Document of The World Bank FOR OFFICIAL USE ONLY Report No. 9872-UNI STAFF APPRAISAL REPORT FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT APRIL 20, 1992 Infrastructure Operations Division Country Department IV Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. C-JRRENCY EOUIVALENTS (March 1992) Currency Unit = -aira (N) = 100 Kobo (k) US$1 = N 18.0 Naira (N) = US$0.056 MEASURES AND EOUIVALENTS I kilometer (km) 0.62 miles 1 meter (m) = 3.28 feet 25.4 millimeters (mm) = I inch 1 cubic meter (m3) = 264 US gall^-.-:s = 220 imperial gallons = 1000 liters 3.8 liters (1) - I US gallon 4.5 liters (1) I 1 Imperial gallon ABBREVIATIONS AND ACRONYMS ADP - Agricultural Development Project DWSQC - Department of Water Supply and Quality Control ERR - Economic Rate of Return FCT - Federal Capital Territory FGN - Federal Government of Nigeria FMF&ED - Federal Ministry of Finance and Economic Development FMWR - Federal Ministry of Water Resources KDSWB - Kaduna State Water Board KTSWB - Katsina State Water Board lcd - liters per capita per day LGA - Local Government Authority ML - million liters MLD - million liters per day NEPA - National Electric Power Authority NTCWR - Nationa! Technical Committee on Water Resourees NWRP - National Water Rehabilitation Project NWRI - National Water Resources Institute RBDA - River Basin Development Authority SOE - Statement of Expenditures SWA - State Water Authority SWB - State Water Board UFW - unaccounted-for water FISCAL YEAR January I - December 31 FOR OFFICIAL USE ONLY NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT TABLE OF CONTENTS CREDIT AND PROJECT SUMMARY .............................. i-iii I. THE WATER SUPPLY AND SEWERAGE SECTOR ............... 1 A. Background .................................. I B. Water Resources ............................... 1 C. Manpower Resources ............................ 2 D. Level of Service ............................... 2 E. National Sector Institutions ........................ 3 F. State Water Agencies (SWAs) ...................... 4 G. Katsina State Water Board (KTSWB) ......... ......... 4 H. Kaduna State Water Board (KDSWB) ......... ......... 5 I. Previous Bank Group Involvement in the Water Supply Sector and Lessons Learned ............. 5 J. Sector Strategy ............. 5 K. Rationale for IDA Involvement ....... ............... 6 EI. THE PROJECT ................................ ... 6 A. Project Objectives ............................... 6 B. Project Design ................................ 6 C. Project Description . ............................ 7 D. Status of Preparation ............ ................ 9 E. Project Implementation ........... ................ 9 F. Project Cost ................................. 10 G. Project Financing . ............................. 11 H. Procurement ................................. 12 I. Disbursements ................................ 13 J. Land Requirements . ............................ 14 K. Project Supervision . ............................ 14 HI. FINANCIAL ANALYSIS ................................ 15 A. State Governments' Finances ....................... 15 B. SWBs' Past Financial Performance ...... ............. 16 This report is based on the findings of a Bank appraisal mission which visited Nigeria in June, 1991, comprising Messrs./Mmes. David Henley, (Sanitary Engineer and mission leader), William Roach (Senior Financial Analyst), Eleanor Warner (Operations Analyst), Letitia Obeng (Sanitation Specialist), Svein Stoveland (Consultant and Rural Water Supply Specialist). George Plant (Senior Sanitary Engineer) acted as peer reviewer. Secretarial support was provided by Ms. Mary Fisher. Mr. James Wright and Mr. Edwin Lim are the managing Division Chief and Department Director respectively for the operation. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. C. SWBs' Financial Policy and Tariffs ...... ............. 17 D. SWBs' Billing and Collection ....... ................ 18 E. SWBs' Accounts and Audits ....... ................ 19 F. SWBs' Future Financial Performance ..... ............. 19 IV. PROJECT BENEFITS AND !MPACTS ....... ................ 20 A. Project Benefits . .............................. 20 B. Least Cost Solution ............................ 21 C. Environmental Impact ........................... 21 D. Poverty Impact and Affordability ......... ........... 21 E. Adequacy of Tariffs ............................ 22 F. Economic Rate of Return ......................... 22 G. Project Risks ............................. 23 V. AGREEMENTS REACHED AND RECOMMENDATION .... ........ 23 A. Agreements Reached at Negotiations ..... ............. 23 B. Conditions of Credit Effectiveness .................... 24 C. Conditions of Disbursement ........................ 25 D. Recommendation ........ ...................... 25 ANNEXES 1.1 Water Supply Sector Strategy 2.1 Description of Water Supply Systems 2.2 Projections of Population and Water Demand 2.3 Improvement of the Efficiency of Operation of the State Water Board 2.4 Improvement of Accounting, Billing and Collection, Management Information Reporting 2.5 Urban Tariff Study 2.6 Promotion and Hygiene Education Activities 2.7 Reorganization of Rural Water Supply Sector 2.8 Updating of Water Resources Master Plan 2.9 Environmental Sanitation Component 2.10 Implementation Schedule 2.11 Project Implementation Program 2.12 Detailed Cost Estimates 2.13 Summary of Procurement Packages 2.14 Summary of Consultant Requirements 2.15 Disbursement Schedule 2.16 Supervision Plan 3.1 Summary of State Government Receipts & Expenditures 3.2 Assumptions Used in Financial Analysis 3.3 Action Plan - Performance Indicators 3.4 Water Tariffs 4.1 Summary of Environmental Assessment of Funtua Dam 4.2 Summary of Environmental Assessment of Zonkwa Dam 4.3 Environmental Mitigation Plan 4.4 Calculation of ERR 6.1 Documents Available in the Project File MAP: EBRD No. 23242R FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT CREDIT AND PROJECT SUMMARY Borrower: Federal Government of Nigeria (FGN) Beneficiaries: Katsina State Water Board (KTSWB), Kaduna State Water Board (KDSWB), and Federal Ministry of Water Resources (FMWR) Amount: SDR 74.7 million (US$101 million equivalent) Terms: Standard IDA terms with 35 years maturity Onlending Terms: The Federal Government of Nigeria will onlend US$51.5 million to Katsina State and US$47.5 million to Kaduna State at standard IBRD variable interest rate for twenty years including a five-year grace period. State governments will pass on the credit amounts for technical assistance and rural water supply as equity and onlend the remainder to the water boards at 15% interest, with 25 years maturity including 6 years ol -ace, and will bear the foreign exchange risk. US$2 million will ' retained by FGN to assist other states in project preparation. Project Description: The primary objectives of the proposed project are to improve the quantity and reliability of water supply to the more important communities in the two states and to help in commercializing the two water boards. Physical components include: (i) rehabilitating existing facilities and/or increasing supply in seven towns; (ii) providing tools, equipment and water meters; and (iii) limited rehabilitation of rural water supplies. Technical assistance would be provided for: (i) improving technical and financial management of the boards including increased commercialization; (ii) improving operational efficiency; (iii) improving planning procedures; (iv) institutional reorganization of the rural water supply sector to improve the sustainability of future investments; (v) improving environmental sanitation; (vi) traimng; and (vii) preparing water projects in other states of Nigeria. Benefits and Risks: The provision of adequate potable water supply and sanitation is a necessary prerequisite to improvement in public health, and to permit the development of urban areas as centers of economic growth. Industrial development in several of the towns included in the project has been prevented by the lack of water supply, and the living conditions, particularly of the poor, have become, in many cases, intolerable. The project will help to create the proper conditions for growth; it will improve the living conditions of the poor; and it will reduce the time spent by women in water collection. Risks include the possibility that counterpart funds will not become available as needed - ii - and that the states will hesitate to sufficiently increase tariffs to finance the long term operation and maintenance needs of the water boards. These have been addressed by arranging for counterpart funds to be deducted at source, and by designing practical and politically acceptable tariff increases, including up-front increases, consistent with the expected improvements of service. Rate of Return: 9.8% Men: IBRD No. 23242R H ii - Estimated Project Cost Local Foreien Total US$ Million KATSINA STATE Katsina town distribution 2.1 8.6 10.7 Funtua system 6.9 22.9 29.8 Malumfashi dam reconstruction 1.0 2.8 3.8 Daura system expansion 0.2 0.6 0.8 Rural water supply rehabilitation 0.1 0.4 0.5 Operational equipment 0.2 1.4 1.6 Institutional strengthening 0.3 1.7 2.0 Construction supervision 0.9 2.9 3.8 Base cost (March 1992) 11.7 41.3 53.0 Physical contingencies 1.1 4.1 5.2 Price contingencies 1.7 6.1 7.8 Total Katsina State 14.5 51.5 66.0 KADUNA STATE Zonkwa project 3.5 12.9 16.4 Kwoi project 3.6 13.6 17.2 Ikarm project completion 1.5 6.3 7.8 Rural water supply rehabilitation 0.1 0.4 0.5 Operational equipment 0.2 1.5 1.7 Institutional strengthening 0.3 1.7 2.0 Construction supervision 1.1 2.5 3.6 Base cost (March 1992) 10.3 38.9 49.2 Physical contingencies 1.0 3.6 4.6 Price contingencies 1.4 5.0 6.4 Total Kaduna State i2.7 47.5 60.2 Project Preparation 0.0 2.0 2.0 TOTAL PROJECT COST . 27.21 ' 101.0 128.2 Financine Plan Local Foreien Total US$ Million IDA 0.0 101.0 101.0 Katsina State 14.5 0.0 14.5 Kaduna State 12.7 0.0 12.7 Total Financing 27.2 101.0 128.2 Estimated IDA Disbursements IDA Fiscal Year 1993 1994 1995 1996 _'97 1998 1999 2000 US$ Milion_ _ Annual 5.4 2/ 10.3 23.7 29.7 19.7 7.8 4.0 0.4 Cumulative 5.4 15.7 39.4 69.1 88.8 96.6 100.6 101.0 1/ Of this amount, an estimated US$7.0 million equivalent is for duties and taxes. 2/ Includes initial deposits of US$3.2 million to special accounts. FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT STAFF APPRAISAL REPORT 1. THE WATER SUPPLY AND SEWERAGE SECTOR A. Background 1.01 Nigeria is the most populous country in Sub-Saharan Africa with a population, given by the 1991 census, of 88.5 million. It is located between latitudes 4°N and 13°N and has an area of approximately 925,000 km2. The climate varies from semi-arid in the north, with about 500 mm of rainfall per year, to wet and humid in the south with over 2,000 mm. There is a well defined wet season in the summer, -xtending for as little as four months in the north to as long as seven months in the south. In the north, the terrain is flat with sparse natural vegetation, across the center, there are hills and granite outcrops with savannah type vegetation, while in the south the terrain is generally flat with tropical forest vegetation. 1.02 The form of government is a federation comprising 30 states plus the Federal Capital Territory (FCT) of Abuja. Under the Constitution, provision of potable water supply is the responsibility of the state govermnents. Within eacb state, the responsibility for water supply in urban and semi-urban areas is usually assigned to a water board or corporation (the State Water Authority (SWA)). 1.03 Over the last ten years, the states have made substantial investments in water supply. However, the absence of maintenance coupled with economic constraints has led to severe deterioration of even comparatively new systems. The recent depreciation of the Naira relative to other world currencies has caused the water boards to have difficulty servicing foreign loans incurred before devaluation, implementing new projects, and importing the necessary spare parts and replacement equipment to keep existing public water supply systems in good order. A study carried out in 1987 indicated that the cost of rehabilitating all urban and semi-urban systems would be about US$800 million. Another study carried out in preparation of the proposed project, indicated that a similar amount would be needed over twenty years to rehabilitate and expand urban and rural water supply to provide a satisfactory standard of service in just one state. B. Water Resources 1.04 The main rivers (Benue and Niger) and their major tributaries are perennial, as are other rivers in the south of the country. Some rivers in the northern states draining into the Benue/Niger system and into the Chad Basin are seasonal, and do not have any significant flow in years of low rainfall. In these northern areas the exploitation of surface water for water supply and irrigation requires impounding reservoirs, but because of high temperatures, low humidity and paucity of deep reservoir sites, evaporation losses are high. In the central and southern areas of the country, major perennial rivers are frequently exploited for water supply by direct abstraction. The wide variations in rates of flow and water level, and the meandering low flow channels in many places, tend to increase the costs of water intake works. High intensity rainstorms cause soil erosion, and the resulting highly turbid water increases treatment costs. Use of surface water for drinking water supply always requires full treatment which includes clarification, rapid sand filtration and disinfection. - n - 1.05 Parts of the country have underlying sedimentary deposits containing aquifers, which are tapped by boreholes for water supply. Some of these are capable of sustaining high yields, although over-abstraction in places is causing water levels to decline. In other parts of the country, where crystalline rock formations occur, fracture zones can be exploited by boreholes with relatively low yields suitable for rural and semi-urban supplies. Although some large towns and cities have been supplied from boreholes in the past, most major cities will be dependent on surface water sources, possibly supplemented by groundwater, within the next few years. Groundwater usually requires treatment only by disinfection; however, in some places it is very corrosive and has a high iron content, requiring additional treatment. C. Manrower Resources 1.06 The SWAs account for employment of some 25,000 staff nationwide. In general, SWAs have too many low level staff with minimal qualifications (high rates of illiteracy are reported in some states) and too few technically or professionally qualified personnel. There is a low level of management awareness at middle and higher levels, with little emphasis on managenment training for technical specialists who enter management. Many of the staff who are academnically well qualified have not gained work experience in a supervised professional environment and may, therefore, be unable to provide appropriate technical support to the SWAs. 1.07 Review of staffimg profiles and training needs is required in most SWAs to define where staff need to be recruited or retrained (para. 2.08), and where shedding of unskilled and unqualified staff is required to improve management, operation and maintenance. SWAs would be more efficient if they were free from civil service regulations regarCirg staff grading, promotion and remuneration to enable them to compete effectively in the open market in recruiting qualified, experienced and skilled staff for management, supervision and technical duties. D. Level of Servce 1.08 Although accurate data are not available, most of the existing urban water supply systems are not capable of meeting requirements. Due to failure of pumps, generators or other equipment, fewer than 10 percent of all water supply systems are reported to be operating at their design capacities. In addition, the output of some systems is limited by fuel shortages as a result of insufficient funds. The average piped water supply to urban and semi- urban populations is in the r.mge of 10 to 40 liters per person per day Ocd), but many semi- urban communities do not have access to any public water supply. It is estimated that only about half the total urban and semi-urban population has access to reliable water supplies which mee: minimum quality requirements for drinking water. 1.09 Sanitation systems in most areas are the responsibility of Local Government Authorities (LGAs). There is practically no sewerage service, most sanitation using on-site waste disposal. Service provided is generally inadequate in the larger towns due to la.k of financial and technical resources. Improvement of these services is vital in maintaining public health and preventing further environmental deterioration (see Annex 2.9). Improvements will require strengthening of the LGAs or other sanitation authorities and sustainable budgetary provisions supported by realistic tax policies. - 3 - 1.10 An estimated 55 million people live in rural areas. Despite the Government's recent efforts to improve rural conditions, many households still rely on the most rudimentary water and sanitation facilities. The majority is at risk from disease, particularly from Guinea Worm, largely because access to reliable supplies of water of acceptable quality is still low. E. National Sector Institutions 1.11 The Federal Ministry of Water Resources (FMWR) is the technical and professional arm of the Federal Government that advises on all aspects of water resource development in Nigeria. It has eight departments, each of which is headed by a Director: (i) hydrology and hydrogeology; (ii) irrigation and drainage; (iii) water supply and quality control; (iv) dams and reservoirs; (v) flood and erosion control; (vi) plar-i4g, research and statistics; (vii) finance and supplies; and (viii) personnel management. The Department of Water Supply and Quality Control (DWSQC) has been established to carry out advisory and monitoring functions in connection with water supply, sanitation and water quality control. 1.12 FMWR is responsible for overseeing the 11 River Basin Development Authorities (RBDAs) (para. 1.14) and the National Water Resources Institute (NWRI) in Kaduna (para. 1.15). It is also responsible for monitoring both the hydrological networks throughout the country and water use activities of SWAs, the National Electric Power Authority (NEPA), the Inland Waterways Department and others. 1.13 The National Technical Committee on Water Resources (NTCWR) is the main link between organizations involved in water resource development and urban wate- supply. The Committee which meets about four times a year, is chaired by the Director General of the FMWR and members of the Committee are representatives of SWAs, RBDAs, NEPA, Nigerian universities with water resource faculties, the meteorological services, the Inland Waterways Department and the Nigerian Society of Engineers. Inputs to the NTCWR are provided by five working level sub-committees, namely: irrigation and drainage; manpower development; hydrology and hydrogeology; water supply and sawtitation; and dams. The NTCWR advises the National Council on Water Resources, which is chaired by the Minister of Water Resources. 1.14 The River Basin Development Authorities (RBDAs) were estz-'iOied during the 1970s to develop water resources for multi-purpose use within their respective iver catchment areas and to enhance agricultural produrtion. In 1985, the Federal Governmenit decided that the role of the RBDAs would be limited to water resource development and irrigation works and the collection of hydrological, hydrogeological and meteorological data. The main involvement of the RBDAs in water supply has been the construction of multi-purpose dams which provide water for irrigation as well as for some major urban water systems. 1.15 The National Water Resources Institute (NWRI), under the direction of FMWR, was established to train middle level manpower involved in water resources development, irrigation, water supply and related activities. The qualifications conferred by the Institute are recognized by the education authorities of Nigeria. The curricula of the Institute are designed to satisfy an increasing need for training in practical skills and at the middle management level. -4- F. State Water Agencies (SWAs) 1.16 In most of the 30 states and the FCT, responsibility for all potable water supply is assigned either to a state water board or corporation or to a public utilities board which is also responsible for rural electrification. SWAs have, however, for the most part concentrated on urban and semi-urban areas. Each SWA is controlled by a Board comprising members appointed by the state government, one of whom is designated chairman, and ex-officio members designated by title (e.g., Commissioner of the State Ministry of Finance). The chief executive is normally given the title of General Manager and is usually a professionally qualified engineer. 1.17 The SWAs are responsible to their state governments, generally through Ministries of Works or Water Resources, although in a few states they report through a Commissioner for Parastatals or Special Duties or other special assistant to the Governor. The SWAs have, in general, been established under well conceived legislation to develop and manage water supply facilities within their respective states, and to meet sound financial objectives. However, almost all SWAs depend on subvention from the state government to cover at least part of their recurrent operating costs. In addition, all SWAs are dependent on funds for major new construction work, either from state government sources or from external lending agenciss channeled through the state government system. Thus, most SWAs have little autonomy to decide on vital matters affecting their financial position, such as staffing levels, staff compensation, tariffs and procurement. G. Katsina State Water Board (KTSWB) 1.18 The Katsina State Water Board was established by amendment of the Kaduna State Water Board Edict of 1971 at the time Katsina State was divided from Kaduna State, under the terms of the Katsina State Amended Edict 1987. The main duties of the Board are to control and manage all water works vested in the Board; to establish, control, manage, extend and develop new and existing water works as may be necessary to meet the requirements of the general public, agriculture, trade and industry; to ensure that water is supplied at reasonable cost and in potable quality and adequate quantity; and to conduct appropriate research. In practice it is responsible only for urban and semi-urban water supply systems. The Board is required by the edict to conduct its affairs on a commercial basis and is given wide powers to establish and collect water rates and raise capital. Its autonomy is limited, however, in that principal fiscal matters are subject to the approval of the Governor. 1.19 The KTSWB has a two-tier management structure. The first tier comprises the central headquarters, and the second district and zonal operations. A Board of Directors, appointed by the Commissioner for Water Resources, formulates policies and guidelines. The Board consists of 14 members, ten of whom are members at large and include representatives from Local Government Authorities and four of whom represent state ministries. The chief executive officer is the General Manager, who has the responsibility to execute the policies and directives of the Board. He is assisted by five Assistant General Managers, responsible for Administratioui, Operations, Projects, Commercial, and Accounting and Finance. The Board currently has 690 filled positions. Its principal weaknesses are the lack of experienced middle management and inadequate finance to carry out its duties. -5-Z H. Kaduna State Water Board (KDSWB) 1.20 The Kaduna State Water Board was established by the Kaduna State Water Board Edict of 1971. Its duties and responsibilities are similar to those of the KTSWB (para. 1.18). 1.21 The organization ana management structure of the KDSWB are identical to those of the KTSWB, but with an additional division which assists in the maintenance of rural water supplies. There are currently 1,662 staff. As with KTSWB, its main weaknesses are lack of experienced mnddle level managers and lack of financial resources. 1. Previous Bank Group Involvement in the Water Supplv Sector 1.22 Past assistance by the Bank to the SWAs has mainly funded major new water supply systems in state capitals and technical assistance for project planning and institutional strengthening. The Bank has been involved in lending for four major urban water supply projects, of which two, Borno (Ln 2528-UNI approved June 1985) and Lagos (Ln 2985-UNI approved July 1988), are under execution and two, Kaduna (Ln 171 1-UNI approved May 1979 and Anambra (Ln 2036-UNI approved July 1981) have been completed. Lessons learned from these projects, particularly from the Kaduna Water Supply Project (PCR No. 8961), have been taken into account in designing this project. These relate particularly to the need to ensure a reliable flow of counterpart funds for implementation (para. 2.15), to define clearly the needs for technical assistance (extending beyond immediate commencement of operation of the project facilities) and to provide support for programs to reduce unaccounted- for water (para. 2.07). In the ongoing projects, there have been long delays in procurement and an apparent reluctance to go ahead with technical assistance, and the water boards have generally not been able to meet the financial agreements. These concerns have been addressed through up-front tariff increases (para. 3.08) and appointment of consultants for most critical technical assistance as a condition of effectiveness (para. 2.11) as well as preparation and covenanted use of standard bidding documents (para. 2.09) and covenanted adherence to a dated, implementation plan (para. 2.11) and a feasible financial recovery plan (para. 3.08). The Bank has also approved the National Water Rehabilitation Project (NWRP, Ln. 3322-UNI, approved May 1991), which will provide limited funds (up to US$10 million) to each state for urgently needed rehabilitation works and equipmen'. The NWRP will also assist institutional strengthening by improving workshop facilities, providing vehicles for maintenance, improving laboratory facilities, improving billing and collection, manpower audit and training needs analysis, and training. States participating in NWRP would be required to increase tariffs to meet all cash operating costs from revenues within five years. J. Sector Strategy 1.23 In common with most sectors of Nigeria's economy, the immediate needs in the water supply sector are the rehabilitation of existing systems and improvements in operation and maintenance. Initially these are being addressed by the NWRP which is expected to finance about 25% of the total rehabilitation needs throughout the country, and to start to address some institutional needs (para. 1.22). Many of the systems to be rehabilitated are more than twenty years old, so capacity will be inadequate even after rehabilitation, due to large population increases. Rehabilitation therefore needs to be followed by programs of carefully planned expansion and improvement of existing systems as well as selected new systems to provide acceptable service to the rapidly increasing population. Such programs would be accompanied by institutional strengthening. Many water authorities in Nigeria have experienced high costs relative to income, and this has been particularly severe during the economic dislocation of the past decade. A strategy to improve the financial condition of water authorities has been developed (see Annex 1.1 ). The proposed project would meet the objectives of the strategy by minimizing costs and improving sources of revenue. It would, in particular, improve the financial reliability of sector institutions through revenue collection and cost recovery measures so that service can be maintained and expanded over the long term. This would require more demanding cost recovery measures than under the NWRP, whereby depreciation or debt service costs would also be recovered. K. Rationale for IDA Involvement 1.24 The project would form part of the Bank Group's program of assisting to develop Nigeria's infrastructure and is an essential element of the country's economic development, since adequate water supply is necessary for the efficient functioning of cities, maintenance of health standards, and to improve the living conditions of women and the poor. It will incorporate aspects of several of the Bank Group's programs of special emphasis such as poverty alleviation, women's development, environment, and public sector management all of which are important to development. The Bank Group now has considerable experience in water supply in Nigeria, aid has a comparative advantage in encouraging institutional development and long term sustainability, and ensuring the appropriateness of investments. The NWRP commenced during 1991 and the proposed project and any similar future projects, would provide additional finance and support for states which desire to further improve and expand their water supplies and are prepared to adopt the necessary financial measures to do so. II. THE PROJECT A. Project Objectives 2.01 The project originated as a result of the large gap between available water supply and demand and the need to improve the service offered by the State Water Authorities. Four states were initially considered for inclusion in the project, however, coverage was restricted to two states to lessen proJect complexity. It would aim to support economic growth by enhancing health and productivity of growing urban areas; it would promote equity, helping to alleviate poverty by improving health standards of the lowest income urban households and the living conditions of women; and sustainability would be ensured by support for institution building and financial self sufficiency. The primary objectives of the proposed project are to improve both the quantity and reliability of water supply to the more important towns in the two states to meet basic needs and as an essential step in promoting economic development, to help in commercializing the water boards, and to assist in preparing water projects in other states. B. Project Design 2.02 Existing water supply facilities are described in Annex 2.1. The water boards' investment programs, including the physical components of the project, have been designed - 7 - by the boards assisted by consultants and IDA, to provide for the most urgent needs and to maximize the utilization of existing water supply facilities. With this in view, rehabilitation (including work under the NWRP) has been given highest priority, including the restoration of existing works, the matching of distribution capacity with water production capacity, and the repair of water leakage in the distribution systems. Systems have been designed with limited capacity consistent with conservative demand projectioris, to account for considerable tariff increases which will be required under the project. Demand projections have been based on a usage of 20 lcd for users of public standpipes, and from 80 to 100 lcd (increasing up to year 2005) for consumers with house connections (para. 4.07). Industrial and commercial demands of up to 37% of the domestic demand have been added, depending on evaluations made by consultants for each town. In determining the required production capacity, allowance for unaccounted-for water has been made, reducing over five years from a present amount of up to 50% (average 42%), to about 25% as a result of the works to be undertaken under the NWRP and the improved management which would be achieved under the proposed project. Annex 2.2 provides details of population and demand projections for all towns serviced by the two water boards. 