Document of The World Bank FOR OFFICIAI, USE ONLY Report No. 4836-SYR STAFF APPRAISAL REPORT SYRIAN ARAB REPUBLIC HOMS & HAMA SEWERAGE PROJECT April 16, 1984 Water Supply and Sewerage Division Europe, Middle East and North Africa Regional Office lhis document has a restricted distribution and uia% be used by recipients 0iil} in the perforiallnee uf their official duties. Its contents may not other- ise he disclosed vi ithout World Bank authoritation. CURRENCY EQUIVALENTS As of October 1983, the exchange rate of the Syrian Pound (SE) is: US$1.0 = SE 3.9 SE 1.0 = US$0.2564 As of October 1983, the exchange rate of the Kuwaiti Dinar (KD) is: US$ 1.0 = KD 0.2924 KD 1.0 = US$ 3.42 MEASURES AND EQUIVALENTS 1 kilometer (kmi = 0.621 miles 1 millimeter (mm) = 0.03937 inches I liter (1) = 0.264 US gallons 1 cubic meter (M3) = 264 US gallons 1 hectare (ha) = 2.471 acres 1 square meter (m2) = 10.76 square feet 1 square foot (sq.ft.) = 0.09 square meter 1 metric ton (t) = 1000 kilograms 1 kilogram (kg) = 2.2046 pounds ABBREVIATIONS AND ACRONYMS GECOS = General Company for Sewerage GECOP = General Company for Water Projects GECEC = General Company for Engineering and Consulting MHU = Ministry of Housing and Utilities MPW -- Ministry of Public Works and Water Resources AFESD = Arab Fund for Economic & Social Development BOD = Biochemical Oxygen Demand measured during five days at 20° C SS = Suspended Solids FISCAL YEAR January 1 - December 31 FOI'. OFFICIAL USE ONLY SYRIAN ARAB REPUBLIC HOMS & HAMA SEWERAGE PROJECT LOAN AND PROJECT SUMMARY Borrower: Syrian Arab Republic. Loan Amount: US$30 Million, [neluding front-end fee. Terms: Seventeen years, including four years of grace, at the standard variable interest rate. Project Description: The proposed project includes the first two significant sewage treatment plants in the country and has received top priority from the Government in its most recent budget. The proposed project constitutes the least cost solution towards wastewater treatment in the cities of Homs and Hama, the third and fourth largest cities in Syria. The project's primary objectives are: (i) to provide sewage treatment and disposal facilities for Homs (population 380,000) and Hama (population 215,000); (ii) to improve water quality in the Assi River flowing through Homs and Ha,na which is adversely affected by the discharge of raw sewage; (iii) to connect new housing developments to the main sewerage networks; and (iv) to help organize the sewerage sector through the establishment of adequate institutional structures and the introduction of financial policies. The project would generate substantial economic benefits from the maintenance of existing irrigated perimeters downstrearn of both municipalities, increases in urban land vaLues and the restoration of the fishing industry. The project components include: (a) installation of sewage t_eatment plants in Homs and Hama with a design capacity of 1.36 million (including industrial users) and 0.3 million inhabitant equivalent, respectively; (b) construc- tion of trunk sewers (about 25 km); (c) establishment of sewerage authorities including construction of office building and workshops, supply o- vehicles and maintenance equipment and training; and (d) -oovision of technical assistance and consultant services ;o supervise construction and undertake specialized studies, ir.cluding financial policies and management studies. The project would directly benefit nearly 700,000 people by 1990. The main risks associated with the project are those arising from the fact that sewerage authorities are being established for the first time and those related to project implementation. Provisions for training and technical assistance, and adoption of financial policies aimed at making sewerage authorities financially viable should assist in Ininimizing project risks. 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. Estimated Project Cost: Component Local Foreign Total …US$ Million Homs Treatment Plant 19.42 20.63 40.05 Hama Treatment Planc L4.28 14.86 29.14 Trunk Sewers Hama & Homs 17.84 6.63 24.47 Buildings & Workshops 2.82 1.54 4.36 Vehicles, O&M Equipment 0.28 0.99 1.27 Technical Assistance & Consulting 1.01 1.48 2.49 Training 0.42 1.30 1.72 Construction Supervision 2.06 - 2.06 Base Cost (Decemnber 1983 Prices) 58.13 47.43 105.56 Physical Contingencies 5.97 5.07 11.04 Price Contingencies 18.77 15.45 34.22 Front-end Fee _ 0.07 0.07 Total Financing Required 82.87 6____ 150.89 Financing Plan: The financing plan is as follows: Sources: Local Foreign Total …US$ Million -… Bank 30.00 30.00 Arab FuiLd - 17.10 17.10 GECOS (Internal Funds) 3.93 - 3.93 Government 78.94 20.92 99.86 Total 82.87 _6__2 i50.89 Estimated Disbursements: Bank Fiscal Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 ----------------------- US$ Million ------------------------ Annual 0.61 2.42 4.67 5.75 5.60 4.61 3.38 2.21 0.75 Cumulative 0.61 3.03 7.70 13.45 19.05 23.66 27.04 29.25 30.00 Economic Rate of Return: N/A Maps: No. IBRD 14201R - General Setting. No. IBRD 14202R - Principal Features Homs. No. IBRD 14203R - Principal Features Hama. SYRIAN ARAB REPUBLIC STAFF APPRAISAL REPORT HOMS AND HAMA SEWERAGE PROJECT Table of Contents Page No. LOAN AND PROJECT SUMMARY ..................................... i 1. WATER SUPPLY AND SEWERAGE SECTOR.. Water Resources ............... ................... ... 1 Sector Organization ..I Water Supply.. 2 Solid Wastea....... .............* ........ 2 Sewerage .. 2 Government's Sector Objectives .. 3 Bank's Involvement in the Sector 3 II. POPULATION AND DEMAND FOR SERVICES IN THE PROJECT AREA A 4 Population.... 4 Water Demand.... 5 Sewerage Demandemand......... 5 III. THE PROJECT. 7 Genesis . . 7 Project Objectives.. 8 Technological Alternatives and Service Standards...... 8 Project Descriptions. 9 Cost Estimatest...s... 1... ........ ..... .10 Financing Arrangements ..12 Proposed Investment Financing Plan ..13 Project Implem1entation. .................... ...... .......... 14 Procurement ..15 Disbursements ..18 Monitoring Criteria ............... . ......... . .. ...... ... 20 This report was prepared by Messrs. Michel J. L. Pommier, and Alexander Velderman (EMPWS). Table of Contents (Continued) Page No. IV. THE BENEFICIARY .............................................. 20 Present Organization .......................... . 20 Proposed Organization .... 21 Billing and Collect'on. . . . 23 Accounting, Audit and Insurance.. . . 23 V. FINANCIAL ANALYSIS ........................................... 24 Past Results and Present Situation.24 Financing Policies and Objectives.24 Financing Plan of GECOS' Investment Program.25 Future Financial Performance.26 VI. JUSTIFICATION ................................................ 27 Health Benefits and Environmental Impact.27 Least-Cost Solution.27 Beneficiaries ................................................................ 28 Affordability .. . **. *,*. **.. . ... .. . . .. .. ... . ........................... 28 Adequacy of Revenues..28 Risks and Safeguards .. 29 VII. AGREEMENTS REACHED AND RECOMMENDATIONS...................... 29 ANNEXES ANNEX I - Population Projections ANNEX 2 - Homs - Projections of Water Demand ANNEX 3 - Hama - Projections of Water Demand ANNEX 4 - Sewage Flows in Dry and Wet Weather ANNEX 5 - Project Costs ANNEX 6 - Annual Project Investment ANNEX 7 - Project Implementation Schedule ANNEX 8 - Monitoring Criteria ANNEX 9 - Calendar of Key Actions ANNEX 10 - Financial Statements - Homs ANNEX 11 - Financial Statements - Hama ANNEX 12 - Assumption for the Financial Projections ANNEX 13 - Selected Documxents in Project File MAPS I - Homs and Hama Region IBRD No. 14201R II - Homs IBRD No. 14202R III - Hama IBRD No. 14203R SYRIAN ARAB REPUBLIC HOMS & HAMA SEWERAGE PROJECT STAFF APPRArSAL REPORT r. WATER SUPPLY AND SEWERAGE SECTOR Water Resources 1.01 Although the total volume of water available in Syria for urban, industrial and agricultural use is not a constraint, the uneven geographic distribution of water resources generates chronic supply shortages in some cities. The most important confined aquifers are the karstic limestones, dolomites and chalky limestones which produce the more significant springs supplying water to Damascus, Homs, Lattakia and Sweida. Surface water is provided from the Euphrates River which serves mainly Aleppo, fron the Assi River, which provides for the needs of Rama and several small villages. The Barada River, which flows through Damascus, is used only for irrigation due to its polluted condition from urban sewage. The growing problem of pollution and the related increase in the cost of supply is particularly evident in Homs and Hama where new sources of water are located 32 km (ground water) and 90 km (surface water), respectively, fron the center of these cities. Sector Organization 1.02 The Ministry of Irrigation manages all water resources in the country. Eight water authorities in Damascus, Horns, Hama, Ateppo, Lattakia, Sweida, Raqqa and Idleb are responsible, under the tutelage of the Ministry of Housing and Utilities (MIU), for aLl aspects of water supply in their respec- tive cities. In other municipalities the water supply systems are operated by municipal staff. At present there is neither a national nor a regional or municipal sewerage authority. Technrical municipal services operate and manage existing sewerage networks in addition to thei.^ ,thei responsibilities. They lack, in most cases, the managerial expertise ariec the financial resources to provide adequate services. MMU is responsible for general guidance and assis- tance to municipalities and existing water authorities. It has two depart- ments at its headquarters in Damascus, one responsible for potable water supply and one for sewerage. These departments, assisted by expatriates, design facilities or provide supervision and advise in the design of source supply, water treatment plants, main distribution lines aad reservoirs for water supply and of sewerage collection systems and small industrial sewage treatment facilities. The main problems that the Governnent faces in dt elop- ing the sewerage sector are inadequate financial policies, institutional deficiencies, and slow manpower development. The problem of inadequate man- power development is caused by the shortage of skilled staff, by the absence of any formal training program in the sector and by a poor salary and wage structure for staff in public service as a whole. Aware of these difficul- ties, the Governnent has decided to restructure the sewerage sector by - 2 - establishing financially viable companies (para. 4.05) and instituting in Damascus, with the Arab Fund financial assistance, a training center special- ized in water supply and sewerage operations. The municipalities are also responsible for solid waste collection and disposal. Water SUply 1.03 The levels of access to water supply in Syria (measured in terms of house connections) are above average for the Middle East Region. This reflects the Government's strategy which emphasizes house connections in preference to public taps in both urban and rural areas except in small vil- lages which do not have their own municipal technical services. In the past, urban water supply has been rightly given the highest priority. As a result, most of the cities enjoy a high service level. Public water authorities, established in the eight largest cities, operate extensive distribution net- works serving nearly all households except those residing in unauthorized settlements. However, as a result of rural-urban migration and reduced investments in supply works during the early seventies, available water was no longer sufficient to meet the growing urban population's demand and large investments to expand the urban water supply systems were required in order to ensure adequate supply in the future. The Government, with the Bank's assis- tance, completed three projects to expand supply in the two largest cities of the country, Damascus and Aleppo. With the implementation of these and other planned projects, it is estimated that the urban population served by house connections could rise from the present level of about 722 to about 85% in 1990 possibly reaching 95% by year 2000. Rural population with access to public water supply could increase from about 60% at present tc 75X in 1990 possibly reaching 80% by the turn of the century. These estimates reflect the Government's investment objectives. Solid Waste 1.04 The Government intends to improve solid waste collection and disposal and a study carried out recently by MHU recommends the creation in each Mohafazat (governorate) of specialized public enterprises. A draft decree is being prepared. Sewerage 1.05 Population growth, urbanization and industrial activity have created serious pollution problems in the main cities of Syria (para. 1.01). The major cities have comprehensive combined sewer networks although some centuries-old systems like in Damascus and Aleppo are no longer adequate to meet the cities' needs. None of the cities have sewage treatment plants and only a few large factories have treatment facilities. The discharge of untreated sewage into relatively small rivers with minimal dry weather flow causes these rivers to be heavily polluted, thus preventing their use as traditional sources of domestic water supply. Widespread use of the stream flow for irrigation of small agricultural plots is common. During periods when there is little flow in the water courses, the undiluted raw sewage used for irrigation creates serious health problems. From 1970 to 1983, at least six outbreaks of cholera took place in areas where sewage is utilized for contact irrigation, particularly in Homs, Hama and Aleppo. - 3 - 1.06 It is estimated that about 70% of the urban population is at present connected to the municipal sewage collection systems. The quality of recently constructed sewerage networks is good and secondary networks extension is keeping pace with urban development. The percentage of urban buildings con- nected to the sewerage systems is expected to rise gradually to 90% by the year 2000. 