Document of The World Bank FOR OmCIL USE ONLY Report No. 11 864UR STAFF APPRAISAL REPORT BURKINA FASO ENGINEERING CREDIT FOR THE OUAGADUOGOU WATER SUPPLY PROJECT June 3, 1993 Infrastructure Operations Division Sahelian Department Africa Region This document has a restricted distribution and may be used bv recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EOUIVALENTS Currency Unit CFA Franc (CFAF) US$1.0 279.45 CFAF 1 million US$3,578 SDR 1.0 US$1.376 FISCAL YEAR January I - December 31 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS AfDB African Development Bank CFD French Development Bank DEP Directorate of Studies and Planning FEER Fund for Water and Rural Equipment EPIC Public Enterprise (Entreprise Publique a Caractere Industriel et Commercial) ICB International Competitive Bidding GTZ Duetsche Gellschaft fur Technische Zusammenarbeit (German Agency for Cooperation) KfW Kreditanstalt fir Wiederaufbau LCB Local Competitive Bidding ONBAH National Authority for Dams and Hydro-agricultural Structures ONPF National Authority for Wells and Boreholes ONEA National Water Authority (Office National de l'Eau et de l'Assainissement) SDR Special Drawing Rights This report is based on the findings of a World Bank appraisal mission consisting of Ms. Yvonne Powers (Financial Analyst, Mission Leader), and Mr. Gerard Tenaille (Consultant) who visited Burkina Faso in April 1993. Mr. Snorri Hallgrimsson is the Peer Reviewer of the operation. Mrs. Fanny Barrett contributed substantively to the preparation of the report. Mr. Peter Watson and Ms. Katherine Marshall are the managing Division Chief and the Department Director, respectively, for this operation. FOR OFFICIAL USE ONLY BURKINA FASO ENGINEERING CREDIT List of Documents in the Project File 1. Burkina Faso Etude Tarifaire - mai 1990 by GOPA 2. Approvisionnement en Eau Potable de la ville de Ouagadougou - Etude de faisabilite - mars 1992 by LAHMEYER INTERNATIONAL 3. Etude de la Tarification "Eau" par Compagnie G6ndrale des Eaux - janvier 1987 4. Etude Sectorielle Eau et Assainissement au Burkina Faso par IWACO - janvier 1990 5. TOR for the selection of an auditor 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. BURKINA FASO ENGINEERING CREDIT FOR THE OUAGADOUGOU WATER SUPPLY PROJECT STAFF APPRAISAL REPORT Table of Contents Credit and Project Summary . ...................................... i I. THE MACROECONOMIC CONTEXT ............................. 1 II. THE WATER SECTOR . ...................................... 2 A. Background ........................................... 2 B. Sector Organization .......... ........................... 3 C. Government Sector Policy ................................. 4 D. Water Resource Management ............................... 5 E. Rationale for IDA Involvement .............................. 5 F. Lessons from Previous IDA Involvement ........................ 6 III. THE URBAN WATER SECTOR INVESTMENT PROGRAM .... .......... 6 A. Objectives of the Ouagadougou Water Supply Project (OWSP) .... ...... 7 B. Description of the OWSP ................................. 7 C. OWSP Project Costs .................................... 8 IV. THE PROPOSED OWSP ENGINEERING CREDIT .................... 8 A. Credit Objectives ............ .......................... 8 B. Credit Description ............ .......................... 9 C. Credit Amount . ........................................ 9 D. Financing Plan . ........................................ 10 E. Project Implementation/Monitoring ........................... 10 F. Auditing and Accounting .................................. 10 G. Procurement . ........................................ 10 H. Disbursements . ........................................ 11 V. INSTITUTIONAL AND FINANCIAL ASPECTS ....................... 13 A. Institutional Overview ................................... 13 B. Financial Aspects ............ .......................... 13 C. The Performance Contract ................................ 14 VI. JUSTIFICATION AND RISKS .................................. 15 A. Justification ........................................... 15 B. Risks . ............................................. 15 C. Environment . ........................................ 16 VII. AGREEMENTS AND RECOMMENDATION ....................... 17 ANNEXES: Annex 1: Letter of Sector Policy Annex 2: TOR for Environmental Assessment Resettlement Plan Annex 3: TOR for Final Design Study and Bidding Documents Annex 4: TOR for External Assistance (Project Adviser) Annex 5: Organigram (ONEA) Annex 6: Tariff Structure Annex 7: Performance Contract Annex 8: Implementation Schedule BURKINA FASO ENGINEERING CREDIT FOR THE OUAGADOUGOU WATER SUPPLY PROJECT STAFF APPRAISAL REPORT Credit and Project Summary Borrower: Burkina Faso Executing Agency: Office National de l'Eau et de l'Assainissement (ONEA) Credit Amount: SDR 3 million (US$4.25 million equivalent) Terms: Standard IDA terms with a maturity of 40 years Onlending Terms: To be passed on to ONEA on the same terms as the IDA credit Projec Obiectives: The objectives of the Engineering Credit are: (i) to finance the studies and technical assistance needed for the preparation of the future Ouagadougou Water Supply Project; (ii) to lay the groundwork to improve the quality of entry of this project and for its successful implementation; and (iii) to test the commitment and ownership of the Government and the capacity of Office National de l'Eau et de l'Assainissement (ONEA) to improve water sector management before making further massive investments. These objectives are in line with Government's objective of strengthening ONEA so as to enable it to administer the sector more effectively, to achieve financial discipline, and to accomplish financial self-sufficiency of the urban water supply sub-sector, all essential to ensure sustained sector development. Project Description: The proposed engineering credit would finance the environmental assessment, and the final design and preparation of bidding documents which are required for the future Ouagadougou Water Supply Project. In addition, the engineering credit would strengthen ONEA's capacity to prepare and manage such a large investment through the provision of office space and equipment and technical assistance, training and the purchase of equipment and vehicles. ONEA would be responsible for the preparation of the future investment project and, later on, for its implementation. Project Justification: The project would contribute significantly towards the continued reorganization of the water sector, improving sector management, financial accountability and resource allocation. It would also contribute towards relieving the nation's fiscal problem by rendering the sector less dependent on budgetary allocations and by making ONEA responsible for servicing the existing and new debt related to the urban water supply sub-sector. Finally, the program, once ii implemented, would have an important poverty alleviation impact by making an adequate quantity of safe water available to all urban dwellers, improving the general health situation and increasing productivity. Project Risk& The risks involve primarily the Government's willingness and capacity to impose financial discipline, to settle arrears in a timely fashion, to set regulations for prompt payment of water bills and to continue to allow ONEA to increase its water tariffs periodically in order to meet its financial obligations. The Government is very aware that a financially sound sector, including ONEA, is a sine-qua-non condition for further development and investment in the sector. project Cost: The total cost of the project is estimated at US$6.55 million equivalent as detailed in the following table, and expressed in January 1993 prices. iii PROJECT COST ESTIMETES (US$ million; net of taxes) Local Foreign Total % % Foreign Total Costs STUDIES Environmental Assessment 0.10 .90 1.00 90% 15.3% Final Design Study/Bid Documents 0.46 4.16 4.62 90% 70.5% Sub-total 0.56 5.06 5.62 90% 85.8% INSTITUTION BUILDING Office construction 0.06 0.00 0.06 0% .9% Office equipment/vehicles 0.00 0.12 0.12 100% 1.8% TA for Project Management 0.05 0.45 0.50 90% 7.6% Training for ONEA staff 0.01 0.04 0.05 80% 0.8% Incremental Operating Expenses 0.20 0.00 0.20 100% 3.1% Sub-total 0.32 0.61 0.93 65.6% 14.2% TOTAL PROJECT COSTS 0.88 5.67 6.55 86.6% 100% Financing Plan: FINANCING PLAN (US$ million) Local Foreign Total % of Total IDA Credit 0.65 3.60 4.25 65% [ CFD T 0.23 2.07 T 2.30 35% TOTAL 0.88 5.67 6.55 100% Estimated IDA Disbursements ESTIMATED DISBURSEMENTS (US$ million) FY94 FY95 FY96 Annual 2.0 1.95 0.3 | Cumulative 2.0 3.95 4.25 BURKINA FASO ENGINEERING CREDIT FOR THE OUAGADOUGOU WATER SUPPLY PROJECT STAFF APPRAISAL REPORT I. THE MACROECONOMIC CONTEXT 1.1 Burkina Faso is a landlocked country located in a transitional zone between the Sudan-Guinean regions and the Sahel. With a per capita GDP of US$320, Burkina Faso is one of the poorest countries in the world. It's economy depends heavily on agriculture and livestock which account for about 30% of GDP, provide over 60% of export earnings and employ almost 90% of the country's active population. Manufacturing contributes about 14% of GDP, and trade and services about 42%. Overall, taking into account agriculture and informal activities, private sector activities dominate the economy and provide about 80% of the country's output. Informal activities encompass practically all agricultural operations, are preponderant in trade and services, and significant in the secondary sector. In the modern sector, Government services and public enterprises play a major role. Private enterprises, however, have remained very active, particularly in manufacturing and construction. 1.2 Rapid population growth and a weak resource base notwithstanding, Burkina Faso's economic performance throughout the mid-1980's fared well. When the rate of expansion of real GDP exceeded the rate of population growth, inflation was moderate. Between 1982/90, GDP growth (3.7% annually) slightly outdistanced population growth (3.3% annually). Between 1980/88, there was rapid growth (averaging 5.5% annually) fueled by a strong performance in agriculture (6.4% annually), an expansion of public consumption, and a construction boom generated by public investment programs. These sources of growth, however, proved to be unsustainable and, in 1989 and 1990, the country experienced a decrease in economic performance because of inadequate rainfall and reduced public consumption due to budgetary constraints; annual growth dropped to 3.4% and -0. 1% respectively. Due to exceptionally favorable climatic conditions, it rebounded to reach 6% in 1991 and dropped again to 0.7% in 1992. 1.3 The deterioration of public finances has been one of the factors which has hampered Burkina Faso's economic growth. The cumulative overall budget deficit of the government, which averaged 12% of GDP in 1986/90 (excluding grants) produced a heavy debt service burden. Because of administrative inefficiency, poor tax revenues from a stagnating formal sector, and prioritization of other expenditures, Burkina Faso began to fall into arrears on its domestic and external debt service obligations. At the end of 1990, external principal and interest arrears amounted to approximately CFAF 49.4 billion. The Government accumulated an additional CFAF 34.0 billion in domestic arrears. Gross domestic savings averaged 6.4% of GDP during 1986-90. Due to a large influx of workers' wages, gross national savings is much higher, averaging 10.9% of GDP during this same period. 1.4 In the 1980's Burkina Faso's external accounts developed favorably because of increased revenues from the exportation of the commodities which are its main foreign exchange earners: cotton, livestock, and gold. The current account deficit has improved when compared with the performance during the 1977/82 period. Net capital inflows covered not only the current 2 account deficit during 1982/88 but also built up gross official reserves of almost seven months of imports at the end of 1988. In 1989, however, the country's balance of payments position weakened due to a deteriorating trade balance, a large deficit in the service account, lower net private transfers and the state's liability for additional arrears following the liquidation of a railway company owned jointly with Cote d'Ivoire. Burkina Faso's external position is projected to remain fragile because of slow growth in gold exports and weakening of the terms of trade. 1.5 During the period of 1986/90, investment reached, on average, a high of 22% of GDP largely as a result of public investments. These investments, however, consisted of a few large infrastructure and building construction projects with marginal economic returns. Private investment in formal enterprises was constrained by a restrictive legal and regulatory framework. Its financing was crowded out by the privileged treatment given by the banks to the public sector in nearly all economic activity. As a result, the private sector invested primarily in housing, office building construction and informal activities. 1.6 In the late 1980's, when Burkina Faso's situation worsened, as a result of lagging fiscal revenues and growing budgetary constraints and macro-economic imbalances, the Government began to prepare, with Bank and IMF assistance, an important adjustment program which it started to implement in 1990. This program, described in the first Policy Framework Paper (PFP) agreed with the Bank and the IMF in 1991, included far-reaching policy and regulatory reforms paving the way to the development of private initiative in the economic arena. In addition to restoring sound public finance management and macroeconomic equilibria, in particular, it aimed, at: (i) removing the constraints, and establishing an enabling environment to promote rapid and efficient growth of the private sector; and (ii) transferring to the private sector commercial and productive enterprises of the public sector. To facilitate this transfer and to further encourage a sustained expansion of the private sector, the Government of Burkina Faso (GOBF) wants now to promote the establishment of adequate and efficient support services to private entrepreneurs, while pursuing the privatization process and taking appropriate measures to make the financial intermediation system more responsive to their needs. lI. THE WATER SECTOR A. Background 2.1 Burkina Faso is a semi-arid country with an area of 274,200 km2 and a rapidly growing population of nearly nine million inhabitants. The present urban growth rate of about 8% a year is roughly 2.3 times the overall rate of population increase (3.3%). Recent trends in population increase have been compounded by the repatriation, caused by deteriorating conditions in the region, of a number of Burkinabb formerly living in neighboring countries. The total population of Burkina Faso is expected to be at least 11 million by the end of the century, with the urban share climbing from 880,000 inhabitants in 1985 (11 % of the total population of 8 million) to 2.4 million, or 21%. According to the 1985 census, Ouagadougou with 436,000 inhabitants accounted for about 50% of the urban population. Its population is expected to be 941,000 in 1995, 1,201,000 in the year 2,000 and 1,533,000 in 2,005. These projections are based on growth rates of 7% until 1995 and 5% thereafter, compared to 9% over the 1975-90 period, when drought in the Sahel zone intensified migration to the urban areas. 2.2 Burkina Faso extends over three climatic zones: the Sahel in the North, the dry savanna region in the middle and the humid savanna in the South. The long-term average rainfall 3 amounts to 860 mm for the country and varies from 400 mm in the North to 1200 mm in the South. However, since 1976, rainfall has constantly been 10% to 20% below the long-term average, resulting in a lowering of the water table of about 0.5 m per year. Of the average annual rainfall of 860 mm, it is estimated that 21 mm contributes to surface runoff, 829 mm is lost through evaporation and only 10 mm infiltrates to recharge the aquifers. This gives an annual incremental groundwater storage of 2.74 billion m3, but it is unevenly distributed over the country and not easily accessible because of the geological conditions. Groundwater occurs in the weathered zone above the bedrock and in fractured zones. To extract this water, boreholes have to be drilled up to 50 to 80 m deep in rock and are relatively expensive for a limited yield of about 10 m3 per day. Surface water is also scarce and only the Mouhoun River is perennial. Normally, dams have to be constructed to equalize flow and to store water for the dry season, but up to 2,000 mm per year of the stored water may be lost due to evaporation. 2.3 In the rural areas, Government policy is to provide the villages with the necessary water infrastructure, mainly through grant financing and encouraging village participation. With assistance from the donor community, more than 7,000 wells and boreholes equipped with handpumps have been constructed and more than 10,000 have been programmed for the future. The results of this effort are encouraging and at the moment most rural dwellers have access to a minimum quantity of safe water, of nearly 10 liters per capita per day. The Government's objective is to double this by the year 2000. The villages are fully responsible for operation and maintenance, and all rural water supply projects now include village participation, public information and training of technicians to operate repair and maintain the handpumps. Village committees are responsible for collecting the funds needed to finance small repairs (CFAF 50,000 or US$200 equivalent a year per water point). 