2.03 During project preparation, studies of Katsina State Water Board (KTSWB) and Kaduna State Water Board (KDSWB) were carried out by consultants. They made similar recommendations, concurred by IDA, including limited structural changes to the Boards' organizations, and greater commercialization, including improvements in tariff and charging policies, consumer metering, and accounting (including computerization). The Boards have made modifications to their organizational structures in response to these studies, and have accepted the other recommendations in principle. A program of technical assistance to assist in commercialization of the Boards and to further strengthen their operations has been developed (para. 2.07). Other studies recommended devolution of responsibility for rural water supply to the LGA level and development of a mechanism by which a contribution would be made by the beneficiaries to implementation and to operation and maintenance. This concept has been accepted by both states, and Katsina has taken an initial step by separating rural water supply responsibilities from KTSWB; appropriate changes would be supported under the project (para. 2.07). Agreement was reached at negotiations that each state will by December 31, 1994, reorganize the rural water supply sector accordingly and in accordance with national strategy being developed by FMWR. The project allows for financing a small amount of work to improve rural water supply after this reorganization has been completed, to consolidate the proposed new methodology. C. Project Description 2.04 The project would include: (i) physical rehabilitation of existing systems; (ii) selective increase of supply facilities; (iii) improved operation and maintenance practices; (iv) improved investment planning; (v) setting and achieving realistic financial objectives; and (vi) manpower development. The most urgent rehabilitation work in each State, including a leak detection and repair program and the supply of some operational equipment and water meters would be undertaken under the NWRP in accordance with an agreed program (para. 2.11). Agreement was reached at negotiations that each state will participate in the NWRP. 2.05 In Katsina State, the project would include the following components (refer also to Annex 2.1): (i) completion of about 15 km of water transmission, 65 km of distribution pipelines and elevated storage in Katsina town and nearby communities to permit distribution of the full supply from the existing water works; (ii) construction of a new system to augment the existing sul ply at Funtua. This would include a new dam, water treatment plant, transmission pipeline to town, system storage and extended distribution system; (iii) limited expansion of the Dlaura water supply system including new boreholes to increase water production; (iv) remedial construction of the dam at Malumfashi; (v) supply of maintenance vehicles, tools and operational equipment, water meters, and meter testing and repair facilities; (vi) limited rehabilitation of some rural water supplies; and (vii) institutional and financial strengthening as described below (para. 2.07). 2.06 The project for Kaduna State would include the following (refer also to Annex 2.1): (i) completion of the water treatment plant, and construction of transmission and distribution pipelines and system storage at Ikara; (ii) construction of new regional water supply systems at Kwoi and Zonkwa, each including intake works, water treatment plant, transmission mains and distribution systems. Zonkwa would also include a small dam; (iii) supply of maintenance vehicles, tools and operational equipment, and water meters; U (iv) limited rehabilitation of some rural water supplies; and (v) institutional and financial strengthening as described below (para. 2.07). 2.07 The program of technical assistance in each state would include: (i) improvement of the water board's operation and maintenance practices, including a review of technical aspects of its operations to reduce costs (such as for power and chemicals) and minimize unaccounted- for water, assistance to implement the results of the review, development of maintenance and stores procedures (including inspection of dams), and improvement of planning procedures (Terms of Reference at Annex 2.3); (ii) improvement of accounting, billing, collection, and management information systems (building on work under NWRP), including computerization where appropriate (Annex 2.4) and a thorough program of metering of consumers; (iii) a tariff study including recommendations for collection from public standpipe users (Annex 2.5); (iv) undertaking a public relations and hygiene education program to improve the awareness of the communities of their benefits and obligations regarding public water supply, and how to maximize their health benefit (Annex 2.6); (v) support for the reorganization of -9- rural water supply (para. 2.03 and Annex 2.7); (vi) preparation of state-wide water resources master plans including socio-economic studies (Annex 2.8); and (vii) development of plans for sullage disposal, drainage and improved sanitation (Annex 2.9). 2.08 There will be a considerable amount of practical on-the-job training included in the project under several components of the technical assistance program, which will commence during the early stages of project implementation. Under the NWRP, consultants are now being employed to analyze the required staffing profiles for state water boards, identify the most critical training needs in the sector and the capability of local training institutions to meet those needs. This is expected to be completed and reviewed with the Bank during 1992, and provision has been made under the proposed project to finance formal training of KTSWB and KDSWB staff in line with these proposals developed under NWRP. D. Status of Preparation 2.09 In Katsina State, the physical components of the project are in varying stages of preparation. Designs for the new works for Katsina town, for Funtua dam and for remedial works at Malumfashi dam, have been prepared by consultants and are ready for tendering. In Kaduna State, designs have been prepared by consultants for most of the major works required under the project, but will need to be reviewed and updated before inviting tenders, expected to be within six months of credit effectiveness. A model bidding document has been prepared for NWRP and agreement was reached at negotiations to its use in this proposed project. Draft terms of reference for technical assistance have also been prepared (para. 2.07) and agreement to their use was reached at negotiations. E. Proiect Implementation 2.10 Each water board would manage its component of the project under its Projects Division. Consultants would be employed to assist the Boards in managing the project and to take responsibility for contract administration and construction supervision, and to train board staff. These consultants would also be responsible for review where necessary of designs prior to tendering. Although the two projects divisions concerned have limited experience in the management of projects of this size, with the assistance of the consultants for construction supervision and with strong supervision by IDA, they would be able to implement the project. Agreement was reached at negotiations that the state governments will continue to employ in the SWB people with sufficient experience to manage the project. 2.11 A project implementation schedule is at Annex 2.10. Implementation of the project is expected to be complete by the end of 1998 and the proposed credit closing date is September 30, 1999. During negotiations, assurances were received that each water board will follow the implementation program in Annex 2.11 to ensure all aspects of the project are properly implemented and to assist in the institutional development of the board, and regularly exchange views with IDA on their performance and undertake appropriate remedial measures. Appointment of the consultants for design review and construction supervision and for improving the efficiency of operations of the boards (two consultancies are required in each state) would be undertaken in at least one state prior to effectiveness of the proposed credit. Appointment of these consultants in the other state would be a condition of disbursen in that state. - 10 - F. Project Cost 2.12 The total project cost is estimated at US$128.2 million, including a foreign exchange component of US$101 million, or about 79% of total project costs. These estimates include about US$7 million equivalent in taxes and duties. Detailed cost estimates are in Annex 2.12. Cost estinates are summarized below: SUMMARY OF PROJECT COST ESTIMATE % Foreign % State Local Foreign Total Local Foreign Total Exchange Base Cost -N million -US$ million- A. KATSINA STATE 1. Katsina town completion of distribution system 39.0 154.2 193.2 2.1 8.6 10.7 80.4 20.2 2. Funtua expansion project 124.1 412.7 536.8 6.9 22.9 29.8 76.8 56.2 3. Malumfashi rehabilitation 18.0 51.3 69.3 1.0 2.8 3.8 73.7 7.2 4. Daura system expansion 3.0 10.6 13.6 0.2 0.6 0.8 75.0 1.5 5. Rural water supply rehabilitation 1.1 6.4 7.5 0.1 0.4 0.5 80.0 0.9 6. Operational equipment 4.4 25.8 30.2 0.2 1.4 1.6 87.5 3.0 7. Institutional strengthening 5.1 30.1 35.2 0.3 1.7 2.0 85.0 3.8 8. Construction supervision 16.4 51.7 68.1 0.9 2.9 3.8 76.3 7.2 Base Cost (March 1992) 211.1 742.8 953.9 11.7 41.3 53.0 77.9 100.0 Physical Contingencies 20.2 73.9 94.1 1.1 4.1 5.2 78.8 9.8 Price Contingencies 139.2 491.5 630.7 1.7 6.1 7.8 78.2 14.7 TOTAL Katsina State 370.5 1308.2 1678.7 14.5 51.5 66.0 78.0 124.5 B. KADUNA STATE I. Zonkwa project 63.8 232.3 296.1 3.5 12.9 16.4 78.7 33.3 2. Kwoi project 64.5 245.6 310.1 3.6 13.6 17.2 79.1 35.0 3. Ikara completion of new project 27.3 113.7 141.0 1.5 6.3 7.8 80.8 15.8 4. Rural water supply rehabilitation 2.1 7.4 9.5 0.1 0.4 0.5 80.0 1.0 5. Operational equipment 3.6 27.3 30.9 0.2 1.5 1.7 88.2 3.5 6. Institutional strengthening 4.7 29.7 34.4 0.3 1.7 2.0 85.0 4.1 7. Construction supervision 19.1 44.1 63.2 1.1 2.5 3.6 69.4 7.3 Base Cost (March 1992) 185.1 700.1 885.2 10.3 38.9 49.2 79.1 100.0 Physical Contingencies 17.6 63.9 81.5 1.0 3.6 4.6 78.3 9.3 Price Contingencies 118.6 432.3 550.9 1.4 5.0 6.4 78.1 13.0 TOTAL Kaduna State 321.3 1196.3 1517.6 12.7 47 60.2 78.9 122.3 C. FMWR Project Preparation 0.0 36.0 36.0 0.0 2.J 2.0 100 TOTAL PROJECT COST 691.8 2540.5 3232.3 27.2 101.0 128.2 78.8 - 11 - 2.13 Base costs are expressed in March 1992 prices. Cost estimates were prepared by consultants in 1990 and have been updated to reflect increases in price since that time. Physical contingencies of about 10% have been added to the base cost o' the physical components. Price contingencies have been based on 20% increase in local costs in 1992, 15% in 1993, 12.5% in 1994 and 10% annual increases thereafter and on increases in foreign costs of 2.5% in 1992, 4.6% in 1993 and 4.1% per year thereafter, to reflect anticipated inflation in Nigeria and on a basket of Nigeria-specific imports. 2.14 Provision is made for about 2000 man-months (80% local) of consultant input to assist the water boards witi. construction supervision, and about 400 man-months (45% local) for the technical assistance and studies. G. Project Financing 2.15 An IDA Credit of SDR 74.7 million (US$101 million equivalent) to the Federal Government of Nigeria (FGN) is proposed under standard IDA conditions with 35 years maturity. This would be onlent to the two participating states, US$51.5 million equivalent to Katsina and US$47.5 million equivalent to Kaduna, and US$2.0 million would be passed on as grant to other states for studies. It would finance 100% of the foreign costs of the project, about 83% of total cost exclusive of taxes and duties. For the Katsina and Kaduna States components, Agreement was reached at negotiations that onlending will be at IBRD variable interest rate for 20 years including 5 years of grace, and that the states will bear the foreign exchange risk. Agreement was also reached that the states will pass on those parts of the credit related to technical assistance and rural water supply as equity (US$2.3 million equivalent for Katsina and US$2.4 million equivalent for Kaduna), and onlend the remainder to the water boards, for 25 years including 6 years of grace, at 15% interest rate. The interest rate has been set taking into account the poor financial situation of thr two SWBs, which currently do not recover recurrent costs from revenues, and the need for a realistic financial recovery program to be effected over the next six years (para. 3.0f ). A subsidiary loan agreement would be required between FGN and each of dth two states and between each state and its water board. Signing of the sub-loan agreements by one state would be a condition of credit effectiveness and signing by the other state would be a condition of disbursement in that state. Local funds required for the project would be provided by the state governments as equity. During appraisal, each state's finances were reviewed and it was indicated that the project would not create an unbearable burden on state finances (para. 3.03). At least one state would give instructions, binding over the life of the project, to the Federal Ministry of Finance and Economic Development (FMF&ED) to deduct its share of the project's finances from its Federation Account in equal monthly installments and deposit into a state project account as a condition of credit effectiveness. An initial deposit equal to the first monthly installment would be made in the state project account as an additional condition of effectiveness. These two conditions would be required by the other state as conditions of disbursement in that state. The financing plan for the project is indicated below. - 12 - Proiect Financine Plan Local Foreign Total US$ Million-- -- Funds Required KTSWB 14.5 51.5 66.0 KDSWB 12.7 47.5 60.2 FMWR 0.0 2.0 2.0 Total Requirements 27.2 101.0 128.2 Sources of Funds Katsina State Government' 14.5 0.0 14.5 Kaduna State Government2 12.7 0.0 12.7 IDA 0.0 101.0 101.0 Total Sources 27.2 101.0 128.2 1. Including an estimated US$3.7 million equivalent of taxes and duties. 2. Including an estimated US$3.3 million equivalent of taxes and duties. H. Procurement 2.16 Procurement arrangements for the project are summarized in the table below. For procurement purposes, the project would be divided into about 12 major works components (including the supply of the necessary materials). Contracts for these would be awarded after International Competitive Bidding (ICB). In addition, about four contracts for the supply of operational equipment and water meters would be awarded after ICB. The major procurement packages are detailed at Annex 2.13 Operational equipment and other miscellaneous goods estimated to cost less than US$100,000 per contract and not more than US$1.0 million in aggregate, would be procured through international shopping with the evaluation of price quotations from at least three suppliers. Procurement of further operational equipment estimated to cost less than US$200,000 per contract would be under local competitive bidding (LCB), up to a total value of US$1.0 million. For rural water supply rehabilitation and other minor works there would be little interest by foreign contractors, since it is scattered geographically and spread over time; procurement by LCB is proposed, in accordance with procedures acceptable to IDA which would include local advertising, public bid opening, clearly stated evaluation criteria and award to the lowest evaluated bidder. Foreign firms would be allowed to participate. The total value of such procurement would not exceed US$1.7 million, about 1.3% of the total project cost with a maximum contract value of US$0.5 million and an average of about US$200,000. Prior IDA review of advertisements, bidding documents, tender evaluations, recommendations for awards and draft contracts, would be required for all contracts over US$200,000 equivalent, covering, in value, over 95% of the contracts to be awarded. Consultants to be financed under the project would be selected in accordance with the World Bank Guidelines for the Use of Consultants. Detailed consultant requirements are at Annex 2.14. - 13 - Summary of ProDosed Procurement Arrangements (USS minions) 1CB LCB OTHER TOTAL 1. Works contracts for rehabilitation 107.1 1.7 - 108.8 and augmentation of existing and new (83.4) (1.5) (84.9) systems 2. Supply of goods, (operational 1.7 1.0 1.0 3.7 equipment and water meters) (1.6) (0.9) (0.9) (3.4) 3. Services for training and technical - - 15.7 15.7 assistance (including construction (12.7) (12.7) supervision) Total 108.8 2.7 16.7 128.2 (85-0) (2.4) (13.6) (101.0) Note: Figures in parentheses are the respective amounts, in US$ million equivalent, to be financed by IDA. 'Other' covers procurement of goods by international shopping and consultancy services in accordance with guidelines. 2.17 For contracts for the procurement of goods under ICB, a domestic preference of 15% or duties (whichever is less) would apply. For works contracts procured under ICB, the margin of preference for local contractors would be 7.5%. I. Disbursements 2.18 The proposed credit would be disbursed over seven and a half years on the following basis: Allocation and Disbursement of IDA Credit Amount % to be Disbursed Category (US$ million) from IDA Credit 1. Civil works including supply and installation of mechanical and electrical equipment (a) Katsina state 39.0 75% of total expenditures (b) Kaduna state 35.6 75% of total expenditures 2. Supply of operational equipment, and water meters (a) Katsina state 2.2 100% of foreign expenditures (b) Kaduna state 2.2 and 70% of local expenditures - 14 - 3. Training, technical assistance and construction supervision (a) Katsina state 5.0 100% of foreign expenditures (b) Kaduna state 5.0 100% of foreign expenditures 4. Project preparation (FMWR) 2.0 100% 5. Unallocated (a) Katsina state 5.3 (b) Kaduna state 4.7 Total 101.0 Disbursements would be completed by September 30, 1999. Annex 2.15 presents the expected annual disbursements for the project and the standard disbursement profile for similar projects in Africa. Projected disbursements lead the profile in early years of the project because of the advanced state of preparation of some components and the measures that have been taken to advance project procurement activities. 2.19 In order to facilitate implementation of the project, a Special Account in foreign currency would be established for each state and for FMWR in a commercial bank, on terms and conditions acceptable to IDA. Initial deposits of US$1.5 million each would be made to each state account, and US$0.2 million to the FMWR account, sufficient to cover estimated eligible disbursements over four months. The accounts will be replenished against withdrawal applications with standard documentation for eligible reimbursable expenditures. All disbursements under the project would be made against standard documentation except for contracts of less than US$50,000 equivalent which may be claimed under Statements of Expenditures (SOEs), with related documentation retained for review by IDA supervision missions. During negotiations, agreement was reached that, by June 30 each year, the state water boards will submit to IDA the financial statements of the Special Account, Project Accounts and SOEs for the preceding calendar year, audited by an independent auditor acceptable to IDA. J. Land Requirements 2.20 Each water board has land rights for its water supply systems. Most proposed new works, including reservoirs, will be located on land owne: oy the Government, which will be available to the Boards at no cost. Land for the Zonkwa :eservoir has been reserved for many years, and no resetdement is required. Land for the Funtua reservoir is being acquired, and resettlement of a few hundred families is required. A satisfactory plan for resettlement has been developed in consultation with the people being relocated. K. Project Supervision 2.21 Each water board would submit quarterly progress reports for review by IDA. In addition, three IDA missions per year, each staffed by a sanitary engineer, a financial analyst/institutional specialist and an operations analyst and other specialists, and each of about two weeks duration, would be required during the first three years of the life of the - 1S- project and two per year thereatter to support project implementation. Missions would review project management performance, progress with the physical components of the project and the institutional development measures required, exchange views on SWB performance compared to the agreed implementation program (Annex 2.11) and physical and financial targets (para.3.13), and agree on remedial measures. A supervision plan is given in Annex 2.16. Total input required by IDA would be about double an average infrastructure project in Nigeria. During negotiations, agreement was reached that a mid-term review would be undertaken b3 the end of 1994 to review project management, progress against the action program (Annex 2.11) and development of the Boards against agreed performance indicators (Annex 3.3) and to agree on any necessary corrective actions. 111. FINANCIAL ANALYSIS A. State Governments' Finances 3.01 A summary of Katsina and Kaduna State of 1990 actual and 1991 budgeted receipts and expenditures is presented in Annex 3.1. Katsina State receipts and expenditures are budgeted at N 1.1 billion for 1991. The State relies heavily on statutory revenue from the Federation Account (N763.0 million or 69% of total receipts) and capital receipts representing grants and external loans (N253.4 million or 23% of total receipts). Internally generated revenues (N82.8 million or 8% of total receipts) provide the balance of Katsina State financing. Kaduna State receipts and expenditures are budgeted at N 1.5 billion for 1991. The State is also heavily dependent on statutory revenue from the Federation Account and capital receipts (combined N1,209.6 million or 80% of total receipts). Internally generated revenues (N300.0 million or 20% of total receipts) comprise the remainder of Kaduna State receipts. 3.02 The State governments have the main responsibility for ensuring the financial solvency of the SWBs. They are the sole owners of the SWBs; approve all water charges; and provide subventions to the SWBs to cover rural water supply operations and maintenance costs, debt service payments, investment requirements and any shortfalls in operating income. The States of Katsina and Kaduna in 1990 provided N27.9 million (3.6% of Katsina State total receipts) and N 120.7 million (14.8% of Kaduna State total receipts) to their respective SWBs. Total 1991 contributions to the SWBs are budgeted to reach N41.6 million (3.8% of state total receipts) and M 118.4 million (7.8% of state total receipts) in Katsina and Kaduna States, respectively. 3.03 The financing plan for the project includes State governments' financing of all local costs, amounting to N370.5 million for Katsina State and N321.3 million for Kaduna State, spread over the implementation period. The State governments would be required to provide counterpart funding in equal monthly installments (para. 2.15). In addition, the State governments will be responsible for repayment to the Federal government of the IDA credit and the associated foreign exchange risk. As both SWBs plan to participate in the NWRP (para. 2.04), the State governments will also be responsible for a small amount of counterpart funding and debt service on the related IBRD loan. The financial objectives under the proposed project are two-fold: (a) to improve the financial performance of the SWBs to the point where they are able to cover their recurrent costs and debt service payments, and (b) to relieve the heavy burden on the State governments' finances. Under this approach, State - 16 - governments' subvention to the SWBs to cover their operating income shortfalls and debt servicing would be phased out by 1998; State govermnents' financing to the SWBs would be limited to provision of local counterpart funding of the investment program, if any, the debt service related to NWRP and the foreign exchange risk on the IDA Credit. Under this scenario, Katsina State government financing would drop from a peak in 1993 of 7.4% of anrual State receipts and then fall rapidly to about 2% of State receipts in 1999, while Kaduna State government financing would peak in 1992 at 11.3% of annual State receipts and decline to less than 1% in 1999 (Annex 3.1). B. SWBs' Past Financial Performance 3.04 The SWBs' past (1989 and 1990) and budgeted (1991) financial performance is summarized in the table below and detailed in Annex 3.2. SWBs' Past Financial Performance (Naira 000s) KATSINA KADUNA Actual Actual Budget Actual Actual Budget 1989 1990 1991 1989 1990 1991 Volume sold (M3 000s) 6897 7154 7373 40150 36293 41975 Average tariff (Naira) 1.19 1.65 1.98 0.48 1.12 1.23 Net revenue 6675 10794 13055 14469 33265 41014 Cash Operating Expenses 15512 24786 29874 43976 47592 57762 Cash from operations -8837 -13992 -16819 -29507 -14327 -16748 Depreciation 586 2680 3965 35423 34694 22404 Operating loss -9423 -16672 -20784 -64930 -49021 -39152 Past and budgeted financial results of the SWBs show large operating losses, a generic problem in Nigeria as discussed in Annex 1.1. The State governments provide subventions to cover the recurrent operations shortfall, rural water supply operating expenses, debt servicing and investment funds. 3.05 The principal reasons for the SWBs' poor financial performance are: (a) Tariffs. Estimated average 1989 tariffs (Katsina, Nl. 19tm3 and Kaduna, N0.48/m3) are well below production costs for even well-managed water utilities. The last tariff increase prior to 1990 was in 1985. Over the four year period (1985-1989) local inflation was 133% and the Naira was devalued by over 700%; real average tariffs thus fell sharply. - 17 - (b) Collections. Collection/billing ratios for 1989 (Katsina, 70% and Kaduna, 71 %) are low. Part of the collection problem stems from consumer resistance to pay for poor and unreliable service. (c) Unaccopnted-for Water. Estimated unaccounted-for water (Katsina and Kaduna, both over 40%) is high, resulting in a combination of increased operating costs and reduced revenues. (d) Staffing. Number of employees (Katsina and Kaduna, both around 35 employees/1,000 connections) is excessive, particularly at the unskilled level (para. 3.08). 