1.07 In rural villages, most of the houses provided with private water connections possess individual wastewater disposal systems (seepage pits). Government's Sector Objectives 1.08 The Government's primary objective in the sewerage sector consists of abating the pollution of rivers and water sources due to the discharge of urban and industrial raw sewage which creates serious health problems through- out the country. This objective is to be achieved through the construction of sewage treatment and disposal facilities in the largest urban communities, while continuing the development of sewerage secondary networks in all urban areas. The Government has given top priority to the proposed sewerage project in its most recent budget and intends to include the sewerage investments required in Aleppo, Damascus and Lattakia in its sixth deveLopment plan (1986- 1990). The Government intends to implement its sectoral objectives by creating in each Governorate financially viable and technically capable sewer- age institutions to operate, maintain and develop the sector. Bank's Involvement in the Sector 1.09 The Bank's strategy is to assist the Government in developing the institutional framework, financial policies and operational practices within the sectoral institutions, in order to attain their service level and pollu- tion control objectives. The Bank has helped to strengthen and develop the water authorities in Damascus and Aleppo and has made two loans and one credit totalling US$ 98.5 million for the development of water supply in these cities. An IDA Credit of US$15.0 million approved in 1973 (Credit 401-SYR) financed a priority phase of distribution works in Damascus and pollution control studies for the Barada and Assi Rivers. Supply works for Damascus, partly financed by a 1976 Bank loan of US$35.0 million (Loan 1241-SYR) were completed satisfactorily in April 1980, only about four months behind original contract schedule. The combined completion report on the fi-st two Damascus Water Supply Projects (PCR of June 23, 1983) concluded that these projects had met their objectives of providing additional water to the increasing popula- tion in the areas served, and contributed greatly towards the development of the water authority into a technically sound and financially viable institu- tion. The Bank's latest project in the sector is a US$48.5 million loan, (Loan 1458-SYR) for the construction of a 73 km transmission line between lake Assad and Aleppo, treatment plants expansion, improvements to existing distri- butio-. systems and engineering studies for sewage treatment facilities. All facilities are now in operation and the loan was closed by December 31; 1983. Credit 401-SYR also included the study of pollution control in the Barada and Assi Rivers, and feasibility and detail design studies for sewage treatment plants in Damascus, Homs and Hama. These studies are the basis for this pro- ject. In addition to the Homs and Hama Project, the Government has requested Bank assistance for three other sewerage projects in Aleppo, Damascus and Lattakia for which feasibility studies and detail design are completed. - 4 - II. POPULATION AND DEMAND FOR SERVICES IN THE PROJECT AREA Population 2.01 The latest census, held in September 1981, reportedl a total urban population of 349,000 in Homs. Since the previuus census of 1970 the popula- tion growth rate has averaged 4.5% per year, which is slightly above the national average for urban areas (4.3X). At this rate, the total population of Hons would double about every 22 yearsj. However, because of physical and economic absorption capacity constraints, the average annual population growth rate projected by the Government in concurrence with consultants' estimates, averages 4.0% during the 1980s and declines to about 3% by 2010. Most of the expected population increase would be concentrated in the outskirts of the city along the river. 2.02 During the 1970-1981 period, the population of Hama increased from 138,000 to 214,000, at an average annual growth rate of about 4.1%. The popu- lation in Hama is expected to reach 400,000 by the year 2010. The population projections for Homs and Hama are shown in Annex 1. 2.03 In addition to the population of Homs and Hama, there are a number of villages along the banks of the Assi River that will benefit from reduced levels of river pollution resulting from the project. Most of these villages are inhabited by farmers. It is estimated that 41,000 persons live in the villages along the river between Horns and Hama and an additional 38,000 down- stream between Hama and Lake Maharde. Most of these villages have been sup- plied by piped water in recent years. 2.04 Homs is the third largest city of the country and the second indus- trial area. The city has attracted a number of large industries due to its favorable location near Lake Qattineh and Piver Assi and at the junction of major roads to Damascus, Hama, Aleppo and the port cities of Tartous and Lattakia (Maps I and II). As a result of increasing industrial development, the city and its suburbs have expanded rapidly at an average growth rate of 4.6% during the last twenty years. A number of medium and heavy industries have been established in and around the city. These include the two major water users in the city - a sugar factory and a dyeing factory, which together generate about 90% of the existing industrial sewage flow or over 50% of total wastewater flow of the city area. Otiier major industries located inside the city limits and discharging their raw sewage into the Assi River are cotton spinning, dairy, tanneries and slaughterhouses. South of the city, an oil refinery, and a fertilizer (nitrogen) complex which have their own treatment facilities discharge their effluent into lake Qattineh or the river. The municipality is also developing a new industrial zone northeast of the city along the Hama road. By law these industries are compelled to treat their own sewage or to connect to municipal treatment plants. 2.05 As a result of the rapid population growth, unauthorized settlements developed in the outskirts of Homs. The Government's policy was to deprive these settlements of basic services as a means of discouraging increasing urban migration. After the 1977 cholera epidemic, the Government reversed its policy and authorized the Water Authority and the mtnicipality to serve these areas with water supply and sewerage. The project provides for extensions of the city's main sewerage lines to serve these settlements where the majority of urban poor is concentrated, i.e., about 17,000 inhabitants out of the 30,000 dwellers of these areas. 2.06 Hama is the fourth largest city in Srria with a long history aE a strategic trading center and service town to the surrounding fertile agricul- tural area (Maps I and III). In recent years, these functions have been sup- plemented by the growth of some industry in and around the city - iron and steel works to the north and large cement works to the south in addition to the more traditional furniture making, foodstuffs and textile activities. Industrial development is however less important than in Homs. Water Demand 2.07 Piped water is supplied through metered connections in both Homs and Hama by the local Public Water Authorities. About 85% of the total population in Homs is served by private connections, while the service level in Hama exceeds 95%. Projections of future water consumption by various categories of consumers based on the most recent data were reviewed by the appraisal mission and are shown in Annex 2. 2.08 The analysis of water use for Homs indicates that private water supplies (i.e., not supplied by local water authorities) accounted for 32% of the total water supply in 1982 or about 9.5 million m3. These supplies are expected to inicrease only modestly in absolute terms, representing 14% of the total water supply by the year 2000. The dominant private supply is that for the sugar factory, which used some 7.7 million m3 of water in 1982 and is projected to continue at that level in the future since no plan to expand or contract this factory production is foreseen. The major industries south of Hooms, which abstract their water directly from Lake Qattineh or the river, are excluded from these projections since they are not served by the sewer system of Homs. 2.09 There are no significant private water supplies in Hama and indus- trial water consumption is relatively insignificant (Annex 3). 2.10 Per capita water consumption for those connected to the public systetn are comparable in both Homs and Hama (about 150 liters/capita/day) and are a,#umed to increase marginally in future. In Homs, however, a smaller per- centage of the total population is connected to the public supply. This is partly due to the existence in Homs of many private wells, estimated to service about 22,000 people or 6.5% of the population in 1982 and projected to fall to 10,000 people or less than 1.5% of the population by 2000. Further- more, about 8.5% of the population in Homs lives in unauthorized housing not connected to the water system (para. 2.05). Sewerage Demand 2.11 Both sewer systems in Homs and Hama are of a combined type, trans- porting sanitary sewage in dry weather plus storm drainage in wet weather. - 6 - Neither town has sewage treatment and disposal facilities. All flows col- lected by existing sewers are discharged directly into the river without treatment. Detailed projected dry weather Pewage flows and their characteris- tics are presented in Annex 4 and can be summarized as follows: Year 1.983 1988 1993 1998 2002 Homs Mean daily dry weather flcw (m3/s) 1.2 1.5 1.8 2.2 2.6 Biochemical oxygen demand (BODs t/day) 58.3 63.8 70.4 78.6 86.6 Suspended solids (SS t/day) 55.8 62.9 71.3 81.5 92.3 Hama Mean daily dry weather flow (m3/s) 0.4 0.5 0.6 0.7 0.8 Biochemical oxygen demand (BODs t/day) 11.5 13.2 15.0 17.2 19.0 Suspended solids (SS t/day) 17.1 19.7 23.3 25.5 28.3 2.12 These projected average sewage flows can be comsared to flows in the Assi River, which have an annual average of about 8.1 m /s at each town, but are frequently as low as 1.7 m3/s during prolonged periods in the winter anid spring, when the storage reservoirs at Qattineh, and Rastan are being filled for the next irrigation season. These figures illustrate that discharges of untreated sewage at Homs are already approaching le volume of water flowing in the river during low flows causing noxious conditions along the river par- ticularly downstream of the town. Although sewage volumes are less important in Hama, the location of the city downstream of Homs contributes to the increase of its pollution problems. Precipitation in both towns is limited, and characterized by drizzles through most of the rainy season (October to May). The annual average precipitation at Homs is 450 mm and 322 mm at Hama, distributed over 70 days. Rainfall intensities per hour are low. They do not exceed 5 mm during more than 8 days per year. During this period, the flows in the combined sewers system exceed several times the dry weather flows (Annex 4). 2.13 Per capita domestic sewage flows are comparable in both towns (around 140 liters/capita/day). Polltition loads from industries in Homs presently exceed those from domestic sewage. The bulk of this industrial wastewater originates from the sugar refinery. Industrial pollution loads in 'aama amount to less than 152 of those from domestic sewage. 