2.4 The main sector problems, however, are in the urban areas, where the water supply authority, Office National de l'Eau et de l'Assainissement (ONEA), cannot expand its operations fast enough to satisfy the rapidly increasing demand caused by rapid urbanization. With the financial aid of the CFD and KfW, existing facilities have been or are being upgraded. They are, however, stretched to their maximum capacity. As all nearby water resources are fully and even over-exploited, new resources have to be brought in from further and further away. This results in costly and bulky investments. B. Sector Organization 2.5 The Water Ministry was established in 1983, when the Government realized the importance of water resource management in relation to economic development and reorganized the water sector accordingly. The former Ministry of Rural Development was split into a Ministry of Agriculture and Livestock, and a Water Ministry, solely responsible for water resource management. The duties of the Water Ministry are divided among two main directorates and four parastatals: (i) the Studies and Planning Directorate (DEP), responsible for identification, planning and project implementation, including procurement; (ii) the Directorate for Inventorying Water Resources, responsible for producing and maintaining a national inventory of surface and groundwater resources (a water balance project is being undertaken with financing from the Government of the Netherlands), (iii) the National Authority for Wells and Boreholes (ONPF), responsible, as a contractor and in competition with the private sector, for the construction of rural water supply systems; (iv) the National Water Authority (ONEA), responsible for urban water supply and sanitation; (v) the National Authority for Dams and Hydro-agricultural Structures (ONBAH), responsible for small dams and irrigation systems; and 4 (vi) the Fund for Water and Rural Equipment (FEER), currently responsible mainly for environmental protection and anti-erosion measures linked to land management programs. In principle, the parastatals are financially independent. The proposed project would focus exclusively on the urban water supply sector, mainly through the provision of financial assistance to ONEA to carry out the studies necessary to render ONEA capable of increasing its water production and distribution capacity through a future Ouagadougou Water Supply Project and to strengthen its capabilities to manage its finances and future bulky investment projects. 2.6 The National Water Authority (ONEA) was established on July 22, 1985, by decrees No. 85/387 and 388/CNRIPRES/EAU. Its duties are to (i) create and operate all facilities for storage, transport, treatment and distribution of raw and potable water for urban and industrial needs and (ii) create and operate all facilities for urban sewerage and drainage. Under the Urban Environment Project which is currently being prepared, it is envisaged to transfer the responsibility for storm-water drainage to the municipalities, since it is more appropriately planned and executed in conjunction with road projects that fall under municipal responsibilities. As far as sewerage is concerned, ONEA currently does very little. In the absence of government- run treatment plants, almost all sewerage is dealt with through individual solutions-mini-treatment plants or septic tanks-even for large buildings. Virtually no sewage is treated. Much is, in fact, discharged directly into drains or onto waste ground. A Sewerage Master Plan has recently been completed and the UNDP/Bank-funded West Africa Regional Water Group is currently pilot testing individual sewage methods in poor areas in order to design a more comprehensive program which will be financed under the planned Urban Environment Project. The rest of this report focuses, therefore, on ONEA's urban water supply activities. 2.7 At the moment, ONEA is dejure responsible for the water supply in 34 urban centers, through five regional directorates. De facto, of the total population in these centers of about 1.5 million, about 53% are served by ONEA through 37,071 house connections and 2,036 standpipes, of which about 80% have already been privatized. This system works very well through a network of private standpipe operators who have a contract with ONEA to buy metered water at the standpipe to be resold to individual consumers. The payment delays that ONEA used to suffer when the standpipes were operated by the municipalities have been virtually eliminated and waste has been dramatically reduced since it is in the operators' interest to maximize the amount of water for which his clients actually pay. The rest of the population obtains its water from traditional sources (wells, marshes, street vendors, etc.). C. Government Sector Policy 2.8 The financial difficulties that have faced Burkina Faso during the past few years have led the Government to redefine its sector strategy and objectives. The water and sanitation sector in Burkina Faso is hampered by manpower and financial constraints which result in deficient maintenance, weak wellfield management practices, premature degradation of existing facilities, a backlog of expansion and poor levels of service. The Government issued in October 1992 a Water Sector Policy Letter specifying its new sector strategy and objectives (Annex 1). It was agreed at negotiations that the Government will implement the program set out in the letter. Failure to do so would constitute grounds for the Association to suspend disbursements (para. 7.3). The sector policy is now to provide potable water and adequate sanitation facilities as quickly as possible to all urban and agglomerated rural population and, at the same time, reduce the financial dependency of the water sector on Govermment subsidies. The strategy to achieve these objectives is to strengthen the sector institutions in order to enable them to manage the 5 sector efficiently, including the coordination of foreign aid, and achieve the financial independence of the sector through the reinforcement of cost recovery principles. D. Water Resource Management 2.9 In Burkina Faso, the water sector ranks as one of the Government's foremost priority concerns, a concern reflected in all facets of the country's development programs and in the wide range of efforts being undertaken by the entire nation, with the aim of implementing the National Water Policy effectively and consistently. Water management has thus become a prerequisite for economic and social survival. 2.10 The major challenge facing the water sector is how to meet the already huge but ever growing demand for water when available resources are limited, unevenly distributed, and inexorably becoming more precarious as the ecosystem is steadily degraded. Major efforts have already been made to compile improved data on the country's water resources, notably by establishing a master potable water supply system plan, a geographic data system, observation networks, and data banks. A "Water Balance" Program is underway in order to provide better data to decision-makers. Surface water data is reasonably complete; groundwater data is still incomplete. The priorities for water management and water use are set out in the Letter of Sector Policy: first, drinking water provision; second, agricultural and environmental protection uses; third, energy protection. The Directorate of Planning and Studies of the DEP, reviews project proposals and signals priority conflicts to Cabinet for decision. In practice, conflicts have been rare. E. Rationale for IDA Involvement 2.11 The rationale for IDA involvement in the urban water supply sector is to assist the Government to master the critical water situation in Ouagadougou and improve sector management. This would contribute to poverty alleviation by improving the living standards of the population, mainly in the poorest suburbs of Ouagadougou. In addition, it would have a positive impact on public health. Institutional reforms are difficult to achieve and need a long term involvement. IDA's catalytic influence would encourage other donors to participate in project preparation and financing, and its comparative advantage in multi-donor sector reform operations makes it the appropriate lead agency. The objectives of this project, which would make an effective contribution to the development process, would be extremely difficult to achieve without IDA's involvement. 2.12 The amount of investments is very high and no single donor would be able to fund the entire sector investment program. Even the program of detailed design and environmental studies exceeds the intervention capacity of any individual donor. It is therefore proposed that IDA takes the lead in this project, both in the study phase and in the second investment phase. The specific rationale for granting the proposed engineering credit would be to get involved in the sector on a small scale, so as to test both the willingness of the Government to implement sector reforms and the capacity of ONEA to improve its technical and financial management. 6 F. Lessons from Previous IDA Involvement 2.13 This is IDA's first involvement in Burkina Faso's water sector. The proposed engineering credit draws heavily on the lessons learnt from other water supply projects undertaken in the Sahelian region. The major problems identified in these projects have been government interference, non-payment by government of its utility bills, and poor management and financial accountability of the utility. A performance contract, to be concluded between the Government and ONEA, includes clauses which, if respected, would resolve these obstacles. The Government is clearly aware that IDA's involvement in the future Ouagadougou Water Supply Project is dependent on the results of this up-front conditionality. As for the other ongoing operations in infrastructure, the Public Works and Employment Project is performing commendably, the Transport Sector Project is performing reasonably well, and there has been a recent turnaround in the Urban III project. The main lesson learned from these operations is that management is the key factor. The proposed project reflects this lesson in that the Government has been very involved in project conception and preparation. This project will not only give IDA the opportunity to assess the institutional capability but will also give it the chance to encourage its development. III. THE URBAN WATER SECTOR INVESTMENT PROGRAM 3.1 The sub-sector investment program supports the objectives of the country strategy by addressing the need to formulate and execute a priority investment program and to enable sector institutions to manage sector development more effectively. The investment program is dominated by the investment needs for Ouagadougou where limitations on locally available water resources have imposed the need for a bulky investment to dam and transport water from the Nakanbe River forty-six kilometers from the capital. This investment, even after optimization, would absorb almost 80% of the approximately CFAF 50 billion urban water supply investment budget. The second important investments are for two secondary cities water supply projects financed by Danida and the KFW totalling CFAF 5 billion, and a project for Bobo Dioulasso at just over CFAF 4 billion, partially financed by the KFW and for which complementary financing is still to be identified. Overall, the biggest and the priority investment is for the Ouagadougou component. The original estimated cost for the Ouagadougou water supply was of the order of US$183 million. However, by rationalizing design criteria and water consumption targets, by curbing the demand and spreading the investments over a longer period, it is estimated that financial requirement could be limited to US$140 million for Ouagadougou. A feasibility study for the Ouagadougou Water Supply Project (OWSP) was completed in July 1992 and financing is needed for the necessary studies: environmental assessment and resettlement plan, final design and preparation of bidding documents. IDA would propose to intervene in two phases: first, through the Engineering Credit for the OWSP presented in this SAR and, second, through a future credit to contribute to the financing of the OWSP itself. 7 A. Objectives of the Ouagadougou Water Supply Project (OWSP) 3.2 The OWSP would be an urban water sector investment operation for Ouagadougou through which the Bank would assist the Government to: (a) strengthen ONEA (improve autonomy, accounting, long term planning, realistic project design, efficiency of operation and maintenance, and explore the prospects of privatization); (b) improve ONEA's financial situation by improving the collection rate (agreement with Government on payment procedures and settlement of arrears to ONEA), and by allowing ONEA to implement a realistic pricing policy and set adequate tariffs in order to achieve full cost recovery; (c) improve service levels by increasing production and distribution capacity (satisfy basic needs for the population and lift constraints for industrial development); (d) improve efficient use of water resources (curb water demand and reduce wastage); and (e) improve donor coordination and encourage donors to participate in financing the investment plan. B. Description of the OWSP 3.3 On the physical side, the OWSP would finance the expansion of the Ouagadougou water production and distribution facilities; including the following works: (a) construction of a dam and intake works on the Nakanbe River near Ziga: length 3,467 m; height 13 m; (b) transmission mains of 1,000 mm diameter comprising: (i) a raw water force main between the intake and the treatment plant (2,200 m); (ii) a treated water force main (5,400 in3, 15,150 m) between the treatment plant and the Boudtenga storage facility; and (iii) a gravity main between the Boudtenga storage facility and the Paspanga pumping station (29,000 m); (c) a treatment plant of 1,000 I/s (80,000 m3/day) capacity, built near the dam; (d) reinforcement of the distribution network, including elevated storage tanks. 8 C. OWSP Project Costs 3.4 Project cost estimates are based on a feasibility study for the Ouagadougou water supply expansion carried out by consultants and completed in July 1992. For the other components, cost estimates are based on other reports or IDA's estimations. Base prices are expressed in January 1993 prices. For physical contingencies, 15% have been added. Price contingencies for imported goods and services have been estimated in accordance with Bank guidelines: 3.1% per annum for the period 1992-2002. Local price increases for the project construction period (1995-2000) have been estimated at 4% per year. Prices are free of taxes. OWSP Summary Cost Estimate CFAF million US$ million % foreign Ouagadougou Water Supply Dam, intake: 4,881 19.52 77% Transmission main: 7,765 31.06 70% Treatment plant: 1,785 7.14 88% Distribution network: 7,914 31.66 59% Energy and pumping: 814 3.26 87% Total Base Cost: 23,159 92.64 74% Physical contingencies: 3,475 13.90 74% Price contingencies: 4,670 18.68 74% Total Project Cost: 31,304 125.22 74% Training: 250 1.00 70% Institutional Support: 500 2.00 90% Studies: Environmental assessment: 200 0.80 90% Final design: 772 3.09 70% Preparation bidding documents: 386 1.54 70% Supervision of works: 1,621 6.48 70% Grand Total: 35.033 140.13 74% IV. THE PROPOSED OWSP ENGINEERING CREDIT A. Credit Objectives 4.1 The objectives of the Engineering Credit are: (i) to finance the studies and technical assistance needed for the preparation of the future project; (ii) to lay the groundwork to improve the quality of entry of the future project, for successful implementation; and (iii) to test both the commitment of the Government to the sector reforms that are required to sustain the effective operation of the installations that would be financed under the OWSP and the capacity of ONEA to improve water sector management before making further massive investments. 9 B. Credit Description 4.2 The proposed engineering credit would help to finance the preparation of the Ouagadougou Water Supply Project. Specifically it would finance (a) consultant services for the preparation of final designs and bidding documents and (b) consultant services for the dam and transmission main components, the environmental assessment and resettlement plan. In addition it would strengthen ONEA's institutional capacity to manage a project of this scale by financing (a) a full time international expert on the management of large scale water supply projects, (b) training for ONEA staff in project design and management, (c) the marginal costs of adding additional office space to an ongoing construction project to accommodate the staff working on the project, (d) office equipment and vehicles and (e) the incremental costs associated with project management. Terms of reference for the environmental assessment and resettlement plan (Annex 2) have been reviewed by the Association and are judged acceptable. The future OWSP would be located well upstream of the Bagre dam site on the Nakanbe river. Since the new dam is small relative to Bagre, it would have little or no implications on the international waterway. This will be confirmed by the environmental study. Terms of reference for the preparation of final designs and bidding documents (Annex 3) have been reviewed by the Association and are judged acceptable. For the latter study, the letter of invitation, the short list of consultants, and the draft contract have been submitted to the Association which has no objection to the documents. Terms of reference (TOR) for the external assistance in project management are attached as Annex 4. C. Credit Amount 4.3 The Engineering Credit would be passed on by Government to ONEA on the same terms as the IDA credit under a financing agreement acceptable to IDA and would finance the following: Local Foreign Total % % Foreign Total l _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ C o sts STUDIES Environmental Assessment 0.10 .90 1.00 90% 15.3% Final Design Bidding Documents 0.46 4.16 4.62 90% 70.5 Sub-total 0.56 5.06 5.62 90% 85.8% INSTITUTION BUILDING Office construction 0.06 0.00 0.06 0% .9% Office equipment/vehicles 0.00 0.12 0.12 100% 1.8% TA for Project Management 0.05 0.45 0.50 90% 7.6% Training for ONEA Staff 0.01 0.04 0.05 80% 0.8% Incremental Operating Expenses 0.20 0.00 0.20 100% 3.1% Sub-total 0.32 0.61 0.93 65.6% 14.2% TOTAL PROJECT COSTS 0.88 5.67 6.55 86.6% 100% .= . 10 D. Financing Plan 4.4 The Borrower will be the Government of Burkina Faso. The total amount of the IDA credit will be passed on to ONEA on the same terms as the IDA credit under a financing agreement acceptable to the Association. ONEA would bear the foreign exchange risk, but Government would reserve the right to compensate ONEA partially for the costs associated with any foreign exchange movement that would lead to what Government may consider to be excessive tariff increases. The signing of the Financing Agreement would be a Condition of Effectiveness (para 7.2 (a)). The Caisse Fransaise de Developpement (CFD) is preparing a grant of FF 15 million, equivalent to approximately US$2.9 million of parallel financing which will finance the final design and bidding document preparation for the treatment station and the distribution network. Signing of the CFD grant agreement would be a condition of effectiveness (para. 7.2 (d)). E. Project Implementation/Monitoring 4.5 The proposed project would be executed by ONEA, whose project management capabilities would be strengthened through the provision of technical assistance and basic equipment (Annex 8 shows the implementation schedule). ONEA would be responsible for the preparation of the future investment project and, later on, for its implementation using the principles and the successful experience with specialized contract management in urban projects in the Sahel. ONEA's operations will be monitored using the vehicle of a performance contract which is discussed in the section on Institutional and Financial Aspects. 