 years. The assessment also concluded that the non-physical components, in combination with the water sector development context, significantly reduce the impacts of hazards. This screening tool will be used to: (i) strengthen the consideration of climate and disaster risks in project design activities; (ii) inform technical feasibility studies, assessments and designs; and (iii) encourage local stakeholder consultations and dialogues to enhance resilience measures and overall success of the Project. In addition, the Contingent Emergency Response component will be used as a mechanism for rapid response in the event of an eligible emergency. 21 V. World Bank Grievance Redress 31. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/GRS. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org. 22 Annex 1: Revised Results Framework and Monitoring Indicators Haiti: Sustainable Rural and Small Towns Water Supply and Sanitation Additional Financing (P163194) Project Sustainable Rural and Small Town Water Supply and Project Additional Financing Status: FINAL Name: Sanitation Additional Financing (P163194) Stage: Team Requesting Leader(s) Jean-Martin Brault LCC8C Created by: Jean-Martin Brault on 15-Feb-2017 Unit: : Product Responsible IBRD/IDA GWA03 Modified by: Jean-Martin Brault on 08-May-2017 Line: Unit: Country: Haiti Approval FY: 2017 LATIN AMERICA AND Financing Region: Investment Project Financing CARIBBEAN Instrument: Parent Project Parent Project P148970 HT Sustainable Rural and Small Towns Water and Sanitation Project (P148970) ID: Name: Project Development Objectives Original Project Development Objective - Parent: The proposed objectives of the Project are to: (i) increase access to improved water supply and sanitation in targeted rural areas and small towns in zones affected by cholera; (ii) strengthen the Recipient’s water and sanitation service delivery mechanism at the deconcentrated level; and (iii) improve the Recipient’s capacity to respond promptly and effectively to an Eligible Emergency. Proposed Project Development Objective - Additional Financing (AF): Results Core sector indicators are considered: Yes Results reporting level: Project Level Project Development Objective Indicators 23 Corpor Status Indicator Name Unit of Measure Baseline Actual(Current) End Target ate No Change A national programming Number Value 0.00 1.00 5.00 mechanism for deconcentrated Date 30-Sep-2015 31-Mar-2017 30-Sep-2021 WSS service delivery is operationalized, as evidenced Comment by tools in place No Change Required functions Number Value 0.00 0.00 6.00 deconcentrated to targeted Date 30-Sep-2015 28-Aug-2015 30-Sep-2021 OREPA Comment Revised Piped water systems managed Number Value 0.00 2.00 25.00 sustainably by a professional Date 30-Sep-2015 31-Mar-2017 30-Sep-2021 operator (OP) under the Project Comment This end target includes 20 under the Parent Grant and 5 under the AF New Piped water systems managed Number Value 0.00 0.00 5.00 sustainably by a professional Sub Type Date 14-Jun-2017 14-Jun-2017 30-Sep-2021 operator (OP) in zones affected by Hurricane Matthew Breakdown Comment Revised Number of people in rural areas Number Value 0.00 0.00 235000.00 provided with access to Date 30-Sep-2015 28-Aug-2015 30-Sep-2021 Improved Water Sources under the Project Comment This end target includes 150,000 people under the Parent Grant and 85,000 under the AF 24 New Number of people in rural areas Number Value 0.00 0.00 85000.00 provided with access to Sub Type Date 14-Jun-2017 14-Jun-2017 30-Sep-2021 Improved Water Sources in zones affected by Hurricane Breakdown Comment Matthew Revised People in rural areas provided Number Value 0.00 117500.00 with access to Improved Water Sub Type Date 30-Sep-2015 30-Sep-2021 Sources - female Breakdown Comment No Change People provided with access to Number Value 0.00 0.00 30000.00 improved sanitation services Date 30-Sep-2015 31-Mar-2017 30-Sep-2021 Comment No Change People provided with access to Number Value 0.00 30000.00 “improved sanitation Sub Type Date 30-Sep-2015 30-Sep-2021 facilities”- rural Breakdown Comment No Change People in rural areas provided Number Value 0.00 15000.00 with access to “improved Sub Type Date 30-Sep-2015 31-Mar-2017 30-Sep-2021 sanitation facilities” - female Breakdown Comment No Change Priority cholera communes Number Value 0.00 0.00 6.00 targeted under the Project Date 30-Sep-2015 31-Mar-2017 30-Sep-2021 Comment Revised Direct project beneficiaries Number Value 0.00 45000.00 685000.00 Date 30-Sep-2015 31-Mar-2017 30-Sep-2021 Comment This end target includes 300,000 beneficiaries under the Parent 25 Grant and 385,000 under the AF New Project beneficiaries of small Number Value 0.00 0.00 385000.00 repairs and rehabilitation works Sub Type Date 14-Jun-2017 14-Jun-2017 30-Sep-2021 following