2.14 An estimated 85% of the residents of Homs are already connected to the sewers but certain areas on the eastern and southern sides of the town, including areas inhabited by the poorest segment of the community, presently lack service. In llama, the situation is a little better, with more than 90% of the town residents already sewered. Both towns need extensions to the sewer networks, as well as trunk sewers to serve new developed areas. 2.15 Sewage flows from the two largest industries in Horns (sugar refinery and textile dyeing factory) and the largest industry in Hama (cotton spinning factory) will be diverted to the proposed treatment plants facilities. This arrangement represents the least cost solution for the treatment of industrial wastes discharged by these industries (paras. 3.06 and 5.07). - 7 - III. THE PROJECT Genesis 3.01 The Bank's first lending operation in the sector (Credit 401-SYR), for the first Damascus water supply project in 1973, included pollution control studies of the Barada River, which flows through Damascus, and the Assi River flowing through Homs and Hama. Engineering consultants for these studies (Howard Humphreys of UK) were appointed towards the end of 1976. The consultants' work was essentially completed early in 1979 and reviewed by a panel of international experts selected with Bank assistance. Detailed designs and draft tender documents have been prepared for sewage treatment plants at Homs and Hama and were reviewed by the Bank (para. 3.09). 3.02 Bank staff have been monitoring progress on project proposals for Homs and Hama as part of the supervision of the Damascus Water Supply Project. In April and June 1978, preparation missions visited Syria to discuss possible sewerage projects for Homs, Hama and Damascus. The consultants' draft reports on pre-investment studies were available in mid-1978 and were the basic docu- ments for the preappraisal mission which visited Syria in October 1978. Due to the magnitude of investments involved in the sewerage projects for the three cities, the Government decided to form a committee of ministers and senior officials to review the projects and to assess the priority to be given to each one. At the time, no decision was reached by the Government, and the Bank suspended preparation of the Homs and Hama Project. 3.03 In January 1980, after extensive discussions with the Government, the Bank decided to resume processing of the project. An appraisal mission visited Syria in March 1980 together with a mission of the Arab Fund interes- ted in parallel-financing of the proposed project. Broad agreement was reached on the way to deal with the various outstanding issues, and particu- larly the establishment of a sewerage authority. A draft decree was handed to the mission, and it was then understood that if this authority could not be established before the Bank's Board presentation, its establishment would be a condition of effectiveness of the Bank's loan. The Arab Fund took the same position. In May 1980, however, the Syrian Government decided to suspend the ratification process of the proposed decree establishing a national sewerage authority, and instead, started reviewing different alternatives for the organizational aspects of the project. The Bank's internal processing of this project was again suspended. Following an extensive review of a number of options (para. 4.u4), the Syrian Government concluded that the interests of the sector would be best served by creating public establishments for weter supply and sewerage in each governorate. By fall 1982, a draft legislative decree was prepared and circulated through all Government Departments. By mid 1983, this decree received approval of all Ministeries concerned, the con- ference of Mayors and the Prime Minister. Following these developments, the Bank reactivated the project processing and sent an updating appraisal mission in October 1983. Project Objectives 3.04 The main objective of the proposed project is to create and develop for the first time in Syria appropriate institutional, financial, and staff development and training structures in the sewezcage sector. This is essential to achieve ather objectives such as enhancing water quality in the Assi River, which is adversely affected by the discharge of untreated sewage from Homs and Mama, and improving environmental conditions in sections of Homs and Hama not adequately sewered. These objectives will be implemented through provision of: (i) sewerage treatment and disposal facilities for Homs and Hama; (ii) trunk sewers; (iii) establishment of sewerage authorities; (iv) sound financial policies in the sewerage sector; and (v) technical assistance and training. 3.05 Sewerage treatment plants for Homs and Hama are the essence of the project. At present, there are no municipal sewage treatment plants in Syria and no specific laws or regulations governing treatment plant performance or setting water standards. A fundamental objective of the proposed project is to safeguard the environment and to develop institutional arrangements, par- ticularly through legislation and training, in order to increase the economic efficiency of investments in the sector. Technological Alternatives and Service Standards 3.06 A range of alternative technologies is possible for sewage treatment plants, dependent mainly on the specific objectives of the plants, the degree to which various contaminants are to be removed, and on relevant cost factors. For Moms and Mama the consultants (Howard Humphreys of U.K.) examined several alternatives in treatment methods, including waste stabilization ponds. They recommended, and the Bank agrees, secondary treatment plants in each Case as being the appropriate technology for the combined treatment of domestic and industrial sewage and the least cost solution for constructing and operating the facilities (Project File, Document Cl). The least cost alternatives are, for Homs, an activated sludge treatment plant, and for Hama, a biological filtration plant. These different treatment processes would also give Syria the opportunity to compare and monitor the performance of both systems under particular Syrian conditions. This would also provide also broader expertise for future treatment plants in other cities. The provision of secondary treatment and disinfection are needed to ensure a high degree of pathogenic destruction in view of frequent outbreaks of cholera and other waterborne diseases in the area (para. 1.07) and also to provide an adequate degree of treatment for the industrial wastes within each locality. The combined treat- ment of domestic and industrial wastes, with pretreatment of the latter only if necessary, represents the least cost solution !o.^ obtaining an acceptable treated effluent which can be discharged into the Assi River without creating pollution and related health hazards. - 9 - 3.07 The combined sewage collection system in each town is practically complete .and functions adequately, although local remedial measures are required. la the few residential areas not served, the municipalities are implementing secondary networks. Extensions of the combined sewerage network to serve future cities' developments will conform to the existing standards of service. Project Description 3.08 The proposed project components are described in detail in document C2 of the Project File and depicted in Maps IBRD 14202R (Homs) and IBRD 14203R (Hama). Project components were grouped into two parts to permit parallel financing with the Arab Fund whose loan of KD 5.00 million (US$17.10 million equivalent) would coler most of the foreign exchange component of the electro- mechanical equipment and supply of other equipment of Part A. The proposed project includes: Part A (i) sewage treatment plant of the biological filter type for Hama, providing primary, secondary and sludge treatment including chlorination of the effluent before discharge. Part B (i) sewage treatment plant of the activated sludge type for Homrs providing primary, secondary and sludge treatment including chlorination of the effluent before discharge; (ii) trunk sewers to serve new areas of both towns as well as areas not presently sewered; (iii) offi.^e bsiildings and workshops for the new sewerage companies; (iv) operating and maintenance equipment and vehicles for the new sewerage authorities; (v) technical assistance and consultancy services to assist with detailed design of trunk sewers, preparation of tender documents, tendering, procurement, construction supervision, initial operation of the project facilities, updating of sewerage master plan, establishment of organizational and accounting systems; (vi) engineering studies for future extension of sewerage networks and treatment facilities in Homs and Hama; (vii) financial policies study for the implementation of an appro- priate cost recovery policy; and (viii) staff training, including management and accounting personnel. - 10 - 3.09 Final designs and draft tender documents have been prepared by the consultant (Howard Humphreys) for both treatment plants and associated equip- ment. These documents were reviewed by Bank staff and need some revisions to take into account that execution of civil work and supply and erection of electromechanical equipment will be carried out by different contractors (para. 3.18). These revisions will be carried out by the local consultant (GECEC) with the assistance of foreign experts. Proposals for trunk sewer additions and replacements in Homs and Hama are preliminary, based on the consultants' review of the sewerage master plans and existing sewers. Detailed requirement for trunk sewers will be worked out in the final design stage. Cost Estimates 3.10 The estimated cost of the proposed project appears in Annex 5 and is summarized in the table below. It amounts to SE 651.16 million (US$150.89 million) including a foreign exchange component of SE 293.58 million (US$68.02 million), or 45% of the total cost. Identifiable taxes and duties amount to about 21% of the total cost. HOMS AND HAMA SEWERAGE PROJECT SUMMARY COST ESTIMATE Base December 1983 Local Foreign Total Local Foreign Total ---- 3(s million) --- (US$ million) --- Part A I. Hama treatment plant (CW) 52.02 46.09 98.11 13.33 11.82 25.15 Supply & Installation of 3.74 11.84 15.58 0.95 3.04 3.99 Equipment Sub-Total 55.76 57.93 113.69 14.28 14.86 29.14 Physical contingencies 5.76 6.39 12.15 1.47 1.64 3.11 Sub-Total 61.52 64.32 125.84 15.75 16.50 32.25 Price contingencies 30.16 36.03 66.19 5.25 6.09 11.34 Total Part A 91.68 100.35 192.03 21.00 22.59 43.59 Part B II. Homs treatment plant (CW) 68.37 66.81 135.18 17.53 17.13 34.66 Supply & Installation of 7.36 13.68 21.04 1.89 3.50 5.39 Equipment - 11 - Base December 1983 Local Foreign Total Local ForeiRn Total ---- (SE million) --- (US$ million) --- III. Trunk sewers Homs & Hana (CW) 68.64 21.34 89.98 17.60 5.47 23.07 Supply of Equipment 0.92 4.50 5.42 0.24 1.16 1.40 IV. Office bldg. & workshops (CW) 10.40 3.06 13.46 2.67 0.78 3.45 Supply of Equipment 0.60 2.94 3.54 0.15 0.76 0.91 V. Vehicles, 0 & M equipment 1.08 3.85 4.93 0.28 0.99 1.27 VI. Tech. ass. & consulting Ser. 3.93 5.77 9.70 1.01 1.48 2.49 Training 1.63 5.06 6.69 0.42 1.30 1.72 Construction supervision 8.09 - 8.09 2.06 - 2.06 Sub-Total 171.02 127.01 298.03 43.85 32.57 76.42 Physical contingencies 17.52 13.38 30.90 4.50 3.43 7.93 Sub-Total 188.54 140.39 328.93 48.35 36.00 84.35 Price contingencies 77.38 52.51 129.89 13.52 9.36 22.88 Total Part B 265.92 192.90 458.82 61.87 45.36 107.23 Total Parts A and B 3k7Aj 293.26 650.8 82.87 67.95 150.82 Front-end fee - 0.30 0.30 - 0.07 0.07 Total Project Cost 357.60 293.56 651.16 82.87 {Z 150.890 3.11 The cost estimates are based on recent quotations for the treatment plants' electromechanical equipment offered to the Syrian Government and on current prices for civil works executed by state-owned companies (para. 3.18). Physical contingencies of 15% for supply of equipment and 10% for other pro- ject components have been added. Price contingencies of 12% for 1983, 10% for 1984 and 9% thereafter for local costs and 8% for 1983, 7.5% for 1984, 7f for 1985 and 6% thereafter for the foreign cost components have been included in the cost estimates. Physical works are expected to be completed by December 1989, and maintenance contracts by equipment suppliers for the treatment plants by December 1991. Annex 6 displays the estimated annual project investments. 