4.6 As mentioned earlier, one of the main objectives of the technical assistance credit is to test Government's commitment to sector reforms and improve ONEA's management capacity before making further massive investments. To assess results achieved, ONEA will prepare quarterly and annual reports to be submitted to the Association no later than one month after the end of the quarter and no later than March 31 of the following year respectively. The quarterly report will include targets indicated in the performance contract and the results actually achieved. Performance of ONEA will be monitored through the performance contract which contains all the specific monitoring indicators that are required. F. Auditing and Accounting 4.7 As noted below, ONEA has set up an adequate accounting system. It has not, however, been subject to external audits by independent auditors. Rather, its accounts were reviewed by the Government's Commissaire aux Comptes. Under the project, ONEA's accounts will be audited annually by auditors acceptable to the Association and the audited accounts, together with the auditors' report will be made available to the Association not later than six months after the end of ONEA's fiscal year. Agreement has been reached on the Terms of Reference for a multi-year auditing contract. Selection of auditors for a multi-year contract satisfactory to the Association will be a Condition of Effectiveness (para. 7.2 (c)). G. Procurement 4.8 Consultant services for studies, technical assistance and training will be procured according to Bank guidelines dated August 1981. Procurement under parallel CFD financing will 11 follow CFD procedures and will be carried out simultaneously with the IDA procurement. Contracts for construction, vehicles, materials and equipment, too small to warrant ICB procedures (less than US$100,000 each), will be procured under LCB. Items or groups of items for goods estimated to cost the equivalent of US$50,000 or less per contract may be procured under contracts awarded on the basis of comparison of price quotations obtained from at least three suppliers acceptable to the Association. The table below summarizes the project elements, their estimated costs and the proposed methods of procurement: (USS million) Project Element Procurement Method LCB/Shopping Other Total Cost Environmental Assessment 1.00 1.00 l ________________________________________ (1.00) (1.00) Final Design Study and Bid 4.62 4.62 documentation (2.32) (2.32) Construction of a Project Office 0.06 0.06 (0.06) (0.06) Offiec equipment/vehicles 0.12 0.12 (0.12) (0.12) Technical Assistance 0.50 0.50 (0.50) (0.50) Training for ONEA staff 0.05 0.05 (0.05) (0.05) Incremental Operating expenses 0.20 0.20 (0.20) (0.20) TOTAL: 0.38 6.17 6.55 (0.38) (3.86) (4.25) Note: Figures in parenthesis are the respective amounts financed by the IDA Credit. H. Disbursements 4.9 For the preparation of the final design and bidding documents, the credit would finance 100% of the foreign and local costs of the components financed by IDA. All contracts for studies and technical assistance (about 90% of credit demand) will be subject to prior review by IDA. Disbursements from the IDA credit will be fully documented, except for payments under contracts of less than US$20,000 equivalent, training and incremental operating expenses, which will be reimbursed against certified statements of expenditures, for which documentation will be retained by ONEA for review by IDA supervision missions and project auditors. Taking into account that the proposed credit is a simple engineering and technical assistance credit, it is expected that it would be fully disbursed within a two and a half year period. The closing date would be June 30, 1996. The related disbursement profile shown below, in US$ million: 12 Disbursement Schedule FY and sernester Disbursements per Cumulative Percentage semester 1994 I 0.80 0.80 18.8% II 1.20 2.00 47.1% 1995 I 1.30 3.30 77.6% II 0.65 3.95 92.9% 1996 I 0.3 4.25 100.0% Disbursement Table by Category Category Amount of Credit Disbursement l ______________________ (US$ million) percentages 1. Studies Environ. Assessment 1.00 100% Final Design Study/Bid 2.32 100% 2. Civil Works 0.06 100% 3. Equipment/Vehicles 0.12 100% 4. TA for Project Mgt. 0.50 100% 5. Training 0.05 100% 6. Incremental Operating 0.20 100% expenses TOTAL 4.25 4.10 The Government will establish, maintain and operate, in a commercial bank, on terms and conditions satisfactory to IDA, a Special Account to which IDA will make an initial deposit of about US$300,000 (estimate for about three months of expenditures). This Special Account will be replenished by IDA monthly according to disbursement regulations and will include a certification by the bank holding the account showing (i) account activity since the last replenishment application, (ii) the account balance, and (iii) a reconciliation statement. Should any disbursement made be disallowed by IDA, the Government will redeposit the corresponding amount in the Special Account. Given the availability of the Special Account, applications for direct payment and for reimbursement will normally be for US$30,000 (or 10% of the initial deposit) equivalent minimum. 13 V. INSTITUTIONAL AND FINANCIAL ASPECTS A. Institutional Overview 5.1 During the 1980's, ONEA pursued an expansion program for water supply, without adapting its organizational and management system. This approach led to a situation characterized by financial losses, a considerable decline in productivity of its personnel, as well as an acceleration in the loss of its autonomy. To address this unacceptable situation, in 1990 the authorities launched, with the help of Technical Assistance (GTZ), a restructuring program aimed at getting ONEA on sound footing. The objectives of creating the maximum number of new centers and increasing the number of private connections have been abandoned in favor of a policy of strengthening the existing water supply systems. Thus the new policy consists of the rational exploitation of the resources as well as their protection against pollution. In addition, to safeguard all water sources, ONEA put in place in 1991 a program to control the quality of water on a regular basis. ONEA has also established a preventive maintenance system, including adequate stocks and equipment. 5.2 Tariffs were increased in 1991 by 25%. In 1992, the Council of Ministers adopted a new tariff policy which included not only automatic annual increases until 1995, but also a change in the tariff structure (the called-for tariff increases were implemented on schedule in 1992 and 1993). A number of accounting measures have been introduced which have significantly reduced the time it takes to prepare the annual statements. For example, prior to 1990, it took approximately 24 months to finalize the accounts. This was reduced to less than 4 months in 1992. It should also be noted that quality of the statements has improved considerably as well. 5.3 Since 1992 the annual budget has been prepared on time and a monitoring system (for costs, cash flow, etc.) has been set up. A working expense ratio target (operating expenses not including depreciation to sales) has also been introduced in order to contain and reduce the costs of operations. In 1992, a commercial section was established together with a definition of its responsibilities. A complete revamping of the billing system is underway. In 1992, a vigorous campaign was undertaken to clear up outstanding accounts receivable, especially large customers including public and semi-public customers. The computerization of such functions as accounting, personnel, stocks, fixed assets/depreciation is planned for 1993/1994. A management information system is presently under development and will be operational by 1994, as is a revaluation of assets exercise (under CFD financing). 5.4 A new organization chart for ONEA (Annex 5) has been established by the GTZ technical assistance team, and submitted to the Bank who deemed it satisfactory. This chart shows the staffing of each unit in 1993 and 1995. The objective is to reduce the number of employees from 610 to 518 over a two year period. This reduction will be monitored during implementation of the engineering credit. B. Financial Aspects 5.5 Up to now, ONEA has been a loss making entity that has survived thanks to Government subsidies and a low standard of service. Since 1986, ONEA made a loss every year, with a peak of about CFAF 1.4 billion in 1990 (US$5.6 million). The revenue for the three last 14 years was, in CFAF million: 3.5 in 1989, 4.0 in 1990 and 4.0 in 1991. This compares to the expenses of the same years: 4.2 in 1989, 5.4 in 1990 and 4.2 in 1991. Although the number of employees decreased from 1990 to 1991, the personnel expenses jumped from CFAF 742 million to CFAF 924 million. This was due to a new personnel statute and the implementation of a 13th month of salary. C. The Performance Contract 5.6 The water tariffs had not been adjusted between 1983 and 1991. A water tariff study was carried out in 1990 by Consultants under KfW financing. It recommended to increase the tariffs every year in order to gradually reduce the losses, and to cover 57% of the costs in 1990, 64% in 1991, 69% in 1992, 76% in 1993, 90% in 1994 and 100% in 1995. Until now, these recommendations have been followed. The tariffs were increased in 1991, 1992 and 1993. The decision to increase the tariffs as of June 1, 1993 was signed on January 19, 1993, and is given in Annex 6. 5.7 A draft 1993-96 performance contract (Annex 7) was discussed during appraisal. In particular, according to its statutes, ONEA should have the responsibility for the planning, studies and construction of new works, which at the moment are the responsibility of the DEP, within the Water Ministry. The Ministry could then concentrate on sector policy, sector development, water resources management and rural the water supply sub-sector. 5.8 The performance contract, which will cover a three year period beginning on July 1, 1993, includes a number of provisions. The performance contract gives several targets which will be monitored during implementation of the Engineering Credit. The more important ones are the following: (a) Tariff increases, based on a tariff study, are to be implemented every June 1 through June 1995. These increases which are based on a new tariff policy, involve rather substantial increases and will allow ONEA to break even in 1995; (b) A rate of return covenant on net revalued fixed assets in operation should rise from -3% in 1993 to -1.5% in 1994 and 0% in 1995. The target for the year 2000, which will be specified in next performance contract, should be 5%; (c) The average collection period for private customers will be reduced from 3 months in 1993 to 2 months at then end of 1995; (d) With regard to the payment of Government bills, the present performance contract includes a provision that states that by October 31 of every year, an estimate will be made based on the actual consumption of the previous year. Based on this estimate, four equal bills will be established and the Government will be required to settle the bill for each quarter no later than March 31, June 30, September 30, and December 31. In addition, an action plan for the settlement of Government arrears is to be included. 15 (e) The collection rate, excluding the Government's bills, should be raised from 85% in 1993 to 90% in 1994 and 95% in 1995; (f) Ratios to reduce system losses such as volume of water billed to volume of water extracted (75% in 1993, 76% in 1994, and 77% in 1995); (g) The number of house connections, standpipes and water points, per employee of ONEA should be raised from 80 in 1993 to 90 in 1994 and 100 in 1995 (this together with the restructuring of the organigram (Annex 5) should lead to the reduction of staff from 610 in 1993 to 518 in 1995); (h) ONEA would only be responsible for towns of more than 10,000 inhabitants; (e) ONEA will have its accounts audited every year and will put in place by end of 1994 a computerized management system. The signing of a performance contract acceptable to the Association would be a condition of effectiveness of the proposed Engineering Credit (para. 7.2 (b)). 5.9 Since the performance contract ends June 30, 1996, there is a provision that another tariff study will be undertaken 6 months prior to its expiration, so that new tariffs and targets can be proposed. The timing of this will correspond well with the preparation of the OWSP. The respect of the performance contract by the Government and ONEA, as well as meeting the targets specified above, would be criteria for the financing of future investments. VI. JUSTIFICATION AND RISKS A. Justification 6.1 Without this engineering credit, the Government would be unable to proceed further with the preparation of the Ouagadougou water supply project. The project would contribute significantly towards the continued reorganization of the water sector, improving sector management, financial accountability and resource allocation. It would also contribute towards relieving the nation's debt problem by rendering the sector less dependent on budgetary allocations and by making ONEA responsible for servicing the existing and new debt related to the urban water supply sub-sector. Finally, the program, once implemented, would make an adequate quantity of safe water available to urban dwellers and improve the general health situation. B. Risks 6.2 The risks involve primarily the Government's willingness and capacity to impose financial discipline, to settle arrears in a timely fashion, to set regulations for prompt payment of water bills and to continue to allow ONEA to increase its water tariffs periodically in order to 16 meet its financial obligations. The Government is very aware that a financially sound sector, including ONEA, is a sine-qua-non condition for the further development of the sector. The use of an Engineering Credit will allow the Bank to verify: (a) Government Commitment; and (b) ONEA's capacity to respond before committing IDA funds to a massive investment program. To minimize the risks, the Association would have the right to suspend disbursements (a) should the Government not implement the program set out in the Water Sector Policy Letter or (b) if ONEA should fail to perform its obligations under the performance contract or the financing agreement (para. 7.3). C. Environment 6.3 As this project is financing only the studies and detailed engineering for the future project it is a category C. However, the future project will include a dam on the Nakanbe River and up to 5,000 people will have to be relocated. The TOR for the environmental assessment which is financed by this credit, have been reviewed by IDA. The ODs on the environment and on resettlement have been complied with. The expansion of the distribution system will result in an increase in the volume of water sold by water vendors and the amount of water stored at home. This increases the opportunities for the accidental pollution of the water. In addition, the production of wastewater will increase dramatically, and an increase in the disposal of wastewater is a potential negative environmental impact. These aspects have also been included in the TOR for the environmental assessment. Finally, the Development Credit Agreement will contain clauses specifying the following with respect to the environmental assessment, including the resettlement plan: (a) the objectives of the study should be made widely known so that all interested parties can express their opinions; (b) the conclusions of the study should be circulated widely in a form and a language that make it accessible to all interested parties; (c) the report should be made available to the public; (d) the points of view expressed by the population should be taken into consideration; and (e) that the draft report should be forwarded to IDA for its review and comments within 60 days of their receipt by Government; (f) within the framework of the resettlement plan for the population affected by the OWSP, the Government will consult with the population concerned according to mechanisms that respect their socio-cultural values in order to permit them to retain their living standards and socio-economic conditions. The Government should agree to forward the resettlement plan to the Association for review within 60 days after its receipt by the Government. These clauses will ensure that the major issues relating to the environment and resettlement are properly addressed in the reports. 17 VII. AGREEMENTS AND RECOMMENDATION 7.1 During negotiations, agreements were reached on the following points: (a) The Government will carry out the program contained in the Letter of Sectoral Development Policy; (b) The performance contract between the Government and ONEA will be implemented from July 1, 1993, and its conditions respected by both parties (para. 5.7); (c) With regard to the execution of the study on the environment, including the resettlement plan (para. 6.3), the following should be agreed to: (i) the objectives of the study should be largely diffused so that all interested parties can express their opinions; (ii) the conclusions of the study should be circulated widely in a form and a language that make it accessible to all interested parties; (iii) the report should be made available to the public; and (iv) the points of view expressed by the population should be taken into consideration. (d) Terms of Reference for a multi-year auditing contract acceptable to the Association (para. 4.7). 7.2 Conditions of effectiveness: (a) signing of a financing agreement acceptable to the Association between the Government and ONEA (para 4.4); (b) signing of a performance contract, acceptable to IDA, by the Government and ONEA (para 5.7); (c) selection of an auditor, acceptable to IDA, to audit ONEA's accounts (para 4.7); and (d) signing and effectiveness of the grant agreement between the CFD and the Government (para. 4.4). 