the passage of Hurricane Matthew Breakdown Comment No Change Female beneficiaries Percentage Value 0.00 0.00 50.00 Sub Type Supplemental No Change Project beneficiaries in Number Value 0.00 0.00 75000.00 localities on the border with the Sub Type Date 30-Sep-2015 31-Mar-2017 30-Sep-2021 DR including bi-national markets Breakdown Comment Intermediate Results Indicators Corpor Status Indicator Name Unit of Measure Baseline Actual(Current) End Target ate No Change Departments covered by WSS Number Value 0.00 10.00 baseline information Date 30-Sep-2015 30-Sep-2021 Comment No Change DINEPA conducts an annual Yes/No Value No No Yes joint Government/ partners Date 30-Sep-2015 28-Aug-2015 30-Sep-2021 sector review Comment No Change Grievances registered related to Percentage Value 0.00 0.00 80.00 delivery of project benefits Date 30-Sep-2015 31-Mar-2017 30-Sep-2021 addressed (%) Comment No Change Grievances related to delivery Number Value 0.00 0.00 100.00 26 of project benefits that are Sub Type addressed-(number) Supplemental No Change At least one OREPA uses the Yes/No Value No No Yes baseline developed under the Date 30-Sep-2015 31-Mar-2017 30-Sep-2021 Project to prioritize interventions and inform Comment DINEPA’s Program Budget No Change At least one OREPA has Yes/No Value No No Yes installed an accounting system Date 30-Sep-2015 28-Aug-2015 30-Sep-2021 which facilitates the consolidation of financial Comment information at the central level No Change CAEPAs that include at least Percentage Value 0.00 4.00 70.00 20 percent female Date 30-Sep-2015 31-Mar-2017 30-Sep-2021 representation in project area Comment No Change DINEPA supports the design of Yes/No Value No No Yes a Regional joint monitoring Date 30-Sep-2015 31-Mar-2017 30-Sep-2021 mechanism for pandemics is established, as evidenced by Comment triannual meetings with the MSPP and biannual meetings with DR representatives No Change A fecal sludge management Yes/No Value No No Yes service chain for rural areas Date 30-Sep-2015 28-Aug-2015 30-Sep-2021 and small towns is defined Comment Revised People benefitting from Number Value 0.00 0.00 400000.00 consolidation work (small Date 30-Sep-2015 28-Aug-2015 30-Sep-2021 repairs and expansions) Comment This end target includes 100,000 people 27 under the Parent Grant and 300,000 under the AF New People benefitting from Number Value 0.00 0.00 300000.00 consolidation work (small Sub Type Date 14-Jun-2017 14-Jun-2017 30-Sep-2021 repairs and expansions) in zones affected by Hurricane Breakdown Comment Matthew Revised People benefitting from Number Value 0.00 200000.00 consolidation work - female Sub Type Date 30-Sep-2015 30-Sep-2021 Breakdown Comment Revised New piped household water Number Value 0.00 200.00 7750.00 connections that are resulting Date 30-Sep-2015 31-Mar-2017 30-Sep-2021 from the project intervention Comment This end target includes 6,750 connections under the Parent Grant and 1,000 under the AF New New piped household water Number Value 0.00 0.00 1000.00 connections that are resulting Sub Type Date 14-Jun-2017 14-Jun-2017 30-Sep-2021 from project interventions in zones affected by Hurricane Breakdown Comment Matthew No Change Improved community water Number Value 0.00 135.00 points constructed or Date 30-Sep-2015 30-Sep-2021 rehabilitated under the Project Comment No Change People trained to improve Number Value 0.00 0.00 75000.00 28 hygiene behavior/sanitation Date 30-Sep-2015 31-Mar-2017 30-Sep-2021 practices under the Project Comment No Change People trained to improve Number Value 0.00 0.00 37500.00 hygiene behavior/sanitation Sub Type Date 30-Sep-2015 31-Mar-2017 30-Sep-2021 practices - female Breakdown Comment No Change Communities where DINEPA Number Value 0.00 0.00 20.00 and MSPP local structures have Date 30-Sep-2015 31-Mar-2017 30-Sep-2021 jointly been trained or collaborated in water supply, Comment hygiene promotion and sanitation themes and activities No Change Students and teachers Number Value 0.00 0.00 20000.00 benefitting from improved Date 30-Sep-2015 31-Mar-2017 30-Sep-2021 sanitation facilities in public schools under the Project Comment No Change Students and teachers Number Value 0.00 10000.00 benefitting from improved Sub Type Date 30-Sep-2015 30-Sep-2021 sanitation facilities in public schools - female Breakdown Comment Revised Latrine blocks for public Number Value 0.00 0.00 80.00 institutions or spaces Date 30-Sep-2015 31-Mar-2017 30-Sep-2021 constructed or rehabilitated with management and Comment This end target maintenance arrangements in includes 60 place under the Project blocks under the Parent Grant and 20 under the AF New Latrine blocks for public Number Value 0.00 0.00 20.00 institutions or spaces Sub Type Date 14-Jun-2017 14-Jun-2017 30-Sep-2021 29 constructed or rehabilitated Breakdown Comment