3.06 Because of past poor financial performance, the KDSWB has a large accumulated operating deficit resulting in negative capital of N283 million as of December 31, 1990. In addition, the State government has been picking up the Board's debt service payments under a previous IBRD loan. These payments totaling t381 million as of December 31, 1990, have been treated on the books of KDSWB as an outstanding loan. As a condition of credit disbursement for Kaduna State, the State government would restructure KDSWB's capital and long-term liabilities by converting its loan to equity and make arrangements that debt service payments on behalf of KDSWB during the transition to full cost recovery be treated as a grant. The conversion of debt to equity would achieve a satisfactory debt/equity ratio. The KTSWB capital structure is sound, with no long-term debt. C. SWBs' Financial Policy and Tariffs 3.07 The Edicts establishing the SWBs provide for a reasonable financial policy: revenues shall be sufficient to cover operations and maintenance costs and debt servicing and such other sums as may be proper to set aside for general reserves, extensions, renewals, depreciation, etc. The Executive Council of each state is responsible for approving all water rate increases. 3.08 The State governments approved and implemented a three year (1990-1992) package of water tariff increases designed to offset operating cost increases, particularly in chemical and power costs, and improve the financial performance of the SWBs. Rate increases range upward from 83% for public institutions, 133% for residential users, and 180% for industrial/commercial consumers. Tariff structures are presented in Annex 3.4. Despite the substantial rate hikes, the SWBs will need to carry out a medium-term program of further tariff increases and operational improvements to meet minimum financial requirements, i.e., revenues sufficient to cover operations and maintenance costs and debt servicing. A sustaired six year program of tariff increases in real terms (KTSWB, 17% p.a. and KDSWB, 14% p.a.) plus operations improvements, including, inter alia, reductions in unaccounted-for water, improvements in collections, manpower rationalization and reorganization of rural water supply operations, is required. The KTSWB has recently begun its program to shed staff by spinning off the rural water supply operation. The above program would allow: (a) the KTSWB to fully cover from revenues its operations and maintenance costs by 1994 and, in addition, its full debt servicing costs by 1998, and (b) the KDSWB to meet from revenues its operations and maintenance costs by 1993 and additionally its full debt servicing costs by 1998. Agreement was reached at negotiations that each SWB will adjust tariffs and take other actions as necessary to meet its operations and maintenance expenses and debt servicing costs and performance indicators (para. 3.13) in accordance with the following timetable. - 18. SWBs' Covenanted Financial Performance KATSINA KADUNA Revenues as a Percent of Revenues as a Percent of Year Recurrent Cost Recurrent and Debt Recurrent Cost Recurrent and Debt Service Cost Service Cost 1992 46 46 81 33 1993 65 59 100+ 44 1994 92 69 100+ 55 1995 100+ 70 100+ 66 1996 100+ 80 100+ 77 1997 100+ 90 100+ 88 1998 100+ 100+ 100+ 100+ While projected tariffs appear to be affordable (para. 4.07), a study to be carried out under the project would address the present differential tariff structures, including the need for and effectiveness of cross subsidies among and within consumer categories, an overhaul of public standpost billing and collection and effects on revenue of nearly universal consumption metering (para. 2.07). D. SWBs' Billing and Collection 3.09 The KTSWB and KDSWB have 21,400 and 45,600 water connections, respectively. Metering is limited, for the most part, to high usage industrial, commercial and public institution consumers. Most residential accounts are not metered. Neither of the SWBs has operational meter testing and repair facilities. Estimated unaccounted-for water is over 40% in Katsina and Kaduna. A program to reduce unaccounted-for water, including consumption and production metering, will be financed under the project (para. 2.07) and the National Water Rehabilitation Project. 3.1L Billing systems for the two SWBs are similar. Bills are prepared manually, except in the Kaduna City District, where computerized billing by a private data processing bureau has been recently introduced. Metered connections are billed monthly, while flat rate domestic connections are billed quarterly in Katsina and bi-monthly in Kaduna. Collection/billing ratios are poor, but improving: KTSWB collected 70% of billings in 1989 and 80% in 1990; KDSWB collected 71 % of billings in 1989 and 80% in 1990. Net accounts receivable at year-end 1990 amounted to N4.4 million, equivalent to about five months' billings, for KTSWB, and N30.1 million, equivalent to almost nine months' billings, for KDSWB. Over 60% of the SWBs' combined accounts receivable are due from private consumers, which is symptomatic of consumer resistance to pay for poor and unreliable service. Many of the accounts are old or represent flat rate billings to consumers who received no water because of supply outages or distribution breakdowns. The two SWBs should carry out a major accounts collection and write-off exercise. Assistance will be provided under the project to improve the billing and collection systems, including consumer relations programs and further computerization (para. 2.07). - 19 - E. SWBs' Accounts and Audits 3.11 The two SWBs have similar financial management systems. Annual budgets are prepared, with actual revenues and expenditures compared with budget amounts on a quarterly basis. Manual accrual basis accounting systems, with separate profit and loss accounts for each district, are maintained. The SWBs prepare monthly district income statements and semi-annual financial statements; yearly accounts are normally available within four months of year end. The accounting and reporting systems are adequate but can be improved. Financial management improvements under the project would assist the SWBs in fixed assets and inventory valuation and control, micro-computerization of accounting systems and additional training. 3.12 The Auditor General of each state appoints an external auditing firm to examine the SWB's accounts. The external auditors expressed unqualified opinions on the SWBs' 1990 financial statements. Aereement was reached at negotiations that the SWBs' annual accounts and audit reports will be submitted to the Bank within six months of the end of the fiscal y=ar. F. SWBs' Future Financial Performance 3.13 One of the project's main objectives is to improve the operational and financial performance of the SWBs. The proposed financial strategy is aimed at complete coverage from the SWBs' revenues of operations and maintenance costs and debt servicing costs. The improvements are phased in over a six year period, with subventions from the states to cover the operations shortfall and debt servicing gradually reduced to nil by 1998. Summary financial projections for the period 1992-1999 are presented in the table below and detailed, along with assumptions, in Annex 3.2. SWBa' Proiceted Financial Performance (Naim OOOs) KATSINA KADUNA 1992 1994 1996 1998 1992 1994 1996 1998 Volume Sold (M3 000s) 7629 11534 17577 23214 44165 55480 64313 71248 Average Tafiff (Naira) 2.52 5.60 9.25 12.27 1.79 3.59 5.51 7.44 Net Revenue 16722 58836 151213 265313 67458 178077 323504 484046 Cash Operating Expenses 35983 55935 85538 124616 71892 102807 126133 163141 Caah from Operations -19261 -2901 65675 140697 - 4434 75270 197371 318905 Depreciation 5991 12093 32057 66801 23680 36676 61874 78860 Operating Income -25252 -9192 33618 73896 -28113 -38593 135497 240045 Operations Subvention 19261 0 0 0 4434 0 0 0 Debt Service Subvention 381 26757 37746 0 133984 145854 95385 0 State Subvention 19642 26757 37746 0 138418 145854 95385 0 Performance indicators are included in Annex 3.3. - 20- 3.14 Improvement in the SWBs' future financial performance is predicated on a combination of tariff increases, operational efficiencies and sales volume increases. The effects on the SWBs' future financial performance of not fully achieving the projected efficiencies arnd volume increases are discussed below and detailed in the project files. The financial sensitivity analysis for 1998, the last full year of project implementation, shows that: (a) if sales volume is 10% less than projected, operating income would fall (KTSWB, N 17.2 million; KDSWB, N37.0 million), and an additional tariff increase (KTSWB, 7%; KDSWB, 9%) would be required to cover the decrease in operating income; (b) if improvement in unaccounted-for water is 50% of projected, operating income would fall (KTSWB, N13.9 million; KDSWB, PN13.9 million), and an additional tariff increase (KTSWB, 5%; KDSWB, 3%) would be required to cover the decrease in operating income; and (c) if collections rate is 90% of projected, operating income would fall (KTSWB, P25.6 million; KDSWB, N47.7 million), and an additional tariff increase (KTSWB, 11%; KDSWB, 119e%) would be required to cover the decrease in operating income. IV. PROJECT BENEFITS AND IMPACTS A. Project Be:iefits 4.01 When fully operational in 1999, the project will provide improved water supply to about 1.0 million people in urban areas in Katsina and Kaduna States, including about 0.6 million who had not had water supply previously. For the 0.4 million already having supply, service will be improved from providing limited quantities of water of marginal quality for only a few hours each day, to a continuous supply of potable water sufficient to meet domestic, commercial and industrial demands. A further 2.6 million will bene5it indirectly from more commercially and service oriented water boards. In addition, some of the groundwork will be done to improve water supply to over five million rural people. 4.02 Direct project benefits include increasing the quantity, quality and reliability of water supplies, thereby improving public health by providing an adequate amount of potable water for personal cleanliness and hygiene. Continuous pressure would eliminate the presene danger in some areas of drawing back contaminated water into the network. The project would reduce the time spent, mostly by women, in water collection duties. Water would also be available to meet the projected demands of commercial and industrial users, thus removing an obstacle to the development of these sectors, and permitting the development of urban areas as centers of economic growth. 4.03 The project would reduce operating costs and improve the operating efficiency of the two state water boards. It would improve the management ability and performance of the water boards, thereby raising their public image, a prerequisite to encouraging consumers to pay for their water supply. It would develop the water boards into self supporting and sustainable entities with realistic long term development goals. It would also unburden them - 21 - from the difficult demands of the rural water supply sector, which will pass to the local government and community levels which are better placed to bear them. B. Least Cost Solution 4.04 The proposed project has been designed following review of alternative development programs and addresses the highest priority needs in this sector in the two states. The scope of each sub-project is sufficient for anticipated demands, and where appropriate, only limited first stage developments have been included in the project. Expensive investments in headworks have been postponed where possible, and consequently further stages will be required in the future as demands for water increase. The technology adopted has also been kept at an appropriate level, but will be reviewed for some items and modified as necessary before inviting tenders. The project is the least cost solution to the provision of water to the project beneficiaries, a large proportion of whom are at or below the poverty level. C. Environmental Impact 4.05 The proposed project would not be expected to have significant adverse impact on the enviromnent, but rather to improve well-being, health and sanitary conditions in the project area. However construction of two new dams would increase the habitat for mosquitos and bilharzia snails and could cause downstream pollution by sediments during construction if not managed properly. In addition, both dams could be subject to pollution from activities in their catchments. Environmental assessments have been prepared for both dams, and these are summarized in Annex 4.1 for Funtua, and Annex 4.2 for Zonkwa. During negotiations, a mitigation plan to minimize environmental impact relating to the two dams, including the hiring of a health specialist by December 31, 1992, was discussed and agreed (Annex 4.3). Where appropriate, the actions required under the mitigation plan have been incorporated into the implementation program (Annex 2.11), or agreed terms of reference, or will be incorporated into bidding documents. A limited resettlement effort is required and is being undertaken (para. 2.20). The project would increase the use of water, and consequently the amount of wastewater which must be disposed of. Guidelines would be developed under the project to improve environmental sanitation in each state, and plans would be formulated to improve drainage of sullage and stormwater in project towns (Annex 2.9). Any detrimental effect would be minor with no lasting or irreversible impact. D. Poverty Impact and Affordability 4.06 About half of the beneficiaries of the proposed project are at or below the poverty level. By 1999, most households within the project area would be served by the project, including about 500,000 people at or below the poverty level. Project expenditure directly related to the poor is estimated at about US$44 million, 34% of total project costs. 4.07 The poverty threshold in urban areas in Nigeria is estimated at about US$1180 per year for a family of eight members, based on 1988 prices. Monthly household water consumption for the poor, utilizing public standpipes, is estimated at about 4.8 cubic meters. At the higher tariff levels required under the project, this would represent US$8 per year, or about 0.7% of current family income, which is affordable. For those with house connections, monthly household water consumption would be in the 15 to 30 cubic meters range, which - 22 - would represent more than US$36 per year, or in excess of 3% of poor family income. This is probably near the limit of affordability, and hence .iany poorer consumers would prefer to utilize public standpipes, or at least severely limit their water consumption. In estimates of water demand for project design, about 43% of consumers were assumed to obtain their water from public standpipes. E. Adequacy of Tariffs 4.08 The average incremental cost of water to be produced under the proposed project is estimated at about N 12 per cubic meter. The highest block of industrial tariffs would increase this level after proposed tariff increases, but the high ',lock domestic tariff would remain below this figure even after being increased by about two and a half to three times (in real terms) as is proposed under the project. A study to be carried out under the project (para. 2.07) will establish appropriate tariff levels and structures to ensure that all high block tariffs at least equal average incremental cost. F. Economic Rate of Return 4.09 Economic analysis of urban water supply projects raises difficult issues related to quantification of benefits from the project such as the measurement of benefits from improved health, improved productivity, and the promotion of further economic activity. There are serious methodological issues associated with quantification of these economic benefits for water projects and this will generally lead to serious under-estimation of benefits. For the proposed project, perceived value of water to the consumer has been accepted as one measure of its economic worth, although it does not necessarily incorporate its full value. In these two states, consumers typically pay the equivalent of N 10 per cubic meter to vendors for up to 30 liters per person per day, and up to the equivalent of N250 per cubic meter for smaller quantities during the dry season. The first of these figures has conservatively been adopted together with the projected average tariff of N4 per cubic meter at a consumption of 90 liters per person per day to provide a crude indication of willingness to pay, yielding a minimum value of economic rate of return (ERR) for the project of 9.8%, 12.8% for Katsina and 6.3% for Kaduna. Details of the ERR calculation are presented in Annex 4.4. Rate of return is lower for Kaduna because of the nature of the developments being undertaken, economy of scale factors and differing hydrological conditions. ERR is sensitive to the value placed on the first 30 liters per person per day, a 10% decrease in this value reducing ERR to 9.1 %, but less sensitive to average tariff, 10% decrease causing ERR to fall to 9.7%. A 10% increase in capital costs would cause ERR to fall to 8.9%. Taking an alternative approach to quantification of benefits, assuming a 10% reduction in health care costs, and a 5% increase in per capita productivity as the value of benefits, yields an ERR of 14.4% for the project (16.7% for Katsina and 11.8% for Kaduna), these figures being almost proportional to assumed percentage improvement in productivity. To some undetermined extent this value would be in addition to the values indicated by households' willingness to pay, however, no attempt has been made to estimate this, or to quantify other potential benefits, and the figures given are, therefore, likely to under-estimate the ERR. During project implementation an imprc A means of measuring socio-economic benefits under the project will be established, as part of the component to prepare follow-on investments. - 23 - G. Project Risks 4.10 The type and scale of the various sub-projects to be undertaken are not uncommon in the Nigerian context, and there is no unusual risk associated with their implementation. The major risk associated with the project is that counterpart funds would not be available as required, a factor which has delayed previous projects. To overcome this problem, at least one state would agree, as a condition of effectiveness of the proposed credit, to give authority to the FMF&ED, binding over the life of the project, to deduct its share of the project's finances from its Federation Account and deposit into a project account according to an agreed schedule, including the making of the initial deposit (para. 2.15). The same conditions would be conditions of disbursement for the remaining state. Establishment of such a mechanism is now being required by the Federal Government for all state development projects in Nigeria. 4.11 A second risk is that the states will hesitate to sufficiently increase tariffs to finance the long term operation and maintenance needs of the boards and to cover debt service. Agreement was reached at negotiations to phased tariff increases to meet the agreed financial objectives (para. 3.08). The tariff study to be undertaken under the project, would recommend tariff levels and structures and agreement was also reached on implementation of the recommendations of the study (para. 2.11). 4.12 Management of the project will be in the hands of the two water boards, under their projects departments, assisted by consultants for contract administration and construction supervision. This will be a major undertaking which could tax their capacities, but it is important for each board to accept this responsibility as part of its development process. Agreement was reached that staff of sufficient experience would continue to be employed by the SWBs to manage the project (para. 2.10) and their performance will be continuously monitored (para. 2.21) V. AGREEMENTS REACHED AND RECOMMENDATION A. Agreements Reached at Negotiations 5.01 During negotiations, agreement was reached with the Government of the Federal Republic of Nigeria, that it will onlend the proceeds of the IDA credit to the states at the IBRD variable interest rate for 20 years, including five years of grace (para. 2.15). 5.02 Agreement was reached with each state and its water board that they would: (i) reorganize the rural water supply sector by December 31, 1994, by devolving responsibility to the local government and community level and in accordance with national strategy being developed (para. 2.03); (ii) participate in the National Water Rehabilitation Project (para. 2.04); (iii) use the model bidding document prepared for NWRP (para. 2.09); - 24 - (iv) use agreed terms of reference for technical assistance under the project (para. 2.09); (v) continue to employ in the SWB people with sufficient experience to manage the project (para. 2.10); (vi) implement the project (including all technical assistance components) in accordance with an agreed program (Annex 2.11) and regularly exchange views and undertake remedial measures. (para. 2.11); (vii) pass on those parts of the loan related to technical assistance and rural water supply to the water board as equity, and onlend the remainder for 25 years including six years of grace, at 15% interest rate with the State bearing the foreign exchange risk (para. 2.15); (viii) by June 30 each year submit to IDA the financial statements of the Special Accounts, Project Accounts, and SOEs for the preceding calendar year audited by an independent auditor acceptable to IDA (para. 2.19); (ix) undertake a mid-term review of the project with the Association by December 31, 1994, to review project management, progress against the action program (Annex 2.11) and development of the Boards against agreed performance indicators (Annex 3.3) and to agree on any necessary corrective actions (para. 2.21); (x) adjust tariffs and take other actions as necessary to meet its operations and maintenance expenses and debt servicing costs and performance indicators (para. 3.08); (xi) submit to IDA the SWB's annual accounts and audit reports within six months of the end of the fiscal year (para. 3.12); and (xii) ensure that the environmental impact relating to two dams is minimized in accordance with an agreed mitigation plan that includes the hiring of a public health specialist by December 31, 1992 (para. 4.05). B. Conditions of Credit Effectiveness 5.03 All of the following actions would be taken by at least one state prior to credit effectiveness: (i) appointment by the water board of consultants for construction supervision and for improving its efficiency of operations (two consultancies are required)(para. 2. 11); - 25 - (ii) signing of subsidiary loan agreements between the Federal Government and the state, and between the state and its water board (para. 2.15); (iii) giving instructions, binding over the life of the project, to FMF&ED to deduct its share of the project's finances from its Federation Account in equal monthly installments and deposit them into a project account (para. 2.15); and (iv) deposit of the initial installment into the project account (para. 2.15). C. Conditions of Disbursement 5.04 All of the following actions would be taken by the second state prior to disbursement in that state: (i) appointment by the water board of consultants for construction supervision and for improving its efficiency of operations (two consultancies are required) (para. 2.11); (ii) signing of subsidiary loan agreements between the Federal Government and the state, and between the state and its water board (para. 2.15); (iii) giving instructions, binding over the life of the project, to FMF&ED to deduct its share of the project's finances from its Federation Account in equal monthly installments and deposit them into a project account (para. 2.15); and (iv) deposit of the initial installment into the project account (para. 2.15). 5.05 In addition, for Kaduna State only, KDSWB's capital and long-term liabilities would be restructured by converting its loan to equity and arrangements made that debt service payments on behalf of KDSWB during transition to full cost recovery be treated as a grant (para. 3.06). D. Recommendation 5.06 Having reached the agreements and subject to the conditions indicated above, the proposed First Multistate Water Supply Project is suitable for an IDA Credit of SDR 74.7 million (US$101 million equivalent) to the Federal Republic of Nigeria. - 26 - Annex 1.1 Page 1 of 10 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Nigeria: Water Supplv Sector Strategy I. Background 1. Water utilities in many Nigerian States have faced difficult financial problems and deteriorating economic conditions for some time. The high cost of imported equipment in terms of the depreciating domestic currency and inadequate cost recovery policies have contributed to large financial deficits. This has left most water authorities dependent on state subventions to operate and maintain their water systems, to service debt and to finance new investments. The states' own financial constraints have often limited the amount and dependability of recurrent and capital subventions requiring the agencies to defer maintenance and limit new investment. The examples from three Nigerian states, below illustrate the magnitude of the problem. 2. The Kaduna State Water Board (KSWB), starting from a low revenue and cost base in 1979, has incurred lcsses in she last 12 years. Whereas in 1979 KSWB could recover two- thirds of its operating costs, having relatively little fixed assets and expenses, by 1989 operating costs (including cost of finance) had grown to 5.6 times total revenues. The Anambra State Water Corporation (ASWC) has made losses since 1983 and these increased from N6.3 million in 1983 to N 167 million in 1989, mainly due to the interest on an IBRD loan and increased depreciation on new investments. The financial performance of the Borno State Water Authority (BSWA) remained about constant from 1982 to 1988. Both years showed annual operating losses of about N i million. 3. Improved financial ptrformance of water utilities is essential for the public sector's ability to improve the reliability of water service and to extend its coverage. To achieve this, it is first necessary to understand the underlying causes of the financial losses in the sector. Several factors, including poor management, poor investment planning, inefficient production and distribution, lack of timely tariff measures, absence of financial discipline and accountability, and the increasing cost of imported inputs in terms of domestic currency have contributed to lack of financial viability in water utilities. This annex presents estimates of the relative magnitudes of the factors contributing to poor performance in three water utilities. It shows how these factors would be addressed under the proposed project and it suggests elements of a longer-term strategy which would be developed for addressing these issues in Nigeria. - 27 - Annex 1.1 Page 2 of 10 II. Factors in the Rising Cost of Water A. Low Investment Efficiency 4. Water production and distribution in Nigeria is very capital intensive, as indicated by a low value of output per unit of investment. In Kaduna, the value of fixed assets was 28 times the revenue earned in 1989 and 12 times that of 1990. Some of the low efficiency of investment may be due to the semi-arid nature of the state. More expensive water supply headworks, such as dams, may be more necessary here than elsewhere in the country. In some cases lower cost technology may be overlooked. Some project designers are not familiar with least cost approaches and in some instances there has been over-investment in headworks and an imbalance between production capacity and capacity for transmission and distribution. This is compounded by a lack of appropriate materials and expertise locally and poor supporting infrastructure such as power. 5. Water supply investment appears to have been more efficient in Anambra State due to a strategy of developing lower cost water from boreholes and greater autonomy in tariff setting which have enabled ASWC to gradually improve its financial performance. By 1989, ASWC's revenues from water sales were covering 73 percent of recurrent expenditures. The value of fixed assets averaged only 4.5 times income earned for both 1989 and 1990. However, fixed assets have not been revalued since 1982, so the actual situation is likely to have been worse. B. Poor Utilization of Capacity 6. Data on production capacity and sales volume are incomplete, but clearly there is scope for improvement. The volume of water sold in Kaduna is estimated at about 40 million cubic meters in 1989, and as much as 44 percent of this output was unaccounted for in 1990. One objective of the earlier project was to limit water losses to 25 percent of production (some water leakage is not economical to curtail), but this met with limited success. Few water systems in Nigeria are metered which would help in leak detection and could lower consumption by up to 40%, enabling existing capacity to be used more effectively. In 1886, unaccounted-for water at BSWA was estimated at 50%. Funding has been included in a Bank-financed project for meters and other equipment to reduce unaccounted-for water to 28% by 1991, but this part of the program has not yet been initiated. C. Debt Service 7. Water utilities have high levels of liabilities compared to their value of assets. In Kaduna, high liabilities are due to the first IBRD loan as well as debts to the state government arising from accumulated debt service. KSWB's liabilities amounted to N890 million in 1990 or 47 percent more than its total assets. Up to now KSWB has serviced its external debts by borrowing interest free from Kaduna State and in effect letting the state service its debts. As a result, liabilities to Kaduna State amounted to N380 million in 1990. 