7.3 Remedies. The Association would have the right to suspend disbursements (a) if the Government should fail to implement the Letter of Sectoral Development Policy or (b) if ONEA shall have failed to perform its obligations under the performance contract of the financing agreement. 7.4 Subject to the above conditions, the proposed project would be suitable for an Engineering Credit of SDR 3 million (US$4.25 million equivalent). 18 ANNEX 1 MINISTRY OF WATER BURKINA FASO FATHERLAN OR DEATH, WE SHALL OVERCOME! WATER SECTOR POLICY LETTER OUAGADOUGOU OCTOBER 1992 19 Annex 1 Page 1 of 11 WATER SECTOR POLICY LETTER INTRODUCTION An underdeveloped, landlocked country, Burkina Faso, like all African countries in the Sudan- Sahelian belt, is still deeply scarred by a drought that has been endemic for more than twenty years. Here, more than in other countries, water is the mainstay of environmental equilibrium, which explains why the vagaries of the climate have had such a disastrous and persistent impact on rural development and the domestic economy. Water management has thus become a prerequisite for economic and social survival. Indeed, for an essentially agricultural country, water is central to all development actions within the boundaries of socio-ecological equilibrium. In the context of implementing the "Seven-Year Broad Alliance Program for Development and Democracy," the role of the water sector is paramount. In Burkina Faso, the water sector accordingly ranks as one of the government's foremost priority concerns, a concern reflected in all facets of the country's development programs and in the wide range of efforts being undertaken by the entire nation, with the aim of implementing the National Water Policy effectively and consistently. I. OVERVIEW OF THE WATER SECTOR Burkina Faso's hydrographic system comprises three main watersheds: the Comoe, the former Voltas, and the Niger. Absolute average annual resources are estimated at 10 billion and 6 billion m3 for surface and groundwater, respectively. The country made major efforts to mobilize and develop these resources during the last decade and, in particular, as part of the popular development plans and programs (1984-90). At the same time there was a substantial improvement in know-how, management, and conditions for rational exploitation of these resources. However, given the limited exploitable resources and the immense and inexorably growing demands (steep population growth), the shortfall remains complex and intractable. This is why a great deal remains to be done in order to achieve the lofty goals of the National Water Policy. Implementation of the water policy is focused on the following areas: * urban and industrial water supply; * village and pastoral water supply; * agricultural water supply; * sewerage. 20 Annex 1 Page 2 of 11 1. Urban and industrial water supply Responsibility for managing water supply to urban and semi-urban population centers is entrusted to a government agency, the Office National de l'Eau et de l'Assainissement (ONEA). Prior to 1986, this agency managed nineteen (19) urban centers with an estimated combined population of 750,000 inhabitants. At the end of December 1990, the number of centers served by the Potable Water Supply (PWS) network rose to 41, with an estimated population of 1,350,000 and a coverage rate of 57%. However, seven (7) of the 41 centers are still equipped only with stand-alone water points. During this period, specific per capita consumnption levels were: Ouagadougou : 40 I/day Bobo-Dioulasso 40 I/day Other centers : 25 I/day Expansion of this subsector, however, is beset by a host of constraints and difficulties that limit its positive impact. The chief constraints are: (a) the scarcity and/or inadequate knowledge of exploitable water resources; (b) the strong population pressures in the cities and the chaotic growth of the urban centers; (c) limited financial, physical and/or human resources; (d) the high cost of PWS infrastructure works; (e) the overall operating deficit of the 41 PWS centers, which can be traced to operational losses incurred in managing the secondary centers, inadequate pricing, and inappropriate institutional and/or organizational measures on the part of the state management agency; (f) the absence of a master plan for the PWS centers; (g) the inadequacy and/or complete absence of steps to effectively implement sewerage measures. 2. Village and pastoral water su=lv The village and pastoral supply system is used to provide water to villages and to rural and pastoral areas. It has evolved as follows: * In July 1986 there were 14,598 modern water points (wells and boreholes), 7,020 of them permanent, which provided 36% of the rural dwellers' water needs, based on the per capita target of 20 liters/day. 21 Annex 1 Page 3 of 11 * The census carried out in March 1992 found 22,500 water points, 14,908 of them permanent, scattered unevenly among the country's 7,245 villages, thus raising the coverage rate to 72% for a rural population estimated at 8.5 million (average growth rate 2.7%). * During the same period it was observed that more and more water was being obtained from boreholes, which are steadily growing in number and which rose from 49.6% in 1986 to 67.2% in 1990. At the same time, sizable disparities in the distribution of water points were found among regions and provinces, ranging from 31% (Poni province) to 115% (Ganzourgou province). Implementation of the policy for supplying potable water to village communities is hampered by the following main constraints: (a) a growing failure rate in the construction of new water points, due to: * inadequate knowledge of the hydrogeological context; * unsuitability of technical operating methods and equipment; * the likelihood that virtually all the best locations were used for the initial installations. (b) the heavy population pressure in rural areas. (c) socio-cultural resistance. In fact, even where modern water points are available, in a number of localities some villagers can still be found drawing water from their traditional sources, posing a serious threat to individual and community health and hygiene. (d) inadequate maintenance of installations by beneficiary groups, which restricts their benefits and shortens the useful life of the water supply facilities. (e) the precariousness of the water supply for grazing stock. 3. Sewerage Sewerage is undeniably of paramount importance for public health since it contributes to the pre- servation and development of infrastructures and installations likely to promote economic and social advancement. In Burkina Faso, however, the actions and measures taken in this area are still highly embryonic or simply nonexistent. Action has so far been limited to the maintenance of community stormwater discharge works and the construction of small gutters in the two main urban centers (Ouagadougou and Bobo-Dioulasso). It has not been possible to carry out any sizable investment for almost a decade. However, a few regulatory, institutional and financial measures (sewerage tax) adopted in early 1984 had raised hopes that fresh progress might be made in this subsector. 22 Anex I Page 4 of 11 A review of the general status of sewerage facilities shows that initial results have been faltering and difficult owing to the following constraints: (a) the people's apathy and/or lack of health education with respect to sewerage measures; (b) despite the strong social component of sewerage in poor countries like Burkina Faso, it does not attract lenders; (c) institutional problems stemming from the presence of a host of intermediaries in the sewerage sector, with no coordinated action; (d) absence of a coherent national sewerage policy; (e) the need for extensive technical and financial resources to construct sewerage facilities; (f) the absence of a master plan for urbanization and sewerage, except in Ouagadougou and Bobo-Dioulasso. 4. Agricultural water supplv The importance of water supply to agriculture derives from the chronic vulnerability of rainfed farming to climatic risks. Indeed, an analysis of the food situation in Burkina Faso shows that agro- pastoral production is still as unstable as ever, despite the special attention paid to this sector as the engine of the national economy. Supplying water for farming by harnessing it with the aid of hydro-agricultural projects is seen as the surest way to compensate for rain shortfalls and thereby ensure the security of the nation's food supply, while preserving the ecosystem and providing an attractive return for the rural community. Irrigable soils are found along the main watercourses and represent a potential of some 165,000 ha, or 2% of usable farmland. Existing hydro-agricultural projects currently total 16,750 ha, or approximately 10% of the potential area. The breakdown of developed areas by degree of water management is as follows: * 10,500 ha fully managed; * 1,250 ha partially managed (improved bottom-land); * 5,000 ha plain bottom-land; * 72,050 ha anti-erosion sites. These areas are further broken down into "small and medium-scale irrigation" (less than 1,000 ha), which are being developed around some 800 existing small dams, and "large-scale irrigation" (Sosuco sugar cane, Sourou and Bagre plains). Irrigation currently accounts for about three-fourths of the country's rice production and the bulk of its truck crop produce, and also plays an important part in fruit growing. 23 Asn 1 Page 5 of 11 Irrigation similarly contributes to exports, notably of green beans, vegetables and fruit. The attention paid to irrigation through various measures and the implementation of helpful programs (strategy for upgrading and developing irrigated perimeters, subsequent mobilization of financing, etc.) has encouraged considerable expansion in recent years. Further development and expansion of irrigation, however, will depend on how successfully the following constraints can be lifted: (a) the lack of exploitable water resources; (b) the impoverishment of the soils; (c) illiteracy among beneficiary groups; (d) limited knowledge of the hydro-agricultural potential; (e) the fact that water projects have made inadequate allowances for socioeconomic aspects; (f) inadequate or weak follow-up of irrigation operations (agricultural credit, supervision and organization of marketing outlets for produce, etc.); (g) inadequate financial performance by hydro-agricultural projects. I. NATIONAL WATER POLICY AND ITS OBJECTIVES The national water policy has two basic objectives: (1) to help foster continuous improvement in the physical and health conditions of the people by bringing appropriate solutions to bear on water problems; and (2) to protect and restore the enviromnent by controlling the aggressive action of water, to prevent it from becoming a constraint on socioeconomic development. In short, the aim is to assure the long-term control and management of water resources within the boundaries of socio-ecological equilibrium. This policy must be based on a sound knowledge of water resources, which will be harnessed in accordance with the following priorities, pursuant to the provisions of the Agrarian and Land Reform: 1. earmark water on a priority basis for drinking and household needs, in order that all citizens can see their health and living standards improve, enabling them to participate in the country's development effort; 24 Annex 1 Page 6 of 11 2. take account of the absolute need to become self-sufficient in food as quickly as possible, in view of the extreme unreliability of the rainfall, with second priority going to water for agricultural and pastoral use; and 3. finally, manage water rationally in order to promote agro-industrial development and energy resources and to contribute toward environmental protection. III. OVERALL GOALS AND ACTION PLAN OF THE NATIONAL WATER POLICY 1. Overall goals Bearing in mind the country's socioeconomic realities, and within the framework of implementing the "Seven-Year Broad Alliance Program for Development and Democracy," the broad goals of the national water policy are: (a) to ensure permanent water resources within the boundaries of socio-ecological equilibrium; (b) to contribute toward the national economic reform and recovery policy; (c) to assist in implementing the Agrarian and Land Reform; (d) to involve beneficiary groups in the management of water supply facilities and increase their accountability; (e) to help improve the social conditions of the urban and rural population; (f) to give priority to maintaining or refurbishing and to upgrading existing water supply facilities; (g) to increase the effectiveness and management skills of the authorities involved in administering the water sector; (h) to adopt the "watershed" approach as an appropriate framework for planning, mobilizing and exploiting natural resources in general and water resources in particular. 2. Urban and industrial water supplv (a) Specific goals * contribute toward the harmonious implementation of the master urbanization and water supply plans; * help to raise the health standards of the people by providing acceptable potable water and sewerage service; 25 Pge 7 of 11 * incorporate economic rate of return criteria in new and follow-up activities financed under the public investment program (PIP); * ensure financial break-even in the management of urban water supplies. (b) Action plan The revised per capita objectives for the second Five-Year Plan 1991-95 are: Ouagadougou : 55 I/day Bobo-Dioulasso : 55 I/day Other centers 45 I/day The following actions will be taken: -- draw up PWS master plans; * progressively implement new water pricing measures; * carry out institutional, structural and organizational adjustments within ONEA; * draft measures and prepare the necessary groundwork for the so-called secondary centers to become economically and financially feasible; * strengthen water supply in Ouagadougou and Bobo-Dioulasso; * open secondary PWS centers incorporating cost recovery criteria. 3. Village and pastoral water suD1l1 (a) Speific goal * help to improve the living conditions and stability of the rural population; * help to promote the continuous development of livestock fanming; * help to implement the 'village management" approach ("gestion terroir"). (b) Action plan The quantitative targets of the second Five-Year Plan 1991-95 are to raise the coverage rate to 92% by: * construction of 3,880 new water points; * rehabilitation of 1,020 water points (wells and boreholes combined); 26 Annex 1 Page 8 of 11 The following actions will be taken: * training of local staff and transfer of know-how; * preparation of the second version of Burkina Faso's master plan for Potable Water Supply; * compilation of 1:500,000 hydrogeological maps covering the entire country; * creation of a national water information center; * provide training and consciousness-raising for beneficiary groups in the maintenance and operation of water supply facilities; * ensure uniform distribution of water points (planning) and standardization of equipment in cooperation with beneficiaries; * identify appropriate technical methods and equipment for controlling and exploiting aquifers; * ensure compliance with the pertinent standards; * rehabilitate and upgrade existing infrastructures. 4. Agricultural water suDDlv (a) Specific goals * support the development of agricultural production and contribute to domestic self- sufficiency in food; * with the aid of attractive returns, help to stem the drift from the countryside and promote the socioeconomic development of the rural population; * help to preserve and restore environmental equilibrium; * make rural communities fully accountable for the technical, agricultural and financial management of water supply projects; * complement the regional programs. (b) Action plan The quantitative targets of the second Five-Year Plan 1991-95 are: * to construct 13 medium-sized dams; 27 ,Ane 1 Page 9 of 11 * 2,713 ha under full water management; * 2,342 ha plain bottom-land and anti-erosion sites. The following actions will be taken: * adhere strictly to specifications for agricultural water supply installations; * implementation fully the "strategy for developing and upgrading irrigated perimeters," activities under which are being coordinated by the water sector; * rehabilitate and upgrade existing facilities; * proceed with construction of new irrigated perimeters; * improve the management and technical construction of infrastructure works; * assist in the training and organization of viable cooperative groups that will be made fully accountable for the technical, agricultural and financial management of their operations; * introduce innovative technology to reduce the cost of infrastructure works for irrigation; * help to ensure consistent follow-up measures with respect to agricultural production; * treat hydro-agricultural schemes as integrated development poles. 5. Sewerage (a) SRecific goals * draft a coherent and consistent national sewerage policy; * contribute toward the improvement of public health; * protect the environment. (b) Action plan The objectives established for the second Five-Year Plan 1991-95 are: * prepare and implement the master urban development and sewerage plans for 17 principal towns, including in particular Ouagadougou and Bobo-Dioulasso. The following actions will be taken: develop sewerage programs targeted preferentially to areas with health problems; 28 Annex I Page 10 of 11 * adhere strictly to the provisions of the water regulations; * take systematic account of the sewerage angle in potable water supply projects; * seek ways to improve the coordination of activities; * heighten the awareness of aid agencies and mobilize external and domestic resources to meet medium-term investment needs; * carry out a concerted campaign to provide the people with health education; * implement appropriate solutions to industrial effluents consistent with the situation of the country as a whole. IV. DEVELOPMENT STRATEGY FOR THE WATER SECTOR Analysis of Burkina Faso's climatic, demographic, environmental, and economic conditions high- lights the major challenge facing the water sector, one of the main pillars of the country's socioeconomic development: how to meet the already huge. but ever growing. demand for water when available resources are limited. unevenly distributed, and inexorably becoming more 2recarious as the ecosystem is steadily .ieraded. Major efforts have already been made to compile improved data on the country's water resources, notably by establishing: * a master potable water supply plan; * a geographic data system; * observation networks; and * data banks. Against this backdrop, even the best formulated goals and action plans will not solve the country's water problems by themselves but will need to be designed as part of an overall strategy that includes meaningful measures in the areas of human skills, institutional framework, regulations, and finances. This development strategy for the water sector should be built around three overriding concerns: 1. ensure reliable knowledge of water resources so that they can be mobilized efficiently; 2. manage the resource rationally so as to ensure lasting equilibrium between its development and the ecosystem. Resource management calls for continuous monitoring and forward planning by the Ministry responsible for water resources and should be linked to environmental control. 