with management and maintenance arrangements in place in zones affected by Hurricane Matthew No Change Female and youth beneficiaries Percentage Value 0.00 0.00 70.00 rating safety in access to water Date 30-Sep-2015 31-Mar-2017 30-Sep-2021 and sanitation services as satisfactory or better Comment No Change Households with latrine built Number Value 0.00 0.00 1900.00 during project implementation Date 30-Sep-2015 28-Aug-2015 30-Sep-2021 and of which use is verified Comment 30 Annex 2: PPSD – Executive Summary for Procurement Plan Haiti: Sustainable Rural and Small Towns Water Supply and Sanitation Additional Financing (P163194) 1. General: Procurement for the proposed Project will be carried out in accordance with the “World Bank’s Procurement Regulations for Borrowers under Investment Policy Financing” dated July 1, 2016. As per the requirements of the World Bank’s New Procurement Framework (NPF), the first draft of a comprehensive Project Procurement Strategy for Development (PPSD) was carried out and identified the appropriate selection methods, market approach and type of review by the World Bank. The objective was to improve procurement efficiency. Most activities under the proposed Project will be carried out through National or International Competition. An acceptable Procurement Plan was also prepared. Procurement arrangements for the Contingent Emergency Response Component are described in the Operational Manual. For International Competition, in addition to World Bank Standard and Sample Bidding Documents, the DINEPA will use standard bidding documents agreed with the CNMP (Commission Nationale des Marchés Publics). 2. Project Procurement Development Objectives (PPDO): To increase procurement efficiency and ensure value for money that contributes towards enhancing reliability and continuity in drinking water supply services in the Grand South Region affected by Hurricane Matthew. 3. Project Procurement Result Indicators: the following indicators will measure the achievement of the PDO: (i) Bidding processes initiated as per Procurement Plan with no substantial delays and no rebidding, (ii) No substantial cost and time overrun of the contracts, and (iii) Successful implementation of Key Performance Indicators in the key contracts. 4. Procurement institutional Arrangements: Procurement and contract management implementation will be the responsibility of DINEPA’s Project Coordinator and DINEPA’s Procurement Department (DPEM). Project implementation teams have been established. The project implementation teams will be supported by the Project Management Unit (PMU) at the DINEPA to be responsible for overall project coordination and reporting. The DPEM will be responsible to ensure proper quality of the design, procurement and construction management and supervision. 5. Client Capability and PMU Assessment: Project implementation will be the responsibility of the DINEPA under the “Ministère des Travaux Publics, Transports et Communications” who will be responsible for procurement, contract management, financial management, disbursement, safeguards, and monitoring and evaluation. Project implementation has been established. The project implementation teams will be supported by the OREPAs at the department level. The PMU will be responsible for overall project coordination and reporting, including monitoring compliance with safeguards, fiduciary, legal and other covenants. The PMU will be supported by an international consulting firm. It is envisaged that the PMU will take the lead on the institutional strengthening and capacity building. 31 6. PMU staffs have limited experience in handling contracts financed by the World Bank. The New Procurement Framework (NPF) is also new and procurement staffs involved in the Project will be trained on the different features of NPF and the Systematic Tracking and Exchanges in Procurement (STEP) system. The field level officers managing the contracts needs comprehensive contract management training. 7. Procurement risks analysis : Procurement main risks are in particular inherent to the following: (i) weak capacity of the implementing agency in procurement and management of large contracts; (ii) high risk and weak control environment, Haiti’s ability to manage public resources is undermined by poor security, outdated practices; (iii) limited local market with a few regional/international bidders with the required experience may result in lesser competition and higher bid prices, and (iv) delays in implementation due to the overall context conditions in Haiti, (v) delay in implementation from the Bidder’s side and time/cost over-run. Based on the overall assessment of the implementing agency and the information available on the procurement environment in Haiti, the overall procurement risk is judged to