3.12 The project provides for 209 man-months of foreign expert services for assistance to GECEC in the revision and evaluation of bid documents, engineering studies, staff training and a study of financial policies; 830 man-months of local consultants (GECEC) for the revision of bid documents, technical studies and construction supervision. The estimated cost of th.ese services including salaries, overhead, fees, international travel and sub- - 12 - sistence is US$1.98 million, i.e. on average US$ 9,500 per man-month for foreign experts and US$ 3,100 per man-month for local consultants. Financing Arrangements 3.13 It is proposed that the foreign exchange cost amounting to US$68.02 million equivalent (including front-end fee) be covered by a loan from the Arab Fund of KD 5.00 miLlion (US$17.10 million equivalent) or 25%, by a loan from the World Bank of US$30.00 million (including the front-end fee) repre- sentinR 44% of the total foreign exchange cost or 20% of the total project cost aid by the Government for the balance of US$20.92 million. During nego- tiationE assurances were obtained that this balance representing LOO of the foreign exchange cost of civil works carried out by nominated Syrian contrac- tors, will be financed by the Government as well as local costs estimated at US$82.89 million and any supplemental funds required for a timely completion of the project. 3.14 The Arab Fund loan of KD 5.00 million for the financing of the Hama treatment facilities has already been signed. The financing arrangements for the foreign exchaiige cost would be as follows: Financing of Foreign Exchange of Project Components Government AFESD IBRD Total U-- US$ Million - 1. Treatment Plant - Homs a. Civil Works 7.50 - - 7.50 b. Electromechanical Equipment - - 17.08 17.08 c. Supply of Other Equipment - - 5.03 5.03 2. Trunk Sewers - Horns & Hama a. Civil Works 7.48 - - 7.48 b. Supply of Equipment - - 1.63 1.63 3. General ComPanies for Sewerage a. Buildings and Workshops (CW) 1.00 - - 1.00 b. Supply of Equipment - - 0.98 0.98 c. Vehicles and O&M Equipment - - 1.33 1.33 4. Technical Assistance and Consulting - Homs & Hama a. Technical Assistance & Consulting - - 2.06 2.06 5. Training - Homs & Hama a. Training - - 1.82 1.82 - 13 - Government AFESD IBRD Total -- US$ Million - 6. Treatment Plant - Hama a. Civil Works 4.94 - _ 4.94 b. Electromechanical Equipment - 13.05 - 13.05 c. Supply of Other Equipment - 4.05 - 4.05 Sub-Total 20.92 17.10 29.93 67.95 7. Front-end Fee - - 0.07 0.07 Total 20.92 17.0 301ONQ ___02 31% 25% 44% 100% Proposed Investment Financing Plan 3.15 The following sets out the financing plan of planned investments during the proposed project implementation period 1984-1991: Total Fund Required Homs Hama SE USW % -- SE Million-- ---- million --- Proposed Capital Investment 378.62 272.22 650.84 150.89 94.4 Capitalized Interest 13.97 6.64 20.6L 4.78 3.0 Working Capital 12.36 5.64 18.00 4.17 2.6 Total Requirements 404.925 84.50 689.45 59.58.A4 1.0Q Sources of Funds Internal Cash Generation 88.07 53.04 141.11 32.71 20.4 Less: Debt Service 54.22 31.34 85.56 19.83 (12.4 Net Internal Cash Generation 33.85 21.70 55.55 12.88 8.C Proposed Bank Loan 115.66 13.67 129.33 30.00 18.8 Proposed AFESD Loan - 76.17 76.17 17.10 11. Government Equity 255.44 172.96 428.40 99.86 62.2 Total Sources of Funds 404.95 284.50 689,45 159.84 12QLS The net internal cash generated by the General Companies for Sewerage (GECOS) in Homs and Hama would cover about 8% of the total financing. The Government would provide about 62% of the total project financing (632 in Horns and 61% in Hama). The loan of the Arab Fund for Economic and Social Development (AFESD) of US$17.1 million and the proposed Bank loan of US$30.0 million, including US$0.07 million for the front-end fee which the Government has requested - 14 - the Bank to finance, would cover the foreign exchange financing requirements of the components described in para. 3.14. 3.16 The proposed Bank loan would be made to the Government, which would on-lend US$28.7 million to the GECOS of Homs and Hama, upon their establishment foreseen by July 1, 1986 (para. 4.08), for a term of 15 years including 2 years of grace with the same interest and other charges as the Bank loan for their respective amounts of US$26.0 million and US$2.7 million equivalent. The balance of the proposed loan of US$1.30 million will be used by the Government to finance the training of instructors at the training ceater of the Damascus Water Supply Authority (EPEF). rhis center specializes in electromechanical techniques applied to the water and sewerage sector and will receive trainees from Homs and Hama. The AFESD Loan already maci to the Government will be on-lend to the GECOS of Hama for a term of 16 years includ- ing 2 years of grace at the same interest rate. Assurances were received during negotiations that the Government will enter subsidiary Loan Agreements with both GECOS as soon as they are established on terms and conditions acceptable to the Bank. Project Implementation 3.17 The overall responsibility for project implementation will be entrusted to the Ministry of Housing and Utilities (MHU). MHU has already assigned a qualified engineer as project manager. MHU has also requested the General Company for Engineering and Consulting (GECEC) of Syria, a state-owned company, to provide assistance in tendering, procurement, bid evaluation, construction supervision, preparation of project's accounts and other studies as needed. This firm, staffed with a number of foreign experts, is well qualified for carrying out the engineering works required by the project at a reasonable cost. It has already undertaken satisfactorily similar assignments for the Government in the sector particularly in Damascus, Aleppo and Lattakia. Furthermore, the consultants will be reinforced by selected indi- vidual experts familiar with ICB procedures and with treatment plant techno- logy. The contract between the Government and GECEC was reviewed and found acceptable by the Bank and was signed on March 22, 1984 before start of nego- tiations. 3.18 The civil works for both treatment plants and for the trunk sewers would be executed by the General Company for Water Project (GECOP). This arrangement is in line with the Government's policy that all civil works for government projects be carried out by state-owned construction companies set up for this purpose in the mid-70s. State construction companies have considerable authority and resources. This company has proved in the past, particularly in a water distribution project in Damascus, its ability to carry out quality works in the water sector with due diligence and within reasonable contractual costs. Civil works contracts for the treatment plants, the trunk sewers and office accommodations would be entirely financed by the Government. Supply and erection of equipment for the treatment plants, supply of other equipment for trunk sewers and office accommodations, and supplies of vehicles and equipment for the GECOS will be awarded following ICB procedures (para. 3.23). 3.19 It is estimated that the overall construction would be completed by December 1989. The Implementation Schedule, Annex 7, shows that after con- - 1 5 - pletion, the plants will be maintained by the equipment suppliers for a period of two years. No adverse environmental impact is expected from the project (para. 6.01). 3.20 Land will have to be obtained for both treatment plants. This land, near the end of the existing main sewer's outfall in each town, is presently being farmed by its private owners. Vo residential buildings exist at the proposed plant sites. Under prevailing procedures, such land can be purchased at negotiated prices or expropriated by the Government. Syrian officials foresee no unusual difficulties in acquiring thi6 land. During negotiations, assurances were obtained that the Government will take all actions to acquire all such land and rights in respect of land for the construction of treatment plants and sewers. 3.21 Upon completion of the proposed works, MHU wiLl transfer the related inErastructures to the sewerage companies for sewerage instituted in Homs and in Haama (para. 4.01). The technical staff of both companies will require considerable assistance, particularly at the outtset, to become proficient in operating and maintaining the netwc-rks and the plants. Provision is made for the implementation of a detailed training program (para. 4.08). The treatment plant's equipment suppliers will provide guidance on specific cperations during the plants commissioning and a two years maintenance period. A special situation prevails in Horns, where industrial wastes fron the sugar refinery will reach the plant separately from the town's nain sewer. The treatment plant is designed to handle these two sewage streams separately or nixed together. rhe optimnum operation would be best determined by experience. Assurances were received during negotiations that engineering consultants assisted by equipment suppliers to analyze the quality of effluent obtained from the combined or separate treatment of domestic and industrial waste of the Hons sugar factory and to prepare quarterly reports on their recommendations, including a final report to be issued within 12 months of the initial operation of the Homs treatment plant. Agreement was also reached with the Government that the GECOS would maintain the folloving records in each treatment plant: On a daily basis: - mininum, average, and maximum flow through treatment plant - BOD concentration of raw and treated sewage - SS and TS concentration of raw and treated sewage - Chlorine dose of effluent On a monthly basis: - DO levels of Assi River near treatment plants outlet - Energy consumption in KWH - Bacteriological analysis of effluent of each treatment plant (MPN of coliforms) Procurement 3.22 The procurement arrangements for various project's components are shown in the Table below: - 16 - PROCUREMENT ARRANGEMENT FOR PROJECT COMPONENTS (US$ Million) PROCUREMENT METHOD TOTAL PROJECT COMPONENTS ICE LCB OTHER NIA COST Homs Treatment Plant Civil Works - 23.32 23.32 Supply & Installation of Equipment 31.79 - - - 31.79 (22.11) - - - (22.11) Homs & Hama Trunk Sewers Civil Works - - - 32.54 32.54 Supply of Equipment 1.96 - - - 1.96 (1.63) - - - (1.63) General Companies for Sewerage Buildings and Workshops - - 4.48 4.48 Supply of Equipment 1.18 - - - 1.18 (0.98) - - (0.98) Vehicles and O&M Equipment 1.71 - - - 1.71 (1.33) - - - (1.33) Technical Asst. & Consulting Consulting and Supervision - - - 3.67 3.67 Technical Assistance - - 2.74 - 2.74 (2.06) (2.06) Training - Homs & Hana Training of Instructors - - 1.30 - 1.30 - - (1.02) - (1.02) Training of Personnel - - 1.09 - 1.09 (0.80) - (0.80) Hama Treatment Plant Civil Works - -- 17.66 17.66 Supply & Installation of Equipment -_ _ 24.46 - 24.46 Total 29.59 81.6 147.90 (26.05) (3.88) (29.93) Note: Figures in parenthesis are the respective amounts financed by the Bank. OTHER: Procurement of services in accordance with Bank guidelines. N/A: Executed by GECOP and financed by the Government. - 17 - In accordance with Government's policy to negotiate and award civil works contracts for government projects to state-owned construction companies (para. 3.18), all civil works for the treatment plants, trunk sewers and offices accommodations would be executed by GECOP, the designated contractor, and therefore would not be financed by the Bank. Civil works contract for treat- ment plants, trunk sewers and for offices' accommodations amount to an esti- mated US$78.0 million in the aggregate representing about 52% of the total project cost. 3.23 The civil works contract for the Homs treatment plant ($23.32 mil- lion), the trunk sewers ($32.54 million), and office accommodations in Homs and Hama ($4.48 million) representing in the aggregate US$60.34 million, and the civil works contract for the Hama treatment plant amotnting to US$17.66 million, will be awarded directly to the General Company for Water Projects (GECOP), which has been selected by the Government. Therefore, in this case there will not be any financing by the Bank. The contract for the supply and erection of equipment for the Homs treatment plant estimated to total US$31.79 million equivalent will be awarded on the basis of International Competitive Bidding (ICB) in accordance with the Bank's procurement guidelines. This con- tract will include the supply of mechanical and electrical equipment, equip- ment such as pipes, valves, cast iron parts and the special sulfate resistant cement and high yielding and other reinforcement steel not manufactured in Syria. The contracts for the supply and erection of equipment for the Hama treatment plant amounting to US$24.46 million will be awarded under the same ICB procedures but in accordance with the Arab Fund guidelines. The supply contracts for equipment, such as, cast iron parts, manhole covers, steel ladders, etc. ($1.96 million), to be incorporated in the trunk sewers and for equipment such as electrical lighting, fittings, pipes, etc. ($1.18 million) for the buildings and workshops, will be awarded on the basis of ICB. The contracts for the supply of vehicles and O&M equipment estimated to total US$1.71 million will be awarded under the same procedures. The Hama treatment plant supply and erection of equipment contracts amounting to US$24.46 million will be awarded under the same ICB procedures but in accordance with the Arab Fund procurement guidelines. For bid evaluation purposes a 15% margin of preference or an amount equal to the customs duties, whichever is lower, would be applied in the case of equipment manufactured in the Syrian Arab Republic. All equipment contracts, vehicles and operation and maintenance equipment contracts will be grouped as far as practicable in order to encourage inter- national competition. For this type of contracts, a minimum individual group- ing of US$100,000 would be retained. Foreign experts for engineering and financial and management studies would be engaged in accordance with Bank's guidelines for the use of consultants by World Bank Borrowers. 