29 Annex 1 Page 11 of 11 3. guarantee that the resource is permanently available to future generations, while ensuring that its quality is preserved. To satisfy these concerns, the following are called for: 1. availability of appropriate tools for observing and monitoring water resources and the ecosystem, within the framework of a multisectoral program of applied research tailored to the country's socioeconomic realities. 2. availability of human resources with the skills needed to design, execute, operate and maintain the structures required to control and manage water resources, within the boundaries of socio-ecological equilibrium; training continues to be a powerful means of instilling these skills. This training will be organized at all levels -basic training, ongoing training, and advanced training- so as to help build up a local body of expertise. 3. the overriding need for an institutional and regulatory environment capable of stimulating and maintaining sound and dynamic cooperation among the different sectors of the economy, in the interest of balanced national development. 4. the creation, by way of support, of an adequate financing mechanism based primarily on government funds generated by the water sector itself, backstopped by the international community. Future action will be planned with this in mind. CONCLUSION The national water policy faces a real challenge which can no longer be avoided: to contribute to the pursuit of development that is in balance with the country's natural resources. Such development, tailored to Burkina Faso's socioeconomic and environmental conditions, can be achieved only within the framework of a multisectoral -indeed international- approach. All the country's energies and knowledge will need to be brought to bear through appropriate publicity and consciousness raising. The national water policy dovetails with this new outlook, which alone offers the best guarantee for the future. MINISTRY OF WATER OUAGADOUGOU BURKINA FASO OCTOBER 1992 30 ANNEX 2 Page 1 of 7 MINISTRY OF WATER GENERAL SECRETARIAT DIRECTORATE OF STUDIES AND PLANNING NATIONAL WATER AND SANITATION BUREAU TERMS OF REFERENCE FOR THE ENVIRONMENTAL IMPACT ASSESSMENT OF THE WATER SUPPLY PROJECT FOR THE CITY OF OUAGADOUGOU March 1993 31 ANNEX 2 Page 2 of 7 I. INTRODUCTION To be able to cope with the increased demand for and the lack of drinking water in the city of Ouagadougou during the dry season, on November 2, 1984, the Government of Burkina Faso, using financing provided by the Federal Republic of Germany, retained Lahmeyer Interna0tional to make a feasibility study of water supply for Ouagadougou covering the period 1985- 2005. This study proposes execution of: - A dam on the Nakamb6 River at Ziga (50 km from Ouagadougou) - A water offtake - A supply line - A treatment station - An expansion of the distribution system. The main characteristics of the project are as follows: Reservoir * Watersheds: 20,800 km2 * Capacity: 200 million m3, of which 150 million m3 usable Line * Nature: 2 cast-iron pipes, 1200 mm diameter * Length: 40,000 m Treatment plant: a facility for clarification, filtration and disinfection of the water Distribution and Storage: - 15 water towers of 37,500 m3 capacity - 147 km of lines by the year 2000 - 500 standpipes and 40,000 private connections Implementation of the project in its different components as described above will have an impact on the environment that must be clearly determined in order to minimize its effects. II. OBJECTIVES OF THE STUDY * To study the environmental impact of execution of the Ouagadougou City Water Supply Project. * To propose solutions to the different problems identified. 32 ANNEX 2 Page 3 of 7 III. REFERENCE DOCUMENT These Terms of Reference are based on "World Bank Operational Directive 4.00 Annex A: Environmental Assessments," and on national and regional legislation for protection of the environment. IV. CONTENT OF THE STUDY The object will be to justify in advance the choice of a water supply project and its consequences on the multiple utilization of water resources and to make a broadbrush study of the following effects: IV.1 Physical impacts on natural resources IV.l.1 Aspects connected with the areas to be used The studies will focus on: * Definition of the zone concerned * Inventory and diagnostic study of the existing natural resources, rare species to be protected (fauna, forest, flora) and archeological remains * The possibilities of using the trees at Ziga for lumber (construction of villages, workshops, other) or for fuelwood * Definition of an appropriate technology for charcoal production * The market for wood and determination of the means required * The feasibility of clearance * Any suggestions that could serve to limit degradation of soils and vegetation * Protection measures for flora and fauna; transhumance, etc. * The existing road system, plus any additional roads needed once the works have been completed * Compensatory measures for reestablishing populations of species to be protected and conserving any archeological relics * Measures concerning the quality of the treatment of the raw water and sludge. 33 ANNEX 2 Page 4 of 7 IV.1.2 Aspect connected with hydrology and the risks of silting up of the reservoir or breaking of the dam The studies will include: * The regime of the watercourse * Estimation of evaporation losses, their influence on the quality of the water stored and their downstream consequences (salinization, flooding, etc.) * Estimation of possible eutrophication of the reservoir and its influence on the quality of the water * The gathering of data on the river, from which information can be derived on the depositing of solid matter * If necessary, a series of measurements of solids carried by the Nakamb6 * Estimation of erosion caused by agriculture and stockraising * If the stagnant stretch is cleared, treatment or removal of the sediments * Proposals for the regular monitoring of the reservoir water quality, a preventive research program on pollutant wastes in the upstream watershed and surveillance of colonization by undesirable aquatic plants * The type of treatment to make the water potable, quality standards for potable water and utilization of sludge IV.1.3 Influence of the Ziga dam on the filling of Bagre * Gathering of data on the Bagr6 dam * Estimation of the influence of the Ziga dam on the water inputs and functioning of the Bagr6 dam, erosion of the bed and banks, modification of the hydraulic regime, effects on agricultural activities and changes in the aquatic ecosystem * Changes in downstream flow and their consequences * Estimation of resulting losses (environmental, financial). IV.1.4 Risks in case of breaking of Ziga dam * Inventory of areas affected (villages, population, fauna, vegetation, etc.) * Estimation of losses 34 ANNEX 2 Page 5 of 7 * Steps to be taken to reduce the risks and consequences to a minimum. IV.2 Social impacts IV.2.1 Population-related aspects The studies will focus on: * Listing of the villages and population concerned * Resettlement, size of affected population, identification of areas for resettlement and possible compensation. An acceptable rehousing plan shall be proposed. * A sociological survey on acceptability and participation by the population in the resettlement operations (inventorying and estimating of goods lost, reception by receiving communities, public infrastructure to be strengthened, training, health status, etc.). The report shall include the findings of interviews with the people concerned. * Study of the occupations the people engage in and proposals as to future activities the dam might generate. * The impact of the dam on land use and livestock * Study of the development and organization of fishery. IV.2.2 Aspects connected with health risks * Assessment of diseases due to proximity of the dam (malaria, schistosomiasis, etc.) in the villages around it * The risks of appearance of certain vectors as a result of the hydraulic conditions that will be created at the level of the spillway for example (simulium damnosum for onchocerciasis) * An information and awareness-rousing campaign among the people on the benefits and risks connected with execution of the project * Proposals on associated measures * A program to monitor the impacts and measures to mitigate any negative effects. IV.2.3 Aspects connected with the impact of execution of the project on the urban environment * Estimation of the increase in water consumption and its consequences 35 ANNEX 2 Page 6 of 7 * Wastewater disposal and possibility of recycling wastewater. V. COMPOSITION AND DURATION OF MISSION V.1 Composition of the mission Number Mission members Duration (man- months) 1 Water supply and environment specialist-Mission leader 8 1 Socioeconomist 4 1 Specialist in public health and tropical diseases 2.5 1 Botanist specialized in forest management 2.5 1 Remote sensing and cartography specialist 2 1 Hydrologist 2 1 Zoologist 1 1 Sociologist (woman) and team of interviewers 6 I Total 28 V.2 Duration of the mission The total duration of the mission is estimated at eight months, during which the consultant will perform the following services: - Make contacts with the different services and gather data and documents - Visits to the field, surveys, processing and analysis of data gathered - Discussion of the main conclusions with the technical services concerned - Writing of the reports. V.3 Reports The consultant will submit to the promoters of the project monthly reports on the progress of his work. Similarly, a report setting out the study criteria is to be submitted three months after the start of the study, a preliminary report six months later and the final version of the report after eight months. 36 ANNEX 2 Page 7 of 7 Number Mission members Duration Unit cost Total cost man-months CFAF CFAF Water supply and environment 1 specialist-Mission leader 8 6,000,000 48,000,000 1 Socioeconomist 4 4,500,000 18,000,000 Specialist in public health 1 and tropical diseases 2.5 4,500,000 11,250,000 Botanist specialized in 1 forest management 2.5 4,500,000 11,250,000 Remote sensing and 1 cartography specialist 2 4,500,000 9,000,000 1 Hydrologist 2 4,500,000 9,000,000 1 Zoologist 1 4,500,000 4,500,000 Sociologist (woman) and team 1 of interviewers 6 6,000,000 36,000,000 Total 28 147,000,000 Overhead 30X 44,100,000 Travel 10,000,000 Grand Total 201,100,000 Rounded Total 200,000,000 37 ANNEX 3 POTABLE WATER SUPPLY FOR THE CITY OF OUAGADOUGOU = -- 0 DRAFT TERMS OF REFERENCE -==0==---U JANUARY1993 I 38 SUMMARY I. INTRODUCTION I.1 GEOGRAPHY I.2 SOCIOECONOMIC SITUATION 1.3 EVOLUTION OF THE PWS SYSTEM II. OBJECTIVES I1.1 ENGINEERING ASPECTS 11.2 FINANCIAL AND ECONOMIC ASPECTS III. PWS STATUS III.1 STATUS OF FACILITIES IN 1992 III.2 CURRENT STATUS OF PROJECT IV. SCOPE OF CONSULTING SERVICES IV.1 METHODOLOGY IV.1.1 Formulation IV.1.2 Overall mission IV.1.3 Liaison with executing agency IV.1.4 Procedure IV.2 BASIC STUDIES IV.2.1 Hydrological studies IV.2.2 Geological and geotecnical studies IV.2.3 Topogaphical studies IV.2.4 Environmental study IV.2.5 Design criteria 39 IV.3 DETAILED ENGINEERING IV.3.1 Catchment IV.3.2 Treatment IV.3.3 Supply IV.3.4 Storage IV.3.5 Distribution IV.3.6 Simulations IV.4 ECONOMIC AND FINANCIAL STUDY IV.5 SYSTEM MANAGEMENT V. REPORTS AND IMPLEMENTATION SCHEDULE V.1 GENERAL V.2 PRELIMINARY REPORT V.3 PROGRESS REPORTS V.4 TECHNICAL REPORTS V.4.1 Report on basic study and design criteria V.4.2 Geological, geotechnical and topographical report V.4.3 Detailed pre_iminary designs V.4.4 Economic and financial study * Socioeconomic report * Economic and rmancial report * Report on system management V.5 BIDDING DOCUMENTS V.6 APPROVAL OF REPORTS V.7 IMPLEMENTATION TIMETABLE 40 ANNEX 3 Page 1 of 21 I. INTRODUCTION 1.1 GEOGRAPHY Burkina Faso is a west African country of 274,800 km2 lying within the loop of the River Niger, some 1,000 km from the Atlantic coast. Ouagadougou, the capital, is the country's largest city. It is situated on the central plateau in the middle of the country, at an elevation of 300 m. Its coordinates are: latitude 12-21' north and longitude 1 31 ' west. It has a tropical climate of the Sudano-Sahelian type, characterized by alternating seasons of unequal length: a short rainy season from June to September and a long dry season from October to May. The city lies between isohyets 800 and 1000 mm. The tropical regime of the hydrographic system reflects rainfall levels. It is essentially defined by three main watersheds: * that of the Niger in the north * that of the Nakanbe, Nazinon and Mouhoun in the center * that of the Comoe in the south-east. Ouagadougou is located in that of the center. 1.2 SOCIOECONOMIC SITUATION The "Reference Document" prepared in 1985 presents the socioeconomic situation of the city. Economic activity in Ouagadougou is diversified, with the tertiary sector dominant (79%) over the secondary (14%) and primary (7%). At the time of the 1975 census, the city of Ouagadougou had 250,000 inhabitants. The 1985 census showed a population of 431,000 inhabitants, giving a growth rate of 9% a year. The growth rate for the country as a whole is 2.68% a year. The urbanization rate in the city is growing rapidly, with large migratory movements from the rural areas into the cities. The breakneck pace of urbanization in the city of Ouagadougou is causing critical problems that must be addressed without delay, the most important being that of potable water supply. 1.3 EVOLUTION OF THE PWS SYSTEM The city of Ouagadougou's potable water supply consists of a conventional surface supply system built about forty years ago. The basic facilities at the time comprised an intake on Dam No. 3, a treatment station with a capacity of 620 m3/hr situated at Paspanga, and a rudimentary network of distribution mains made of cast 41 ANNEX 3 Page 2 of 21 iron and asbestos cement which supplied the city's chief administrative, commercial, religious and residential centers. The systemn has evolved considerably since then: 1951: Basic system 1970: Supply from the Loumbila dam added 1977: Construction of the Danish station 1984: Start of the Feasibility Study 1985: Construction of stand-alone water stations 1986: Rehabilitation of the Danish station 1987: Independent network at Pissy 1990: Start of reinforcement works - Emergency Measures 1991: Independent networks at Nioko I and Nioko II. The Emergency Measures carried out from 1990 to 1992 had the effect of rehabilitating and strengthening the system. * Catchment : construction of a canal and pumping station to harness an additional 600 m3 of raw water. * Treatment : construction of a new treatment facility with a capacity of 400 m3/hr. * Storage and distribution : construction of 4 new water towers with a total capacity of 5,000 m3. Laying of separate delivery mains and distribution networks 180 km long, with 188 water hydrants. The purpose of the Feasibility Study begun in 1984 by the consulting firm of LAHMEYER International was to identify alternative solutions for supplying water to the city. After reviewing a number of alternatives, it recommnended an approach to catchment, treatment, supply and distribution which was written up as a Summnary Preliminary Project (SPP). The results of the study were presented to a lenders' conference in Frankfurt, Germany, on November 19 and 20, 1992. The lenders unanimously agreed on the technical and financial feasibility of the project and on the need for a few adjustments. 42 ANNEX 3 Page 3 of 21 II. OBJECTIVE The purpose of the present study is to prepare an implementation blueprint to be used as a basis for competitive bidding on and execution of a project to supply potable water to the city of Ouagadougou in the time frame 2000 to 2005. The study will comprise two parts: * technical aspects * financial and economic aspects. II.1 TECHNICAL ASPECTS The technical studies proposed consist in putting together a construction blueprint containing design notes, plans and technical drawings, precise quantities, and the necessary bidding documents, for construc- ting water supply infrastructure works to meet Ouagadougou's potable water needs through 2005. 11.2 FINANCIAL AND ECONOMIC ASPECTS The study will make it possible to determine the repercussions of the project on the borrower's financial situation and its impact in terms of organization and staffing. It will also use economic analysis to determine the project's economic and financial rate of return based on current and projected revenues and on the financing plan. The different stages of the assignment are: Stage 1 * Preparation of the implementation plans and compilation of the bidding documents. Stage 2 * Publication of the documents, screening, negotiations, and drawing up of the draft contracts, in cooperation with the Management. The different stages may be covered by different procurement contracts. III. PWS STATUS Population In 1990 the population of Ouagadougou was estimated at 671,000 inhabitants. It is currently (1992) estimated at 768,000, giving a growth rate of 7%. The following growth rates have been assumed for project purposes: * from 1990 to 1995: 7% per year * from 1996 to 2010: 5% per year. 43 ANNEX 3 Page 4 of 21 III.1 STATUS OF FACILITIES IN 1992 Existing system The central system: The central system comprises a surface water catchment facility, a treatment station, storage reservoirs, and the distribution network. * Catchment Dams Year Commissioned Capacity Average annual Usable volume Built in m3 x 106 usable volume in dry year Ouagadougou 1934 1951 6.11 3.31 3.26 Loumbila 1947 1970 35.50 10.80 2.49 The intake at Ouaga comprises three 175 m3/hr pumps; the Loumbila intake consists of three 480 m3/hr pumps and a 600-mm cast-iron main 18 km in length. * Treatment Comprises the following facilities: Units Date Cacity Degremont 1954 620 r3thr Static 1971 200 m3thr Danish 1977 600 r3thr KfW (Emergency Measures) 1992 800 m3/hr 44 ANNEX 3 Page 5 of 21 Storage Water Date Location Height Capacity Towers (Sector) in m in m3 Rl 1977 25 11 500 Kamsaoghin 6 9 1,000 Koulouba 1972 5 10 1,500 Gounghin 1965 9 3,000 Cissin 16 10 500 Camp 9 10 500 Pissy 1987 17 17 500 R2 1992 28 28 500 R7 1992 10 32 2,000 R8 1992 29 22 1,500 R9 1 1992 16 15 1,000 * Distribution network This comprises 500 km of primary and secondary distribution mains serving hydrants and branch connections. * Decentralized system This comprises the Nioko 1, Nioko II and Pissy independent networks and the stand-alone water stations. Independent Date No. of Throughput Length of Population networks boreholes in m3/hr network (Im) (inhabitants) Nioko I 1992 5 77.0 44,392 52,000 Nioko II 1992 6 69.0 20,956 25,000 Pissy 1987 13 123.2 37,778 50,000 * Water stations There are 28 water points scattered throughout the peripheral sectors. 