8. In Anambra's case debt service, largely on an IBRD loan, increased considerably between 1987 and 1989 due to the depreciation of the naira against the dollar. Table 7 indicates the debt service increase from N 11 million in 1987 to N33 million in 1989. - 28 - Annex 1.1 Page 3 of 10 9. BSWA's capital structure at the end of 1988 is very strong, with a debt/equity ratio of less than 0.25. The foreign exchange risk for a Bank-assisted project is being borne by the state government, insulating the BSWA from devaluation. Debt service payments were minimal through 1988 and had little effect on BSWA's financial results. D. Exchange Rate Related Costs 10. Rapid depreciation of the naira has led to large increases in the cost of imported inputs into water production, such as chemicals and spare parts. The nominal rate of exchange for the naira rose by a factor of 13.5 between 1979 and 1990. As shown in Table 1, in 1990, the cost of chemicals was 35 percent and electricity and lubricants 41 percent of KSWB's income. In addition, the income statement shows a separate 'exchange loss" item which was 6.8 times revenue in 1989 and 1.8 times that of 1990. Increases in the price of electricity, also partly due to devaluation, have also contributed to losses by KSWB. Devaluation of the naira affected BSWA's operating costs mainly through increases in electricity cost. Power costs amounted to 56% of BSWA's 1988 revenues. 11. Exchange rate changes also have had a very adverse effect on water boards with foreign currency denominated debt. In Anambra, if loan interest and exchange losses are excluded, operating losses dropped slightly from N6.3 million to N6.0 million during the 1987 to 1989 period. However, if the loan interest charges are included, the losses rose to N 167 million. 12. As the book value of fixed assets is aijusted to reflect their higher replacement value due to the increasing value of foreign exchange, and as new equipment is purchased from abroad, larger amounts must be set aside for depreciation. In Kaduna, depreciation allowances were as much as 175 percent of revenues in 1989 and 83 percent of revenues in 1990. In ASWC fixed assets were last revalued in 1982 and all the subsequent depreciation charges are based on historical book values, even though the replacement cost of the imported equipment have increased markedly. The 1990 depreciation charge of 14.6% of operating costs would have been much higher if fixed assets had been periodically revalued. E. Water Agency Related Costs. 13. Although most water agencies in Nigeria are legally boards or corporations, they often function more as government departments. Government must clear procurement, authorize staffing and salaries and approve tariffs. This close relation to government often inhibits the financial and administrative autonomy of the boards, contributes to increased costs through delays in approvals and makes it difficult for the water agencies to hire and retain competent staff. m. Inadequate Income Generation A. Tariffs 14. In most water utilities, income has remained depressed with infrequent revisions of water tariffs and often with most water consumers charged a low flat rate regardless of the amount of consumption. Free riding is also present. In Kaduna there have been tariff - 29 - Annex 1.1 Page 4 of 10 increases but adjustments have been too infrequent and have not matched increases in the cost of production. Since 1978, the average water rates which were less than NO.30 per cubic meter were raised several times and a more differentiated rate structure has been adopted. However, rate increases were relatively moderate up to 1990. BSWA's tariffs have not been increased since 1987 leading to a serious deterioration in the Authority's financial performance. ASWC took steps to improve its income in 1983 with a 75 percent tariff increase. This resulted in monthly revenue collections almost three times those of the previous year. A more fundamental improvement was achieved in 1988 when the State Government allowed ASWC to make yearly tariff adjustments of up to 20 percent without authorization from government. 15. A comparison between the rate of increase in nominal wages and the changes in the price of water would shed some light on prices that the low income households can pay for water. Although wages and personal income data are not readily available for Nigeria, a large decline in real per capita income, particularly in dollar terms has taken place since 1980. Between 1980 and 1987, real incomes are estimated to have fallen by 62 percent for the urban households and by 30 percent for the rural households (see Table 2). This may in part explain the political reluctance and the real limits to raising water tariffs more rapidly and frequently. Lack of political autonomy of the Water Boards in most states adds to the political difficulty of tariff adjustments in line with increasing costs. B. Billing and Collection 16. Inadequate billing systems and poor collections have often constrained the income of water authorities. Water authorities do not appear to have a firm grasp on the volume of output, amount of water lost through "free-riders" usage and uncollected accounts. In Kaduna, amounts collected were about 80 percent of billings until recently. Large water consumers, including the public sector, owed KSWB N35 million in 1990, an amount equal to 85 percent of sales in the same year. BSWA did an excellent job of collections in 1988, with a collection/billing ratio of 100%. Despite this effort, customer accounts receivable at the end of 1988 still represented over 11 months of annual sales. In Anambra, billing and collection operations have been relatively successful with 77% of the billings collected in 1990 and 80% in the first six months of 1991. This is mainly due to the commercialization of these operations during the early stages of the project implementation. IV. Sumrnny 17. It is clear that the large and persistent losses by water authorities are due to a number of factors. Much of the increase in cost was related to the economic instability, structural adjustment and devaluation which took place in the 1980s. In 1989 in Kaduna exchange losses (revaluation of debt in naira terms) were 55% of total expenses (see Figure 1). The cost of finance, chemicals and energy, as well as higher depreciation allowances, all of which are linked to the rate of exchange, increased as the international value of the naira fell adding to the cost of devaluation. At the same time, water sales, denominated in domestic currency and sensitive to the purchasing power of low income consumers, whose real incomes were falling, could not increase in real terms. Even though revenues from water sales rose by a factor of 4 in Kaduna from 1979 to 1989, costs rose by a factor of almost 8 during the same Annex 1.1 Page 5 of 10 period (see Table 1). These factors help to explain the impact on Nigerian water utilities of past financial deterioration . 18. Even before Nigeria's economic situation worsened in the early 1980s, water authorities faced difficulty charging and collecting economic tariffs for costly water systems. In many states the cost of water production and distribution of a unit of water are high relative to per capita income which suggests than the issues related to cost and income outlined above must be confronted even in the absence of economic destabilization. Exchange rate depreciaticon exacerbated an already critical situation. V. The Proposed First Multistate Water Supply Project in the Context of Sector Issues 19. The proposed water supply project for Kaduna and Katsina States is designed to address, during the project period, most of the issues outlined above and thus reduce the risk of repeating past problems. A. Cost Factors 20. Investment Efficiency. Alternative development programs have been carefully reviewed, and the proposed program would address the highest priority needs in the two states. The scope of each sub-project is sufficient for anticipated demands and, where possible, limited to first stage development to minimize costs. Expensive investment in headworks have been postponed where possible until demand increases, and the extent of distribution will be balanced with production capacity. Appropriate technology has been adopted, and some items will again be reviewed and modified before inviting tenders. Assistance to reduce operating costs is also included in the project. 21. Capacity Utilization. Unaccounted for water is estimated at about 44% in Katsina and 41 % in Kaduna. Each Board has already initiated a program of leak detection and repair. An action program, including technical assistance, has been agreed upon to reduce losses further. Managers are being made aware of the large potential benefits of loss reduction. A program of metering is being introduced to enable an analysis of the water system efficiency and particularly to identify leakage. Targets for water waste reduction are included in the monitoring indications which will be reviewed carefully by supervision missions. 22. Debt Service. The Katsina State Water Board is relatively new and has very little debt. The Kaduna State Government has been repaying loans for KSWB which accumulated up to N381 million up to the end of 1990 and has been treated as a loan to the KSWB. At present KSWB cannot service the loan, so it has been agreed under the project that the State Government will restructure KSWB's liabilities, converting its accumulated arrears to equity and assuming its loan payments. In order to help the Board to return to financial viability, the State Government will continue to service the loan on a grant basis until KSWB's income permits it to resume the payments as well as to cover its other obligations under the loan. (about 1998). 23. Foreign Exchange Risk. In the proposed project, both State Governments will assume the foreign exchange risk, thus relieving the Boards of a cost which has been heavy in the past, which is very difficult to pass on to their consumers and which is beyond the control of 31 - Annex 1.1 Page 6 of 10 the water utilities. The experience of BSWC has shown that when water utilities are isolated from foreign exchange risks, the financial position will stabilize. B. Income Generation 24. Water Tariffs and Collections. Both State Governments have agreed to cover recurrent cost and debt service cost from beneficiaries by 1993 and 1998 respectively. As a first step in achieving this, both State Governments have implemented large, up front tariff increases ranging from 83% for public institutions, 133% for residential users and 180% for industrial/commercial users. The rates now allow for a graduated structure based on volume. Kaduna is already recovering 81% of recurrent costs, which is unusually high in the Nigerian context, and Katsina is recovering 46%. A program of 10% to 35% annual stepped increases in real terms has been agreed upon so that the boards will meet recurrent and debt service costs by 1998. 25. Billing and Collection. Both boards collected about 80% of billings in 1990, up from about 70% in the previous year. Assistance will be provided under the proJect to further improve the billing and collection systems and to write off uncollectible debts. A customer relations program and further computerization will also be included. 26. More Rizorous Enforcement of Covenants. Progress in meeting covenants in past Credit Agreements is being monitored much more rigorously in Nigerian projects. As a result one state government is being notified of the Bank's intention to suspend disbursements if substantial progress is not made soon in addressing financial and institutional development covenants. In addition, extension of closing dates on other Loans and Credits now depends upon satisfactory progress complying with loan agreements. VI. Confronting Longer-Term Issues in the Water SuDIly Sector. 27. Some of the more fundamental issues in the sector are being dealt with over the longer term through collaboration of the Bank and the Government of Nigeria. 28. Use of Affordable Technology. It is important to keep project costs affordable. With so much water supply equipment imported, devaluation of the naira has clearly been a driving force behind the inflation of water supply costs. Present exchange rates should increase the incentive to produce more water supply equipment and chemicals in Nigeria. Ways to improve local production of inputs required should also be explored. The use of low cost options should be explored where feasible. Especially until the financial incentives governing investment decisions in water authorities are improved, it is important to improve investment analysis, especially forecasts of demand to ensure appropriate scale and efficient use of resources, and appropriate technical design. 29. Enhanced Autonomy. More emphasis is needed in the future on the autonomy and accountability of water supply agencies. More autonomy to control staffing, to enhance tariffs (within established limits) and to manage procurement can significantly improve efficiency, if combined with sufficient financial accountability. The case of ASWC demonstrates the importance of autonomy in tariff setting. It was granted autonomy by the State Government - 32 - Annex 1. 1 Page 7 of 10 to make limited tariff adjustments. The result was a dramatic improvement in cost recovery from 20% of recurrent costs in 1983 to 73% in 1989. Delegation of other types of authority from the Lagos State Government to the Lagos State Water Corporation (LSWC), such as authority to approve contract awards below certain thresholds, have been discussed but not yet acted upon. 30. Private Sector Participation. Private sector participation is a way to reduce costs, assign accountability and improve efficiency. Water supply agencies in several countries have increased the efficiency of their operations through private sector participation of various types. Private participation can be used in fairly simple management contracts, for example, maintenance contracts or contracts for billing and collection. Alternatively, the private sector can be placed in charge of most aspects of the utility with contracts to maximize incentives for efficiency. With growing world-wide recognition that public sector utilities invariably face political pressures which compromise economic efficiency and financial performance, private sector participation should be seriously considered. The World Bank, with the assistance of federal and state water supply agencies in Nigeria, is currently examining specific ways of introducing private sector participation in Nigerian water utilities under a separate study.' 1. Nigeria: Private Sector Participation in Lfrastructure and Urban Services. Table 1. Kaduma State Water Project - Pre- 1989 Financial Situation Mtlltfn Naira per tear Index Share of Sales 1979 1986 1988 1979 1986 1988 1979 1986 1988 Water Sales 4.5 17.5 17.7 100.0 388.9 393.3 100.0 100.0 100.0 Prod./Dist. Costs 2.5 7.8 18.1 100.0 312.0 724.0 55.6 44.6 102.3 Administratfon 3.5 4.0 4.8 100.0 114.3 137.1 77.8 22.9 27.1 Depreciation 0.0 5.9 28.3 0.0 33.7 159.9 Interest 0.7 0.9 1.8 100.0 128.6 257.1 15.6 5.1 10.2 Totat Costs 6.7 18.6 53.0 100.0 277.6 791.0 148.9 106.3 299.4 Total Cost/excl. Dep. 6.7 12.7 24.7 100.0 189.6 368.7 148.9 72.6 139.5 Net Income -2.2 -1.1 -35.3 -100.0 -50.0 -1604.5 -48.9 -6.3 -199.4 Net Income/excl. Dep. -2.2 4.8 -7.0 -100.0 218.2 -318.2 -48.9 27.4 -39.5 Source: PCR I- : OQ 0 o m 0 Table 2 Index of Real Household Incomes of Key Groups, 1980/81 - 1986/87 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87 Urban Self Employed 100 83 72 63 46 46 41 Urban Wage Earner 100 87 81 69 50 50 44 All Urban Households 100 76 69 58 43 43 38 Rural Self Employed 100 103 95 86 73 74 65 Rural Wage Earner 100 90 83 76 52 53 47 All Rural Households 100 102 94 85 70 80 70 Source: Nigeria: 1990 CEM, p. 31 OQ : 0 -35 Annex 1.1 Figure 1 Page 10 of 10 Kadunna St;ate Water Board Composeton of Expenses 198,9 Deprecpiraton (14.0%) / > BereI E'moCumwnts (1.6%) ChsmdcaU (4.3X) Maintetance (7.4X) Etectrodtyj a,td Lubricntaes( Bad Debts (0M7X) Exchange Loss (55. Xdn ation (3.6) Interest (74.8X) Kctduna State Water Boarct Compositfon of Expenees 1990 Depreciatmon (17.9X) Exchange Lose (33.OX) Persoonnl moztuments (Z.X 7) Chtnicats (7.6%) Main,*enanee (2. S) BleeCtricitj and Lubricants (8. 7X. Bed Debts (a.8X) Interest (20.4%) 4dm*WctrEion (4.7%) Annex 2.1 -36- Page 1 of 3 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Description of Water Supply Systems Katsina City 1. The Katsina water supply system serves Katsina city and several neighboring towns and villages. The system which was built in 1975, is supplied from the Ajiwa dam and 50 MLD (recently increased from 25 MLD) treatment works, approximately 20 km east of Katsina. The treatment works use conventional processes of clarification, filtration and chemical dosing. Water is pumped from the treatment works to a 14.5 ML ground level concrete reservoir near Katsina. From this reservoir, water flows by gravity to a booster station in Katsina which then feeds two identical 2.3 ML elevated storage reservoirs in different parts of the city. Gravity feed distribution mains extend from the elevated reservoirs to supply Katsina city as well as areas outside of Katsina. 2. A large number of open wells throughout the city are still used consistently. Most of these are polluted to some degree. Consumers in some areas experience inadequate water pressure for more than 8 hours per day due to inadequate capacity of the distribution system. 3. Under the project about 80 km of transmission and distribution pipelines, pumping stations, and an additional elevated reservoir, will be constructed within the town. Funtua 4. The existing Funtua system serves Funtua town and extends about 20 km to Bakori and Kabomo. Raw water comes from Mairuwa dam approximately 12 km northwest of Funtua. The treatment works, near the dam site, consist of a conventional plant with a capacity of 4.5 MLD and a prefabricated package plant having a capacity of 2.3 MLD. The conventional plant was commissioned in 1971 and the package plant was added in 1983. At present, only the conventional plant is operational, due to difficulties in conveying raw water to the package plant in the dry season. Water is pumped from the treatment works to a 2.25 ML circular concrete reservoir on a hill in Funtua, and distributed from there. There is also a borehole at Bakori which feeds into the system and produces about 100,000 liters per day. The current water requirement far exceeds the existing supply, and numerous open wells throughout Funtua make up the shortfall. 5. Under the project a dam would be constructed on the River Gwagwaye located within 5 km of the existing Mairuwa Waterworks. A two staged program is considered. Stage 1, financed under the project, would include construction of the dam and 15.2 km of 800 mm diameter pumping main to Funtua designed for the maximum potential output available of 30 MLD. The treatment works, pumping stations storage reservoirs and reticulation network reinforcements would be sized at 20 MLD. Stage 2 would provide the balance of the safe yield available from the dam, 10 MLD. Annex 2.1 37 - Page 2 of 3 Malumfashi 6. The existing system consists of an impounding reservoir at the Turo dam, a 3.5 MLD conventional treatment plant feeding a 4.5 ML elevated steel storage reservoir, and a distribution system in Malumfashi town. The source and treatment works are located about 15 km north of Malumfashi, while the storage reservoir is located approximately 1 km south of town on a large rock outcrop. A transmission main also extends 30 km to Kankara, which has a 0.23 ML elevated storage reservoir and distribution system. 7. The dam has many problems including poor construction, noticeable settlement, seepage, inadequate spillway, erosion in spillway channel and vegetation growth on both faces. The safety of the dam cannot be assured unless remedial works are undertaken. Work to be done includes raising the dam crest by 1.9 m to prevent overtopping, construction of a new spillway, repairs to intake tower outlet gate and landscaping the downstream face for erosion control. Daura 8. The Daura city water supply is based upon 9 boreholes. Water is pumped from the operating boreholes to two elevated steel storage tanks for gravity distribution throughout the city. The tanks have capacities of 0.9 ML and 0.23 ML respectively. Water will also be piped 12 km to Sandamu via a booster station. The current water supply from the operating boreholes is approximately 2.9 MLD. The water distribution system consists of 75, 100 and 150 mm AC pipe, reaching most areas of the city. Work to be included in the project includes augmenting supply capacity by increasing the number of boreholes, about 14 km of distribution pipeline, stores, and repair facilities. Ikara 9. The present supply at Ikara is from individual wells, which are inadequate particularly in the dry season. Commercial/industrial activity in the town (food processing) has been hindered through lack of water supply. The civil works have been completed for several years for the Gimbawa dam, pumping station, rising main, and water treatment plant, however no mechanical or electrical equipment has been installed. The project will finance pumping and water treatment equipment of 4 MLD capacity (of 8 MLD ultimately proposed), 10 km of 300/400 mm diameter transmission main to the town, about 20 km of distribution network, and system storage. Kwoi 10. At present water supply in Kwoi is obtained from wells via water vendors or from individual household wells, which are inadequate particularly in the dry season. Lack of water supply is hindering further development of the town. The project would finance a weir intake on the Gurare River, a pumping station and conventional water treatment plant of about 6.5 MLD capacity, about 14 km of 350/400 mm transmission pipeline to the town, system storage, and about 75 km of distribution network up to 400 mm diameter. - 38 - Annex 2.1 Page 3 of 3 Zonkwa 11. The present situation in Zonkwa is similar to that in Kwoi. The project will finance a new dam, intake pumps and treatment plant of about 5.0 MLD capacity, 5 km of 300 mm transmission pipeline, system storage, and about 70 km of distribution network up to 250 mm diameter. Kaduna and Zaria Cities 12. Although not benefiting directly from new works under the project, both Kaduna and Zaria cities will feel the influence of institutional development bv the Kaduna State Water Board. Each of these towns is served by a dam, conventional water treatment plants, and distribution network. In Kaduna, there are three plants of capacity 150 MLD (financed under Ln. 171 1-UNI), 54 MLD, and 27 MLD. In Zaria there are two, of 50 MLD and 10 MLD. There is currently excess capacity in Kaduna, but a major shortage in Zaria where additional reservoir and treatment capacity are required, subject to further studies. - 39 - Annex 2.2 Page 1 of 4 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Projections of Population and Water Demand 1. Demand projections have been based on estimates made by consultants of populations and forecast population growth, and an anticipated consumption per person, with allowance for industrial and commercial needs. The last official census in Nigeria was in 1963, and the results are generally considered suspect. However these results have had to form the basis of population projections, with comparisons being made with other statistics such as school enrollments and voting registers. Populations served by the various systems vary from about 30% up to 95% of total service area population at present, with an objective of 95%. The estimated current populations and projected populations for all towns served by the two water boards, including all project towns, are shown in the attached tables. 2. In projecting water demands, towns have been divided into three categories, large, medium, or small, and different proportions of consumers utilizing house connections (HC) and standpipes (SP) have generally been assumed for each, as follows: HC%/SP% Large towns 1990 50/50* 2005 65/35 Medium towns 1990 30/70 2005 40/60 Small towns & 1990 15/85 semiurban 2005 20/80 * Except Kaduna city and Zaria where alternative figures were adopted to better fit current statistics, 62/38 in Kaduna and 45/55 in Zaria, increasing to 70/30 and 55/45 respectively. Per capita demand has been projected conservatively to increase from 80 litres per day in 1990 to 100 in 2005 from house connections, and to remain constant at 20 litres per person per day for standpipe users. In fact, these quantities will rarely be available in all towns from house connections, since at all times there will be a deficit in supply capacity in at least one town of the state. Averages for all towns supplied by the boards are indicated in the attached tables. Additional water requirements for commercial and industrial uses have been estimated by consultants as an additional percentage (ranging from 5% up to 37%), depending on the nature of development in each town, to give the total water demand in each town. 3. Water production requirements depend also on unaccounted-for water (UFW). Accurate figures on UFW are not available, since neither water production nor amount sold is metered. However assessment of available records indicates that between 35% and 50% of water produced is not accounted for. Experience here and elsewhere would suggest that 20% to 25% might be physical losses, and the remainder might be under-measurement of usage, in - 40 _Annex 2.2 Page 2 of 4 various forms. It is assumed in making projections of future sales and production, that total UFW will reduce over five years to about 25% for existing systems and will be 20% for new systems. A comparatively small part of this reduction would be achieved by the proposed leakage detection and repair program, and the remainder by reducing the undermeasurement. It is expected that this will be possible since the cause of these "losses" can be clearly identified. Typically, the amount of water billed to any consumer is a nominal amount based on the number of fixtures he has at the time of connection. Typically also, connections are extended to neighboring residences without reference to the water board, while billing is still based on a single family. Where meters have been installed recently on a sample of consumers, actual usage has been shown to be from 17% to over 200% in excess of the nominal amount billed prior to metering. A comprehensive metering program and properly designed tariff structure as proposed under the project, will account for a much larger proportion of water used, and encourage consumers to obtain their own connection and economize on water usage. 4. Numbers of connections and public standpipes have been projected from current numbers. Present statistics vary a great deal from town to town, but indicate that from 6 to 26 people are served per house connection, and from 200 to 2600 per standpipe, but with considerable uncertainty in these figures. Surveys have indicated that a maximum of about 12 persons per house connection should be expected if each household had an individual connection, and 300 persons per standpipe has been adopted as an objective. It is expected that numbers will reduce towards these two objectives in the project towns during the life of the project, for example reducing from 21 to 15 persons per connection and from 2600 to 1200 persons per standpipe in Kaduna city and remaining at about the current figures of 8 and 310 in Katsina city. Projected numbers of connections are given in the attached tables. Annex 2.2 Page 3 of 4 - 41 - FEDERAL REPUBUC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT SUMMARY OF POPULATIONS AND DEMANDS KATSINA STATE 1090 1961 1992 1003 1004 1995 1960 1967 1966 1999 KATSINA CrrY Total Populaom 362000 378920 396649 4151098* 434015 454939 476214 496464 521705 546107 Populdon svsd 221260 231848 242943 254571 298588 34843 361177 418541 439231 480948 FUNTUA Totil Populson 144000 151336 150048 187148 1756e3 164612 194016 203900 214288 225204 Populadon served 46080 48427 50895 53487 56212 59076 62085 01755 120573 180103 MALUMFASHI Total Populdon 70000 73154 76450 7994 63494 87256 91187 95208 99569 104077 Populdon served 8o0o9 63044 6e511 60508 72840 75013 79333 82007 8643 90547 DUTSIN MA ToW Populadon 45263 47010 40840 50733 52700 54743 50e64 9069 61358 63737 Populdon svod 43000 44667 46398 48197 50065 82005 54021 58115 58290 80505 DAURA Tota Populdion 71579 75086 76785 82624 o8672 906w1 95373 100048 104947 110089 Populaon swved 68000 71332 74826 7843 82338 06372 o0604 05043 99700 104585 SEMI URBAN Total Populsion 180000 185307 19095 186862 202579 208083 214910 221353 227991 234827 Popul,aon served 12600 25056 40101 55071 72920 104327 152586 221353 227991 234027 JIBIA Tota Populdion 75000 77253 79573 81963 84425 86961 89573 02264 95035 97e88 Populabon seed 71250 73390 75595 "G865 80204 82e13 85094 87650 90283 92995 Total Populadon 047842 986172 1030279 1074242 1120148 110082 1218138 1270411 1325003 1382010 Tota Populaton saed 823090 059263 597269 637192 712945 806849 904900 1053385 1130710 1224614 Percentage served 55.2% 56.6% 58.0% 59.3% 63.0% 06.1% 74.3% 821% 85.3% 88.6% Of serviced populabon - Pop. % by standpip. 