3.24 Foreign contractors are expected to win all contracts for the supply of equipment. Because the local electrical and mechanical industry is reason- ably developed, local companies may seek partnership with foreign firms for installation of equipment. 3.25 Technical ministries are responsible for all procurement related activities. Cumbersome administrative procedures, shortage of skilled staff and scattering of responsibilities create bottlenecks and delays in the pro- curement process when carried out by the ministries. In the case of the - 18 - Damascus and Aleppo Projects, project committees in each Water Supply Company, exempted from compliance with standard Government administrative channelling, have been established by Presidential Decree to expedite the implementation of the projects. GECEC which has in the past efficiently contributed to a number of such project committees will, on behalf of MHU, be responsible for carrying out procurement of all equipment and materials. Furthermore, GECEC will receive assistance through individual foreign experts familiar with ICB procedures and with treatment plant technology. A project unit will be established within MHU not later than September 30, 1984 to supervise all project implementation related activities, including procurement carried out by GECEC. The project unit will keep project accounts, which will be audited by auditors acceptable to the Bank and sent to the Bank not later than nine months after the end of each fiscal year. Assurances were also obtained that all civil works will be subject to supervision by MHU assisted by GECEC. Disbursements 3.26 The Proposed Bank Loan of US$30.0 million would be disbursed as follows: Wmount 2 of Expenditures Category Description US$ million To be Financed 1 Supply of mechanical and electrical equipment for 13.47 100% of foreign Homs treatment plant, expenditures and O&M equipment 2 Supply of equipment for civil works of the Homs treatment plant, 6.88 100% of foreign and for Homs and Hama trunk sewers, expenditures office buildings, and workshops 3 Installation of Electrical & 1.38 30% of total Mechanical Equipment expenditures 4 Supplier's Contract for Operation 1.74 70% of total and Maintenance of Homs Treatment expenditures Plant 5 Technical assistance 1.85 100% of foreign expenditures 6 Training 1.64 75% of total expenditures 7 Unallocated 2.97 8 Front-end Fee 0.07 Amount due Total _____ 4... 3.27 Disbursements are expected to be completed twelve months after project completion, hence the Closing Date of the proposed loan would be December 31, 1992. The estimated schedule of disbursements is as follows: - 19 - Bank's Fiscal Years Loan Disbursements Loan Disbursements and Semester Per Semester Cumulative _% …---------------(US$ million) -- FY1985 1st Semester 0.16 " 0.16 2nd Semester 0.45 0.61 2 FY1986 1st Semester 0.93 1.54 5 2nd Semester 1.49 3.03 10 FY1987 1st Semester 2.12 5.15 17 2nd Semester 2.55 7.70 26 FY1988 1st Semester 2.85 10.55 35 2nd Semester 2.90 13.45 45 FY1989 1st Sernester 2.87 16.32 54 2nd Semester 2.73 19.05 6' FY1990 1st Semester 2.45 21.50 72 2nd Semester 2.16 23.i6 79 FY1991 Ist Semester 1.86 25.52 85 2nd Semester 1.5Z 27.04 90 FY1992 1st Semester 1.23 28.21 94 2nd Semester 0.98 29.25 98 FY1993 1st Semester 0.75 30.00 100 1/ Includes front-end fee US$75,000. - 20 - 3.28 Disbursemnent profiles show that disbursements for the water supply and sewerage sector in the EMENA region have extended over an eight years period, while the overt i disbursement for the Syrian Arab Republic has extended over eight and a half years. It is expected that the proposed Bank Loan would ba fully disbursed according to the Syrian profile of eight and a half years. Monitoring Criteria 3.29 A number of key indicators will be used to evaluate sewerage authorities' rexforrnan<-r and to complement the normal reporting procedures. The key indicators are tisted in Annex 8. During negotiations, these indi- cators and the projact implemenitation schedule (Annex 7) were discussed and agreed upon with the Guvernment. These monitoring criteria will serve as targets for the GECCS. Aa.ur..nces were obtained during negotiations that both the GECOS in Homs a.ad li.ta '.1 1 report quarterly on all aspects of project work including the key indicttors and the project implementation schedule. Furthermore, each GECOS will r-^ment on any deviations from agreed targets and will as necessary take prompt remedial action in consultation with the Bank. 3.30 Assurances have also been obtained that within six months following the Closing Date of the proposed loan, MHU with the assistance of the GECOS will prepare and submit to the Bank a combined project completion report reviewing the planned objectives and the achievements of the project, including the costs and benefits derived and the performance and contribution of all parties associated with project execution and systems operation. IV. THE BENEFICIARY 4.01 The Government will be the borrower of the proposed loan of US$30.0 million. The proposed works and related infrastructures will be transferred to the General Companies for Sewerage (GECOS) to be established in Homs and Hama upon their completion (paras. 3.16 and 4.08). Present Organization 4.02 At present, the responsibility for the construction and operation of the sewerage networks in Homs and Hama is undertaken by the Technical Divisions of the respective municipalities. These Divisions are also respon- sible for construction and maintenance of roads, buildings, parks and garbage collection. There are no special sewerage sections within the Technical Divigions and staff are allocated to this functior as and when required. The general administration, personnel function and accounting are handled by the municipalities' Administration and Finance Departments. Accounts are main- tained in accordance with the municipal accounting code of Syria. No attempt is made to apportion labor and overhead costs of the various services pro- vided. Therefore, it is not possible to obtain reliable costs for the opera- tion of existing sewer systems. The actual limitedl operating costs incurred for sewerage services are covered by the municipalities general revenues, and funds for system expansion and capital expenditures provided by Government grants are written off each year. - 21 - 4.03 The present administrat-ve and financial management of the sewerage systems in Homs and Hama is unsatisfactory. In particular, specialized staff are not assigned responsibility for operation, adequate resources are not available, the accounting and revenue position is grossly inadequate and management and engineering staff do not assign the necessary priority to the system. Two of the major reasons for the present problems are the lack of financial resources of the municipalities and the inadequate salary structure of the local Government system in Syria, which makes it extremely difficult for municipalities to recruit and retain qualified staff. Proposed Organization 4.04 Management consultants (Peat, Marwick & Mitchell; USA) recruited in 1976 under the First Damascus Water Supply Project (Credit 401-SYR) reviewed the present organizational structure in the sewerage sector in Homs and Hama, as well as Damascus. Five organization options were considered: (i) creation of special sewerage departments within thp three municipalities; (ii) three separate single-purpose sewerage authorities; (iii) three combined water and sewerage authorities; (iv) a national sewerage authority with local branches; and (v) regional sewerage authorities. 4.05 The consultants recommended in 1978 the establishment of regional single purpose sewerage authorities; one for the Assi River Basin to serve jointly the cities of Homs and Hama, one for the Barada River Basin to cover the Damascus area and four other regional authorities to cover the remainder of the country based on natural drainage areas. The consultants' proposal had the advantage of establishing reasonably sized sewerage companies which could phase over a period of time the extension of their activities to other centers in their respective areas. The Government, however, expressed the view that establishment of regional companies based on river basins would1 create in particular the risk of having the few existing technical staff in each governorate not acquainted with local conditions prevailing in the various river basins located outside of their governorate. Furthermore, such companies would not be based on the present administrative and political boundaries. The Government preferred the creation of public establishments for water supply and sewerage in each governorate. Subordinated to each Public Establishment would be two semi-autonomous General Companies: one for water supply and one for sewerage (GECOS). Each Public Establishment within a Governorate would entrust its executive powers for operation and maintenance to General Companies. Through this structure the Establishments and the Companies would be able to benefit from cooperation and coordination with existing local water supply companies, particularly for billing, customer files management, and accounting procedures. Each GECOS would be chaired by a General Director and would receive appropriate authority (staffing, equipment and operating budget) to operate effectively. - 22 - 4.06 The legislative provisions governing the management and operation of public sector institutions in Syria are set out in Legislative Decree No. 18 of 1974. This Decree provides, inter alia, for: (i) drawing up local policies under the supervision of the Ministry of Housing and Utilities; (ii) providing for the transfer of the existing assets to new Companies in agreement with the municipalities; (iii) entering into Loan Agreements with the State or financial and banking establishments, local or foreign, without prejudice to the rights of the State Planning Authority in virtue of the regulations in force; and (iv) proposing by-laws vo be promulgated by decree relating to financial policies, accounting and procurement. Existing establishments for water supply have been set up in accordance with the provisions of this Decree. The sewerage companies (GECOS) will be set up in the same way and will operate on a commercial basis. In order to create a Public Establishment for water supply and sewerage in each Governorate under the Chairmanship of the Governor, the Government has prepared a draft legislative decree. This decree has already been reviewed and agreed upon by all ministerial departments concerned, by the conference of Mayors and by the Prime Minister. The draft Legislative decree allows for the establishment of the general companies (GECOS). The latter is effected by Presidential Decree and does not require ratification. 