45 ANN~EX 3 Page 6 of 21 111. 1 CURRENT STATUS OF PROJECT In 1984, to meet the increase in demand and the lack of potable water in Ouagadougou during the dry season, the authorities initiated feasibility studies that have just been brought to completion thanks to financial assistance from KfW of the Federal Republic of Germany. The cost of the project is estimated at CFAF 88 billion, of which CFAF 45 billion is for the first stage (through 2000). To mobilize the necessary financing, the project was submitted to a donors' conference held in Frankfurt (FRG) on November 19 and 20, 1992. The participating lending agencies: * praised the quality of the study carried out by LAHMEYER International. - found the cost of the project high. * stated that they were willing to finance the works. * recommended that the first stage of the project be tailored to ONEA's financial and organizational capacity. IV. SCOPE OF CONSULTING SERVICES IV. 1 METHODOLOGY IV. 1.1 Formulation The consultant will develop appropriate methods to ensure full implementation of the Study within the lead times established for its services. It will demonstrate the technical and financial validity of its bid using a methodology appropriate to the situation. To this end, before starting the works, it will specify in detail the work to be performed by its different agents and the resources and equipment to be brought on site for purposes of the project. The entire study will be carried out in close collaboration with the Client. IV. 1.2 Overall mission The consultant will be fully accountable for all stages of the project up to final acceptance: * Preparation of the construction documents (comprising design notes, plans and technical drawings, precise quantities, and economic and financial appraisal) and compilation of the bidding documents. 46 ANNEX 3 Page 7 of 21 Publication of the bidding documents, screening, negotiation and drawing up of the draft contracts in cooperation with the Management. IV. 1.3 Liaison with executing agency The consulting firm will be required to maintain continuous liaison with the executing agency. ONEA, which is the executing agency responsible for overseeing the engineering works, will establish an executing unit to monitor and directly supervise the conduct of the studies and other works. The consulting firm will arrange for professional and technical staff from the executing unit to participate in the tasks to be performed by the expatriate personnel, so as to maximize the scope for transfer of technical know-how. IV.1.4 Procedure In performing its services under the implementation study the consultant will adopt a similar procedure for all the different components of the system: A: Catchment B: Supply C: Treatment D: Storage E: Distribution The consultant's specific assignments address the following aspects: * basic studies * detailed engineering * financial and economic study * system management * procedures for carrying out the works. IV.2 BASIC STUDIES The consultants will collect, compile, analyze and process the basic data required in order to carry out the study. Existing data, notably from the Feasibility Study, will be supplemented as necessary by: 47 ANNEX 3 Page 8 df 21 field investigations laboratory tests. IV.2.1 Hydrological studies The basic hydrological report in the Feasibility Study dates from September 1986; its purpose was to evaluate different alternative approaches to solving Ouagadougou's water supply problem. Briefly, this report contains the following: * Overview of the existing reservoirs, i.e. Loumbila, Ouagadougou, those in the Loumbila watershed (3), and those in the Ouagadougou area (4). * new water supply alternatives based on: - the Black Volta (R. Mouhoun) - the Red Volta (R. Nazinon) - the White Volta (R. Nakanbe) In the case of the While Volta variant, the consulting firm: * calculated average inflows. * calculated peak inflows. * estimated evaporation at the various potential sites. * compared the potential White Volta sites. Pursuant to the supplementary TOR of 1988, the consulting engineers revised the water inventory on the basis of a hydrological study that placed more emphasis on the sites at ZIGA I and II and on Loumbila. The firm accordingly tabulated inflows, requirements and evaporation, and calculated optimum sizing for the impoundment, which it put at 200 million m3. For the implementation study, the consultant should check, update, and further refine the data from the Feasibility Study, as follows: (1) With respect to the watershed: * prepare an inventory of dams capable of affecting the filling of ZIGA, complete with their characteristics and any necessary recommendations. * verify the surface area and include a location drawing showing existing stream-gauging stations. * determine runoff coefficients, overall gradients, and the state of degradation of the hydro- graphic system. * determine characteristic times, permeability, etc. 48 ANNEX 3 Page 9 of 21 (2) Inflows The stream-gauging stations date from the 1950s. The time series used by the consulting firm for the Feasibility Study comprise data from 1954 to 1983, that is, for approximately thirty years, with data missing for some years. The series should be supplemented with data from 1984 to 1992. The data relate to rainfall and flows at the measuring stations. These data will be used to update the calculations of inflows and flow rates. For each case and for each structure the consultant will specify the average and maximum inflows, flood discharges (flood hydrograph), evaporation and evapotranspiration, and entrained solids. (3) Impoundment The site chosen for the dam is ZIGA II on the middle course of the R. Nakanbe at kilometer marker 1280, approximately 50 kmn east of Ouagadougou. Conditions were evaluated as part of the Feasibility Study, but only in overall terms. Implementation will require verification and refinement of selected data to permit fine tuning of the structures, specifically: * data on the reservoir in terms of inflow and discharge rates. * effective and usable volumes * capacity of the reservoir * evaporation * flood stage of the project * sedimentation and silting * dead storage. The consultant will also carry out simulations of reservoir operation and management, and make recommendations regarding any supplementary works or measures to be put in place to permit efficient management of the reservoir. IV.2.2 Geological and geotechnical studies The geological and geotechnical studies carried out under the Feasibility Study were mainly concerned with the potential sites at Loumbila and Ziga, as well as with borrow sites. The field investigations carried out on-site under the Feasibility Study comprised: 49 ANNEX 3 Page 10 of 21 * visual reconnaissance visit * drilling of reconnaissance wells 3 to 10 meters in depth * test drillings along the alignment with coring to a depth of 10 to 30 meters * test drillings in cuts 3 to 5 meters in depth. The laboratory tests, trials and analyses carried out during the Study comprised: * type of soil (identification) * density * water content * permeability * Proctor test * shear resistance * dispersivity * aggressiveness to concrete. Deposits of materials identified within a 30- to 40-kilometer radius are: * sands and gravels: Kourikiaka, Basbedo, Sawana * clays: valley * aggregates for concrete: quarries at Wayen, Pissy, Ziniar6. The geological and geotechnical studies to be carried out under the implementation study are aimed at accurately determining: * the quality of the foundation and supporting soils of the dam and associated structures * the degree of permeability or imperviousness of the reservoir basin * the availability and quality of materials for fill and for mixing concrete. On completion of these studies, the consultant will make a final decision regarding the type of structure and the kind of foundation treatment required, specifically cememt grouting and its characteristics (number, spacing, depths). 50 ANNEX 3 Page 11 of 21 Investigations on site will include: * geological photo-interpretation of the site and the surrounding area based on aerial photographs taken by the Burkina Geographic Institute (IGB). * test drillings in cuts, reconnaissance boreholes varying in depth from 3 to 30 meters around the sites of the structures (dikes, channel, spillway, intake, treatment and pumping stations, access roads, main supply line, storage reservoir). * reconnaissance wells to investigate geological strata at the potential locations of borrow materials. Laboratory analyses of typical samples will be performed on a meaningful number of the test drillings conducted, i.e. at least 10%, and will be used to obtain information on: * density * water content * particle size distribution * Atterberg limits * Proctor and Standard Penetration Tests (SPT) * permeability * resistance * shear * dispersivity * triaxial test * aggressiveness to concretes * organic content * soundness test * seismic surveys. The criteria for selecting deposits will be a function of: * the quality of the deposit in terms of particle size distribution 51 ANNEX 3 Page 12 of 21 * the volume of material available in the deposit * the haulage distance between the deposit and the site of the dam. The consultant could develop other additional methods of analysis if it considers them necessary and will specifically examine the recommendations made in the Feasibility Study regarding the supplementary investigations which were to be carried out but which were left open, namely: * risk of suffusion of the sands in the bed and flood zones * degradation of the foundation earth due to the dispersivity of cohesive soils under the influence of an underflow current * aggressiveness to concrete of the soils and groundwater of the bed * availability of filter material vs. the use of geotextiles * heaving and changes in soil characteristics due to water absorption * adhesion of foundation layers to bedrock * physical and mechanical properties (bearing values) of the foundation soils of the structures (dam, spillway, channel, stations, access roads, pipeline, observation wells, portals, etc.). IV.2.3 Topographical studies As part of the Feasibility Study of Ouagadougou's PWS, the Client arranged for local contractors to compile a 1:10,000 monochrome map of the Nakanbe valley (formerly the White Volta). The map in question covers only a strip 2.7 km wide, with the R. Nakanbe in its center, bounded to the north by the bridge carrying the Ouagadougou-Kaya highway and to the south by that carrying the Ouagadougou-Koupela road. A more accurate topographical survey to a scale of 1:2,000 was made along the axis of the dam by the consulting firm of LAHMEYER, with the assistance of technicians from the National Bureau of Dams and Hydro-agricultural Projects (Office National des Barrages et des Amenagements Hydro-agricoles [ONBAH]). The assignments as far as topography is concerned can thus be summarized as follows: 1. Site conditions The 1:10,000 monochrome map must be expanded to include the contiguous areas up to 0.5 kmn' on either side of the river and then enlarged to a scale of 1:5,000. Y' The original reads 0.5 m. A typo is suspected. 52 ANNEX 3 Page 13 of 21 The map should cover the entire reservoir area of the dam to permiit identification of the villages to be relocated. 2. Layout plan and situation drawings These should cover the following: * the dike * the spillway * the channel * the treatment station * the pumping stations * the main supply line * the reservoirs * the ancillary structures. 3. Grading The precise elevations of the structures will need to be determined to enable the various offsets to be calculated. In the case of the main supply line, the access roads, flyover structures or crossings (over depressions), and the power line, in particular, both the longitudinal profiles and the cross sections will need to be calculated. IV.2.4 Environmental study Separate terms of reference have been prepared for the environmental study for the Ouagadougou PWS project. This study is to be carried out in parallel with or before the implementation study by a different consultant or through subcontracting. The consultant awarded the implementation study will be required to collaborate with the consultant for the environmental study and to take into account, and comment on, the findings of this study when preparing the implementation study. IV.2.5 Design criteria The consulting firm will propose the design criteria on which the design of the project is to be based. 53 ANNEX 3 Page 14 of 21 These criteria should be based on local operating conditions or standards deemed satisfactory on the strength of earlier reports with respect to local experience or standard, recognized engineering practices. These should be discussed and agreed with the Client. The criteria must also take account of the recommendations by the round-table held in Frankfurt in the Federal Republic of Germany on November 19 and 20, 1992. The criteria will encompass the parameters relating to each component of the system, namely: * catchment * supply * treatment * distribution and storage. IV.3 DETAILED ENGINEERING Each component of the system will be covered by: * a design note * detailed engineering plans and drawings * nprecise bills of quantity. IV.3.1 Catchment Catchment comprises the dam itself, its associated structures, and the intake. It will be necessary to update the design features of the different structures by calculating: * for the reservoir: its capacity, dead storage, minimum operating level, normal design elevation, and peak impounding head, height of the dike, and year-to-year regulation. * for the flood spillway: its length, height of overflow, and wire drawing * the stilling pond * the water intake * the positioning of the outlet works together with possible alternatives * evaporation. 54 ANNEX 3 Page 15 of 21 IV.3.2 Treatmnent Treatment comprises the actual treatment structures (flocculator, clarification basin, filters, tank), the upstream and downstream pumping stations, and appurtenant structures (service buildings, living quarters, storage sheds, etc.). It will be necessary to define: * raw water requirements * the capacity of the different structures * their type * reserves * electricity supply. IV.3.3 Supply Supply comprises the main supply line and different associated structures (observation well, crossing structures or flyovers), and water handling devices (valves, air valves, outlets, etc.). It will be necessary to define: * the minimum and maximum flows * the characteristics of the supply line (type, diamneter, length, quality) * the dynamic heads * the linings * alignments (longitudinal profile and cross section) * crossing structures (flyovers) * water hamner and protective measures * handling devices (valves, outlets, etc.). IV.3.4 Storage Storage comprises the different water reservoirs. It will be necessary to determine: 55 ANNEX 3 Page 16 of 21 * their volume (operating reserves, firefighting, etc.) * their distribution and architecture * their service pressures * their heights * their construction materials and imperviousness * the hydraulic equipment required * their stability. IV.3 .5 Distribution This is made up of the primary, secondary and tertiary networks at the various stages of the project time frame. These networks should be defined in terms of: * the alignments of the supply conduits * material and diameters * the profile of the conduits * their service pressures * the number of hydrants and their location * the networks' water handling devices * diagrams of joints * etc. IV.3.6 Simulations The consulting firm will carry out the following simulations: * operation of the dam (release, intake, evaporation) with details of year-to-year regulation * operation of the spillway, the stilling basin, and outlet works (wire drawing, flood hydrograph, etc.) * operation of the station with the different regulating and control devices 56 ANNEX 3 Page 17 of 21 a operation of the main supply line showing its control and handling devices * operation of the storage reservoirs and their controls * overall operation of the network * optimization and mathematical model of distribution * integration and operation of the proposed system * development of software for project management by the Client. IV.4 ECONOMIC AND FINANCIAL STUDY The Feasibility Study calculated the capital and operating costs of the project and performed an economic analysis under different scenarios. The cash flow was calculated for: * the existing system plus Stage I and Stage II * the existing system plus Stage I * Stage I * Stage II. A sensitivity analysis was carried out to assess performance in the event of deviations in the factors (change in water prices, lower network efficiency, more modest consumption). The consultant will be required to make a financial and economic reappraisal of the resized project. It will calculate detailed estimates of: (a) Project costs * basic costs * unit costs * capital costs * costs of existing facilities * operating costs * additional costs (financing and related charges) (b) Cost prices 57 ANNEX 3 Page 18 of 21 * the dynamic financial cost per m3 of water * the dynamic economic cost per m3 of water. (c) The internal rate of return * the internal financial rate of return * the internal economic rate of return. (d) Cash flow The cash flow will be calculated using at least two different rates of interest. The consultant will draw up a financing