67.3% 87.3% 67.3% 67.3% 86.6% 84.4% 618% 60.4% 58.8% 57.5% Pop. % by connecUon 317% 327% 327% 3Z7% 33.4% 35.0% 37.2% 396% 41.2% 41S% Produecon capacity (peak M) 50.1 81.1 811 56.1 67.8 6o.8 93.6 120.9 120.0 120.9 Producfon capaty (av. MLW) 415 43.4 44.2 47.0 57.4 59.1 79.5 102.7 102.7 102.7 Ac.aproducfon (MUW) 35.0 35.7 38.4 59.7 40.1 40.8 66.2 78.1 63.0 91.3 % utlizaton 814% 82.3% 823% 83.4% 83.9% 83.9% 83.2% 78.1% 81.7% 88.8% Totl sales (MLD) 10.0 20.2 20.0 24.5 31.0 34.8 40.1 59.1 63.0 69.2 DomesUc sales (MLW) 15.1 15.6 10.3 10.0 24.4 27.0 37.1 45.4 48.5 513 Unaccounted wate % 44% 44% 43% 38% 34% 30% 27% 24% 24% 24% UtrsIpersoday-atandpipes 20 20 20 20 20 20 20 20 20 20 Li#rs/persoriday - coinncdons 47 44 42 50 63 58 70 78 70 74 Number conn ectons 20686 21304 22115 22949 26392 31733 37331 49062 56615 64186 Number of swidpipes 821 650 885 92? 1040 1146 1306 1670 1757 1893 Annex 2.2 Page 4 of 4 - 42 - FEDERAL REPUSUC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT SUMMARY Of POPULATIONS AND DEMANOS KADUNA STATE 1990o l991 192 1993 1994 1996 199e 1997 199s 1999 KADUNA CITY Tota Populdaon 1175000 1211642 1249427 120383o 132ns. 1370000 1404245 1439345 1475323 1512201 Populaomnserved 1057500 1090478 1124484 1159551 1195712 1233000 1291905 135296s 1401557 1436591 ZARIA Totol Populedon 580400 599904 620064 640902 662439 664701 707710 731493 75075 761483 Populbon srvoed 430100 445163 460754 476890 493592 510879 526771 547290 566457 566296 SAMINAKA TotW Populadon 3000 31731 33862 35499 37546 39715 42006 44431 4e995 49707 Populaon served 90 9519 16761 24649 33793 35743 37606 3998s 42295 44736 KAFANCHAN I Totl Populsdon 100000 102506 105079 T07714 110416 113188 116024 116934 121917 124074 Populdon seved 59290 e677 62300 63662 74615 66276 93354 95695 9o60 100553 IKARA Touta Populdion 47600 48012 80256 51530 52638 54178 55552 se591 56406 59e66 Populaton srd 0 0 0 0 0 16253 33331 51265 55486 66693 KWOI Totl Populaon 53116 54541 56004 57506 59040 60633 62260 63930 65645 67406 Populaton seved 0 0 0 0 0 0 16676 36356 59061 64036 ZONKWA Total Populolon 55400 so530 5e 59201 60526 61670 63263 64679 66125 67604 Populelion sevd 0 0 0 0 0 0 16979 36807 59513 64224 BIRNIN GWARI Tota Populaion 23000 23560 24134 24722 25324 25941 26573 27220 27683 26563 Populaton sved 16400 1o64 19307 19776 20259 20753 21256 21e77 22307 22850 MANCHOK ToWtl Populaion 12200 12602 12912 13229 13554 13867 14226 14577 14835 15302 Population sevd 9640 10062 10329 11244 12198 13192 13516 13848 14168 14537 TotaW Populaion 2077016 2142141 2209344 2276es5 2350262 2424119 2491661 2561570 2633304 2707127 TotW Pupulion served 1584130 1634867 1693956 1756176 1630370 1016090 2057599 2200011 2316977 2390716 Percentage served 76.3% 76.3% 76.7% 77.1% 77.9% 79.0% 62.6% 85.9% 68.1% 66.3% Of served populSaon Pop. % by stwndpipe 44.6% 43.7% 43.0% 413% 41.7% 41.3% 41.4% 41.3% 41.0% 40.2% Pop. % by connecton 55.4% 56.3% 57.0% 57.7% 58.3% 56.7% 58.6% 58.7% 59.0% 59.6% ProducSon capact (eo MID) 266.4 266.4 266.4 291.4 296.0 302.0 313.2 313.2 313.2 313.2 Producton capacity (av. MLD) 226.5 226.5 226.5 247.7 253.3 256.7 266.2 266.2 266.2 266.2 Uol production (MLD) 163.5 194.3 203.9 235.4 232.9 230.7 234.6 251.1 259.5 260.6 %utilizaton 61.9% 6s.8% 90.1% 95.0% 92.0% 68.9% 86.1% 94.3% 07.5% 96.0% Total sales (MLD) 110.2 115.5 121.4 141.6 151., 162.0 176.2 1t8.6 195.2 19t.3 Domosc sales (MLD) 71.2 74.6 76.3 92.6 9o.7 106.6 116.3 124.8 129.4 130.2 Unaccountedwater% 41% 41% 40% 40% 35% 30% 25% 25% 25% 25% Ultrs/personday - standpipes 20 20 20 20 20 20 20 20 20 20 Litres/person/day- connmetons 65 6o as 77 79 e1 62 63 e1 76 Numberofconnecons 43489 45810 47967 5256 60008 609524 79120 65577 91312 95369 Numberofstindpipes 390 396 424 467 537 8o 876 1123 1246 1279 Annex 2.3 - 43 - Page 1 of 4 FEDERAL REPUBLIC OF NIGERIA FIRST MULTI STATE WATER SUPPLY PROJECT Improvement of the Efficiency of Operation of the State Water Board Terms of Reference 1. The Kaduna and Katsina State Water Boards are expected to receive financial assistance from the World Bank to carry out a program of rehabilitation and limited expansion of water supply facilities, and to upgrade their capacities to carry out the functions of large water supply authorities. To this end, a major program of assistance is proposed to each Board to improve its ability to efficiently operate and maintain its facilities, and to plan for the future, and consultants are required to assist with this program. These terms of reference indicate requirements in the technical and engineering fields. Concurrently with this program, other consultants may be assisting with improvements to accounting, billing and collection procedures, and development of a management information system, including review of computer needs for the Board as a whole and setting up of the necessary computer facilities. The consultants carrying out these two activities are expected to liaise as necessary for the efficient completion of their assignments. 2. It will be of utmost importance for the success of this program that technicians and engineers at the working level are fully trained and understand the objectives of the assistance program and the techniques to be used. To this end, the assistance will include several periods of mentoring, follow up, checking of achievement, and further instruction. In addition, the consultant will be expected to make specific efforts to ensure that its objectives, importance, program, techniques and achievements are transmitted regularly to higher levels in the Board and to the political level. Scope of Work 3. The proposed program will consist of one major component directed towards improving the operational efficiency of the Board in the engineering fields of operation and maintenance, and four subsidiary components. The geographic coverage of the program will be the whole state but with concentration of activities on the Board's head office. The improvement of operational efficiency component will include the six urban systems operated by each Board. Each Board has already initiated a program of leak detection and repair, utilizing leak detection equipment. Relevant parts of this assistance will build upon that program. Separate commission will be arranged for assistance in each state. The scope of work will include but not necessarily be limited to the following: Annex 2.3 - 44 - Page 2 of 4 Improve Operational Efficiency (i) Inventory all water resources connected to the system at present or which could be readily reconnected. (These might include the existing surface water supply and old groundwater supplies if of adequate quality.) Determine the cost of producing potable water from each source, investigate means to reduce these costs, and develop operating rules to optimize use of water and minimize operating costs, depending also on demand patterns and transmission and distribution system capacities. This should include particularly a review of all uses of power fuel and chemicals (especially coagulant), and recommendations for maximizing the efficiency of their use. (ii) Analyze the distribution system and recommend a system of metering by area to permit this analysis to be improved and to form part of the leak and wastage detection and repair program. Recommend also any necessary production meters and assist the Board with procurement and installation. Analysis of the distribution system should include setting up the system on an appropriate computer analysis program and ensuring that Board staff are able to continue its use. (iii) Review the achievement of previous programs of detection of leakage and wastage, and following the installation of meters as indicated in the previous point, recommend a program of further loss reduction, including loss through undermeasurement and illegal connections. Recommend an appropriate program of consumer metering including specification of suitable and cost effective meters. (iv) If necessary, prepare a program of leakage repair to be carried out as part of the Board's maintenance activities and prepare contract documents. (Leakage repair may extend beyond the period of this program of technical assistance, in which case Board staff, trained during this program, would take responsibility.) (v) Examine water catchments used by the Board and make recommendations for protection of water quality including particularly control of the use of biocides and fertilizers, and activities which would increase erosion and subsequent sedimentation of the reservoir. (vi) Analyze the Board's field operations and establish manpower requirements for operation and maintenance. Develop a program of routine preventive maintenance. This should include a program of safety inspections for all dams used for water supply. (vii) Analyze stores, stores procedures, and procurement arrangements. Establish necessary holdings of spare parts and chemicals, and locations of stores facilities, and recommend procedures. Amnex 2.3 -45 - Page 3 of 4 (viii) Recommend equipment, tools, vehicles, etc necessary for the Board to carry out its duties, including establishment of a meter workshop. (ix) Determine suitable monitoring indicators for use by the Board management to assist in its duties and in general quality control, and assist in establishing a management information system utilizing these indicators. Laboratory Needs (x) Review existing laboratory facilities and the need for additional equipment and supplies. Prepare specifications and assist with procurement. (xi) Prepare a routine water quality monitoring program for potable water and for stream and dam water quality related to town water supply, and assist Board staff in commencing its implementation. For new reservoirs, monitoring of stream water quality should commence before commencement of dam construction. Library (xii) Deternine library needs, assist with purchase of books and journal subscriptions and establishment of a technical library. Train a Board staff member to operate the library. Planning Procedures (xiii) Assist the Board in the development of its medium and long term investment planning procedures and demonstrate the relation between system operation and monitoring, and system planning in a developing water supply system. Training (xiv) For all of the above activities ensure that Board staff are fully trained and understand the procedures adopted so that they are able to continue to utilize them in the future. Implementation Timing and Reporting 4. It is anticipated that the entire program of technical assistance will extend over a period of three years. All of the analysis and recommendations arising therefrom should be completed in draft form within the first six months. Following tl;is the program of assistance would be intermittent depending on when the necessary equipment becomes available, and would involve establishment of the recommended procedures and training of Board staff in their implementation. This program, which will need to evolve as work proceeds, should - 46 - Annex 2.3 Page 4 of 4 involve periods of assistance.followed by periods when Board staff work alone, to be followed by further periods of follow up and assistance. 5. An inception report is required at the end of the second month, detailing the proposed work program and necessary inputs by others. Each month thereafter, a brief progress report will be required detailing significant progress and benchmarks reached, causes of delay, and points requiring clarification or decision. Reports on each investigation carried out will be required in draft form at the end of the sixth month, these reports to be finalized on completion of the relevant component. A final report will be required analyzing the effectiveness of the whole program of assistance and making recommendations for further assistance to the Board, and for suggested modification to future similar programs elsewhere. 6. Budgeted funds for this assistance are US$1.0 million equivalent per state at present day costs, including vehicles and other normally required equipment, however each consultant should make his own estimate of the required resource inputs. The supply of special equipment such as water meters would be additional. 47 - Annex 2.4 Page 1 of 3 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Improvement of Accounting. Billing and Collection. Management Information Reporting Terms of Reference Accounting 1. Backgrund. The Katsina and Kaduna State Water Boards (KTSWB and KDSWB) have similar financial management systems. The systems are adequate in most respects. The KTSWB's system is completely manual, while the KDSWB is experimenting on an ad hoc basis with the use of personal computers in its accounting system. Areas that definitely need improvement are fixed assets and inventory accounting. In addition, better consolidation of district accounts and more rapid year-end closings are needed. 2. Obiective. The objective of the consultancy services is to improve the reliability, timeliness and utility of accounting reports and strengthen internal control over fixed assets and inventory for both water boards. 3. Scope of Work. The scope of work includes: (a) review accounting practices and procedures; (b) assess capability of finance staff; (c) determine areas that can be computerized (personal computers) including fixed assets, inventory, payroll, general ledger, district accounting, consolidations, etc.; (d) determine and cost personal computer hardware and software needs, including availability of maintenance and support services; and (e) identify training sources and training programs. Billing and Collection 4. Background. Billing systems for the two SWBs are similar. Bills are prepared manually in all districts of the SWBs except in Kaduna City District, where billing is contracted out to a private data processing bureau. Most of KTSWB's 21,500 water connections and KDSWB's 39,500 water connections are not metered and are billed on a flat rate basis. Plans include nearly universal metering introduced over a three year period. Collection/billing ratios are low: KTSWB collected 80% of its billings in 1990; KDSWB collected 78% of its billings in 1990. Annex 2.4 - 48 - Page 2 of 3 5. Objective. The objective of the consultancy service is to improve the efficiency of the billing and collection system and strengthen internal control over revenues. 6. Scope of Wor. The scope of work includes: (a) review existing commercial organization and operations; (b) determine additional commercial requirements based on metering plans; (c) review billing frequency, meter reading routes, collection practices; (d) review connection/disconnection/reconnection policies and procedures; (e) recommend improvements in commercial operations and procedures, including computerization (personal computers) and further use by KDSWB of private data processing bureau; (f) determine and cost personal computer hardware and software needs, including availability of repair and support service, and additional use of private data processing bureau; (g) identify training sources and training programs; and (h) assist the SWBs in designing a comprehensive accounts receivable collection and write-off exercise. Management Information Reporting 7. Background. Other than periodic reports on financial results and budget performance, neither of the SWBs has comprehensive management reporting. Other information produced is presented in a number of separate reports. 8. Obiective. The objective of the consultancy service is to develop a simple, yet complete, management reporting system and format. 9. Sope of Work. The scope of work includes: (a) review information needs (financial, technical operational) and frequency of reporting with senior management; (lb) determine sources of information and how best to record and report the information; and (c) develop a management information package (sample reports at district, assistant general manager and general manager levels with recommended frequency of reporning). - 49 - Annex 2.4 Page 3 of 3 Services Required 10. Twelve staff months of consultancy services will be required (six staff months of a financial management specialist and six staff months of a commercial (billing and collection) specialist). The SWBs will each provide 12 staff months of senior local accounting and commercial staff. The consultants will provide transport and office equipment. The SWBs will provide office space and supplies and secretarial support. _ 50 - Annex 2.5 Page 1 of 2 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Urban Tariff Study Terms of Reference Background 1. The Katsina and Kaduna State Water Boards (KTSWB and KDSWB) operate and maintain all urban water supply systems in their respective states. The KTSWB presently services about 22,000 connections to all categories of consumers, including over 800 public standposts, while the KDSWB services about 42,000 connections, including over 380 public standposts. Most connections are billed on a flat rate basis; however, the SWBs plan to introduce nearly universal consumption metering beginning in 1993. 2. The SWBs are heavily subsidized by their state governments, including subvention to cover a portion of their operation and maintenance costs, any debt servicing and investment requirements. The SWBs and the state governments have agreed to a medium term program to fully recover from revenues all operation and maintenance costs and debt servicing requirements by 1997. 9hiective 3. lThe objective of the study is to develop an urban tariff structure that would: allow the SWBs to meet their financial requirements per para 2 above; discourage waste and excessive consumption and address the need for affordable water for the poor; and - be simple and economical to administer. The study should produce good, practical recommendations for each SWBs' consideration. Scope of Work 4. The scope of work includes: (a) Revenues and Finandal Requirements - analyze current sources of revenues and consumption by consumer categories and blocks, service mode and unmetered/metered consumers; and - review current and projected financial requirements, and determine average tariff to meet financial requirements. (b) Metering - review metering plans; - review basis of charges for all categories of unmetered consumers; - determine for a representative sample, actual consumption for all categories of unmetered consumers; - determine effects on revenues and consumption of metering plans; and * recommend tariffs for unmetered consumers while the transition is made to nearly full metering. - 51 - Annex 2.5 Page 2 of 2 (c) Dem and Management - assess the extent to which existing graduated tariffs encourage consumers to control consumption; - assess the extent to which existing graduated tariffs discriminate against low-income consumers; and - consider, based on the above assessment, whether any revisions should be made in the existing tariff structure. (d) Public Standposts - review revenues and costs; - review tariff levels and billing/collection arrangements; - study private water vending practices and charges; and - identify and consider options for revisions, including privatization or neighborhood control of standposts. (e) New Connections - review current charges and their effects on the SWBs' revenues and access to water supply by the poor; and - recommend revisions as needed. (f) Other Services - review revenues and costs of SWBs' other services; and - identify and recommend appropriate charging policy. (g) Tariffs (Charges) - -review basis of charging for domestic, public and commercial/ industrial consumers; - review basis of graduated tariffs and minimum consumption blocks; and - assess amount of cross-subsidization among domestic, public and commercial/industrial consumers, domestic consumers at minimum block tariff and domestic consumers at higher consumption blocks, and public standpost consumers and private domestic consumers. (h) Tariff Structure - Based on work under (a) through (g) above, develop a revised tariff structure and charging policy for connections and other services. Services Required 5. The work requires six staff months of services of an expatriate tariff specialist and twelve staff months of services of a local counterpart financial/commercial specialist and a sociologist. The SWBs will provide transport, office space, office equipment and secretarial support. - 52 - Annex 2.6 Ps ge 1 of 2 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Promotion and Hygiene Education Activities Terms of Reference 1. A promotion and public relations program will have to be established prior to the introduction of the new water supplies (standpipes and house connections). In addition, involving the population in making improvements in water use practices, excreta disposal and sullage disposal will help to improve the sanitary condition of the urban environment. Promoting lasting changes in behavior is a long term process and health and hygiene agents need to develop the skills and capacity to sustain promotion and education activities. Scope of the Work 2. Water board staff and the project team as well as other sector staff involved in promotion activities in the two States will be assisted in developing a promotion and public relations program for connection and management of the new water supplies. In addition, key sector staff will learn new skills and methods to assist them in improving community education and sensitization with respect to hygiene related issues. There will be two main areas of work, the water supply promotion and management program, and the hygiene education program. The scope of the work will include the following: (a) review of current community mobilization/sensitization practices including financial and human resources as well as equipment and training materials and media used. (b) review of water supply and sanitation related diseases endemic in the States and an assessment of the degree of awareness of the urban population of the causes of these diseases. (c) training of extension agents/health inspectors in participatory methods of interaction with the population/communities. (d) development of program for promotion of new water supplies with information on all aspects of (connection, metering, billing, fees/tariffs, promotion of sullage disposal for house connections, management of public standpipes etc.), development of appropriate promotion information and training materials and initiation of implementation of the program. (e) review of requirements for staff training, training materials, equipment and financing required and development and a proposal for funding to enable provision of improved hygiene education in urban areas. - 53 - Annex 2.6 Page 2 of 2 Roles of Consultants and Timing 3. It is expected that the preparation of the program and the planning for improved promotion and hygiene education will take about six months. The teams in the two states will be assisted by an international consultant (3 months). Annex 2.7 Page 1 of 4 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Reorganization of Rural Water Supply Sector Terms of Reference Background 1. Many state, national, and international agencies have been involved in development of rural water supply facilities in Nigeria, specifically in the states of Katsina and Kaduna, and in their maintenance. Activities have been uncoordinated with the result that there has been considerable overlap and dupliLated effort. The state water boards have had the major responsibility for maintenance, but have not had the resources to do this adequately. Hence, of about 1350 rural water supplies that have been developed in the two states (900 in Katsina and 450 in Kaduna), only about one third are in operation. Less than 5% of the rural population of about 5.3 million have access to safe water. It has been estimated that 20,000- 25,000 water points, costing perhaps US$100 million would be required to provide safe water to all of these people by the year 2005. 2. It is now proposed to reorganize the rural water supply sector to improve coordination amongst various participating organizations and to ensure that maintenar,t e activities can be properly carried out to ensure sustainability. This reorganization must be consistent with the national policy and strategy currently being developed by the Federal Ministry of Water Resources. The paramount concept of the reorganization will be that the users (communities) will be the owners and managers of their own rural water supplies, with the local governments and state agencies undertaking tasks and responsibilities to facilitate such development. Development will be based on cost sharing and the users will be required to contribute a significant part (10% to 25%) of the costs, in money or in kind. The state will adopt a coordinated approach to sector development which all relevant agencies will be required to adhere to, and the private sector will be stimulated and encouraged to actively participate in sector development. 3. When the new organization is in place, rural water supply activities would start with the village (through its water supply committee) making request for water supply to the rural water supply and sanitation unit of the local government. This unit would prepare a priority list of those villages which are ready with their contributions and with an indication of the type of supply required. The list would be forwarded to the state coordinating unit which would prepare an annual state implementation plan, with budgets, resources and technical inputs required. The state unit would package the different activities required for tender and contracting, depending on financing available and other constraints imposed by the various financiers. Local government would prepare itself and the communities for implementation after an implementation schedule has been agreed. After commissioning the water supply, the water supply committee of the community would continue to collect cash contributions for maintenance and call on local area mechanics for assistance for larger repairs. Local government would be called on to arrange a specialized agency to assist for repairs that are - 55 - Annex 2.7 Page 2 of 4 beyond the capacity of local mechanics. Local government would also monitor operation of the supplies by annual visits. 