4.07. The enactment of the draft Legislative Decree which creates public establishments for water supply and sewerage in each governorate and which allows for the establishment by Presidential Decree of subsidiary companies for sewerage and water supply is a condition of effectiveness of the proposed Bank Loan. 4.08 It is not expected that the GECOS would be able to recruit many suitable staff from the municipalities, so the companies will have to be established from scratch. This could be an advantage, as it might enable the GECOS to break away from some of the traditional ineffective administrative practices in the sector. In these circumstances, a proper plan and training program is vital for the successful establishment of the companies as effective organizations (Document C2, Project File). In 1983, the Arab Fund provided financial assistance for a Water Supply and Sewerage Training Center in Syria. The Syrian Government has agreed to make the necessary land and buildings available, and the French Government has financed and carried out a feasibility study for the establishment of a training center, including a manpower survey. Supplemental funds are included in the proposed Bank loan to provide project related training for the GECOS staff in Homs and Hama. Assurances were obtained during negotiations that the GECOS of Homs and of Hama would be established by July 1, 1986. Assurances were also obtained that the transfer of ownership and management of all existing networks in the respective cities would be carried out by July 1, 1986. To put in place the basic structure of both GECOS in Homs and in Hama, a calendar of the key actions to be undertaken by both GECOS and MHU has been established (Annex 9). During negotiations, the implementation schedule of these actions was discussed and agreed upon. - 23 - In particular, the following target dates were agreed upon: (i) nomination of the General Director of each sewerage company not later than July 1, 1985; (ii) start of recruitment cf operating personnel and implementa- tion of the training program by July 1, 1985; and (iii) engagement by January 1, 1986 of management and accounting consultants to assist in establishing the organization and the implementation of administrative procedures and commer- cial accounting system. Billing and Collection 4.09 Surcharge on water for sewerage services will be billed by the exist- ing water authorities. All households connected to the public system are metered. The water authorities have experienced some difficulties in billing, since a stepped tariff was introduced in late 1977. However, bills are pro- duced since early 1983 by computer in both water authorities. Customer files are also maintained on the same equipment and accounting is being computer- ized. Water authorities expect to clear the present backlog in billing during the next two years. The authorities estimate that the necessary system for surcharging water could be introduced within three months. The GECOS would bill directly the limited number of industries, including the Sugar Company, not connected to the public water system. Accounting, Audit and Insurance 4.10 T1-e Water Supply Authorities in Syria maintain their accounts on a commercial basis in accordance with a standardized Government format. This system is satisfactory and there should be no difficulties for the GECOS to adopt a similar system. During negotiations, agreement was reached that the GECOS will implement, as soon as established, a commercial accounting system, that their annual accounts will be audited by independent auditors acceptable to the Bank and that the annual accounts and audit report will be submitted to the Bank within nine months of the end of each fiscal year. Assurances were also obtained that the GECOS will take out and maintain insurance coverage in accordance with normal public utility practice. - 24 - V. FINANCIAL ANALYSIS Past Results and Present Situation 5.01 The present sewer networks in the cities of Homs and Hama are con- structed, operated and maintained by the municipalities. These systems are regarded as one of the range of services provided by the municipalities and no separate accounts or asset inventories are maintained. Capital funds are provided by the Central Government and day-to-day operating and maintenance expenditures are financed from the general reve-xue of the municipalities. 5.02 The total revenue of the Homs and Hama Municipalities in 1982 was SE 77.46 million and SE 93.54 million respectively. These revenues accrued from three main sources: revenues collected directly by the Municipalities (19%); allocation of certain taxes collected by the Government (9%); and grants from the Government (72%). The principal source of directly collected revenues is derived from the sale of land which is acquired in excess of need for road construction and housing development and sold after the schemes are completed. In 1982 this source provided 45% of Homs' income and 35% for Hama's. Included in these revenues, is a small income specifically related to sewerage which consists of a charge levied on the owners of property when a sewer is provided or reconstructed. The charge is set at SE 0.601m2 (SE 0.30 when a sewer is reconstructed) of floor area for all properties which can be connected to the sewer. This charge generates about SE 1.24 million per annum for Homs and SE 0.56 million for Hama. 5.03 The expenditure of the municipalities in 1982, on wages and admini- stration, accounted for about 40% of their budget and the balance was invested in construction of roads, buildings, parks and sewers. The municipalities prepared a breakdown of the expenditure on sewerage for the last three years 1980-1982 as follows: Homs Hama 1980 1981 1982 1980 1981 1982 ----- SE 000 -- ----- - Maintenance 0.40 1.00 1.09 0.40 0.90 1.18 Construction 1.10 2.44 3.11 0.70 2.18 1.56 Total !5N 3.44 4.20 1.10 3.08 2.74 The municipalities do not operate cost accounting systems and it is most unlikely that all the expenditure on maintenance, particularly the labor and overhead costs, is 'included in the above figures. Financing Policies and Obijectives 5.04 One of the objectives of the Bank's involvement in the sewerage sector is to establish financial policies and implement cost recovery from users by the introduction of a progressive tariff structure and other direct - 25 - sources of income to provide revenue for the operation and development of the system and thereby reduce the burden on municipal and Government resources. The issue of financial policies to be applied in the sector has been raised since 1978. Only recently (June 1983), has the Government accepted in principle a recovery of at least all operating costs including depreciation. Depreciation is expected to remain higher in any given year than projected debt service to be charged to the GECOS when works are in operation. In order to determine the most appropriate way for achieving this financial objective, the Government has agreed to commission a financial study about 15 months before the GECOS take over responsibility for sewerage services, i.e., March 1985. The objective of this study is to assess the optimum manner to generate and collect revenues that would amount to a level at least equal to operation and maintenance costs plus depreciation. 5.05 The Government confirmed during negotiations that a financial study will be commissioned not later than March 1985 and that its recommendations will be sent to the Bank for comments. Furthermore, the calendar of main project actions (para. 4.08) agreed upon during negotiations shows the target date for completion of the financial study to be carried out by GECEC as December 31, 1985. It was also agreed that the sewerage companies would implement, not later than July 1, 1986, the financial measures proposed on the basis of the study. The Government will take into account the view of the Bank in the formulation of such measures. Financing Plan of GECOS' Investment Program 5.06 The GECOS Sources and Applications of Funds Statements appear in Annexes 13 and 14. Those for the project implementation period (1984-1991) may be summarized as follows: GECOS GECOS Total Fund Required Homs Hama SE US$ % -- Sf Million- ---- million Proposed Capital Investment 378.62 272.22 650.84 150.89 74 Capitalized Interest 13.97 6.64 20.61 4.78 2 Other Capital Expenditures 140.16 45.77 185.93 43.10 21 Working Capital 14.72 6.21 20.93 4.85 3 Total Requirements 54Z.41 330.84 __.3_1 203.62 _QO Sources of Funds Internal Cash Generation 104.84 58.30 163.14 37.82 19 Less: Debt Service 54.22 31.34 85.56 19.83 (10) Net Internal Cash Generation 50.62 26.96 77.58 17.99 9 Proposed tank Loan 115.66 13.67 129.33 30.00 15 Existing AFESD Loan - 76.17 76.17 17.10 9 Government Equity 381.19 214.04 595.23 138.53 67 Total Sources of Funds 5U4 L7 33Q.±84 _8_1 2kL&2 100 - 26 - 5.07 During the project implementation period, the net internal cash generation would provide on average for both GECOS about 92 of total financing requirements, Government contributions 67%, the existing Arab Fund loan 9% and the proposed Bank loan 15%. Debt charges would be charged to the GECOS of Homs and Hama by the time of the treatment works completion, i.e., 1989 for Horns and 1990 for Hama, in addition to the operating costs of the new facili- ties. Before that time, the only recurrent costs of the sewerage authorities would be those related to operating and maintaining the existing facilities, including depreciation, with interest during construction on the IBRD and AFESD loans amounting to US$4.78 million to be paid by the Government, as part of its equi:y contribution. This financing plan supports the Government financial policy principle (para. 5.04). The Government envisages obtaining a substantial financial contribution (about one-third of total treatment plant cost) from the Homs sugar factory, which would otherwise have to construct separate treatment facilities at a higher cost. The form of this contribution whether in capital or in special sewerage charges or both would be determined in the financial study. Future Financial Performance 5.08 Forecast financial statements appear in Annexes 10 and 11. Financial assumptions are presented in Annex 12. The investment plan (1989-1993) discussed with MHU assumes investments other than the proposed project on the or.der of SE143.93 million for Horns and SE51.37 million for Hama, in current value. This objective is realistic and aims at maintaining the service level in both municipalities and expanding the treatment facilities when they reach their optimum capacity. 5.09 Projections of the GECOS revenues'fh-ave been assessed accordirig to the financial policy principle set by the Government (para. 5.04). Projected debt service to be "harged Lo the sewerage authorities when treatment facilities are in operation would remain constantly lower than depreciation over the foreseeable future. From 1987 -' to the end of the project implementation period (1990 in Homs and 1991 in Hama), the GECOS revenues are expected to grow about 3.9 times in Homs and 4.3 times in Hama from SE 13.3 million and SE 7.5 million to S£ 52.1 million and S£ 31.9 million respectively. During the same period their operating expenses beFore depreciation would grow from Sf 3.0 million to SE 25.9 million in Homs and from SE 2.0 million to Sf 13.9 million in Hama, leaving gross margins sufficient to cover all their projected debt service and an average of 92 of investment costs. Their working ratio would remain below 50%. In Homs total fixed assets in operation would increase from SE 391.3 million to S£ 734.5 million, i.e., about 1.9 times, while in Hama, they would grow from SE Z03.6 million to SE 464.0 million, i.e., about 2.3 times. The debt equity ratio would stay around 11:89 in Homs and 16:84 in Hama. The debt service coverage ratio would not drop below 1.5. 1/ Both GECOS are expected to start operating their respective sewerage facilities by mid 1986 and therefore this year cannot be taken as a valid basis for revenues comparison. - 27 - VI. JUSTIFICATION Health Benefits and Envnrenotl Imact9 6.01 One of the main objectives of the project is to enhance health and environmental conditions in the area by providing adequate sewage treatment. The project thus would provide a first opportunity in Syria to address issues of widespread environmental deterioration that have profound long-run economic consequences. In particular, present health hazards caused by the discharge of effluents directly into the bed of the Assi river which flows through both cities, will be eliminated. Removal of efEluents from the river bed, parti- cularly during the dry season when the flow of the river is at a minimum, will also remove the threat of contamination of lower aquifers which are found below the city of Homs and are used for human consumption. The treatment of sewage will provide safer water for irrigation and eliminate the present dangerous practice of irrigating vegetable gardens with raw sewage or heavily polluted water from the river. This would lessen the greatest sources of contamination and infection and is expected to reduce significantly the morbidity and mortality of the population living in the project area. Sewage treatment will also contribute to the restoration of the fishing industry in the Assi river. 6.02 No adverse environmental impact is expected from the project. The treatment plant sites are located several kilometers downstream from both towns and the closest rural settlements are situated 0.6 km fror the plant sites. Under normal operation of the treatment plants, little or no odor and no noise nuisance should affect these settlements which are located windward of the plants. Furthermore no urban zoning will be permitted within a 0.5 km radius from the plant sites. Sludges from the treatrent process will be dried, stabilized and stored during such period as to ensure that they are pathogenic free before being provided to farmers for disposal on agricultural land as soil conditioner. Least-Cost Solution 6.03 Alternative treatment processes considered for least-cost comparisons include conventional activated sludge, biological filtration, extended aeration, aerated lagoons, and waste stabilization ponds (Document Cl of the Project File). 