plan and will examine in particular the impact of the project on ONEA's financial condition. It will also carry out a sensitivity analysis to test deviations in various factors, such as: increase in the rate of losses (20 % instead of 15 %), more modest consumption, and different movements in water prices. IV.5 SYSTEM MANAGEMENT The analysis performed in the Feasibility Study on the overall structure of ONEA and its personnel will be updated, expanded and deepened since the project must be resized in keeping with ONEA's tech- nical and financial capacity. The consultant will accordingly need to carry out a diagnosis: * of its institutional framework: it will be necessary to review the general framework within which ONEA is evolving, to identify potential impediments to satisfactory project implementation and manage- ment, and to propose improvements. * of ONEA: its organization, technical capacity, human resources, financial situation, etc. This diagnosis will also be accompanied by suggestions of an organizational, technical, financial and personnel nature designed to enable ONEA, in liaison with the Ministry of Water, to successfully execute the project and manage the facilities to be constructed. With particular reference to staffing, the consultant will determine any additional requirements and will propose a program to train existing personnel and to recruit the new staff required to execute the project and manage the system in the future. V. REPORTS AND IMPLEMENTATION SCHEDULE V.1 GENERAL The project promotor and its financial partners attach great importance to adherence to the lead times for preparing and submitting the different reports required during the study. The working language 58 ANNEX 3 page 19 of 21 will be French, and all documents and reports will be drafted in French. An English translation will also be required. With the exception of the progress reports, the preliminary version of each report will be submitted simultaneously for review and approval to the executing unit -10 copies- and to the financing group- 2 copies. The preliminary versions of the technical reports will be discussed and agreed with the executing unit within six (6) weeks following their submission. The technical reports will be revised and submitted in final form to the executing unit in the Ministry of Water -10 copies- and to the lender - 2 copies- one month after approval of the provisional version. V.2 PRELIMINARY REPORT The initial report will be submitted within one month following the start of the study. It will present the consultant's work program and define the scope of the study, with comments on the TOR and a work program for each task. It will specify the submission dates for (the preliminary version of) each of the technical reports and will name the experts (with their professional experience) actually assigned to work on each task. The timetable proposed for carrying out the study will be broken down into tasks and sub-tasks and presented in graph form. V.3 PROGRESS REPORTS These reports will be submitted in five copies to the executing unit within the Ministry of Water and in one copy to the lender. They will be prepared monthly. The reports will give a concise account of the work done and in progress, the number of staff, the time devoted to each task, and an exhaustive list of any problems encountered that are likely to lead to delays in carrying out the study, together with the remedies advocated. The reports will indicate the status of billing, in addition to a recapitulation of the reports [to date]. V.4 TECHNICAL REPORTS V.4.1 Report on design criteria The consultant's report will reflect all the consequences of the decisions taken during the 1st Conference of Lenders for the Ouagadougou PWS Project, held in Frankfurt on November 19 and 20. The basic data obtained will be supplemented and presented in this report, together with the consultant's comments and suggestions regarding pertinent proposals. It will also record in this report all the design criteria reviewed, refined or agreed with the executing unit. V.4.2 Geological, geotechnical and topographical report 59 ANNEX 3 Page 20 of 21 This report will present the findings of the geological, geotechnical and topographical investigation program covering the sites of the project's main components, notably the dam, the treatment station, the access roads, the main supply conduit, and the reservoirs. It will be sufficiently accurate to allow structural design work to proceed, together with the necessary final plans. V.4.3 Detailed preliminary designs This report will contain an exhaustive recapitulation of the design of the structures proposed, complete with their different design features. It will also include, for each component, detailed preliminary drawings, together with design notes. These detailed preliminary designs will include architectural plans, structural drawings, drawings of electrical and mechanical installations, and drawings for the civil engineering works and pipelines. The detailed preliminary designs will be presented as separate reports for each structure: - the damn and associated structures - the treatment station and pumping stations - the main supply line - the water towers the distribution network V.4.4 Economic and financial study This report will be in three sections: * a socioeconomic section * an economic and financial appraisal * a section on system management. V.5 BIDDING DOCUMENTS The documents will be drawn up in confornity with the provisions of the "international contract conditions applicable to contracts for works and services" published by the International Federation of Consulting Engineers (FIDIC). They will comprise: 60 ANNEX 3 Page 21 of 21 * notice of prequalification * prequalification package * bidding package, consisting of: - instructions to bidders - submission and attachment - model agreement - model guarantee - model performance bond - contractual conditions - plans and drawings * confidential estimate of costs (±5% margin of uncertainty) V.6 APPROVAL OF REPORTS The maximum lead time for approval of any report is two months. If no comment is forthcoming from the execution unit within two months following its submission, a report shall be deemed approved as presented, provided, however, that it shall have been submitted no later than the date specified in the preliminary report. V.7 IMPLEMENTATION TIMETABLE The works set forth in the present Terms of Reference shall be completed within fifteen (15) calendar months from the date of the authorization to commence the works: T = date of signature of the contracts and authorization to commence the works T + Ilmonth = start of the Study T + 2 = Preliminary Report T + 6 = Report on Design Criteria T + 8 = Geological, Geotechnical and Topographical Report T + 10 n = Economic and Financial Study and Report on System Management T + 12 " = Detailed preliminary designs T + 15 " = Bidding Documents. 61 ANNEX4 PROJECT ADVISQR Job Description Position: Advisor to ONEA's Development Department Director. Qualifications Water engineer with a good knowledge of design, implementation, operation and maintenance of large urban water supply systems. Experience: 10 years of management of urban water supply projects. Responsibilities: (a) Advise the Director of the Development Department (b) Ensure preparation and review of designs, studies and documentation needed for project execution (c) Arrange for review and, where applicable, for approval of documentation by ONEA, other agencies of the Government of Burkina Faso, IDA and other financing agencies (d) Prepare and coordinate with consultants, ONEA, Government agencies and the co-financiers, the bidding process (e) Oversee actively in the supervision of works and develop procedures for monitoring and reporting on project implementation (f) Advise on the selection of staff for operation and maintenance functions (g) Assist in preparing instructions for operation and maintenance of the water sypply system (h) Participate in the implementation of the training program for ONEA's staff (i) Prepare quarterly progress reports on project implementation for ONEA, IDA and other cofinanciers (j) In carrying out this assignment, the project advisor will to the maximum extent possible, train local counterpart staff STAFFING New ONEA Organization Chart Target Year 1993 Sedio AParogramog t Gwl orrl OFI D | Opsabrr &| ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Faal I n | ,Direlrt Hjiman P |oumW | CwVra Wodmliop J i F l at Water ProducOon, Personral5m5It ACOIflflg1s S 1nkation Service GU&* SwuOW ProdioA dmin Cssrae i Operat1 Servic Fiwnar T,nra Srvc Seink c gI I 2- u DwII =., , I ef 1 I I r Isu IIs I c ' SeO1 Stat A501D Mac Lasw..2!0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~sife ysz 100 ~~~*5 Sedion ~~~~~~~~~~~~100 - 250 250 - Soo SW0- 1000 1000 - 1500 >1500 I_I arp.w53926 ANNEX 6 63 Page 1 of 5 MINISTRY OF WATER MINISTRY OF INDUSTRY, TRADE AND MINES DECREE No. 93/0001 MICM/EAU FIXING THE SELLING PRICE OF WATER PRODUCED AND DISTRIBUTED BY THE NATIONAL WATER AND SANITATION BUREAU (OFFICE NATIONAL DE L'EAU ET DE L'ASSAINISSEMENT (ONEA)) THE MINISTER OF WATER THE MINISTER OF INDUSTRY, TRADE AND MINES Having regard to the Constitution of June 2, 1991 Having regard to Decree No. 92/160/PRES of June 16, 1992, appointing the Prime Minister Having regard to Decree No. 92/161/PRES of June 19, 1992, establishing the composition of the Government of Burkina Faso Having regard to Order No. 77-007/PRES of March 1, 1977, regulating the price system Having regard to Order No. 74-051/PRES of August 9, 1974, on the establishment, prosecution and prevention of offenses in connection with prices, together with its amendment No. 77- 001/PRES/CODIM of January 7, 1977 Having regard to Decree No. 85/387/CNR/PRES/EAU establishing the National Water and Sanitation Bureau (Office National de l' Eau et de L'Assainissement -- ONEA) Having regard to Decree No. 85/388/CNR/PRES/EAU approving the Statute of the National Water and Sanitation Bureau Having regard to the Decision of the Council of Ministers adopted at its session of April 24, 1992, 64 ANNEX 6 Page 2 of 5 HEREBY DECREE AS FOLLOWS: ARTICLE 1: The selling price of the water produced and distributed by the Office National de l'Eau et de l'Assainissement (ONEA) in the towns served by ONEA is hereby fixed as detailed in Annexes I, II and III attached to this decree. ARTICLE 2: Violations of the provisions of this decree, which will enter into effect as of June 1, 1993, will be punished in accordance with current economic legislation ARTICLE 3: This decree revokes all previous provisions contrary to it, specifically those of Joint Decree No. 00022/MICM/EAU of June 26, 1992. ARTICLE 4: The Director General of the Office National de l'Eau et de l'Assainissement and the Inspector General of Prices and Economic Affairs are hereby charged, each in his particular sphere, with ensuring application of this decree, which shall be registered, published and communicated wherever necessary. Ouagadougou, January 19, 1993 THE MINISTER OF INDUSTRY, THE MINISTER OF WATER TRADE AND MINES (stamp) (stamp) /s/ Zephirin DIABRE /s/ Seni Macaire NARE 65 ANNEX 6 Page 3 of 5 ONEA TARIFFS EFFECTIVE DATE JUNE 1, 1993 TARIFFS FOR SALE OF WATER GENERAL WATER TARIFF: (a) Potable water sold to standRige concessionaires: CFAF 127/m3 No ceiling amount (b) Potable water sold through individual supply Roints: CFAF 64/m3 (postes d'eau autonomes) No ceiling amount (c) Potable water sold to consumers 1. Consumption of from 0 to 10 m3: CFAF 134/m3 2. Consumption of from 11 to 25 m3: CFAF 209/m3 3. Consumption of from 26 to 50 m3: CFAF 390/m3 4. Consumption of from 51 to 100 m3: CFAF 441/m3 5. Consumption of 101 m3 and above: CFAF 461/m3 (d) Raw water: CFAF 202/m3 No ceiling amount MINISTER OF INDUSTRY, MINISTER OF WATER TRADE AND MINES (stamp) (stamp) Isl Zephirin DIABRE /I/ Seni Macaire NARE ANNEX 6 66 Page 4 of 5 ONEA TARIFFS EFFECTIVE DATE JUNE 1, 1993 TARIFFS FOR SALE OF WATER II. COST OF SETTING UP METERING EOUIPMENT a. ADVANCE ON CONSUMPTION: METER DIAMETER ADVANCE 15 mm CFAF 12,275 20 mm CFAF 18,635 25 mm CFAF 25,250 30 mm CFAF 31,865 40 mm CFAF 45,495 50 mm CFAF 59,325 60 mm CFAF 73,155 80 mm CFAF 100,815 100 mm CFAF 128,475 150 mm CFAF 197,625 200 mm CFAF 266,775 b. METER INSTALLATION CHARGE: - Meter of diameter smaller than or equal to 30 mm: CFAF 860 - Meter of over 30 mm diameter: CFAF 1,600 c. STAMP DUTIES: - On original: CFAF 200 - On copy: CFAF 200 THE MINISTER OF INDUSTRY, THE MINISTER OF WATER TRADE AND MINES (stamp) (stamp) /s/ Zephirin DIABRE /s/ Seni Macaire NARE ANNEX 6 67 Page 5 of 5 ONEA TARIFFS EFFECTIVE DATE JUNE 1, 1993 TARIFFS FOR SALE OF WATER III. MONTHLY CHARGE FOR METER MAINTENANCE AND RENTAL Regardless of meter diameter: CFAF 380/month IV. METER CALIBRATION CHARGE - Meter diameter smaller than or equal to 30 mm: CFAF 2,000 - Meter diameter over 30 mm: CFAF 5,000 V. PENALTIES FOR LATE PAYMENT - For one bill overdue: CFAF 1,000 - For two or more bills overdue * Meter diameter smaller than or equal to 30 mm: CFAF 2,000 * Meter diameter over 30 mm: CFAF 5,300 MINISTER OF INDUSTRY, MINISTER OF WATER TRADE AND MINES (stamp) (stamp) /s/ Zephirin DIABRE /s/ Seni Macaire NARE ANNEX 7 68 Page 1 DRAFT CONTRAT-PLAN Between The Government of Burkina Faso and Office National de l'Eau et de l'Assainissement 69 ANNEX 7 Page 2 CONTRAT-PLAN The present contrat-plan is the first to be concluded between the Burkina Faso Government and ONEA, a societe 6tatique. The indicators contained in the contrat-plan reflect the constraints of the general framework and ONEA's development objectives, while at the same time offering the opportunity for gathering data as a basis for computation. I. General covenants Article 1 - Partners The partners to the contrat-plan are the Burkina Faso Government, represented by the Water Ministry, and Office National de l'Eau et de l;Assainissement (ONEA), charged with the construction and exploitation of water and sanitation infrastructures (liquid and solid waste treatment and disposal) in urban and semi-urban areas. Article 2 - Duration This contrat-plan is concluded for a period of three years running from July 1, 1993 to June 30, 1996. No later than May each year, the partners will be required to submit a report to the monitoring committee containing data for verification of the preceding year's indicators. Renewal of the agreement shall require submission of a proposal by ONEA in January 1996. Projections for indicators from 1996 onwards shall be based on data for the years 1992 to 1995, available in April 1996. Article 3 - Overall framework/Constraints on water sector development Development of the water sector is characterized by an increasingly severe water shortage resulting from the rapid rate of growth of the urban population, and the lack of increase in available water resources, ANNEX 7 70 Page 3 which are increasingly threatened by pollution. Moreover, the performance of the PWS and Sanitation departments has not kept up with development of the general framework, which has led to the deterioration of services in this sector. Following are the main thrusts of the policy to improve water supply and sanitation in urban centers: - expansion of the legislative framework covering the PWS and Sanitation sectors; - protection of available water resources and maximum efficiency of exploitation; - reduction of water wastage; - making available of existing water resources, primarily for water supply; - maximum efficiency of water distribution. In the event of chronic water shortage, public standpipes will receive priority; - application of Water Regulations [Rfglme de 1 'Eau] concerning controls and priorities in the area of resource exploitation; - introduction of rationing arrangements to handle foreseeable water shortages; - guarantee of potable water quality; - establishment of financial equilibrium within the sector, particularly for ONEA; - increase in the sector's cash flow [capacltd d'autoflnancement], particularly that of ONEA, and creation of a fund to finance new projects; ANNEX 7 71 Page 4 - development of sanitation activities at all ONEA centers, to which all payments of sanitation charges will be allocated in full; - increase in ONEA's productivity. II. Commitment bv ONEA Article 4 - Exploitation and protection of water resources ONEA undertakes to ensure maximum efficiency of exploitation of the water resources available to it, and to cause measures to be taken for their protection and conservation. To this end, it shall prepare, monitor and enforce annual resource exploitation programs in all centers complying with its requirements. In addition, it shall oversee the exploitation of surface water resources and groundwater resources (boreholes) by private individuals in urban and semi-urban environments, once a framework of responsibilities has been drawn up by the Water Ministry (see Article 18). Borehole Rrotection indicator: Number of boreholes observing recommended flow (1) Borehole protection rate Total number of boreholes in service Article 5 - Output of PWS facilities Output of the PWS facilities shall be continually upgraded until an acceptable level is reached. Indicator for output of facilities Water volume billed (2) Total output of facilities Gross pumping volume 72 ANNEX 7 Page 5 Water volume billed (3) Distribution output Water volume ex pumping station Water volume ex pumping station (4) Production output Pumping volume (5) Metering rate No. of nonoperational meters Connection meters in service Operating charges (net of depreciation) (6) Operating expenditure rate Water sales Article 6 - Maintenance To achieve maximum efficiency of exploitation of the facilities, ONEA undertakes to introduce a maintenance plan that should be operational by April 30, 1994 at the latest. Article 7 - Service to the public The following table shows the numbers of private connections (to meet programmed customer growth rates), standpipes, and standalone water points planned by ONEA for the next three years: 1993 1994 1995 Private connections 39,676 41,263 42,914 Standpipes 1,020 1,042 1,145 Standalone water points 34 34 60 In centers where available exploitable water resources already meet water needs, ONEA undertakes to promote private connections. 