4. The states now wish to appoint a consultant under these terms of reference, to help establish the proposed new process for handling rural water supply. One individual consultant is proposed to assist the two states. Objectives of Consultancy 5. The consultant will provide conceptual, managerial and technical support to the state coordination units (SCU) for the purpose of making the unit professionally strong enough to be able to handle coordination of the development of the state rural water supply and sanitation program. The assistance would also support the state coordination unit in implementation of a small scale project to demonstrate the use of the new approach and consolidate the new organizational methodology. Scope of Work 6. The scope of work would be as follows: (i) Assist the SCU in preparation of detailed documentation for all project activities including drafting a state rural water supply and sanitation program document and advice on how to organize the logistics of the implementation of the program including liaison with potential financiers. (ii) Join the SCU in meetings with state agencies and assist and advise the SCU in drafting state policies and strategies to be adopted by the state government. (iii) Participate in workshops for developing state sector policies and strategies. (iv) Assist in defining needs for staffing, office facilities, equipment and transport for the SCU and local government rural water supply and sanitation units. (v) Assist the SCUs in preparation of terms of reference for short term consultancy support covering: - Drafting a training program at state and local government levels: - state and local government decision makers - local government unit staff - technicians and artisans - extension workers - Develop/facilitate training materials for use at community level covering: - approach to community involvement - 56 - Annex 2.7 Page 3 of 4 - community management of water supply - skills training in construction, operation and maintenance - health and hygiene education/promotion - latrine construction Planning limited scale community based rural water supply and sanitation activities. Study for deepening hand dug wells by blasting. Strengthening private sector support, including pump mechanics, well diggers, local spare parts distributors, latrine builders. Planning strategies for rehabilitating defunct rural water supplies. - Training assistance for use of PCs for word processing, desk top publishing and program monitoring (database). (vi) Advise on links to the federal program, RUSAFIYA project, Training Network Center and other relevant sector activities in the state or in Nigeria. (vii) Assist the SCU in preparation and organization of surveys on: - existing rural water supply facilities - habitation patterns use of private dug wells (with the view of assessing potential for upgradability and general suitability of dug wells in the different areas) (viii) Assist the SCU in setting up an information management system and for preparation of planning, implementation, operation and maintenance, and monitoring guidelines. (ix) Assist the SCU in establishing a publicity system for the promotion of the program and sector approach. (x) Assist the SCU in drafting guidelines on standardization of equipment and choice of technology for different types of communities. (xi) Provide routine backup of SCU on a quarterly basis for planning, monitoring and general support. - 57 - Annex 2.7 Page 4 of 4 Oualification of Consultant 7. The consultant must have a minimum of ten years professional experience of which at least five years is with related projects in developing countries, hold a recognized degree and be fluent in English. Project Duration and Consultancy Time Reguired 8. The project duration is 3 to 4 years. The consultancy support required will be part time, expected to be about 4 to 6 months the first year, 3 to 4 months the second and third year. The consultant would be expected to visit the project on approximately a quarterly basis. - 58 - Annex 2.8 Page 1 of 3 FEDERAL REPUBLIC OF NIGERIA FIRST MULTI STATE WATER SUPPLY PROJECT Updating of Water Resources Master Plan Terms of Reference Background and Objectie 1. The State Water Board has recently prepared a feasibility study for the purpose of identifying a water supply project for World Bank financing. Inherent to this project is a thorough review and updating of two master plan documents prepared some years ago. The first was prepared in 1973 and included Katsina emirate only. The other was completed in 1979, and included all of present Kaduna and Katsina states, except for the area of the earlier study. A number of their recommendations are no longer relevant, as certain developments have proceeded along different lines than originally proposed. This has thus reduced or changed options for further water projects. 2. Since creation of Katsina State in September, 1987, the new government entities have established their own priorities, which further render the earlier documents of reduced usefulness for planning purposes. 3. Within the State, several federal and state agencies are responsible for the development and utilization of water resources for improvement of community health, irrigation, cattle watering, rural development and urban potable water supply. Funding for development of these resources has come from a variety of state, national, bilateral, and multilateral sources. The state has designated the State Water Board as the main agency responsible for supply of potable water to urban areas. It and other federal and state agencies have also constructed open wells and boreholes in rural areas, and fund emergency water supplies in response to drought and other disaster conditions, and rural water supply is likely to be devolved to communities and local government authorities. 4. There are no perennial rivers in the Katsina State and little perennial flow in Kaduna State, but several major dams have been constructed to supply water for irrigation and urban water supply. Scope of the Work 5. The role of the Consultant is primarily to update the information and recommendations of the existing master plan documents and to provide a framework in which water resources can be developed for the next twenty years. Inasmuch as there are always competing demands for limited funding and for limited water resources, it is essential to develop a plan to maximize the benefits to the greatest overall good, while eliminating or minimizing conflicts between the various users. The work will cover the two states of Kaduna and Katsina, but separate reports are required on each state. The consultant should particularly liaise with FMWR and ensure compatibility of his work with the National Water Resources Master Plan. 59 _ Annex 2.8 Page 2 of 3 6. More particularly, the Consultant will carry out the following activities: (a) review the existing master plan documents; (b) consolidate all available information on water resources, rural and urban supplies, irrigation, mapping, etc.; (c) update the sources and data base on water resources to the latest information available on: (i) rainfall; (ii) wind; (iii) insolation; (iv) evapotranspiration; (v) long-term climatic changes (desertificaton); (vi) surface water hydrology; (vii) erosion; and (viii) present utilization of water resources for all purposes. Data should be collected in a form suitable for inclusion in the national water resoures data base which will be developed under the National Environmental Plan. (d) inventory all facilities used for exploitation of water resources; (e) assess present and future needs for water resources for: (i) irrigation; (ii) rural potable water supply; (iii) urban potable water supply; (iv) cattle and other domestic animals; (v) construction; (vi) reforestation; and (vii) other. (f) identify and estimate costs at pre-feasibility level of major works to develop water resources for further urban, rural, irrigation, and other purposes. This particularly includes Turo Dam where a study of its safe yield is needed; (g) recommend methodologies to assure adequate collection, storage, processing, and dissemination of water resource data, including computerization of existing and new data, etc.; (h) develop use of computers as management tools for human and financial resources, including hardware, software, training, and updating and usage manuals; (i) study and recommend alternative methods of evaluating water resource potential, e.g., by river basin, by water balance studies, etc.; (j) describe present practices of sanitation and identify additional needs; - 60 - Annex 2.8 Page 3 of 3 (k) evaluate additional water and funding needed for satisfactory hygiene and sanitation; and (I) evaluate institutional requirements: (i) Management Structure; (ii) Board of Directors; (iii) Changes in LGA, Districts, Divisions, HQ; (iv) System Dem. nds; (v) Consumer Demands; and (vi) Financial Status re: Subsidies/Revenues. (m) evaluate training aspects: (i) assessment of the present and future manpower needs; (ii) assessment of the present manpower complement with respect to their: - Education - Skills - Age - Needs. The Consultancy will be for a period of 12 months. Renorting Requirements 7. The consultant shall prepare monthly progress reports which outline activities in each. major element related to the assignment, identify milestones achieved and difficulties encountered, indicate consultant personnel levels over the period, and indicate activities planned for the next period. Each of the personnel of the consultant team will prepare a report related to his area of assignment. These will be submitted to the Consultant Team Leader for compilation and then submitted to the General Manager. 8. On a quarterly basis, the Consultant shall prepare a comprehensive statement of progress which will be submitted to the General Manager. It will provide information on the main activities in which the consultant has been involved during the previous three months, comparing planned and actual accomplishments. A statement of budget position and anticipated cash flow for the remainder of the assignment shall be included. Time inputs of all consultant personnel who worked on the assignment during the period shall be identified and compared to planned and anticipated manpower requirements. Requirements for the next quarter will be forecast. Any manpower, equipment, or other constraints shall be identified and possible solutions proposed. 9. A draft final report will be prepared and submitted at the end of Month 10 for review by the Client. By the end of the following month, the Client will discuss with the Consultant those modifications needed in order to finalize the document. 10. The final report will be submitted by the end of Month 12, taking into consideration the modifications discussed and agreed upon with the Client. - 61 - Annex 2.9 Page 1 of 6 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Environmental Sanitation Component Terms of Reference Background 1. Environmental sanitation (sullage disposal, drainage, human and solid waste management) in urban areas is fast becoming a major issue of the 1990s, as urban populations continue to grow at high rates and the need for pro .ision of adequate services becomes more pressing. Of the eight project towns and urban areas in Katsina and Kaduna States, Katsina city and Funtua have estimated populations of over 100,000 each and the others have populations in the region of 50,000 (1991). Some of the project towns will be receiving their first distribution system, whilst others will be extending existing ones. In either case there is a need to ensure that the water being brought into the towns does not create an additional environmental burden. 2. Management of sanitation is divided up among several agencies although the limits of responsibility are not clearly defined. The key agencies are the urban planning authorities, the ministries of health, and the LGAs. Several others play limited roles. Both states have environmental sanitation committees or task forces which comprise staff of all the agencies involved with sanitation management. Both States have edicts covering various aspects of environmental sanitation, but there are no clear guidelines on management practices and options. 3. There are two main ways in which sullage (kitchen and bath water) currently is disposed o,. Where houses are enclosed in walled compounds, the majority of owners make a hole in one of their walls and drain their sullage out into the adjacent pathway where it eventually finds its way into public drains which are often blocked by garbage, weeds and sediment. Those homes which do not have walled compounds tend to dispose of their sullage on site either by surface spreading or in seepage pits. Off site disposal results in ponded water and muddy pathways that make walking difficult and allow mosquitos to breed. Human waste is disposed of primarily by traditional pit latrines in the poorer neighborhoods, and by septic tanks/vaults with soakaways in others. In addition there are some institutional improved latrines. The conservancy system and the open air are also options which are being phased out. There is no sewerage in any of the project towns although there are a few package sewage treatment plants in Katsina town. Garbage is a problem only in the big towns where limited collection systems have been established. Otherwise it is generally dumped at official or unofficial sites Environment day, the last Saturday of each month, is usually a good opportunity to clean street drains and to remove garbage piles from the immediate neighborhood. Existing water sources are surface waters, open wells, standpipes and house connections. Surface waters and well water are often polluted and management of standpipe sites is usually inadequate. Annex 2.9 Page 2 of 6 - 62 - Objective and Design of the Component 4. The primary objective of the environmental sanitation component is to reduce possible adverse environmental effects caused by the water which will be brought into the towns by the project. In order to achieve this: (i) provision will be made for wastewater disposal and management of new water points; (ii) extension agents will be trained to better promote improved environmental sanitation; (iii) planning activities will be carried out to improve existing domestic sanitation management practices including human waste, sullage disposal, stormwater drainage, and solid waste. In doing this, special attention will be paid to increasing the skills of sector staff and local consultants in working on sanitation issues. 5. The water boards will ensure that standpipes sites include appropriate drainage (soakaways or trenches for the wastewater produced at the water point) and that house connections have appropriately dimensioned soakaways or trenches. It is assumed that households which have multiple taps will have adequate wastewater disposal through septic tanks and infiltration trenches. Sound management of standpipes to ensure that the water points are not vandalized and that the surrounds are kept clean can be achieved by several m:aY3 to be decided upon by the States. Sub-contracting or franchising of the standpipes to private citizens to sell water, or putting in place a workable maintenance and management system which will be the responsibility of the LGA or the water board, are two options. 6. The promotion and hygiene education activities will include providing additional training skills and tools to health inspectors and .xtension agents so that they can promote the new water supplies and encourage better water use practices and proper disposal of sullage including on-site soakaways and the upkeep of community drains. Sanitation planning will consist of first reviewing existing conditions, institutional arrangements, policy and legislative provisions, technology choice, financing and the willingness of the population to pay for services, social and cultural conditions. Subsequently additional work will result in recommendations on policies, guidelines and actions that can be taken to improve environmental sanitation conditions in the two States. 7. The sanitation planning, promotion and hygiene education activities in the component will be implemented concurrently in both states by a full time, multi-disciplinary team of sector personnel and two long term consultants (engineer and community development expert) based in a lead agency. The team will be supported by an advisory committee comprising sector agencies involved in environmental sanitation management in the State and short term local and international consultants. Subsequent to completion of the activities described in the component, the local teams will be in a position to continue planning activities, assisting other urban areas in the states and coordinating and monitoring implementation of new projects. Detailed terms of reference for each member of the team as well as the consultants will be prepared in an initiating workshop (where additional technical assistance will be provided by the Regional Water and Sanitation Group in Abidjan). Activities common to both states will be supported and coordinated thrcugh joint workshops. 8. In order to assist state govtinments to better manage sanitation services, it will be necessary for them to develop clear guidelines and policies on the responsibilities of the various institutions involved in the sub-sector, as well as on technology choice, financial and legislative issues and on the role of the population. It is important that the guidelines for Annex 2.9 - 63 - Page 3 of 6 management of the sanitation (human solid waste management, sullage disposal, and storm water drainage) services are prepared by state officials who will be responsible for updating them. These terms of reference therefore describe the work to be done and indicate where consultants will be required to assist the states in implementation. A team of state officials from the urban planning agencies, state ministries of health, local government and long term consultants, will be based at the respective urban planning agencies, (KUPDA and KASUPDA) and will be equipped to conduct a study to develop the guidelines. Sanitation Management Guidelines Scope of Work 9. The main phases of the work to be conducted in each State which will lead to recommendations to be adopted by Government, are as follows: (a) review of existing sanitation conditions in urban and rural areas in the State including levels of service, and coverage; (b) detailed analysis (organizational structure, human and financial resources, equipment, roles) of the institutions (public and private including NGOs) involved in providing sanitation services; (c) sanitation survey including information on types of excreta and sullage systems used by the population, water supply sources, how much they pay for collection and disposal of solid and human waste and other related services, how such services are organized, preferences and thoughts about existing alternative services, determination of the willingness to pay for improved services. The survey will be based on representative sampling in rural and urban areas in the State and will require preparation of a questionnaire, definition of a sampling procedure, identification and training of enumerators and their supervisors and development of a database to process the results; (d) review of actual financing mechanisms for services (loans, subsidies, etc.) and options for cost recovery and review of existing State policies, legislation, edicts, regulations within the context of Federal requirements, and on the basis of actual need within the State; (e) review of current technologies used and recommendations on criteria for technology choice for the collection, treatment and disposal of human and solid waste, sullage, and stormwater; and (f) recommendations for new policy decisions and guidelines on institutional, financial and technical, aspects reviewed in order to improve management of services to be acted on by State Government. Annex 2.9 - 64 - Page 4 of 6 Roles of Consultants. Timing. and Reporting 10. It is expected that the study will take six months. Two long term local consultants (oart of the project team) will be responsible for coordinating activities between the two states, providing technical assistance to the teams and assisting with report writing. A consultant will be required for 2 months to assist with the sanitation survey and additional input will be required from short term local consultants. Sullage Disposal. Drainage and Sanitation Plans 11. The additional standpipes and house connections to be introduced into the urban areas as a result of the project will need to be better managed than the ones currently in place. Furthermore, improved treatment and disposal of the wastewater produced is needed. Solid waste management is an important aspect to consider since poor management often contributes to drainage and wastewater disposal problems. Some information needed fcr these planning activities, will already exist from the management guidelines study (paras 7-9). Scope of the Work Analysis of the Existing Situation 12. A review will be made of actual sanitation services in Katsina city and Funtua. For each town the following will be conducted: (a) An overview of existing water supply and sanitation facilities in all areas of the town (domestic, commercial, industrial). Completed, current and planned waste treatment and disposal facilities (and projects) will also be reviewed and assessed. Determination of the current needs for sanitation and the deficiencies in sanitation services throughout the town. (b) Determination of the costs of the different levels of sanitation service, who pays for services and what are the current financing mechanisms. (c) Review of the status, operation and responsibilities of agencies and organizations involved in the provision of sanitation services in the town including their institutional, human resource, operation and maintenance capabilities and financial situation. (d) Review of the current involvement of the private sector NGOs and the population in sanitation services, for example septic tank emptying, construction of on-site excreta disposal and soakaway systems, collection of garbage, cleansing of drains, and an assessment for the capacity of the private sector for participation improving sanitation services. (e) Examination of housing types and densities, demographic, socio-economic and industrial growth patterns and population growth projections. Annex 2.9 - 65 - Page 5 of6 (f) Review of neighborhood, topcgraphical and drainage maps and aerial photographs of the town and environmental considerations includ:ng soil and groundwater conditions. (g) Review legal and policy guidelines as well as options for enforcement of regulations. Technology Options 13. A proposal will be made of appropriate technology options for different areas of town based on the criteria for choice developed in the management study and on the willingness of the population to pay for services. (a) Identifiction and proposal of feasible technology options for each area/zone of the town to meet sanitation needs taking into account institutional, financial, human resource, legal, policy and social and cultural considerations and using the criteria developed in the management study. (b) Comparison of technological options for collection, treatment and disposal taking into consideration the costs of the different alternatives as well as other relevant factors and propose feasible options for the different areas of the city including assessing of rehabilitation, upgrading and service expansion options. Financing Cntions 14. Options for financing services in the town will be proposed. (e) Review the mechanisms for financing the different services and identify the most suitable cost recovery mechanisms, determine the levels of subsidy required, determine the need for credit to individual homeowners and propose suitable administrative procedures for loans (such as through commercial banks and or revolving funds). Institutional Options 15. The results of the management study will be the basis for institutional recommendations on management of sanitation services in the towns. (a) Review the options for institutional support and organization (public, private, the population) for the different technology choices proposed for the town. (b) Review the existing human resource capacity and propose solutions for providing adequate human resources for management and implementation of the plan. All training requirements (immediate and future) should also be included. - 66 - Annex 2.9 Page 6 of 6 Implementation Strategy 16. Preparation of a package of projects and activities (sanitation plan) to be financed by the population, State and Federal Governments with the assistance of external financing as appropriate, including an implementation schedule and investment plan. An on-going planning process will be identified for each service level. Sullage Disposal and DrainaFe 17. The four towns and urban areas which will be receiving new or additional water supplies are Zonkwa, Kwoi, Birnin Gwari, and Ikara. An analysis of the existing sullage disposal and drainage systems will be made and recommendations made on improvements required in the management of the systems. The recommendations will include: the roles to be played by public and private institutions as well as the population being served; description of new or improved systems to be constructed and training requirements for artisans and the population; community organization, promotion and sensitization activities; financing requirements from government, population and external sources. Roles of Consultants. Timing and Supervision 18. The planning process in Katsina will take about 12 monhs,, and will begin at the end of the management study. Several consultants will be required to assist the team for periods of up to two months each. There will be three supervision missions. A sanitation plan will be available at the end of the 12 months. In Kaduna, it is expected that the planning process will take about three months and will also begin at the end of the management study. An international consultant (1 month) and local consultants will assist the project team. FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Implementation Schedule … … - - - s- s- : -s sPROJECT COMPONENT : 1992 : 1993 : 1994 : 1995 : 1996 : 199? : 1998 : 1999 … : s s : : : s : : :Kathina town completion of distribu: PPPPsIIIIIIII:IIIIIIII:IIII : : : 2Malumfashi Dam remedial work s PPPP:IIIIIIIIsIIIIIIII: s : s 2 : : : 2 :* sFuntua new system s sPPPPPPPP:IIIIIIIIsIIIIIIII:IIIIIIII:IIII : 2 : s : : : : IDaura expansion . PP:PPPPIIIIsIIIIIIII: : 2 S S S : S S~~~: 2 S S 2: sIkara system completion s PPPPsIIIIIIII:IIIIIIIIsIIII s : : : s s : : 2 s3 aKwoi new system s PPPP:PPPPIII:IIIIIIIIs:IIIIIIII:IIII s 2 s :Zonkwa new system s PPPP:PPPPIIIIsIIIIIIII:IIIIIIII;IIII s $Rural Water Supply rehabilitation a :PPPPPPII:IIIIIIII:IIII s s s :Supply of operational equipment s s PPPPIIsIIIIIIIIsIIII : 2 : s sHetering and leak detection program: PPPP:IIIIIIIIzIIIIIIII:IIIIIIIIs s s s : s s : : a :Technical assistance s 2 s s s 3 2 s - improvement of operations :PPPPIIII:IIIIIIIIsIIIIIIII:IIIIIIII:II s 2 a - improvement of accounting etc.: PPPPPP:IIIIIIII: s 2 : s - tariff study : PPPP:IIIIII : 3 s s 2 s _ a - public relations program : :PPPPIIIIsII : : : : - rural water supply reorganizat: PP:PPIIIIII:IIIIIIII:IIIIIIII:IIIIII : 2 : : - water resources master plan s : PPPPPP:IIIIIIII: s s : s - sanitation and draitage plan : :PPPPIIII:IIIIIIII: : : : - design studies : s s PPPP:IIIIIIII:IIIIIIII: : : : - training s sIIIIIIIIsIIIIIIIIsIIIIIIIIsIIIIIIIIsIIIIIIIIsIIII :Project management 311111111: IIIIIIII:IIIIIIII:IIIIIIII: : aConstruction supervision :PPPPIIII:IIIIIIII:IIIIIIII:IIIIIIII:IIIIIIII:IIIIIIII s: ---------------------------- ------- -- --- ----- ----- ----- ----- ----- ------- PPPPPP Procurement period IIIIII Implementation period I-D 0 - 68 Annex 2.11 Page 1 of 2 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Project Implementation Program 1. SWBs appoint consultants for completion of engineering design July 1, 1992 and construction supervision. 2. SWBs appoint consultants to assist with improving operational July 1, 1992 efficiency of the Boards under agreed terms of reference (Annex 2.3). 3. SWBs establish special accounts. July 1, 1992 4. SWBs submit their previous year unaudited accounts May 31, 1992 and annially 5. SWBs submit previous year audit report. June 30, 1992 and annually 6. SWBs review current year compliance with action plan and Oct. 31, 1992 monitoring indicators (para. 3.08) and propose tariff increases and annually and other measures for following year. 7. State Governments act on proposed tariff increases and budgeted Dec. 31, 1992 counterpart funds for following year. and annually 8. SWBs appoint consultants to assist with improving accounting, Jan. 1, 1993 billing, collection and MIS. 9. SWBs appoint consultants for tariff study and public standpipe Jan. 1, 1993 charging policy review. 10. SWBs commence leakage detection and repair program under Jan. 1, 1993 NWRP. 11. SWBs commence comprehensive three year metering program Jan. 1, 1993 under NWRP. 12. SWBs appoint public health expert to advise on snail and Jan. 1, 1993 mosquito control and other health matters. 13. SWBs appoint consultant to assist with reorganization of rural April 1, 1993 water supply sector. 14. SWBs implement programs to improve efficiency of operation July 1, 1993 in acccordance with consultants' recommendations. 15. SWBs commence implementation of accounting, billing and July 1, 1993 collection and management information reporting. - 69 - - 69 - ~~~~~~Annex 2.11 Page 2 of 2 16. SWBs implement dam inspection and maintenance program. July 1, 1993 17. SWBs implement program to improve routine maintenance. July 1, 1993 18. SWBs implement improved investment planning procedures. July 1, 1993 19. SWBs commence public relations program. July 1, 1993 20. SWBs initiate training programs in accordance with NWRP July 1, 1993 manpower study and recommendations. 21. SWBs appoint consultants to prepare proposals for improved July 1, 1993 wastewater disposal. 22. SWBs establish unit to monitor environmental impact of dam July 1, 1993 construction. 23. SWBs effect new tariff policy including billing at public Jan. 1, 1994 standpipes. 24. SWBs appoint consultants to prepare state-wide water resources Jan. 1, 1994 master plan. 25. SWBs, State and Federal Governments and Bank participate in Nov. 30, 1994 mid-term review of project and implement the results thereof. 26. SWBs implement program to recompense downstream farmers Jan. 1, 1995 for losses due to dam construction. - 70 - FEDERAL REPUBLIC OF NIGERtA Annex 2.12 MULTI-STATE WATER SUPPLY PROJECT Page 1 of 6 KATSINA STATE Table 1. KATSINA TOWN - COMPLETION OF ONGOING PROJECT Qetailed Cost Table Totals Including Contingencies USS 1992 1993 1994 199S 1996-99 TotaL . .,........................ ..........................................__ .......... ..........._ I. INVESTMENT COSTS . .____. _ __ _ _ _.... A. CONSTRUCT. SPILLWAY GATES 0.0 34.5 48.1 37.5 0.0 120.1 B. TRANSMISSION MAIN, 15.3KM PIPE SUPPLY 0.0 991.4 1035.0 0.0 0.0 2026.4 CONSTRUCTION 0.0 0.0 874.7 910.6 0.0 1785.3 Sub-Total 0.0 9i1.4 1909.6 910.6 0.0 3811.6 C. PUMPING STATIONS BUILDINGS 0.0 98.8 103.3 0.0 0.0 202.1 MECH & ELECT EQUIPMENT 0.0 0.0 592.4 616.7 0.0 1209.0 Sub-Total 0.0 98.8 695.6 616.7 0.0 1411.1 0. ELEVATED STORAGE 0.0 287.1 399.5 312.0 0.0 998.5 E. OISTR. SYSTEM PIPE SUPPLY 27.614 OF 250MM DIA 0.0 950.5 992.6 0.0 0.0 1943.1 17.3KM OF 200 MN DIA 0.0 461.4 481.8 0.0 0.0 943.3 9.2KM OF 1SOMM DIA 0.0 187.4 195.7 0.0 0.0 383.1 10.6KM OF 100M4 DIA 0.0 162.3 169.4 0.0 0.0 331.7 .. _....... ........ ........ ..... .......... ... ........... . ..... ..... ....__ Sub-Totat 0.0 1761.7 1839.5 0.0 0.0 3601.2 F. INSTALL. 64.7 KM PIPELINE 0.0 0.0 1428.0 1486.6 0.0 2914.6 ........ ............ ........ ............. ........ ............ ....___..... Total INVESTMENT COSTS 0.0 3173.4 6320.3 3363.4 0.0 12857.1 uu=3=X22 32=2=2n z32-52-=2= - 3_= 22 3=## 33323 Total 0.0 3173.4 6320.3 3363.4 0.0 12857.1 TabLe 2. FUNTUA - NEW PROJECT Detailed Cost Table Totals Including Contingencies USS =3===U2322222Sfl==_s532=32=2 8=C5====333U=2w#X_5=a5======5555=====553= 1992 1993 1994 1995 1996 199i 1998-99 Total ......... ................... _... ...._. .. .... ................. _.............................. .........._................._ 1. tNVESTMENT COSTS .._............. A. DAM AND INTAKE 0.0 0.0 2632.9 2741.0 1426.4 0.0 0.0 6800.3 B. TREATMENT PLANT -20ML/d BUILDING AND CIVIL WORKS 0.0 0.0 1244.9 2592.3 1348.8 0.0 0.0 5186.0 MECH & ELECT WORKS 0.0 0.0 0.0 1276.5 2657.4 1382.9 0.0 5316.7 ........ ......... ........ ........ ........ ........ ........ ........ Sub-TotaL 0.0 0.0 1244.9 3868.7 4006.2 1382.9 0.0 10502.7 C. PUMPING STATIONS CIVIL WORKS 0.0 0.0 69.3 144.2 75.1 0.0 0.0 288.6 MECH & ELECT WORKS 0.0 0.0 0.0 574.4 1195.8 622.3 0.0 2392.5 ........ ........ ........ ........ ........ Sub-Total 0.0 0.0 69.3 718.6 1270.9 622.3 0.0 2681.2 D. TRANSMISSION PIPELINE PIPES AND FITTINGS 0.0 0.0 2665.6 2775.0 0.0 0.0 0.0 5440.6 PIPELINE INSTALLATION 0.0 0.0 0.0 2498.0 2599.5 0.0 0 0 5097.5 ........ ........ ........ ........ ........ ........ ....... . ........ Sub-Total 0.0 0.0 2665.6 5272.9 2599.5 0.0 0.0 10538.0 E. DISTRIBUTION SYSTEM PIPE SUPPLY 0.0 0.0 924.7 962.7 0.0 0.0 0.0 1887.4 PIPE INSTALLATION 0.3 0.0 0.0 486.1 1011.7 526.3 0.0 2024.1 RESERVOIR 0.0 0.0 0.0 959.1 998.2 519.2 0.0 2476.5 ........ ........ ........ ...... . ........ .. ..... ........ ........ Sub-TotaL 0.0 0.0 924.7 2407.9 2009.9 1045.5 0.0 6388.0 F. LAND PURCHASE 838.7 0.0 0.0 0.0 0.0 0.0 0.0 638.7 ~~~~~~~~~~--- ............ ........ .............._,__ ........ ............. ........ ............. ........ Total INVESTMENT COSTS 838.7 0.0 7537.4 15009.2 11312.9 3050.7 0.0 37748.9 v3%M3& 3333=3n 3222=33x 3 *= 3=M 3= 22=c==uu ac332=32 -32=22= Total 838.7 0.0 7537.4 15009.2 11312.9 3050.7 0.0 37748.9 Vatues mcaled by 1000.0 4/17/1992 9:00 - 71- Annex 2.12 Page 2 of 6 FEDERAL REPUBLIC Of NIGERIA MULTI-STATE WATER SUPPLY PROJECT KATSINA STATE Table 3. MALUMfASHI Detailed Cost Table otals Including Contingencies USS 1992 1993 1994 1995 1996-99 Total ........-.... .. . . . . . I. INVESTMENT COSTS A DAM REHABILITATCON DAM REPAIRS 0.0 1725.9 1803.5 913.4 0.0 442.8 DAM INTAKE 0.0 46.6 48.7 50.7 0.0 145.9 ....... .......... ....... ........... ....... ............... ....................... Sub-Total 0.0 1772.5 1852.2 964.1 0.0 6588.8 .... ...... ... .......... ....... ........ ..... ......... ....... ........... ....... Total INVESTMENT COSTS 0.0 1772.5 1852.2 964.1 0.0 4588.8 Total 0.0 1772.5 1852.2 964.1 0.0 4588.8 Table 4. DAURA - SYSTEM EXPANSION Detailed Cost Table Totals Including Contingencies USS 1992 1993 1994 1995 1996 1997-99 TotaL i........................................................ I. INVESTMENT COSTS A. BOREFIELD 0.0 49.9 69.5 54.3 0.0 0.0 173.7 B. STORES & WORKSHOPS 0.0 0.0 47.7 49.7 0.0 0.0 97.5 C. SYSTEM STORAGE 0.0 O0. 0.0 25.3 26.4 0.0 51.7 D. DISTRIBUTION SYSTEM PIPE SUPPLY 0.0 0.0 162.1 168.7 0.0 0.0 330.8 INSTALLATION 0.0 0.0 0.0 170.5 177.4 0.0 347.9 _ ...... ... .............. ........... ... .._..... ........_ ....... ....... .............._ Sub-Total 0.0 0.0 162.1 339.2 177.4 0.0 678.7 _,,,,,,. ._._. :. .......... ..... ....... ...--_ _._ Total INVESTMENT COSTS 0 0 49 9 279 .3 68.5 203 .8 0.0 001 6 u=mS=w 33=uu=== =#m=2=3 =8== --3 ----- 33==333 Total 0.0 49.9 279.3 468. 5 203.8 0.0 1001.6 Table 5. RURAL UATER SUPPLY REHABILITATION Detailed Cost Table Totals Including Contingencies USS 92-93 1994 1995 1996 97-99 Total .......................................... I. INVESTMENT COSTS A. BOREHOLE REHABILITATION 0.0 115.3 149.6 125.0 0.0 389.9 B. HANOPUMP REPLACEMENT 0.0 50.5 70.1 54.7 0.0 175.2 C. MAINTENANCE EQUIPMENT 0.0 0.0 0.0 0.0 O.C 0.0 D. SPARE PARTS 0.0 0.0 0.0 0.0 0.0 0.0 ; ..... ...... ...... ...... ...... Total INVESTMENT COSTS 0.0 t658 219.6 179.7 0.0 565.0 TotiL 0.0 165.8 219.6 17V.7 0.0 565.0 - Values scaled by 1000.0 4/ - 72 - Annex 2.12 PEOGRAL REPUBLIC OF NIGERIA Page 3 of 6 P'4.Tt-StATE WATER SUPPLY PROJECT KATSINA STATE Table 6. INSTITUTIONAL STRENGTHENING DetaiLed Cost Table TotaLs Including Contingencies USS 1992 1993 1994 19,5 1996 1997 1998-99 Total 1. INVESTMENT COSTS A. IMP. BILLING & COLLECTION 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 8. COMPUTERIZATION & MIS 0.0 39.0 54.3 42.4 0.0 0.0 0.0 135.7 C. TARIFF STUDY 0.0 0.0 0.0 0.0 67.3 70.0 0.0 137.3 D. OPERATIONAL EFFICIENCY TECHNICAL IMPROVEMENTS 0.0 0.0 274.0 285.3 296.9 103.0 0.0 959.1 DAM MAINT. & INSPECTION 0.0 0.0 0.0 31.7 33.0 0.0 0.0 64.7 LIBRARY DEVELOPMENT 0.0 0.0 50.7 0.0 0.0 0.0 0.C 50.7 LABORATORY DEVELOPMEPT 0.0 0.0 180.9 0.0 0.0 0.0 0.0 180.9 PUBLIC RELATIONS PROGRAM 0.0 0.0 30.4 31.7 0.0 0.0 0.0 62.1 _.......... ....... .......... .. ._...... ............ ....... .......... ... .... _... _.__.. ... Sub-Total 0.0 0.0 536.1 348.6 329.9 103.0 0.0 1317.5 E. RURAL WATER SUPPLY 0.0 30.0 31.3 16.3 0.0 0.0 0.0 77.6 F. UPDATE WTR RES.MSTR PLAN 0.0 0.0 0.0 126.8 132.0 0.0 0.0 258.9 G. PREPARATION NEW PROJECT 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 H. SANITATION/DRAIN STRATEGY 0.0 0.0 0.0 116.1 120.8 0.0 0.0 237.0 I. TRAINING 0.0 24.9 26.1 27.1 28.2 29.4 0.0 135.8 ....... .......; ...... .... ...;... ....... ....... ....... Total INVESTMENT COSTS 0.0 93.9 647.7 677.4 678.3 202.4 0.0 2299.7 === == ====U = --- = = = Z Total 0.0 93.9 647.7 677.4 678.3 202.4 0.0 2299.7 Table 7. PROJECT ADMINISTRATION Detailed Cost Table Totals Including Contingencies USS 1992 1993 1994 1995 1996 1°97 1998 1999 Total ..... ......... _____..............._._____. ..............................__..___... I. INVESTMENT COSTS A. PROJECT MANAGEMENT 82.8 171.4 179.3 93.3 97.0 100.9 104.9 109.3 939.1 B. CONSTRUCTION SUPERVISION 0.0 523.9 547.3 569.8 593.0 617.0 641.9 486.1 3978.9 ....... ....... ....... ....... ....... ....... ....... ....... ....... TotaL INVESTMENT COSTS 82.8 695.4 726.6 663.0 690.0 717.9 746.8 595.4 4917.9 =====u ==== in2 u: = u:- =a S Y = u= m== TotaL 82.8 695.4 726.6 663.0 690.0 717.9 746.8 595.4 4917.9 TabLe 8. OPERATIONAL EQUIPMENT Detailed Cost Table TotaLs Including Contingencies Uss 1992 1993 1994 1995 1996 1997 1998-99 Total ................................................... .....................................................................__. t. INVESTMENT COSTS A. TOOLS & EQUIPMENT 0.0 629.3 656.8 113.9 118.6 123.4 0.0 1642. S. WORKSHOP AND TOOLS 0.0 0.0 8L.4 87.8 122.0 0.0 0.0 294.2 ....... ......... ..... ..iz;..... ..... ........... ....... ........... ....... ................................... ... Total INVESTMENT COSTS 0.0 629.3 741.2 201.8 240.5 123.4 0.0 1936.2 u=====M U-=-= _== --== ===-= C=m- === ====== a=u==== ======= Total 0.0 629.3 741.2 201.8 240.5 123.4 0.0 1936.2 - Values scaled by 1000.0 4/17/1992 9:00 - 73 - Annex 2.12 * ~~~~Page 4 of 6 FEDERAL REPUBLIC OF NIGERIA MULTI-STATE WATER SUPPLY PROJECT KADUNA STATE Table 1. ZONKWA DetaIled Cost TabLe Totals Includfng Contingencies USS 1992 1993 1994 1995 1996 1997-99 Tot I. INVESThENT COSTS A. DAM AND INTAKE 0.0 3005.0 4185.? 3268.2 0.0 0.0 10459 8. PUMPINC STATIONS CIVIL WORKS 0.0 0.0 142.7 297.2 154.6 0.0 594 MECHANICAL & ELECT WORKS 0.0 0.0 0.0 254.7 265.1 0.0 519 Sub-Total 0.0 0.0 142.7 551.9 419.7 0.0 1114 C. WATER TREATMENT PLUNT BUILDING & CIVIL WORKS 0.0 0.0 270.6 563.6 293.2 0.0 1127 MECHANICAL & ELECT WORKS 0.0 0.0 0.0 733.4 763.3 0.0 1496 Sub-Total 0.0 0.0 270.6 1297.0 1056.5 0.0 2624 0. TRANSMISSION PIPELINE PIPES & FITTINGS 0.0 0.0 245.9 255.9 0.0 0.0 501 PIPELINE INSTALLATION 0.0 0.0 0.0 209.6 218.1 0.0 427 Sub-Total 0.0 0.0 245.9 465.6 218.1 0.0 929 E. OISTRISUTION SYSTE't PSPE SUPPLY 0.0 0.0 876.0 912.0 0.0 0.0 1788 PIPE INSTALLATION 0.0 0.0 0.0 747.1 777.5 0.0 1524 RESERVOIR 0.0 0.0 0.0 876.1 911.7 0.0 1787 Sub-Total 0.0 0.0 876.0 2535.2 1689.3 0.0 5100 Total INVESTMENT COSTS 0.0 3005.0 5720.9 8117.8 3383.6 0.0 20227 .sxcmum iasn3n UUUN.in UUUz== sox=== mSU UZ Totat 0.0 3005.0 5720.9 8117.8 3383.6 0.0 20227 Table 2. KWOI Detailed Cost Table Totals IncludIng Contingercfes USS 1992 1993 1994 1995 1996 1997-99 Total ._.... .....__ ...................................................................... 1. INVESTMENT COSTS A. DAN AND INtAKE 0.0 1346.2 1873.3 1464.2 0.0 0.0 4685.7 B. PUMPING STATION CIVIL WORKS 0.0 0.0 81.2 169.1 88.0 0.0 338.3 NECHANICAL & ELECT WORKS 0.0 0.0 0.0 694.5 722.8 0.0 1417.2 ........ ........ ........ ........ ........ ........ ........ Sub-Total 0.0 0.0 81.2 863.6 810.7 0.0 1735.5 C. TRANSMISSION PIPELINE PIPES & FITTtNGS 0.0 0.0 380.3 395.9 0.0 0.0 776.3 PIPELINE INSTALLATION 0.0 0.0 0.0 323.3 336.4 0.0 659.7 ........ ........ ........ ........ ........ ........ ........ Sub-Total. 0.0 0.0 380.3 719.2 336.4 0.0 1436.0 D. WATER TREATMENT PULNT BUtLDING & CIVIL WORKS 0.0 0.7 623.9 1299.0 676.0 0.0 2598.8 MECHANICAL * ELECT WORK! 0.0 0.0 0.0 896.3 932.9 9.0 1829.2 PIPES & FITTINGS 0.0 0.0 333.5 347.2 0.0 0.0 680.7 PIPELINE INSTALLATION 0.0 0.0 0.0 284.6 296.2 0.0 580.8 ........ ........ ........ ........ ........ ........ ........ Sub-Total 0.0 0.0 957.4 2827.1 1905.1 0.0 5689.6 E. DISTRIBUTION SYSTEM PIPE SUPPLY 0.0 0.0 1475.7 1536.3 0.0 0.0 3012.0 PIPE INSTALLATION 0.0 0.0 0.0 1258.4 1309.6 0.0 2568.1 RESERVOIR 0.0 0.0 0.0 1154.8 1201.8 0.0 2356.7 …....... ........… ........ ........ ........ Sub-Total 0.0 0.0 1475.7 3949.5 2511.5 0.0 7936.7 Totat INVESTMENT COSTS 0.0 1346.2 4770.0 9823.6 5563.7 0.0 21503.5 Total 0.0 1346.2 4770.0 9823.6 5563.7 0.0 21503.5 Vatues scaled by 1000.0 4/17/1992 8:06 - 74 - Annex 2.12 Page 5 of 6 FEDERAL REPUBLIC OP NIGERIA MULTI-STATE WATER SUPPLY PROJECT KAOUNA STATE Table 3. IKARA - NEW PROJECT Detailed Cost Table Totals Including Contingencies UsS 1992 1993 1994 1995 1996-99 Total .... ....... ._............. _........ I. INVESTMENT COSTS A. DAM AND INTAKE 0.0 252.8 264.1 0.0 0.0 516.9 S. WATER TREATMENT PLANT BLOG AND CIVIL WORk 0.0 165.9 0.0 0.0 0.0 165.9 MECH & ELECT WORKS 0.0 3217.3 0.0 0.0 0.0 3217.3 ....... ....... ....... ....... ....... ....... Sub-Total 0.0 3383.2 0.0 0.0 0.0 3383.2 C. TRANSMISSION PIPELINE PIPES & FITTtNGS 0.0 385.2 402.1 0.0 0.0 787.4 PIPE INSTALLATION 0.0 0.0 333.3 347.0 0.0 680.3 ....... ....... ....... ....... ....... ....... Sub-Total 0.0 385.2 735.4 347.0 0.0 1467.6 D. DISTRIBUTION SYSTEM PIPE SUPPLY 0.0 538.0 561.7 0.0 0.0 1099.7 PIPE INSTALLATION 0.0 0.0 466.6 485.7 0.0 952.3 RESERVOIR 0.0 859.9 898.3 0.0 0.0 1758.3 , ...... ... .............. ........... ....... ........... ....... ..........._ Sub-Totat 0.0 1398.0 1926.5 485.7 0.0 3810.2 ttalo INVESTMENT COSTS 0.0 S419.2 2926.0 832.7 0.0 9177.9 u===m mz===Z= uS= 3z= 1ZZU uu=2=== Total 0.0 5419.2 2926.0 832.7 0.0 9177.9 Table 4. RURAL WATER SUPPLY REHABILITATION Detailed Cost Table Totals Including Contingencies U'# 92-93 1994 1995 1996 97-99 Total ...... ........... _.... ............ ... .... _. ....._. ___ t. INVESTMENT COSTS A. BOREHOLE REHABILITATtON 0.0 75.8 105.3 77.9 0.0 258.9 B. HANDPUMP REPLACEMENT 0.0 45.5 63.1 49.3 0.0 157.9 C. SPARE PARTS 0.0 101.1 105.2 0.0 0.0 206.3 D. MAINTENANCE EQUIPMENT 0.0 0.0 0.0 0.0 0.0 0.0 ..... ....... ...... ..;... ......... ... .... .......__ Total INVESTMENT COSTS 0.0 222.4 273.6 127.2 0.0 623.1 Total 0.0 222.4 273.6 127.2 0.0 623.1 - Values scaled by 1000.0 4/17/1992 8:06 I Annex 2.12 75 - Page 6 of 6 FEDERAL REPUBLIC OF NIGERIA MULtl-STATE WATER SUPPLY PROJECT KADUNA STATE TabLe S. INSTITUTIONAL STRENGTHENING Detailed Cost TabLe Totals Including Contingencies USS 1992 1993 1994 1995 1996 1997 1998-99 Total _.. ............................................... 1. INVESTMENT COSTS ................ A. IMP. BILLING * COLLECTION 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 S. COMPUTERIZATION & MIS 0.0 39.0 54.3 42.4 0.0 0.0 0.0 135.7 C. TARIFF STUDY 0.0 0.0 0.0 0.0 67.3 70.0 0.0 137.3 0. OPERATIONAL EFFICIENCY TECHNICAL IMPROVEMENTS 0.0 0.0 274.0 285.3 296.9 103.0 0.0 959.1 DAN MAINT. & INSPECTION 0.0 0.0 0.0 31.7 33.0 0.0 0.0 64.7 LIBRARY DEVELOPMENT 0.0 0.0 50.7 0.0 0.0 0.0 0.0 50.7 LABORATORY DEVELOPMENT 0.0 0.0 180.9 0.0 0.0 0.0 0.0 180.9 PUBLIC RELATIONS PROGRAM 0.0 0.0 30.4 31.7 0.0 0.0 0.0 62.1 ....... .......... ....... ........... ....... ........... ....... ............_....... ... ......... ... .. ... Sub-TotaL 0.0 0.0 536.1 348.6 329.9 103.0 0.0 1317.5 E. RURAL WATER SUPPLY 0.0 30.0 31.3 16.3 0.0 0.0 0.0 77.6 F. UPDATE WTR RES.MSTR PLAN 0.0 0.0 0.0 126.8 132.0 0.0 0.0 258.9 0. PREPARATION NEW PROJECT 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 H. SANITATION/DRAIN STRATEGY 0.0 0.0 0.0 82.9 86.3 0.0 0.0 169.2 I. TRAINING 0.0 24.9 26.1 27.1 28.2 29.4 0.0 135.8 .......... ....... ........... ....... ........... ....... ........... ....... ...... ...............,,,_ Total INVESTMENT COSTS 0.0 93.9 647.7 644.2 643.7 202.4 0.0 2231.9 CZ===3 *=5=Z= c333 S33S== 3=M==mx= U=z -==U .33= 35=3352 ==33=3 TotaL 0.0 93.9 647.7 644.2 643.7 202.4 0.0 2231.9 __=333333333533=SS 33 5=833333333Z= g58U==-S8 333333333UUS3D333-U3==SSS--333 3S=Y=z=535 Table 6. PROJECT ADMINISTRATION DecalLed Cost TabLe Totals Including Contingencies USS 33535 = 3=3=3333==8S 3S-S -= Z3=-- 33 _ =S S===S5 = 1992 1993 1994 1995 1996 1997 1998 1999 Total t. INVESTMENT COSTS ................ .................. A. PROJECT MANAGEMENT 35.7 166.0 173.7 40.2 41.8 43.5 45.2 47.1 593.1 B. CONSTRUCTION SUPERVIStON 0.0 535.1 559.2 582.1 605.8 630.2 655.5 447.3 4015.1 ....... ........ ....... ....... ....... ....... ....... .. .... ....... Total INVESTMENT COSTS 35.7 701.1 732.8 622.3 647.6 673.7 700.7 494.3 4608.2 =33Z= *uU S 3 ==3 3= 3.3=3--=3. .3=a= W= ==S= =M33== =3- == - a333=3 Totat 35.7 701.1 732.8 622.3 647.6 673.7 700.7 494.3 4608.2 Table 7. OPERATIONAL EQUIPMENT Detai.ed Cost able TotaLs Including Contingencies USS := =s_s um=2==z_* __ 1992 1993 1994 1995-99 Total ........................................ t. INVESTMENT COSTS ................ A. TOOLS & EQUIPNSNT 0.0 892.4 931.4 0.0 1823.8 ....... ........... ....... ........... ....... ....... ... ....... ... TotaL INVESTMENT COSTS 0.0 892.4 931.4 0.0 1823.8 U 3== 5a3====35 uwu=uz nn==3== ==D=S= TotaL 0.0 892.4 931.4 0.0 1823.8 - Values scaled by 1000.0 4/17/1992 8:07 - 76 - Annex 2.13 Page 1 of 1 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Summary of Major Procurement Packages Local Foreien Total No. of PackaRes Procurement Mcthod USS1,$C0 Katsina State Water Board Maintenance tools/equipment 332.8 1778.2 2111.0 multiple ICB, LCB & shopping Completion of Katsina system 2612.3 10297.5 12909.8 1 ICB Funtua dam 1922.1 5580.5 7502.6 1 Funtua water treatment/pumping 2562.8 11062.2 13625.0 1 Funtua storage and d&tribution 4144.1 12582.3 16726.4 1 Malumfashi dam rehabilitation 1197.5 3401.1 4598.6 1 Borefield construction 25.8 146.5 172.3 1 New Daura system 149.3 538.6 687.9 1 Rural water supply 74.5 423.6 498.1 several LCB Consultancies 294.7 1811.9 2116.6 multiple Cons. guidelines Construction supervision 1173.3 3729.1 4902.4 1 Training 31.6 89.6 121.2 - TOTAL 14520.8 51451.1 65971.9 Kaduna State Water Board Maintenance tools/equipment 215.8 1630.0 1845.8 multiple ICB, LCB & shopping Zonkwa dam 2317.2 8116.9 10434.1 1 ICB Zonkwa supply system 2064.8 7768.6 9833.4 1 Kwoi system complete 4500.2 17004.3 21504.5 1 Ikra treatment Flant 656.2 3359.1 4015.3 1 Ikara supply rystem 1141.9 4066.1 5208.0 1 ICB Rural water supply 138.7 485.8 624.5 several LCB Consultancies 271.0 1794.0 2065.0 multiple Cons. guidelines Construction supervision 1371.2 3168.9 4540.1 1 Training 31.7 89.7 121.4 - TOTAL 12708.7 47483.4 60192.1 FMWR Project preparation 0.0 2000.0 2000.0 sveral Cons. Guidelines - 77 _ Annex 2.14 Page 1 of 1 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Summary of Consultan. Requirements Description Timine Estimated Man- Fiffn/ months Individual KATSINA 1. Improve efficiency of operation 1992-1995 65 Firm 2. Project management ane construction 1992-1997 1010 Firm supervision 3. Water resources master plan 1994 17 Firm KADUNA 1. Improve efficiency of operation 1992-1995 65 Firm 2.Project management and construction 1992-1997 990 Firn supervision 3. Water resources master plan 1994 17 Finn TWO STATES JOINTLY 1. Improvement of accounting, billing 1993 12 Finn and MIS procedures including computerization 2. Tariff study 1993 18 Finn 3. Public relations and hygiene 1993-1994 6 Individual education 4. Rural water supply reorganization 1993-1996 12 Individual 5. Sanitation sategy and drainage plans 1993-1994 35 Firm & Individual 1. Project Peparation 19934 140 Firm Annex 2.15 - 78 - Page 1 of 1 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Disbursement Schedule (US$ million) Quarterly Cumulative Percent of Standard Profile IDA Fiscal Year and Ouater Disbursement Disbursement Total Loan Africa Water Sector FY 1993 FirstQuarter - - 0 0 Second Quarter 3.2 1/ 3.2. 3.2 - Third Quarter 0.9 4.1 4.0 3 Fourth Quarter 1.3 5.4 5.3 - FY !994 First Quarter 2.1 7.5 7.4 6 Second Quarter 2.5 10.0 9.9 Third Quarter 2.8 12.8 12.7 14 Fourth Quarter 2.9 15.7 15.5 - FY 1995 First Quarter 5.1 20.8 20.6 22 Second Quarter 6.1 26.9 26.6 Third Quarter 6.2 33.1 32.8 34 Fourth Quarter 6.3 39.4 39.0 - FY 1996 First Quarter 7.1 46.5 46.0 46 Second Quarter 7.6 54.1 53.6 - Third Quarter 7.5 61.6 o1.0 58 Fourth Quarter 7.5 69.1 68.4 - FY 1997 First Quarter 5.6 74.7 74.0 70 Second Quarter 4.7 79.4 78.6 - Third Quarter 4.7 84.1 83.3 78 Fourth Quarter 4.7 88.8 87.9 - FY 1998 First Quarter 2.7 91.5 90.5 86 Second Quarter 1.7 93.2 92.3 - Tbird Quarter 1.7 94.9 Y40 94 Fourth Quarter 1.7 96.6 95.6 - FY 1999 Fust Quarter 1.5 98.1 97.1 98 Second Quariter 1.1 99.2 98.2 - Third Quarter 0.7 99.9 98.9 100 Fourth Quarter 0.7 100.6 99.6 FY20 Fist Quarr 0.4 101.0 100.0 1/ Initial deposit of US$3.2 million to special accounts. - 79- Annex 2.16 Page 1 of 2 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Supervision Plan The IDA input into the table below is in addition to regular needs for the review of progresrs reports, procurement actions, correspondence, etc., estimated to require 12 staff weeks per year for the first three project years, and 8 per year thereafter. In addition each water board would submit quarterly progress reports. Approximate dates of input Expected Skill (mol/yr) Activity Requirements Staff Weeks 7/92 Supervision Mission Engineer, Financial/ 10 (Project Launch) Institutional Specialist, Analyst, Procurement, Disbursements, Rural Water Supply. 11/92 Supervision Mission Engineer, Financial/ 6 Institutional Specialist, SWB performance review Analyst. 2/93 Supervision Mission with Engineer, Financial/ 8 special emphasis on Institutional Specialist, technical assistance and Analyst, Sanitation, efficiency improvement. Training. 7/93 Supervision Mission Engineer, Financial/ 12 Institutional Specialist, Analyst, Procurement, Rural Water Supply, Disbursements, Environment. 11/93 Supervision Mission with Engineer, Financial/ 10 special emphasis on Institutional Specialist, implementing results of Analyst, Rural Water technical assistance studies. Supply, Sanitaion, Training. SWB performance review 2/94 Supervision Mission Engineer, Financial/ 7 Institutional Specialist, Analyst. 7/94 Supervision Mission Engineer, Financial/ 7 Institutional Specialist, Analyst Environment. 8 Annex 2.16 - 80 - Page 2 of 2 11/94 Supervision Mission and Engineer, Financial/ 9 mid term review Institutional Specialist, Analyst. SWB performance review 3/95 to 98 Supervision Missions Engineer, Financial/ 5 Institutional Specialist. 11/95 to 98 Supervision Mission Engineer, Financial!/ 7 Institutional Specialist, SWB performance review Analyst 3/99 Supervision and PCR Engineer, Financial/ 8 preparation Institutional Specialist, Analyst. Annex 3.1 -81- Page 1 of 3 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Summary of State Government Receipts & Expenditures (Naira Millior.,j) KATSINA KADUNA ACTUAL BUDGET ACTUAL BUDGET 1990 1991 1990 1991 Statutory Revenue From Federation Account 646.7 763.0 386.7 756.6 Internal Revenue 61.8 82.8 154.4 300.0 Capital Receipts 56.5 253.4 277.1 453.0 Total Receipts 765.0 1099.2 818.2 1509.6 Current Expenditujres 334.1 564.1 420.4 709.8 Capital Expend .tures 418.0 535.1 395.0 799.8 Total Expenditures 752.1 1099.2 815.4 1509.6 State Water Doard (SW33) Finrincing 27.9 41.6 120.7 118.4 % SWI3 Financing of Total Re'.e.ipts 3.6 3.8 14.8 7.8 82 - Annex 3.1 Page 2 of 3 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Katsina State Subvention to SUB ...........................~. .... (Naira 000) 1991 1992 1993 1994 1995 1996 1997 1998 1999 ._.......... ......... ...... ........ ..ii.... ........ .......... .... .... ..... __.... ...... ... Counterpart Financing 24,760 71 251 76,578 77 357 72,50s 67,000 35,500 0 0 Recurrent Subvention 16,819 19,261 14,097 (2,901) (27,9941 (65,675) (100,134) (140,697) (170,732) Debt Service 0 1,818 12,392 35,259 64,030 91,179 161,161 220,688 224,656 . .. .. .. .. . .. .. .. ._. .._._.._... ----- . .. .. .... . ...... ..... ..... ---- Total SUB Subvention 41,579 92,330 103,067 109,715 108,541 92,504 96,527 79,991 53,924 Estimated State Receipts 1,099,219 1,264,102 1,390,512 1,529,563 1,682,520 1,850,m 2,035,849 2,239,434 2,463,377 X Subvention to Receipts 3.8% 7.3% 7.4% 7.2X 6.5% 5.0% 4.7% 3.6X 2.2% ................ ...._....... Total SwUB subvention includes effect of recent Naira devaluation, while the effect on estimated receipts has not been determined. Estimated state receipts are thus very conservativeLy stated. - 83 - Annex 3.1 Page 3 of 3 FEDERAL REPUBLIC OF NIGERIA --------------------------- FIRST MULTISTATE UATER SUPPLY PROJECT ................ .......................... _. Kaduna State Subvention to SWB ....... ........... ... .... .. .... (Heira 000) 1991 1992 1993 1994 1995 1996 1997 1998 1999 ........ ........... .__...... . . ..... .... ._........... . .... .... ........ ............ ........ ............ Caunterpart Financing 6,686 58,825 61,489 61,879 59,453 56,700 S7,800 0 0 Recurrent Subvention 16,?48 4,434 (34,052) (75,270) (134,372) (197,3?1) (251,388) (318,905) (352,147) Rurat Water Supply Subvention 1,937 2,441 2,947 0 0 0 0 0 0 Debt Servico 93,954 134,876 193,790 213,749 240,538 263,960 326,086 379,820 381,831 _... .... .... .......... ...._.._ __. . __........ .......... ........... ........ ............ ...... ....... ... Totat SUB Subvention 19,325 200,576 224,174 200,358 165,619 123,289 112,498 60,915 29,684 Estimated State Receipts 1,509,525 1,?81,201 2,188,459 2.972,972 3,417,127 3,758,840 4,134,724 4,548,196 5,003,016 X Subventfon to Receipts 7.9X 11.3X 10.2% 6.7X 4.8% 3.32 2.72 1.3X 0.6X .... ..... .. ..... ...... Total SWS subvention inctudes effect of recent Hairs devaluation, while the effect on estimated receIpts has rot been determined. Estimated state receipts are thus very conservatively stated. - 84 - Annex 3.2 Page 1 of 6 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT AssuMmtions Used in Financial Anaysis Katsina State Water Board 1. Volume of water sold has been derived from engineering projections. 2. Unaccounted-for-water declines from 44% in 1991; 42% in 1992; 38% in 1993; 34% in 1994; 30% in 1995; 27% in 1996; 25% in 1997; and 24% onward. 3. Bad debt allowance is assumed to be 16% in 1991 and 1992; 14% in 1993; 12% in 1994; and 10% onward. 4. Connection fees and other revenues have been estimated as t.he ratio of 1991 connection fees and other revenues to 1991 water sales times water sales for each year. 5. Salaries and wages grow at the rate of inflation. 6. The cost of chemicals and power increases in proportion with the change in volume of water produced plus inflation. 7. Maintenance and materials grow in line with inflation plus 5%. 8. Administrative expenses grow with inflation. 9. Depreciation has been calculated on a straight line basis at the rate of 3.3% annually. 10. Interest expense is calculated at 15% per annum on the project loan. 11. Rural water supply expenses grow with inflation plus 5% until such time as the rural operations are spun-off from the SWAs. 12. Debt service principal equals principal payment on IDA credit of US$49.2 million to KTSWB payable in Naira over 19 years, starting in 1998 at 15% interest (para. 11 above) 13. Investment program includes all SWAs' investment including project, NWRP and other investments. - 85 - Annex 3.2 Page 2 of 6 Kaduna State Water Board 1. Similar assumptions apply to Katsina State Water Board and Kaduna State Water Board. The exceptions are listed below. 2. Bad debt allowance has been calculated as follows: 22% in 1991; 16% in 1992; 14% in 1993; 12% in 1994; and 10% in 1995 onward. 3. Interest includes interest expense on a previous IBRD loan plus 15% interest on the project loan. 4. Debt service principal includes principal payments on a previous IBRD loan that matures in 1999 and an IDA credit of US$45.1 million to KDSWB payable in Naira over 19 years, starting in 1998 at 15% interest. - 86 - Annex 3.2 Page 3 of 6 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT ..................................... KatsiMn State Wter Bard .......... ............................... Inceme ar Cash Flow state ts ----ACTUAL.----- W1.GET ..........................PROJECTED..................................... 1989 1990 1991 1992 199.' 1994 1995 1996 1997 1998 1999 .(N~~~~~~~~~:::CAiRAS 000)....................... INFLATION RATE AVG LOCAL 20.0X 15.0m 12.52 10.02 10.0o 10.0X 10.02 10.02 AVG. WATER TARIFF/3 1.190 1.68 1.978 2.516 3.727 s.59 7.736 9.249 10.314 12.273 13.500 TARIFF INCREASE lNOMIAL (X) 48 sox 38X 202 12S 19X 102 TARIFF INCREASE REAL (S) 29s 342 26X 9s 12 8S 0o VOL I E OF WATER PRODUCED 12316 12844 13213 13153 14308 173"4 18043 24083 28572 30625 33322 UNACCUNTED FOR ATER X) 44X 442 442 42S 380 34X 302 272 25s 24X 24X VOLUME SOLD WA/S) 6897 7154 7373 762 943 11534 12702 17557 21572 23214 25258 WATER SALES 8208 11791 14965 19193 33329 64S67 98263 162380 222488 284905 340991 BAD DEBT EXPENSE 2462 2358 2398 3071 4666 7748 9826 16238 22249 28491 34099 NET WATER SALES 5746 9433 12587 16122 28663 56819 88436 146142 200240 256415 306892 CONNECTION FEES 151 133 253 324 563 1090 1659 2742 3756 4810 5757 OTHER REVENUES 7?8 1228 215 275 478 926 1410 2330 3192 408 4892 TOTAL REVEES 6675 10794 13055 16722 29704 S8836 91505 151213 207188 265313 317541 SALARIES AND WAGES . 5741 6525 6335 7602 8742 9835 10819 11900 13091 14400 15840 CHEMICALS 2633 7512 12180 14549 18201 24821 28403 41703 54423 64168 76800 POWER 1677 2834 5561 6643 8310 11333 12968 19040 24848 29297 35064 NAINTENACE £ MATERIALS 4105 6547 3860 484 5873 6937 8013 9254 10689 1234 14259 ADMINISTRATIVE EXPENSES 1356 1368 1938 2326 2674 3009 3310 3641 4005 4405 4846 OTHER EXPENSES 0 0 0 0 0 0 0 0 0 0 0 TOTAL CASH EXPENSFS 15512 24786 29874 35983 431 55935 63511 ss538 107054 124616 146809 OPERATING INCOME BEF DEP -8837 -13992 -16819 -19261 -14097 2901 27994 65675 100134 140697 170732 DEPRECIATION s56 2680 3965 5991 85O 12093 22347 32057 49963 66801 67495 OPERATING INCOME -9423 -16672 -20784 -25252 -22607 -9192 5647 33618 50171 73896 103237 INTEREST 163 246 105 381 6642 29657 6800 103421 123100 132548 131289 -RSUPPLY EXPENSE 2506 2944 0 0 a 0 0 0 0 0 0 -9586 .16918 -20889 -25633 -29249 -38850 -62362 -69803 -72930 -53d'Z -28052 IPERATIONS -837 -1399 *16819 -19261 '1409 2901 2794 65675 100134 1406S. 170732 E PRINC;PAL 0 0 0 0 0 0 0 0 0 8086 9345 I INTEREST 163 246 105 381 642 29657 68009 103421 123100 132548 131289 SN GENERATION -9000 -14Z38 -16924 -19642 -20739 -26757 -40015 -37746 -22967 63 3098 PROM 506 13600 24760 48047 211952 509983 587525 359520 117520 22856 19237 RENT SLBVENTION 14276 14343 16924 19642 20739 2675r 40015 37746 22967 0 0 NTION 2506 2944 0 0 0 0 0 0 0 0 0 -s 11607 11153 16819 19261 14097 0 0 0 0 0 0 163 246 105 381 662 26757 40015 37746 22967 0 0 STATE CAPITAL SUBVENTION 5086 13600 24760 16458 41929 113982 13798 80090 9748 0 0 INVESTMENT PROGRAM 5086 13600 24760 16458 41929 113982 137984 8090 9748 0 0 PRINCIPAL 0 0 0 0 0 0 0 0 0 0 0 FEDERAL GMAT 0 0 0 0 0 0 0 0 0 0 0 IMD PASSED AS LOUN 0 0 0 5084 78397 228466 28289 189262 73128 15383 13030 IBRO PASSED AS GRAT 0 0 0 26S05 91626 167535 166644 90168 3444 7473 6207 IBRO TOTAL 0 0 0 31589 170023 396001 449541 279430 107172 22856 19237 NET CSH FLOW 5276 105 0 0 0 0 0 0 0 63 30098 Annex 3.2 - 87 - Page 4 of 6 FEDERAL REPUBLIC OF NIGERIA ........................... FIRST MULTISTATE WATER SUPPLY PROJECT ..................................... Katsina State Water Board ......................... Balance Sheet ............. For Year Ended 12/31 .................... (Naire 000) ...ACTUAL.----- ---------------------------------PROJECTED.................................... 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Net Fixed Assets 48827 69620 132369 182418 270530 379000 857549 913060 1860715 1816770 1768512 Work-In-Progress 60906 66714 24760 1676? 