6.04 In Homs and Hama, the sites for the proposed plants are adjacent to existing sewer main outfalls beside the river, in accordance with earlier sewerage master plans. Land at each of these sites is limited and could accommodate conventional treatment plants, but would be inadequate for waste stabilization ponds. The only feasible sites for ponds in each town are several kilometers away from the existing outfalls and would require pumping stations plus pipelines. This additional equipment is not necessary at the more restricted sites by the river. The combination of capital and operating costs make pond alternatives more expensive than conventional plants to be constructed in the vicinity of both towns. - 28 - 6,05 For Hoxis and Hama, the recommended alternative for sewage treatment is to construct conventional plants which inclu.de disinfectiozi of f-fluents. This provides the least-cost solution for achieving a high degree of patho- genic destruction and improving the potential use of the river for irrigation. 6.06 The proposed extension of trunk sewers to serve the low-income settlements also is the least-cost solution to the disposal and treatnient needs of these settlements, due to their high population density and their proximity to existing trunk sewers. Beneficiaries 6.07 The proposed project will benefit the present and future population of Homs and Hama although at different levels. The treatment and reuse of the effluents of an estimated 750,000 inhabitants living Li the project area by the year 1990 and of the industries representing an additional 0.90 million inhabitant equivalent, will have a major health environmental and economic impact. The residents along the river are mostly affected by the noxious conditions prevailing at present as a result of the discharge of raw sewage. The elimination of these discharges and the improved water quality of the river as a result of the sewage treatment will provide a better environment to the presently connected 120,000 inhabitants living along the river. Finally the 1984-1990 trunk sewers expansion progran will give 148,000 inhabitants access to community sewer systems. Affordability 6.08 The average water consumption of the low-income group is 10 m3 per month per household of 6.2 persons on average. Assuming that the income of this segment of population is the minimum wage paid to the employees of the public sector (SE 567 per month) where employment is freely available, the total monthly payment for sewerage in 1990 would be SE, 9.4 or about 1.7% of minimum monthly income in Hama, and SE 7.5 or about 1.3% of minirum monthly income in Hors. This is considered to be affordable. Future sewerage charges adjustments should not change this forecast, since no increases in real terms are expected for low-income consumers. The conbined monthly payment for water and sewerage will amount about S£ 13.9 in Hiama r-id S£ 12.0 in Rows or 2.5% and 2.1%, respectively, of the minimum wage, which is also considered affordable. Adequacy of Revenues 6.09 The long-run incremental cost of providing sewerage services in Homs and Hlama is estimated at SEO.694/m3 in 1983 prices, at a 10% discount rate which is considered appropriate for Syria. It is also estimated that once both treatment plants are commissioned, the revenues generated from sewerage operations will reach S£0.800/m3 in 1983 prices (SEO0.747/Wm in Homs and SF0.928/m3 in Hama). The fact that these revenues per cubic meter apuroxi- mate the long run average incremental cost of providing sewerage services indicates that their level would be appropriate. - 29 - Risks and Safeguards 6.10 The risks confronting the project are two-fold, those arising from the fact that the GECOS are being newLy established and those associated with pro- ject and country considerations. Both of these risks could result in delays in project implementation and consequent escalation of costs. Experience with previous projects in the sector is useful but may not be completely reliabLe because of the newness of the GECOS and the nature of the project. It will be the first plants to be built in Syria for urban and industrial sewage treatment. This will introdu.ee some risk due to the relative inexperience in the country with treatment facilities of this size. However, the measures recommended in this report, such as (i) the technical assistance provided by foreign experts for bid evaLuation, construction and supervision; (ii) experts to assist in the development and implementation of the technical, managerial and accounting organization of the new authorities; (iii) implementation of a vigorous train- ing program complemented by a two years maintenance contract of the treatment plants equipment suppliers; (iv) study and adoption of financial policies aimed at building the financial viability of the GECOS; and (v) gank's monitoring of key performance indicators for the GECOS and providing necessary guidance during supervision, should help to minimize the project risks. VII. AGREEMENTS REACHED AND RECOMMENDATIONS 7.01 The enactment of the draft Legislative Decree allowing for the establishment of separate general companies for water supply and sewerage under a public estabLishment in each goveraorate on the same comnercial basis as provided by Decree Vo. 18 of 1974 would be a condition of effectiveness of the proposed Bank loan (para. 4.07). 7.02 Agreements having been reached on the issues referred to in Chapter III to V, and subject to the condition of effectiveness set forth in para 4.07, the proposed project is suitable for a Bankc loan of US$30.0 million to the Government of the Syrian Arab Republic for a term of 17 years, including 4 years of grace at the standard variable interest rate. - 30 - SYRIAN ARAB REPUBLIC NNEX 1 HONS & HAMA SEWERAGE PROJECT POPULATION PROJECTIONS Hons Hama Population Annual Growth Population Annual Growth Year (000) Rate (% pa) (000) Rate (% pa) 1980 215 - 138 - - 4.5 - 4.1 1981 349 - 214 - - 4.2 - 0.2 1983 379 - 215 - 4.0 - 2.7 1988 462 - 246 - - 3.8 - . 2.7 1993 556 - 281 - 3.6 - 2.4 1998 664 - 316 - - 3.4 - 2.1 2003 784 - 350 - - 3.1 - 2.0 2008 915 - 387 SYWlAN RISW UKYLBLII' i(Eti & ( H&At bB}: PRIWE(T tills - PJIECtrONS (IF hWWR 1ElIAM) PUhLiC WA;R SUPPLY PRIVAIE SUPPLIES Public Otiher Public Population Served Daestic & C(umercial Establish- Uses, Mosques Total Sugar Other Total 1nrAl. WA71R by Coniections Connections rents _ 6 Standpipes Industry Public Factory Industries Private sVPPIY % of Mmber Per Capita 000 m3/ cmo m31 ml/ Year lotal (ooo) (1/c/d) year ODO nd per year year sec 1961 84 293 54 16,470 1,758 440 820 19,488 7,700 1,744 9,444 28,932 0.q2 1982 84 305 154 17,144 1,854 424 878 20,469 7,700 1,800 9,500 29,81 oqS 1983 85 322 155 18,217 1,955 490 915 21,577 7,700 1,860 ),5f0 31,137 0.'99 19W5 81 402 163 23,920 2,550 680 1,180 28,330 7,700 2,180 9,880 35,210 1.21 1993 69 495 171 30,895 3,350 865 1,480 36,590 7,700 2,570 10,270 46,860 1.49 1998 91 605 180 39,750 4,250 960 1,840 46,800 7,700 3,030 10,730 57,530 i.82 Z003 93 730 189 50,360 5,450 1,060 2,245 59,115 7,700 3,530 11,230 70,345 2.23 20W)5 95 o70 199 63,190 6,550 1,160 2,745 73,645 7,700 4,090 11,790 85,435 2.71 Note: (1) Private wells, estimat,d to serve 19,500 inhabitants in 1981 and projected to decline so that only 10,000 inhabitants will be using wells in 208, not included in this sumary. (2) Other public uses, nmsques and star'lpipes are iretered but not dcarged. - 32 - At@= 3 SY1* ARAM EMPM=C IIE & MM. ~ R3C HAMS - W C0r8 F 31 E PtlLc Othai Pi*ic Populatia Sared &atie & Cocial EstabUi- ue, 1sJq,m Yer w C4mect;s uait6 s&tm*ipa Id'kz Total Z of er Per pita OOD 0 000 a3/ Total (000) (1/cid) Yeo 000 u3 per year ese L981 98 210 149 11,441 116 525 418 12,500 0.40 1982 98 203 149 11,038 570 585 757 1,2950 0.41 1983 98 211 150 11,540 590 600 805 13,535 0.43 1988 98 242 L58 13,960 705 660 905 16,230 0.51 1993 98 276 166 16,725 845 730 1,015 19,315 0.61 1998 98 310 175 19,8&0 975 805 1,445 22,725 0.72 2003 98 343 184 23,035 1,170 890 1,285 26,380 0.84 2008 98 379 194 26,840 1,400 980 1,445 30,665 0.97 Notes In 1981 and 1982 due to the umseable local sib?atiOc, part of tthe popalaticn left Ham teprorily; in 1983 a reverse pheram= is observed. SYRIAN ARAB REPUBLIC HOMS & HAMA SEWERAGE PROJECT SEWAGE FLOWS IN DRY AND WET WEATHER HS Per Capita Population Served Discharge to by Sewers aewSers _ Mean Dry Weather Flow Wet Weather Ratio of % of Number ti Industra Extraneous Total Peak Flow Wet to Dry Year Jotal oOO JliLd literslsecond ljs Weather Flows 1981 84 293 139 491 376 254 1.111 2,438 2.2 1982 84 305 140 494 383 264 1.141 2.527 2.2 1983 85 322 141 525 389 274 1,188 2.627 2.2 1988 87 402 148 688 425 333 1,446 3,247 2.2 1993 89 495 ISS 88a 468 407 1,763 4,007 2.3 1998 91 605 162 1,134 531 499 2,164 4,963 2.3 2003 93 730 170 1,436 571 602 2,609 6,052 2.3 2008 95 870 178 1,792 641 730 3,163 7,388 2.3 HAMA ikor Capita Population Served Disc,,arge to by Sewers Sewers Mean Dry Weather Flow Wet Weather Ratio of X of Number DBstAL Industrial Extraneous Total Peak Flow Wet to Dry Year Total (t00) ilcld litersISecond lls Weather Flows 1981 93 199 125 287 26 63 316 976 Z.6 1982 93 193 131 292 47 68 407 1,038 2.6 1983 93 200 132 305 50 71 426 1,086 2.6 1988 93 230 138 367 56 85 508 1,298 2.6 1993 93 262 145 439 63 100 602 1,543 Z.6 1998 95 300 152 528 71 120 719 1,846 Z.6 2003 95 333 160 616 79 139 834 2,145 2.6 2008 95 367 169 717 89 161 967 2,490 2.6 No: Wet weather peak flows are limited by storm water overflows to the sum of: - mean daily domestic sewage flow times peak factor of at least 3.0: - average industrial wastewater over working day times peak factor of 2.0; and - extraneous inflows. - 34 - SYRIAN ARAB REPUBLIC ANNEX 5 Page 1 of 2 HCHS & HAMA SEW"ERAL PROJECT PROJECT COSTS: H2S Local Foreign Total Local Foreign Total % of Total SE Millions - US MilTions - K)MS - TREAPM PLANI Civil Wbrks 45.01 21.37 66.38 11.54 5.48 17.02 32 Mech. & Electr. Equipxit 18.56 45.44 64.00 4.76 11.65 16.41 71 Supply of Other Equipjent 7.36 13.68 21.04 1.89 3.51 5.39 65 Land 4.80 - 4.80 1.23 - 1.23 H)MS - TRUN( SEhERS Civil Works 45.10 14.04 59.14 11.56 3.60 15.16 24 Supply of Equipment .61 2.95 3.56 .16 .76 .91 83 caERAL OD. FOR SEWRAGE Buildings & Wokshops 6.71 2.00 8.71 1.72 .51 2.23 23 Vehicles, O & M Equipxent .62 2.21 2.83 .16 .57 .73 78 Supply of Equipment .39 1.90 2.29 .10 .49 .59 83 TEUiNICAL ASSISEANCE & ONSLUII Prep. & Review Bid DDcunmnts .22 .39 .61 .06 .10 .16 64 Sewerage Master Plan Study .63 .58 1.21 .16 .15 .31 48 Detailed Design Sewers .36 .19 .55 .09 .05 .14 35 Phase II Treatitrent Plant .42 .39 .81 .11 .10 .21 48 0 & M, & Engineering Asst. .47 1.42 1.89 .12 .36 .48 75 TRAf~ING- -M Training of Trainers .63 1.70 2.33 .16 .44 .60 73 Training of Persornel .40 1.43 1.83 .10 .37 .47 78 Construction Supervision 4.84 - 4.84 1.24 - 1.24 Base Cost (Dec. 1983 Prices) 137.13 109.69 246.82 35.16 28.12 63.28 44 Inysical Contingencies 14.10 11.65 25.76 3.62 2.99 6.60 45 Price Contingencies 58.84 47.21 106.05 10.38 8.33 18.72 45 TOrAL PRECO= ODSr 210.07 168.56 378.63 49.16 39.44 88.60 45 - 35 - I SYRIAN ARAB REPUBLIC ANNEX 5 Page 2 of 2 HiMS & HAMA SEWERALG PRWUECT PROJECT COSTS: HAMA Local Foreign Total Local Fore- Total % of Total SE Millions VUS Millions - HAMA - TREACNT PLANr Civil Works 34.11 13.26 47.37 8.74 3.40 12.15 28 Mech. & Electr. Equipint 13.41 32.83 46.24 3.44 8.41 11.85 71 Supply of Other Equipment 3.74 11.84 15.58 .96 3.04 3.99 76 Land 4.50 - 4.50 1.15 - 1.15 HAMA - TRUNK SEWERS Civil Works 23.54 7.30 30.84 6.04 1.87 7.91 24 Supply of Equiprnt .31 1.55 1.86 .08 .40 .48 83 (NERAL OD. FOR SEWERAGE Buildings & Workshops 3.69 1.06 4.75 .95 .27 1.22 22 Vehicles, 0 & M Equiunent .46 1.64 2.10 .12 .42 .54 78 Supply of Equipnet .21 1.04 1.25 .05 .27 .32 83 TECHNICAL ASSISrANCE & QDNSU1ING Prep. & Review Bid Documtents .22 .39 .61 .06 .10 .16 64 Sewerage Master Plan Study .42 .39 .81 .11 .10 .21 48 Detailed DLe'ign Sewers .29 .19 .48 .07 .05 .12 40 Phase IJ Treatment Plant .42 .39 .81 .11 .10 .21 48 0 & M, & Engineering Asst. .48 1.44 1.92 .12 .37 .49 75 TRAING - 4A Training of Trainers .27 1.02 1.29 .07 .26 .33 73 Training of Personnel .33 .91 1.24 .09 .23 .32 78 Construction Supervision 3.25 - 3.25 .82 - .82 _ Base Cost (Dec. 1983 Prices) 89.65 75.25 164.90 22.98 19.29 42.27 46 Physical Contingencies 9.18 8.12 17.30 2.35 2.08 4.43 47 Price Contingencies 48.70 41.33 90.03 8.38 7.14 15.52 46 ToLAL PROJECr COSr 147.53 124.70 272.23 33.71 28.51 62.22 46 - 36 - SYRIAN ARAB REMTLIC ANNEX 6 *W & MM M&2" PROJECr Page I of 2 ANNAL PRWECr INvSTfr - 1984 1985 1986 1987 1988 1989 1990 TOTAL % Foreign Amnt UR4~ ~ ~ ~ ~~~- (US$ Mifllion) -- HS- TREAIMMN PLANr Civil Works - 5.11 5.11 5.11 1.70 - - 17.02 32 5.5 Mech. & Electr. Equipnent - - 2.95 7.38 4.43 .82 .82 16.41 71 11.7 Supply of Other Equipent - 1.62 1.62 1.62 .54 - - 5.39 65 3.5 Land 1.2,3 - - - - - - 1.23 - - HOW - TRU SEES Civil Wbrks - 3.79 3.79 3.79 3.79 - - 15.16 24 3.6 Supply of %quipw.nt - .23 .23 .23 .23 - - .91 83 .8 ENERAL OD. IUR SEWERAE Buildings & Workshops - 1.47 .76 - - - - 2.23 23 .5 Vehicles, O & M Equipment - - .73 - - - - .73 78 .6 Supply of Equiprent - .39 .20 - - - - .59 83 .5 IECI _CAL ASSIST.