73 ANNEX 7 Page 6 Article 8 - Water quality Action shall be taken to improve water quality and to make quality control mechanisms more effective. For this purpose, ONEA shall prepare a report no later than March 31 each year on the various analyses performed (bacteriological and physico-chemical). The benchmark standards to be used are those recommended by WHO. Water guality indicator: Number of tests meeting standards [dans les normes] (7) Water quality rate Number of tests conducted Number of tests conducted (8) Test performance rate Number of tests planned The water quality control program shall be submitted no later than November 30 each year, and shall define the number and regularity of water quality tests and specify sampling sites. Article 9 - Investments ONEA shall plan investments for the new centers and extensions for existing centers, provided that a financial rate of return is assured and adequate water resources are available. Priority areas of investment are: - increase in exploitable water resources - increase in capacity and technical output - increase in service rate - guarantee of renewals of facilities - guarantee of water quality ANNEX 7 Page 7 ONEA shall make every effort to establish an investment fund to increase its cash flow [capaclt6 d'autoflnancement] for future projects. The amount of annual allocations will be directly linked to net income for the year. ONEA may in no case finance investments that are not linked to improvement of its assets or to an increase in water resources, and shall not make financial or material contributions or provide expertise for projects unrelated to its activities. It shall also refrain from all types of participation in other companies. ONEA undertakes to achieve a self-financing rate [taux d'autofinancement] of lOX in fiscal 1996. This self-investment rate shall represent an annual average measured over a period of three years and shall be computed on the basis of increases in fixed assets subject to depreciation. ONEA undertakes to submit an updated long-term (7-year) investment plan to the Water Ministry no later than January of each year. Article 10 - Sanitation Following the establishment of its sanitation department, ONEA undertakes to implement a phased program to involve all of its centers in its sanitation activities. The proceeds of payments for sanitation services shall gradually be made available for the operation of those services until full coverage is reached in 1995. Indicator of allocation of sanitation Dayments: Sanitation service expenditure (9) Sanitation absorption rate Payments for sanitation services 75 ANNEX 7 Page 8 ArtLcle 11 - Customer management ONEA undertakes to improve the quality of its commercial management in general and customer relations in particular. Actions to be taken in this area are listed below: - improve metering and reading on private connections - improve billing and collection procedures - reorganize the follow-up of arrears, in particular through quarterly summaries of customer accounts - substantially raise the level of familiarity with computerized billing and customer account management systems - improve customer service: equipping of windows and agencies, staff training in customer relations, procedures for handling complaints, consolidated billings for customers with multiple connections, etc. organize a sensitization campaign to alert the public to the dangers of wastage and vandalism clear all unrecoverable customer accounts. Customer credit indicator Private customer account balance (10) Private customer portfolio ratio One-twelfth of annual billings Bill collection indicator (11) Collection rate net Payments of administrative costs Billings 76 ANNEX 7 Page 9 Article 12 - Pricing ONEA shall continue to apply the pricing policy for the period 1992-1995 approved in Council of Ministers on April 24, 1992. It shall submit a new draft water and sanitation pricing policy no later than June 30, 1995, if the in-depth review shows this to be necessary. If not, a tariff formula shall be used (see annexed specifications). Article 13 - Revaluation of assets ONEA shall cause a legal revaluation of its assets to be performed no later than December 31, 1994. Article 14 - Financial equilibrium Strict application of the covenants of the present contrat-plan will help ONEA to achieve financial equilibrium by 1995. Profitability indicator: Net oper. income net of debt interest (12) Financial rate of return Net value of average revalued assets Should future statements of account show a profit, such profit shall be allocated in its entirety to the investment fund to be established by ONEA. Article 15 - Personnel ONEA undertakes to pursue its present human resources policy (hiring freeze, attrition, other than in cases of force majeure, etc.). Staff groductivity indicators: PCs + ((St.pipes+wtr.pts) x 4) (13) PWS staff productivity ratio Staff - (San.staff+assets & AWs) 77 ANNEX 7 Page 10 Km of system (14) Network/employee ratio PWS staff ONEA undertakes to achieve an acceptable ratio of personnel expenditure to turnover. Personnel expenditure indicator: Wage bill + indirect costs (14) Expenditure ratio Turnover ONEA shall submit a workable staff motivation system by the end of 1993, encompassing new pay and grading arrangements. Article 16 - Internal audits and management information system ONEA shall perform regular financial, accounting, and procedural audits of all its centers. It shall install a management information system no later than December 31, 1994, comprising management charts, cost accounting based on the general accounts, and a reliable and regular system for monitoring operating costs, in order to determine the costs of each service provided by the different departments, as well as cost prices and sale prices per m3 of water per center. Article 17 - Organization chart and human resource management With the establishment, no later than September 30, 1993, of a new organization chart based on the conclusions of the various studies, ONEA will initiate a true system of human resource management, with job descriptions, management charts, career development plans, a viable training plan, etc. 78 ANNEX 7 Page 11 Training indicator: Intern hours per year (16) Training rate Staff III. Commitment by the Government Article 18 - Exploitation of water resources by private individuals for urban PNS Under the present contrat-plan the Government undertakes to enforce regulations whereby ONEA has the exclusive right to use the water pumping facilities. This inventory [sic - initial reference to Inventory moved In this update to next paragraph - Translator] will identify by name each of the boreholes for which the Government has granted exceptional operating authority subject to the installation of a meter by ONEA. At the same time, the Government undertakes to enact the necessary measures to ensure that prior authorization shall in future be obtained before any new borehole is exploited. ONEA shall take inventory of all boreholes in urban and semi-urban areas no later than December 31, 1993, and [shall submit] a pricing proposal for the exploitation of groundwater by private individuals. The Government undertakes to make arrangements for its adoption and application (of the pricing system] no later than December 31, 1994. Article 19 - Taxation The Government undertakes to put in place a system to reimburse ONEA for customs duties and charges on equipment for extensions and renewals and on imports of chemicals with effect from January 1, 1994 (see annexed list of equipment). 79 ANNEX 7 Page 12 The same applies to taxes on profits for allocation to investment funds. Article 20 S- N sector development policy The government undertakes not to require ONEA to make investments for the establishment of new centers, if studies have shown that they would not show a financial return and hte local population is less than 10,000 inhabitants. Article 21 - Collection by ONEA on billings to Government and the Etablissements publics Government consumption The Government's annual potable water consumption shall be estimated on October 31 each year on the basis of actual consumption over a 12-month period (from July 1 of the preceding year to June 30 of the current year). On this basis, four equal bills shall be prepared. ONEA is to receive payment of the amount of each bill not later than March 31, June 30, September 30, and December 31 of the consumption year. A fifth bill (or credit [avoir]) will be prepared on March 31 following the consumption year concerned, showing the outstanding balance, which is to be paid by May 31, or two months after its submission. Etablissements publics ONEA is authorized to shut off water supply to any public enterprise or dtablissement public whose cumulative payments are more than three months overdue. Service will not be restored until the arrears have been paid in full. 80 ANNEX 7 Page 13 By way of exception, this authorization shall not apply to the establishments named on the annexed list. The Government is bound by agreement to substitute for those establishments should they default on their payment obligations. Article 22 - Onlending of grants and loans The Water Ministry will include ONEA in all negotiations and meetings concerning donor-financed urban PWS Supply and Sanitation projects. Should the rate of exchange fluctuation exceed 5X, the Government undertakes to compensate ONEA or to authorize an increase in water charges, to enable it to cover increases in reimbursements of loans and grants onlent by the Government to ONEA. A decision on coverage of these exchange rate fluctuation risks shall be taken by the Government by the end of 1993. Article 23 - Government contribution to ONEA's financial restructuring The Government will assume responsibility for all ONEA's arrears to SONABEL incurred through March 31, 1992, in the amount of CFAF 1.8 billion. Article 24 - Personnel management The General Manager of ONEA has full authority over all aspects of personnel management, including matters related to seconded staff. He shall be at liberty to decide on all recruitments, promotions, penalties and dismissals within the framework of current labor legislation. He shall also be free to appoint his close co-workers, with a view to successful achievement of the objectives of this contrat-plan. t/ This list and the maximum potential annual amounts shall be submitted for IDA's approval before the contract is signed. 81 ANNEX 7 Page 14 To ensure continuation of the actions initiated within the framework of ONEA's restructuring, the Water Ministry will provide supporting action to ensure stability of the management team. Article 25 - Sanitation The Ministry undertakes to seek a decision in Council of Ministers, no later than 1993, on the responsibilities of the various agencies active in the sanitation sector. Within this framework, the Ministry will define its own responsibilities and those of ONEA. Artclel 26 - Water resources The Government undertakes to perform a scientific assessment of water resources and to set up the various monitoring bodies required. The Water Ministry undertakes to submit the rationing plan proposed by ONEA for adoption by the assembly or authority concerned. IV. MONITORING AND EVALUATION COMMITTEE Article 27 - Monitoring Committee Performance of the present agreement will be monitored by a committee comprising the following members: - three members appointed by the Water Ministry, or one member appointed by each of the ministries representing the Government on ONEA's Board of Directors; - three members representing ONEA, appointed by its General Manager, including one SYNTEA member; - two observers appointed by each party to the contrat-plan. The monitoring committee shall meet once a year (July or August), and shall draw up a report evaluating the performance of each party. 82 ANNEX 7 Page 15 The report shall include the performance indicators for the preceding year, and a progress report on each article of the contrat-plan. It shall be transmitted officially to ONEA's Board of Directors for inclusion in its agenda. Should the prevailing economic, financial, or social conditions alter in such a way as to affect performance of the present agreement, the monitoring committee will be required to hold a special meeting, [? words omltted - Translator] which will be recorded in an amendment duly signed by the partners. Done in Ouagadougou, this ..... day of ....., 1993. For ONEA For the Government of Burkina Faso The Water Ministry The Ministry of Planning and Finance The Ninistry of Commerce, Industry, and Nining 84 ANNEX 7 Page 17 Number of boreholes observing recommended flow (1) Borehole protection rate Total number of boreholes in service (a) - The borehole protection rate is a measurement indicating that activities to determine the maximum pumping volume have been carefully monitored, and that exploitation of the boreholes has been monitored without any risk of overexploitation [sic]. The numerator of the fraction represents the number of boreholes in service for which the volume pumped is lower than the exploitable volume originally estimated without having damaged the borehole [sic]. The total number of boreholes in service is all those in service in a given calendar year. (b) - The resource exploitation program contains estimates of exploitable quantities and flows. At present, center managers are required to report monthly on the dynamic levels of each borehole in service. The ONEA hydrogeologist regularly establishes the dynamic level and the maximum flow to be respected. The rate is computed using those estimates and the operating data from the technical reports. 1993 1994 1995 Borehole protection rate 65% 75% 90% Water volume billed (2) Total output of facilities Gross pumping volume ANNEX 7 85 Page 18 Water volume billed (3) Distribution output Water volume ex pumping station Water volume ex pumping station (4) Production output Pumping volume No. of nonoperational meters (5) Metering rate Connection meters in service Operating expenses (excl. amortization) (6) Operating expenditure rate Water and sanitation revenues (b) - The volume of water billed is obtained from billings, and the different volumes of water pumped, produced, etc. from the monthly technical reports. The number of nonoperational meters will be determined from the meter readers' cards, and the number of connection meters in service from the centers' reports. The operating expenditure rate comprises all water and sanitation operating expenses, including overhead, but excluding amortization expenses and the tax on earnings. Water and sanitation revenues exclude receipts from connection works. Data on operating expenses may be obtained from the accounting service, and on water and sanitation revenues from customer management. 90 ANNEX 7 Page 24 Wage bill + indirect costs (15) Expenditure ratio Turnover (a) - The expenditure ratio indicates whether the company is overstaffed, or whether the level of personnel expenditure is disproportionate in relation to the company's other expenditures. (b) - In addition to gross wages and employer contributions, the numerator includes allowances, medical costs, clothing costs, and training costs. 1993 1994 1995 Personnel expenditure ratio 30X 25X 20X Intern hours per year (16) Training rate Staff (a) - The training rate indicates efforts made by the company to upgrade the skills of its staff through training. (b) - The data are taken from the Human Resources Management report. 1993 1994 1995 Training rate 35 37 40 (Training hours/ ONEA employee) 91 ANNEX 7 Page 25 Annex concerning Article 19 EguiRment for extensions and renewals: chemicals - pipes and accessories - faucets - standpipe equipment - meters, pumps, motors and spare parts - chemicals for water treatment - pumping infrastructure - equipment to measure and regulate flow, pressure, and dosing Annex concerning Article 21 List of subscribers whose water supplY may not be cut off by ONEA Government, specifically: - Ministries - State hospitals and clinics - The government-owned homes of certain political figures (the President, the Prime Minister, the President of the Assembly, Supreme Court Justices) - Military facilities (including fire stations) - Airports Industrial facilities: - SONABEL (production center) Communes: Commune clinics Commune markets Public toilets Other: Fire hydrants 92 ANNEX 7 Page 26 TARIFF REVISION FORMULA Pn - Pn-i x 0.10 + 0.20 Mn + 0.20 Sn + 0.20 En + 0.20 An + 0.10 Fn (CFAF) __ Mn-i Sn-i En-i An-i Fn-1 in which: Pn : Price per m3 of water to be charged during the year concerned Pn-1 : Price per m3 of water charged during the preceding year Mn : Represents average taken from the industrial products index published by the statistics office of Burkina (or, if not available, by the French statistical service) at the end of the preceding year Mn-1 : Represents that average at the start of the preceding year Sn : Represents the wage at the end of the preceding year received by a team composed of one Bi, one B2, and four C2 employees (ONEA grading system) Sn-i Represents that wage at the start of the preceding year En : Represents the average price per high-voltage kWh at the end of the preceding year En-i : Represents that average price at the start of the preceding year An : Represents the amount of amortization allowances for the year concerned An-i : Represents that amount for the preceding year Fn : Represents the amount of financial costs for the year concerned Fn-l : Represents that amount for the preceding year. The above revision formula will be applied when the variation exceeds 5%. To this end, a specific file will be prepared and submitted to the Council of Ministers for review prior to application. 93 ANNEX 7 Page 27 Summary of tariff policy approved in Council of Ministers on April 24, 1992 Final product Tariffs Tariffs Tariffs Tariffs Tariffs 1991 1992 1993 1994 1995 Gross vater 186 194 202 211 220 Potable water 90 107 127 151 180 - standpipes - connections: tranche 0 - 10 m3 113 123 138 147 158 11 - 25 m3 120 158 209 276 374 26 - 50 m3 250 312 390 486 603 51 - 100 m3 320 376 441 517 603 >100 m3 350 402 461 529 603 number of tranches 5 5 5 5 3 - water points 46 54 64 76 90 Customer management/ charge * 380 380 380 380 A Depending on meter diameter. 94 ANNEX 7 Page 28 TOTAL INVESTMENT CFAF 106 YEAR ONEA External Total 1993 635 3,210 3,845 1994 820 4,379 5,199 1995 830 11,295 12,125 1996 845 12,900 13,745 1997 850 10,800 11,650 1998 815 4,560 5,375 1999 845 3,580 4,395 1_2000 950 1,550 2,500 |_TOTAL 6,590 52,244 58,834 IMPLEMENTATION SCHEDULE 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 O N D J F MA M J J A S ON D J F MA M J J A S O N D J F M A M J J A S O N D En i rornrAssessment - Fwn D.Bign Sbady & B docume - - - - - - - - - - - - - - - - - - - - - - - - Tcdwa A nce - - - - - - - - - - - - - - - - - - - - - - - - - - - - CiWodw - - - U' z Xo