be high. 8. Key procurement under the proposed project: The total value of the Project is US$20.0 million, of which US$0.5 are allocated to project management, approximately US$16 million for procurement of water supply and sanitation works, including US$2.0 million for well drilling campaigns, and US$3.5 million for consulting services, as shown in the procurement plan below. Supply Positionning of the project 5.00 4.50 4.00 [CELLRANGE] [CELLRANGE] 3.50 [CELLRANGE] [CELLRANGE] RISK ESTIMATE [CELLRANGE] [CELLRANGE] 3.00 [CELLRANGE] [CELLRANGE] 2.50 [CELLRANGE] [CELLRANGE] 2.00 [CELLRANGE] 1.50 1.00 0.50 0.00 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% VALUE OF CONTRACTS 9. Market Analysis: Owing to the economic conditions and instability of the country, the possibility of attracting big reputable international companies could be limited. However, 32 communicating and consulting with the potential bidders would be important to have competition from the region. 10. Civil Works: The rehabilitation of the damaged potable water networks by the Hurricane Matthew and in the Grand Sud and Nord-Ouest regions, well drilling works, are civil works anticipated under the Component 2 and will be implemented by the DINEPA. In addition, Construction of new water supply systems will be executed after the completion of the feasibility studies. As per PPSD, appropriate procurement methods will be selected and mentioned in the procurement plan. 11. Goods and Non-Consulting Services: It is envisaged that the PMU will procure office equipment and furniture for its staff. Contracts will be of small value and will use request for quotation procedures. 12. Selection of Consultants: There are a number of important consultancy services under component 1 and 2 for hiring consulting firms to conduct all relevant feasibility studies, leading to the various works planned for this project, for improving the institutional knowledge and preparedness with regards to all aspects of water security and urban water management and other technical assistance activities to improve the capacity of OREPAs’ staff in implementing the project. As per PPSD, appropriate procurement methods will be selected and mentioned in the procurement plan. 13. Procurement Thresholds and Prior Review Thresholds. The Procurement Plan shall set forth those contracts, which shall be subject to the World Bank’s Prior Review for high risk environment. All other contracts shall be subject to Post Review by the World Bank. Spending Contract value Procurement method Contracts subject category (threshold) to prior checking Thousand US$ by World Bank 1. Work >3,000 ICB All between 1,000 and 3,000 NCB None ≤1,000 RFQ None 2 Goods >500 ICB All ≤500 RFQ/NCB None ≤150 RFQ None 3. Consultants > 300 >200 3. A National Firms ≤300 >100 No limit DC 3. B Consultants No limit Comparison of 3 CV >100 and specific missions 14. High risks procurement activities and contracts: High risk contracts during the course of the implementation of the additional financing. 33 Type of procurement Prior review High risk in US$ million Works (well drill, construction of new water supply systems and 16.00 equipment, rehabilitation of damaged water networks) Consulting Services (Feasibility Studies, Supervision of the execution 3.50 of works, mobilization and underground water studies) Total 19.50 Procurement Plan Budget Procurem Bank’s Review # Contract type Description Estimate ent (Prior / Post) Million US$) method 1 Works 16.00 1.1 Drilling campaign in prioritized zones RFQ Post Rehabilitation of water systems damaged by Hurricane 1.2 Matthew in the southern peninsula and the Nord-Ouest RFQ Post department Construction works of new water systems in the southern NCB / 1.3 Prior peninsula, the Nord-Ouest and other prioritized zones. RFB Connection to schools, health facilities, public spaces such 1.4 RFQ Post as market places in the departments affected by Matthew Construction and rehabilitation of latrine blocks in 1.5 identified schools, health facilities, public spaces such as RFQ Post market places in departments affected by Matthew 2 Consulting Services 3.50 Consultancy for feasibility studies for water systems in the 2.1 QCBS Post South Region, and north-west departments Consultancy for the diagnostic of water systems to rehabilitate due to the damages caused by Hurricane 2.2 QCBS Post Matthew in the South Region, and the Nord-Ouest department 2.3 Sanitation promotion campaign QCBS Post QCBS / 2.4 Work supervision Prior QBS QCBS / 2.5 Hire consultant/firm for groundwater study Prior QBS Total 19.50 Acronyms: ICB = International Competitive Bid QCBS = Quality and Cost-Based Selection NCB = National competitive Bid QBS = Quality Based Selection 34 DC= Direct Contracting RFQ = Request for Quotations RFB: Request for Bid 35