& CONSWLEU Prep. & review Bid Docs. .16 - - - - - - .16 64 .1 Sewerage Naster Plan Study - - .16 .16 - - - .31 48 .1 Detailed Design Sewers .07 .07 - - - - - .14 35 .0 Phase II Treatent Plant - - - - .21 - - .21 48 .1 O & M, & Engineering Assist. - .16 .16 .16 - - - .48 75 .4 TRAININ - IKS Training of Trainers - .12 .24 .24 - - - .60 73 .4 Training of Personnel - .09 .19 .19 - - - .47 78 .4 Construction Supervision - .29 .32 .38 .22 .02 .02 1.24 - - Basc Cost (Dec. 1983 Prices) 1.46 13.34 16.45 19.25 11.12 .84 .84 63.28 44 28.1 Physical Contingencies .15 1.41 1.73 2.01 1.14 .08 .08 6.60 45 3.0 Price Contingencies .13 2.29 4.19 6.47 4.69 .43 .51 18.72 45 8.3 TOTAL PlaECE wDsr 1.73 17.04 22.37 27.73 16.95 1.35 1.43 88.60 45 39.4 - 37 - SYRIN ARAB REPLIC ANNE= 6 Page 2 of 2 H4S & lHA SROES PROJECr AtUAL PJECr INVESTHN - HAM 1984 1985 1986 1987 1988 1989 1990 1991 TOuAL 2 Foreign Aztlmt HM - TRFAMNr PLAW Civil Works - - 3.64 3.64 3.64 1.21 - - 12.15 28 3.4 Mech. & Electr. Equiment - - - 2.37 4.74 3.56 .59 .59 11.85 71 8.4 Supply of uther Equipnt - - 1.20 1.20 1.20 .40 - - 3.99 76 3.0 Laid - 1.15 - - - - - 1.15 - - 1 - TRL SEWRS Civil Works i 1.58 1.58 1.58 1.58 1.58 - - 7.91 24 1.9 Supply of Equipnant - .10 .10 .10 .10 .10 - - .48 83 .4 GENAL OD. FOR GUM" Buildings & Workshops - .80 .41 - - - - - 1.22 22 .3 Vehicles, 0 & M Equipment - - .54 - - .54 78 .4 Supply of Equip,nt - .21 .11 - - - - - .32 83 .3 EHNINCG L ASSIST.& O)ELtTING Prep. & review Bid Docs. .16 - - - - - - .16 64 .1 Sewerage Master Plan Stxiy - - .10 .10 - - - - .21 48 .1 Detailed Design Sewers .06 .06 - - - - - - .12 40 .0 Phase II Treat entPlant - - - - .21 - - - .21 48 .1 O& M, & Egineerig Assist. - - .12 .12 .12 .12 - - .49 75 .4 TAJI - EA Training of Trainer8 - - .11 .11 .11 - - - .33 73 .2 Training of Persomnel - - .10 .10 .11 - - - .32 78 .3 Construction Supervision - .08 .16 .19 .23 .14 .01 .01 .82 - - Base Cost (Dec. 1983 Prices) .22 3.99 8.18 9.51 12.04 7.11 .60 .60 42.27 46 19.3 Physical Contingenies .02 .40 .88 1.01 1.27 .73 .06 .06 4.43 47 2.1 Price ContingeiCies .02 .68 2.09 3.20 5.10 3.65 .36 .42 15.52 46 7.1 TOlAL ERJECr ODsr .26 5.07 11.15 13.72 18.41 11.49 1.02 1.08 62.22 46 28.5 - 38 - ANNEX 7 SYRIAN ARAB REPUBLIC HOMS AND HAMA SEWERAGE PIIOJECT Project Implementation Schedule ITEM YEAR 1984 1985 1986 1987 W 1988 1989 1990 199,1 QUARTER 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 I 2 3 4 I TREATMENT PLANT HOMS Review Tender Locuments Land Acqisition Civil Woriks Contiact Marrrlr2ation U.i Execution Cwi,lW s _ _ _ _ _ _ _ _ _ _ _ _ Tender Period MuCh /El I oupmrent Tondro EvarleatKon _ Contract Award Mobilat__ion Supptv I Erection* U-UmmmUm Ogsration & Maintenance m U _ _ _ _ Supply of Equipment Preparation oT Tender Docurments r . Tender EvalIuatioJn l | L ___ l l Contract AwardJ Supply E m _ _ T II 11 TREATMEN PLAN lHAMA Review lender Documents Land Arogu,srtla Cmivl Woirts Contract Mobrlization is I_ ExecutionCivil Wortks m .i . mm n m m Tenuef Pep od Mach/El Equipment Tercf olTe nder Elo Contract Ase-ird MoDilidatior- SLipry & Erecton- Operation 8 Maintenance m U _ _ _ _ Supply of Equipment Preparation at lenider Documents Tender Period Tender Evaluation Contract A%wudc III TECHNICAL ASSISTANCE & STUDIES T TA Organization & Managemnent Utlt It* * ** II UN It all et oo TA Engineering Studes LU II II! U! Ut UIt EU UB UKl Ut Ut II E, It EU EU I IU Sewerage Masterplar I I I U U I Detailed Design & Tender Doc IV TRUNK SEWERSHOMS& AIAMA Final Design o l TendJel Dacurrients Contract Award Conrstrurction H-omns *mmm*-*-UUmmnm Construction Hamamm mm m - m *in m u ** V BUILDINGS & WORKSHOPS And Design Tenderf Da-cumnrits Contract AwardC Construction Vl INSTITUTION BUILDING Appoinirnent ot Director Sewerage Transfer of Assets Personnel. Rlecruirment Operational Procedures Sticlute ato Personnel Cost Recover Studies inplenmentatron at cost Reco,,er-v VII TRAININGOFPERSONNEL Thoming of Trainers Vil POLLUTION CONIROL ENACTMENT | IX SUPPl OFVERICIES a OPERATION & N.AINTENANCE EQUIPMENI Preopior,oin oftendor Doc lander Pernod Evailuation |||§r Contract Award & Suppry Novarmtir- 1to3 Ward Bank-2Ss51 - 39 - SYRIAN AAB REJIC ANN 8 1*i1 & HANA SEVERAGE PROJCr MaKTORfG CRITERIA Each General Cmnpanies for Sewerage should nieke records of the follming infornation and provide revised summaries of these data in their respective quarterly and annual reports: 1986!/ 1987 1988 1989 1990 1991 1992 1993 (i) General Total population 103 427 444 462 479 498 516 536 556 Total population served 103 368 385 402 419 437 455 475 495 (ii) Staffing and Training Total staff 50 65 120 245 300 315 325 335 Man-nth of staff training 36 72 72 25 30 35 35 35 (iii) Systen operation Sewage volume 106/3fyear 16.14 33.59 34.98 36.38 37.83 39.35 40.97 42.65 Nunber of custouers 103 59 62 65 68 70 73 77 80 (iv) Finance Average revenue in Si per rn3 0.372 0.395 0.514 1.107 1.377 1.404 1.471 1.510 Working ratio % 21 22 31 39 50 51 51 52 Debt service coverage - - - 1.5 1.6 1.6 1.7 1.9 Debt equity ratio 6:94 8:92 9:91 11:89 11:89 11:89 11:89 10:90 HAM (i) General Total population 103 23' 240 247 254 260 267 275 282 Total population served 103 217 224 230 236 242 249 255 262 (ii) Staffing and Training Total staff 50 55 60 105 225 270 280 290 Man-2nth of staff training 20 35 37 30 20 25 30 30 (iii) Systen operation Sewage voluue 106r3/year 6.91 14.33 14.87 15.41 15.96 16.53 17.12 17.75 Nunber of custornrs I13 34 35 36 37 38 39 40 41 (iv) Finance Average revenue in Sf per m3 0.518 0.521 0.592 0.809 1.712 1.927 1.932 1.986 Working ratio % 28 26 24 32 38 44 45 47 Debt service caverage - - - - 1.6 1.7 1.7 1.8 Debt equity ratio 3:97 7:93 11:89 15:85 17:83 16:84 15:85 14:86 1/ Six unnths of operation - 40 - SYRIAN ARAB REPUBLIC ANINEX 9 Page I of 2 HOMS & HAMA SEWERAGE PROJECT CALENDAR OF KEY ACTIONS WORKS - HOKS Revision of tender documents (Treatment Plant) April - September 1984 Sewers - detailed design May 1984 Right of use of land September 1984 Civil works contract for treatment plant September 1984 Review of tender documents by IBRD October 1984 Tendering of electromechanical equipment December 1984 Treatment plant civil works start of const. January 1985 Sewers - start of construction January 1985 Electromechanical equipment tender evaluation March - August 1985 Review of tender evaluation by IBRD September 1985 Electromechanical equipment contract award January 1986 WORKS - HAMA Revision of tender docunents (Treatment Plant) April - September 1984 Sewers - detailed design JanuLary 1985 Review of tender documents by IBRD February 1985 Tendering of electromechanical equipment April 1985 Right of use of land June 1985 Civil works contract for treatment plant June 1985 Sewers - start of construction December 1985 Treatment plant civil works start of const. January 1986 Electromechanical equipment tender evaluation September 1985 - February 1986 Review of tender evaluation by IBRD April 1986 Electromechanical equipment contract award June 1.986 INSTITUTION BUILDING (GECOS) Financial study March - December 85 Recruitment of General Directors July 1985 Management study January - March 1986 Construction of office building and workshop June 1985 - June 1986 Tender for operational equipment & vehicles September 1985 Tender evaluation January 1986 Review of tender evaluation by IBRD February L986 - 41 - AITE:X 9 Page 2 of 2 Contract award for maintenance equipment March 1986 Supply of maintenance of equipment & vehicles June 1986 Takeover of sewerage operation July 1986 Implementation of financial policy July 1986 Training of personnel - network July 1985 - December 1986 - treatment plant June 1986 - December 1988 CONSULTING & TECHNICAL ASSISTANCE STUDIES Sewerage master plans January 1986 - December 1987 Detail design and tender document (Phase II) June 1986 - June 1987 SYRIAN ARAB REPUBLIC HOMS & HA14A SEWERAGE PROJECT 'ECOS-HOMS-INCOME STATEMENTS s5 MILLIONS 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 FISCAL YEAR ENDING DECEMBER 31 TOTAL POPULATION (000) 394.00 410.00 427.00 444.00 462.00 479.00 498.00 516.00 536.00 556.00 POPULATION SEWERED (000) 337.00 352.00 368.00 385.00 402.00 419.00 437.00 455.00 475.00 495.00 WATER CONSUMPTION (MCM) DOMESTIC & COMMERCIAL 19.24 20.32 21.45 22.65 23.92 25.18 26.50 27.89 29.36 30.90 INDUSTRIAL .97 1.01 1.07 1.12 1.18 1.24 1.29 1.35 1.42 1.48 PRIVATE SOURCES 9.63 9.69 9.75 9.82 9.88 9.96 10.04 10.11 10.19 10.27 OPERATING REVENUES WATER SURCHARWE)FEEWTAXES - - 5.73 12.67 17.31 39.39 50.93 53.91 58.80 62.83 OTH9R INCOME - - .2B .60 .66 .88 1.18 1.34 1.45 1.57 TOTAL REVENUES - - 6.01 13.27 17.97 40.27 52.11 55.25 60.25 64.40 I OPERATING EXPENSES SALARIES & WAlES - - .46 1.21 2.35 4.98 6.42 7.04 7.62 8.30 MATERIALS & CHEMICALS - - .36 .81 1.72 5.93 10.88 11L98 12-99 1lh.1 ELECTRICITY - - - - - 2.47 5.32 5.74 b.25 b.81 ADMINISTRATION - - .38 .77 1.17 1.79 2.44 2.68 2.90 3.16 MISCELLANEOUS - - .08 .19 .35 .68 .88 .96 1.04 1.13 SUB-TOTAL - - 1.28 2.98 5.59 15.85 25.94 28.40 30.80 33.56 DEPREClATION - - 4.73 10.29 1Z.38 24.42 26.17 26.85 29.45 30.84 TOTAL OPEKATING EXPENSES - - 6.01 13.27 17.97 40.27 52.11 55.25 60.25 64.40 NET OPERATING INCOME - - - - - - - INTEREST - - - - - 7.05 7.84 8.18 8.08 7.45 .b rn NET INCOME - - - - - (7.05) (7.84) (d.18) (8.08) (7.45) - WORKING RATIO - - 212 222 31Z 392 50% 51% 51% 52% - 43 - ANNEX 10 Page 2 of 3 S'IAN ARAB RERJbLIC iS & HAKA SRARA2E W4lhCT Q!M?<) * O /HOMS & HAMA REGION / r zpHalIfayo - Half/ ya r$ Proposed sewage tre,tment plants Moharde Principal irrigation canals Areas irrigoted by canals Assi River Ai c r} t Areas irrigated by river -IC7/. 1;- Daoms.- reservoirs Main roads Railway 4> / Cities, towns re £a/~oH Occupied Terirories 0 5 o0 15 20 / ~~~~~~~~~~~~~~KILOMETERS A -a lomiyoh Ths renp has paen prepared bY The World anAse slaff enchinere .n, (the convenience of thre readers arrd eioctrnrei lo, ine .*teieal is. of The Wor/d &ath ana mee iniarratronai I'rawec Capoaboor roe derr"Moerrrars used arid ithe borordan.Ss hoWn On iiS /nap do riot 7py, ni the Parlto The WorAd Ba Jr anrd the ntrerebonrral Foeace Coipnation, a .any dereart rhe 1egai status io ean, IeirtOry 0a ny zz/erroraeiontr, accepteice ot ^ > vn; t - r . 1 , ~~~~~30- 3'5 4rJ. \ 22 ;| +i / ~~~~~~~~~~~ ~~~~~T U R K E Y_-r _ Al Waa / } / L g r RQSYRIAN ARAB \ <3owoir 1\> / -~~~~~~~~35, CYPRU usUll AI WoIH tE ,ANON I RAO OATTINEII .//401 40/ )| O DAM rrr- r ARtAB .V_ A SAUDI ARABIA t _ ~~~~~~~~~~~~~~REPFUEBLIrC OF |ir V/riroaii.al ro Dr,r,re._ 30' 3?t . DECEMBER tts3 F…_--------------- ; Iolsed v il INDUSTRIAL AREA j ~~~~: I //~~~~~~~~~~~~~I IAI -'77-~ ~ ~~~~~~~~ -'' AL WA`.R /7 7', ,,~~~~~~~~~~~~~~~~~~~~~~~~~:7 {/F~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 500W-- 1000 lZ0 zz010 | / _:-_,=-> X < X 4 4 ( gX lu~~~~~~~~~~~~~~~~~~~~~~~~~e e,adrs aiid vs exclgVvfor hp> ms,fo,nal ubde, of, nh the: if / ,>e g _ ~~~~~~ tl > \ on ale legal starus or aDy terDlory ol anV enotorsernen' aregl acceDtancey oralof orary ndoremen oracceSuch ofbuchndaunnes 2 -_ i i I V V _ ~~~~ ~ ~ ~~~ ~ ~~~~~~~~~3o3' 35---0 J ti~~~~~~~~~~ ~~_ _____ _ s TJRK Y_>>_ __ _ |SYFIANi ARA,B FRE0UBLIC - 10 2000 HOMS AND HAMA SEWE-RAGE PROJECT R-\icPRs . EPUBLIC J MUNICIPALITY Of NOM5 3 ooi3 -P,oposcd t,.4n se,wers - Ex,st.ng trunk sewers ? >_LEBANON %, ;7Propased sewrage tren,ent works - -- Existing overfrow 'erdimos o ur ,o'ral c - Proposed effluent line a overflow - Rtie, Ia RAO Areas requiring seCondary sewers _ Pr.mc,pol irrigation canal,uncovere,J 15RAEL( /_ -rNmciprI i-q.trio. canal. covered .t Finance roods'ae -le dnnaen JORDANr o - Other ror ds --auniocirlty boundary \ t r o : Roxltoods au'lf.up orecss 40' ! 4 ConMours AND A AG PROJeCT -e ARAB .i SAUDI ARABIA -Poosdten eaea Occsr.ng ternksjewers OREPU)LiC OFrs EGYPT ,DD su L _ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~30' 1,5- .rv 2 opcased sewage reeornront works --- Existing overflow ,J, -( IRAQ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~; /DAHtIYE ' - | /- 0 t f a X ' "\\ X X 'ADf A , ' \' V-ans:: I /A -"o\ ..... -j I 0' ... '' )/7 re ")rwwce of ! \C - s of' \ s \- - r-, 1a Jr,# IoIke Is rc ego prnrs rak_ _s 35rrr r f HOMes D H A I I..C Vart~ ~ ~~ j SYIA ARAB It funk anda ofneur se\t -M\ J I r~~ ~ - r 5c, i7 "Jo n..,a Dor n pIije D 3 .r ce REPUBLIC 3YpRUS c-3aProposed eilluenf line oand ovefilow - 0tI,Ier rord .r~d Th,k,fr,, a f |Proosecl pumping slow,0a , -Railroad LEBANON River --mun'c'pality l0UzcuryI -1¢3russ, I RAQ \ f330-Contours in naters 13Buit- ,p oreos J <, -.\ .I \|Eiiaosw3 X Occupied territories _~ ISAE L Er.stvg overflow _ e Ir\ RDAN I CD Dy I_ 0_ __ APAB 1, ( 9~~~~~~Y~I M AR B E UB I ARAE ~ ~ ~ ~ ~ ~ ~~ M AM HAM SEERG PROJ1__CT ESe,t SAUDI ARABIA 1. METERSA .~~~~~EULC---Paoe rukadtrtue~ves- anro