132097 521517 608146 880098 0 0 0 Net Current Assets -11 6724 6724 6724 6724 6724 6724 6724 6724 6787 36E85 Net Assets 113744 143058 163853 205909 409351 907241 1472419 1799882 1867439 1823557 1805397 Capital Grant 114410 144256 185940 248545 402839 711113 1055756 1263760 1331119 1338592 1344799 Revaluation Reserve 5038 5038 5038 5038 5038 5038 5038 5038 5038 5038 5038 Accumilated Deficit -5704 -6236 -27125 -52758 -82007 120857 -183219 -253022 -325952 -384604 -412656 CapitaL 113744 143058 163853 200825 325870 595294 877575 1015776 1010205 959026 937181 IBRO Loan 0 0 0 5084 83481 311947 594844 784106 857234 864531 868216 Liabilities 0 0 0 5084 83481 311947 594844 784106 857234 864531 868216 Total Capital & Liabilities 113744 143058 163853 205909 409351 907241 1472419 1799882 1867439 1823557 1805397 .uwauuu3uuu33uuusuUuuUusUUUgUtUU8U&tasst3UZ3us&&ss&=S2=S2&:fl&=========.= - 88 - Annex 3.2 Page 5 of 6 FEDERAL REPUBLIC OF NIGERIA FIRST IJLTISTATE MATER SUPPLY PROJECT Kaduri State Water Bard Incr and Cash Ftow Statewants ............................... *---ACTUAL----- BUDET ---------.-----------------PROJECTED................................. 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 .CH..................... .................... --NAIRAS 000) ------------------------------------ INFLATION RATE AVG LOCAL 20.03 15.03 12.5 10.03 10.0o 10.0o 10.03 10.03 AVG. WATER TARIFFI.3 0.477 1.120 1.232 1.790 2.779 3.594 4.579 5.509 6.315 7.uo 8.184 TARIFF INCREASE NOMINAL CX) 55s 29s 27X 203 153 183 103 TARIFF INCREASE REAL CX) 35X 15t 16X 9s 4S 7x 03 VOLUME OF WATER PRODUCED 66917 6515S 70665 74227 86096 83092 84231 85636 91638 94745 95279 UNACCOUNTED FOR WATER (%) 40X U4 41X 41X 40X 35% 303 25s 253 25s 25s VOLUME SOLD Cm3) 40150 36293 41975 44165 51830 55480 59110 64313 68912 71248 71650 WATER SALES 19167 40664 51713 79073 144036 199390 270739 354287 435200 530106 556403 aD DEBT EXPENSE 5606 8262 11377 12652 2016S 23927 27074 35429 43520 53011 58640 MET MATER SALES 13561 32402 40336 .66421 123871 175463 243665 318859 391680 477096 527763 CONNECTION FEES 0 0 450 688 1253 1735 2356 3083 3787 4613 5103 OTHER REVENUES 908 863 228 349 635 879 1194 1562 1919 2337 2585 TOTAL REVENUES 14469 33265 41014 67458 125759 178077 247214 323504 397386 484046 535451 SALARIES AND WAGES 7312 8288 10982 13178 15155 17050 18755 20630 22693 24962 27458 CHEMICALS 12821 1460 20050 25273 33711 37483 40814 45644 53728 61104 67593 POWER 12074 1666S 1723S 21724 28978 32220 35083 39236 46184 52525 58103 MAINTENANCE & MATERIALS 3328 4782 S369 6765 8169 9649 11145 12872 14866 17172 19834 ADMINISTRATIVE EXPENSES 8441 3294 4126 4951 5694 6406 7046 7751 8526 9378 10316 TOTAL CASH EXPENSES 43976 47592 57762 71892 91707 102807 112843 126133 145998 165141 183304 OPERATING INCOME BEF DEP -29507 -14327 -16748 -4434 34052 75270 134372 197371 2S1388 318905 352147 DEPRECIATION 35423 34694 22404 23680 29666 36676 41999 61874 78162 78860 79426 OPERATING INCOME -64930 -49021 *39152 -28113 486 38593 92373 13s497 173226 240045 272721 INTEREST 38770 39011 38324 50979 72752 94134 125442 1496OO 152542 149390 135446 RURAL WATER SUPPLY EXPENSE 1003 T770 1937 244 2947 0 0 0 0 0 0 NET INCOME -103623 -88032 -77476 -79092 .68365 -55541 -33069 -14104 20684 90655 137275 CASH FROM OPERATIONS -29507 -14327 -16748 -4434 34052 75270 134372 197371 251388 318905 352147 OEBT SERVICE PRINCIPAL 48S1 48991 55630 8305 121663 126989 134958 143155 151773 168252 179011 DEBT SERVICE INTEREST 38770 39011 38324 5079 727s2 94134 12542 149600 152542 149390 135446 INTERNAL CASH GENERATION -117158 -102329 -110702 -138418 -160363. -145854 -126028 -95385 -52927 1263 37690 INVESTMENT PROGRAM 8646 82 146686 S4864 261472 370292 4724l 244675 22394 19505 14526 STATE RECURRENT SUBVENTION 41507 51316 S7009 57854 41647 18865 0 0 0 0 0 RWS SUBVENTION 1080 1770 1937 241 2947 0 0 0 0 0 0 OPERATIONS 1657 10535 16748 4434 0 0 0 0 0 0 0 INTEREST 38770 1011 38324 5079 38700 18865 0 0 0 0 0 STATE CITAL SUBVENTION 54052 ..820 62316 85435 201221 199594 231463 170657 53m 0 0 INVESTMENT PROGRAM s57 8829 6686 2430 7s955 72605 10543s 75272 846 0 0 PRINCIPAL 481 481 55630 83005 121663 126989 126028 95385 52927 0 0 FEDERAL GRNt 0 0 10000 140000 0 0 0 0 0 0 0 IBRD PASSED AS LOA24 0 0 0 317 12s666 217874 285317 137542 17496 15836 11794 I RO PASSED AS GRANT 0 0 0 12117 S6248 79813 81689 31861 4052 3669 2732 IBRO TOTAL 0 0 0 12434 1l8914 297687 367006 169403 21S48 1950S 14526 NET CASH FLO -30245 -3792 0 0 0 0 0 0 0 1263 37690 - 89 - Annex 3.2 Page 6 of 6 FEDERAL REPUBLIC OF NIGERIA .......... ................. ............. FIRST MULTISTATE ATER SUPPLY PROJECT Kaduna State Water Board Batance Sheet For Year Ended 12/31 (Naira 000) ...-ACTUAL.- ------- .---------.----------------PROJECTED.................................... 1989 190 1991 1992 193 194 1995 1996 1997 1998 1999 Net Fixed Assets 544196 504903 539310 953630 1353126 139069 1597025 2499734 2444168 23849.1 2320202 Work-In-Progress 43389 56810 146686 281047 200240 487913 720399 491 289 111 0 Net Current Assets 5822 9237 9237 9237 9237 9237 9237 9237 9237 10500 48190 ........ ........ ........ ........ .............................................................. Net Assets 593407 570950 695233 1243914 1562603 1896219 2326661 2509462 2453694 2395602 2368392 Capital Grant 178875 190286 392045 1121224 1417393 1715665 2028817 2231335 2289160 2292829 2295561 Revaluation Reserve 27143 27143 27143 27143 27143 27143 27143 27143 27143 27143 27143 Accuiulated Deficit -362445 -500024 -57700 -656592 -724957 -780498 -813567 -827671 -806987 -716332 *579057 ...... ........ ........ ........ ........ ........ ........ ........ ........ ........ ......... Capital -156427 -282595 -158312 491775 719579 962310 1242393 1430807 1509316 1603640 1743647 IBRD Loan 460637 471813 416183 750992 841877 932762 1083121 10M08 943231 790815 623598 State Government Loan 288048 380585 436215 0 0 0 0 0 0 0 0 Federal Govermnent Loan 1147 1147 1147 1147 1147 1147 1147 1147 1147 1147 1147 Liabilities 749832 853545 853545 752139 843024 933909 1084268 1078655 944378 791962 624745 ........ ........... ........ ........ ........ ........ ........ ....... ........ ........ ........ Total Capital & Liabilities 593405 570950 695233 1243914 1562603 1896219 2326661 2509462 2453694 2395602 2368392 # - - - _ ---=- N-==S==-=t-= - 90 - Annex 3.3 Page 1 of 2 FEDERAL REPUBLIC OF NIGERIA ,........................... FIRST MULTISTATE WATER SUPPLY PROJECT ..................................... Katsina State Water Board ......................... Action Ptan - Performance Indicators 1991 1992 1993 1994 1995 1996 1997 1998 1999 Production (m3 000) 13,213 13,153 14,308 17,344 18,043 24,083 28,572 30,625 33,322 Sales (.3 000) 7,373 7,629 8,943 11,534 12.702 17,557 21,572 23,214 25,258 Unaccounted-for-water (X) 44X 42X 38X 34X 30X 27X 25X 24X 24X Water Sates cm 000) 14,985 19,193 33,329 64,567 98,263 162,380 222,488 284,905 340,991 Collections CM 000) 12,587 16,122 28,663 56,819 88,436 146,142 200,240 256,415 306,892 Collections/Water Sales CX) 84X 84X 86X 88X 90X 90X 90K 90X 90X Recurrent Cost Coverage (K) 44XK 4X 68K 105X 144X 177K 194X 213X 216X Recurrent/Debt Coverage (X) 44X 46K 59X 69% 70K 80K 90K 100% 110X Chemical Volume/m3 Produced 1) Electricity kwh/m3 Produced 1) Mumber of Conrection 21,400 22,100 22,900 26,400 31,700 37,300 50,000 56,600 64,200 Number of Metered Connections - - 7,000 16,000 29,000 36,000 50,000 56,600 64,20^ Number of Standpipes 850 880 930 1,040 1,150 1,310 1,670 1,760 1,890 Nurber nf Employees 690 690 690 690 690 690 690 690 690 Number of Employees/1000 Con. 32 31 30 26 22 18 14 12 11 Staffweeks of Training 2) 1) Indicators wiLl be developed by consultants during project iupLementation. 2) Indicators wilt be developed after training study carried out under NWRP. - 91 - Annex 3.3 Page 2 of 2 FEDERAL REPUBLIC Of NIGERIA FIRST. MULTISTATE WATER SUPPLY PROJECT ......... ................. 0.......... Kaduna State Water Board ........................ Action Plan Perfornance tndicators .................................... 1991 1992 1993 1994 1995 1996 1997 1998 1999 ..... ..... . . ----- ..... . . ..... ..... . . ..... ..... . . ..... ............................... Production (.3 000) 70,665 74,227 86,096 85,092 84.231 85,636 91.638 94,745 95,279 Sales (.3 000) 41,975 44,165 51,830 55,480 59,130 64,313 68,912 71,248 71,650 Unaccounted-for-water (X) 41X 41X 401 35X 301 251 25X 25X 25X Water Sates (N 000) 51,713 79,073 144,036 199,390 270,739 354,287 435,200 530,106 586,403 Collections (N 000) 40,336 66,421 123,871 175,463 243,h65 318,859 391,680 477,096 527,763 Collections/Water Sales (x) 781 84X 86X 881 901 901 901 901 90X Recurrent Cost Coverage (X) 711 941 1371 1731 2191 2561 2721 2931 2921 Recurrent/Debt Coverage (X) 271 33X 441 551 661 771 88X 1001 1081 Chemical Volume/m3 Produced 1) Electricity kwh/a3 Produced 1) Number of connections 45,600 48,000 52,600 60,000 69,500 79,100 85,600 91,300 95,400 Number of Metered Comnections - 16,000 36,000 63,000 75,000 85,600 91,300 95,400 Number of Standpipes 400 420 470 540 670 880 1,120 1,250 1,280 Nutmer of Eaployees 1,662 1,662 1,662 1,470 1,470 1,470 1,470 1,470 1,470 Number of EmpLoyees/MOO Con. 36 35 32 25 21 19 17 16 15 Staffweeks of Training 2) 1) Indicators will be developed by consultants during project implementation. 2) Indicators will be developed after training study carried out under NWRP. Annex 3.4 Page 1 of 2 - 92 - FEDERAL REPUBLIC OF NIGERIA ___________________________ FIRST MULTISTATE WATER SUPPLY PROJECT …------------------------------------ Katsina State Water Board _________________________ Water Tariffs - 1992 ____________________ CONSUMER CATEGORY RATE Metered (Per M3) Domestic Up to 30 M3 1.20 30-100 M3 1.50 Over 100 M3 1.80 Public Institutions Federal Government 1.50 State Government 1.50 Local Government 1.20 Industrial/Commercial Up to 500 M3 3.50 500-1000 M3 5.00 Over 1000 M3 6.00 Raw Water 0.50 Unmetered (Per Month) House with One Tap 35.00 House with Internal Water 40.00 House with Internal Water and Garden 65.00 Water Tanker (1000 gallons) 15.00 Annex 3.4 - - Page 2 of 2 FEDERAL REPUBLIC OF NIGERIA …-------------------------- FIRST MULTISTATE WATER SUPPLY PROJECT …------------------------------------ Kaduna State Water Board _________________________ Water Tariffs - 1992 ____________________ CONSUMER CATEGORY RATE Metered (Per M3) Domestic Up to 30 M3 1.01 30-1000 N3 1.57 Public Institutions 1.01 Industrial/Commercial Up to 5000 M3 5.00 5000-10000 N3 5.50 Over 10000 M3 6.00 Tanker Supply Domestic 10.00 Industrial/Commercial 50.00 Raw Water 2.00 Unmetered (Per Month) House with One Tap 30.00 House with 1 or 2 bedrooms 55.00 House with 3+ bedrooms in high/med density areas 75.00 House with 3+ bedrooms in low density areas 100.00 Annex 4.1 94 Page 1 of 2 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Summary of Environmental Assessment of Funtua Dam 1. The following are the main points made by consultants who carried out the environmental assessment of Funtua Dam. (a) The construction of a dam on River Gwaigwaye to impound the requir-d raw water for the proposed water supply scheme is the only economically viable option. This conclusion was based on review of the results of previous studies carried out on the project area and environmental assessment. (b) The location selected for the construction of the dam has no bearing of any importance, whether archaeologically, historically, culturally, biologically, or geologically. Also, it is not enriched with any environmental resources for future exploitation. (c) It is strongly recommended that the construction base camp should be planned on a permanent basis for future use as a housing and operational base for the maintenance and operation staff. Such approach would enhance a favorable environmental appearance. (d) Construction materials needed for the provision of the dam are abundantly available within the reservoir area. All efforts should be made to use these materials. Borrowing materials from areas outside the reservoir should be avoided. (e) Practically, there are no existing policy, legislation. administrative framework or established organization in Katsina to monitor environmental impact. It is proposed to establish a new environmental monitoring unit directly under the control of the Governor's office in Katsina. Man-power required for this unit may be obtained from the various government organizations. However, the Federal Environmental Protection Agency (FEPA) has prepared guidelines for the whole country. Though these guidelines ar at preliminary stage and have not been properly tested, they could be adopted with the necessary modifications for Katsina State. (f) Extensive cultivation is practiced in the catchment area and as a result vegetation cover is generally removed leaving behind only scattered trees. The area is prone to excess sediment transport into the reservoir. Adequate dead storage capacity (at least 20% of the storage capacity) should be allowed in the design to sustain the lifetime of the reservoir. Annex 4.1 - 95 - Page 2 of 2 (g) No special type of species were encountered in the catchment area. Domesticated animals are in existence. A few wild animals of common type i.e. hyena, leopard, monkeys and antelopes exist in the hilly and forestry areas, and do not have any danger of extinction. (h) Sewerage disposal in the catchment area is predominately the pit-latrine system which does not directly threaten the quality of impounded water. Action may be taken to modify the system to ventilated improved pit-latrines. (i) Agro-based chemicals are extensively used in the catchment area for cultivation. Necessary legislation may be introduced to limit their use. 0j) Funtua Textile Mills located witnin the catchment area is known to discharge its waste effluents into the river system without any treatment. Action may be taken to treat this wastage before discharging into the river, or to direct it from the catchment. Ik) The field survey confirmed that no established settlements would be affected by the construction of the dam. However, resettlement of scattered settlers is required. The resettlement process should proceed much earlier than the reservoir impoundment in order to avoid payment of compensation for crops within the reservoir area. (') It is estimated that about 2,500 economic trees within the reservoir area have to be uprooted and disposed. Some of these trees are mature and can be cut and sold for lumber while the rest can be sold for firewood. (im) The use of the reservoir water for multiple purpose should be discouraged. Limited angling may be considered. In addition, limited tourist facilities may be provided. (n) An environmental monitoring unit consisting of about eight members is recommended to monitor environmental aspects during construction. This team could be obtained from the Katsina State Government functionaries. About ten visits to the site during construction would be needed. (o) A panel of experts comprising three members is proposed for review of the dam design and monitoring of construction. These experts can be selected from the following disciplines related to the construction of the dam: General Engineering/Hydraulics, Hydrology and Geotechnics/Geology. (p) New settlements should be sited well clear of the reservoir. (q) Other reservoirs constructed in the area have resulted in a significant increase in the inciden^!e of malaria, bilharzia, and yellow fever. 2. These recommendations have been incorporated into the Environmental Mitigation Plan, Annex 4.3. Annex 4 - 96 - Page 1 of 2 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Summary of Environmental Assessment of Zonkwa Dam 1. An environmental assessment of anticipated environmental impacts of the dam has been made by consultants. Specific impacts are classified as either positive of negative and assessed. Mitigation measures are identified and mitigation plans to reduce potentially significant adverse effects to acceptable levels are proposed by the consultants. 2. The study shows that the positive impacts are: (a) The site for the proposed project was acquired by the KDSWB in 1980, full compensation has been paid to the landowners ard farmers, the acquired area has been demarcated and sin.A; ihere crc no se.ttlements within the acquired area, it would not incur any resettlement costs. (b) The dam has potential for multi-purpose use suci as water supply, irrigation, fisheries and recreation. In the design of the r iisultants, allowance was only made for domestic. industrial and livestock uses. (c) Zonkwa town and the surrounding villages have no pipe borne water supply. The project would ensure adequate and reliable water supply. It would also improve the sanitary conditions of the town and reduce the incidence of some of the water borne and water related diseases such as dysentery, diarrhea, and typhoid. (d) The project would cause an improvement in the local economy during the construction and the operation stages by providing employment opportunities. (e) By attracting * lishment of small and medium scale processing and manufacturing . .ries it would improve the local economy and provide more job opportunities. (f) The development of fish within the lake would not only be a source of income but also an alternative source of protein. 3. Among the negative impacts of the Zonkwa dam are: (a) Loss of agricultural land by the impoundment of water in the reservoir area of 102 hectares. (I) Disturbance of biota within the inundated area. However none of the plant nor animal species is an endangered species as they are the normal entities within the savannah region. Annex 4.2 97 -Page 2 of 2 (c) Malaria is already endemic in the area. There is a likelihood that the impoundment of water behind the dam would cause an increase in the incidence of the disease. 4. The possible mitigation measures are: (a) Afforestation of the reservoir rim to encourage the recovery of the biota. Trees to be planted should be evergreen trees of economic value. (b) Seeding the reservoir with fingerlings of tilapia and mud fish to control the population of mosquito larvae. 5. Necessary measures to improve the environmental quality of the area are: (a) Rehabilitation and proper organization of the facilities for disposal of waste water, solid wastes and storm water runoff to prevent the pollution of the reservoir. (b) Regrassing and afforestation of the valley slopes to minimize erosion and sedimentation of the reservoir. (c) Encouragement of good agricultural practices such as contour tillage, and proper use and management of fertilizers and pesticides to minimize any harmful environmental impacts on the lake. 6. Measures to minimize social conflict within the area should include: (a) demarcation and establishment of grazing tracks leading to possible watering sites around the reservoir rim; (b) fencing of farmlands along the grazing tracks to prevent livestock encroachment; and (c) as an alternative to (a) watering points can be provided downstream of the bridge to avoid contamination of the reservoir by animal droppings and prevent livestock encroachment on farmlands around the reservoir. Annexl!i - 98 - Page 1 of I FEDERAL REPUBLIIC O-F NIGEIJA FIRST MULTISTATE WATER SUPPLY PROJECT Environmental Mitigation Plan To minimize the environmental impacts of construction of dams at Funtua and Zonkwa, the State Water Boards would implement the following: (i) employ a public health specialist to advise on means to minimize the risk of increasing malaria and bilharzia, by reducing the habitat for mosquitos and snails; and to minimize other risks of disease; (ii) develop and implement a catchment management plan to minimize the impacts of activity in the catchment, particularly the use of biocides and fertilizers, and activities which would increase erosion and subsequent sedimentation of the reservoir; (iii) develop and implement a water quality monitoring program for water flowing into the dams, and reservoir water itself, commencing well before construction starts to give adequate baseline data; (iv) review dam design to ensure that proper allowance has been made for sediment storage (including where possible some actual sediment measurements) and to confirm spillway capacity; (v) monitor the effect on downstream farmers of changed river regime following construction of the dam; (vi) establish a three person monitoring unit to regularly monitor environmental impacts during dam construction; (vii) utilize the construction camp for operadion and maintenance staff after completion of the dam, and ensure that it is designed accordingly; (viii) incorporate appropriate clauses into contracts to ensure minimization of impacts during construction; and (ix) clear impoundment area prior to reservoir filling. These activities are included in the Project Implementation Program (Annex 2.11) where appropriate (items i, v, and vi). Items ii and iii are incorporated into the terns of reference for efficiency improvement (Annex 2.3) and items iv and vii to ix will be incorporated into the work of the consultant for construction supervision and into contract specifications. - 99 - 9Annex 4.4 Page I of 3 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Calculation of ERR 1. The primary calculation of ERR has been based on conservative values of what people are known to pay for water at lower consumption levels, and on expected tariffs after the project is completed at higher consumption levels (N4 per cubic meter in March 1992 prices). Typically, pecple pay 20 kobo for a 20 liter can of water from vendors, and use about one and a half cans per person per day, equivalent to N 10 per cubic meter for 30 lcd. There is also anecdotal evidence of people paying as much as five times this amount in some areas, and the equivalent of N250 to N500 per cubic meter for about 10 lcd in the dry season, however this has not been incorporatud into the analysis due to uncermainty about its extent and applicability to the towns in question. Certainly it would raise ERR well above the figures quoted, but the extent is not known, and hence the analysis gives only a minimum measure of ERR. The demand curve adopted thus passes through N ln ner cubic meter at 30 lcd and N4 per cubic meter at 90 lcd, and a straight line has been adopted. This demand curve has been taken to represent the value of water to the consumer. 2. The average value of the water delivered by each system has been calculated depending on characteristics of the consuming population. Water consumed through public standpipes, at 20 lcd, has all been valued at N10 per cubic meter. Industrial water use has been valued at N 13 per cubic meter, the anticipated industrial tariff at the end of the project. Water resulting from the project and consumed through house connections (HCs) has been valued at an average figure depending on whether or not there is an existing supply in the town. Where there is no existing supply, the average value under the whole demand curve has been adopted (N8 per cubic meter). Where there is an existing supply, the current average per capita supply through house connections has been calculated, and the average value of the demand curve between that amount and 90 lcd has been adopted as the average value of water delivered through house connections. Average value of house connection water thus calculated and average value of domestic water taking account of the portion expected to be delivered through standpipes are as follows: Town Value (N/cu.m.) Value (N/cu.m.) (HC water) (All domestic water) Katsina 5.8 7.7 Malumfashi 8.0 9.6 Daura 5.8 7.7 Funtua 5.8 7.7 Kaduna 4.7 6.6 Ikara 8.0 9.6 Zonkwa 8.0 9.6 Kwoi 8.0 9.6 - 100 - Annex 4.4 Page 2 of 3 3. Costs have been based on present day costs (March 1992 prices including physical contingencies). Adjustments have been made to exclude duties, for a shadow pricing conversion factor of 0.85 on local costs. The cost stream has been based on the projected expenditure pattern for the project with the addition of incremental operation and maintenance costs. 4. The above values applied to projections of water use from the project (difference in water use with and without the project), derived as at Annex 2.2, provide the benefit stream used to calculate ERR. Benefits have been extended to 30 years after project completion. Cost and benefit streams are shown in the attached table. 5. The alternative calculation of ERR based on productivity increase and health benefits has beer, based on the number of beneficiaries, also sumizairized at Annex 2.2. Average GDP of about US$316 has been taken as the basic measure of productivity, an increase of 5% being valued at US$15.8 per person per year. Health care costs were taken as 7.8% of GDP and a reduction of 10% in health care costs would be valued at US$2.5 per person per year. The extent to which this is additive to the benefit calculated from consumers' willingness to pay, and even the extent to which consumers' perceptions of the value of water represents its real value to them, have not been addressed. FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT ECOINOIC COST AND BENEFIT STREAMS KATSINA STATE YEAR 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Sates without project (%IIO) 15.1 15.1 16.5 20.3 23.0 20.6 22.5 24.9 25.3 25.6 26.0 26.4 26.8 27.0 27.0 Sales with project MILD) 15.1 15.1 16.5 20.3 26.1 27.9 42.6 53.4 57.8 63.3 68.2 70.2 72.4 73.0 73.3 Sates due to project (LDII) 0.0 0.0 0.0 0.0 3.1 7.3 20.1 28.5 32.6 37.6 42.2 43.8 45.7 46.0 46.3 Value increientat sales 0.0 0.0 0.0 0.0 10.3 25.2 67.3 95.7 109.5 126.9 142.5 147.9 154.2 155.3 156.3 Investment cost (economic) 0.0 0.0 10.8 67.9 213.9 252.0 142.4 38.3 0.0 53.0 53.0 0.0 0.0 0.0 0.0 Incremental production (mLo) 0.0 0.0 0.0 0.0 5.2 10.6 28.3 38.2 43.5 50.2 56.3 58.4 60.9 61.3 61.8 Incremental awnal O cost 0.0 0.0 0.0 0.0 3.2 6.6 16.8 22.9 26.1 30.2 33.8 35.0 36.4 36.6 36.7 Total costs 0.0 0.0 10.8 67.9 217.1 258.6 159.2 61.2 26.1 83.2 86.8 35.0 36.4 36.6 36.7 Met benefits 0.0 0.0 -10.8 -67.9 -206.8 -233.4 -91.9 34.5 83.4 43.7 55.7 112.9 117.8 118.7 119.6 KADUNA STATE YEAR 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Sales without project OtLD) 95.9 101.1 106.7 112.5 118.7 122.1 127.6 136.7 140.3 140.3 140.3 140.3 140.3 140.3 140.3 Sales with project OILD) 95.9 101.1 106.7 112.5 118.7 125.9 137.4 149.6 *55.6 156.3 156.7 157.0 157.1 157.3 157.5 Sales due to project (NLI) 0.0 0.0 0.0 0.0 0.0 3.8 9.8 12.9 15.3 16.0 16.4 16.7 16.8 17.0 17.2 Value incremental sales 0.0 0.0 0.0 0.0 0.0 11.4 30.3 41.1 49.7 52.1 53.5 54.7 55.3 55.9 56.5 Inmestment cost (economic) 0.0 0.0 0.0 138.2 184.4 233.5 109.7 3.6 0.0 42.0 48.0 0.0 0.0 0.0 0.0 Incremental production (NLO) 0.0 0.0 0.0 0.0 0.0 5.3 12.8 16.7 19.7 20.6 21.1 21.5 21.7 21.9 22.1 Incremental annual O1N cost 0.J 0.0 0.0 0.0 0.0 0.2 0.3 1.6 2.2 2.4 2.5 2.5 2.6 2.6 2.7 Total costs 0.0 0.0 0.0 138.2 184.4 233.7 110.5 5.2 2.2 44.4 50.5 2.5 2.6 2.6 2.7 Net benefits 0.0 0.0 0.0 -138.2 -184.4 -222.3 -80.2 35.9 47.5 7.7 3.0 52.2 52.7 53.3 53.8 Note: Net benefits show small imcrease beyond year 2004. Monetary values in million Naira, constant 1991 prices. 00:4 0. Annex 6.1 -102 - Page 1 of 2 FEDERAL REPUBLIC OF NIGERIA FIRST MULTISTATE WATER SUPPLY PROJECT Documents Available in the Prciect File A. Reports and Studies Related to the Project 1. Katsina State Water Board, Feasibility Study, Multistate Water Supply Project, Final Report by Wardrop Engineering Inc. (May 1990) 2. Kaduna State Water Board, Rehabilitation Study, Final Report by Wapdeco (Feb. 1991) Vol 1. Zaria Water Supply Scheme Vol 2. Birnin Gwari Water Supply Scheme Vol 3. Kafanchan/Kagoro Water Supply Scheme Vol 4. Manchok Water Supply Scheme Vol 5. Zonkwa Water Supply Scheme Vol 6. Kachia Water Supply Scheme Vol 7. Kwoi Water Supply Scheme Vol 8. Ikara Water Supply Scheme Vol 9. Management Study 3. Katsina State, Multistate Water Supply Project, Review and Recommendations for Rural Water Supply Component by Stoveland Consult. (Sept. 1990) (Vol. 1, Report; Vol. 2 appendices) 4. Kaduna State, Multistate Water Supply Project, Review and Recommendations for Rural Water Supply Component by Stoveland Consult. (Sept. 1990) (Vol. 1, Report; Vol. 2 appendices) 5. Rural Water Supply and Sanitation, Katsina, Results of discussions, Stoveland Consult. (June 1991) 6. Rural Water Supply and Sanitation, Kaduna, Results of discussions, Stoveland Consult. (June 1991) 7. Funtua Water Supply Extension (Gwaigwaye Option), Environmental Impact Assessment by Enplan Group (June 1991) 8. Environmental Impact Assessment of Zonkwa Dam; Report by Ahmadu Bello University Consultancy Services (October 1991) Annex 6.1 -103- Page2of2 9. Standard Bid Document for Execution of Contracts (June 1990) D42639 B. Financial and Economic Analysis 1. Katsina State Water Board Audited Accounts for 1990 2. Kaduna State Water Board Audited Accounts for 1990 3. Memo to fies, First Multistate Water Supply Project, Cost Estimates - complete COSTAB printout 4. Memo to files, First Multistate Water Supply Project, Demand Projections. 5. Financial sensitivity working papers. 7. TO r|rMaduwa g 130 13_o D t Ob * % Ka~~~~~~tsini OM>ar /4 A NO N1 ab ) -9\/ f " STATE < SOKOTO STATE I~~ ~~ ~~ ~~ ~~ ~~ ~~ ~~ ~~ ~~ ~~ ~~ ~~ ~~ ~~ ~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ A el oo"* - )~ k iI