Public Disclosure Authorized
Documentof
The World Bank FOR OFFICIAL
USE ONLY
Public Disclosure Authorized
Report No. 15806
IMPLEMENTATIONCOMPLETION REPORT
COLOMBIA
Public Disclosure Authorized
Public Disclosure Authorized
CUCUTAWATER SUPPLY AND SEWERAGEPROJECT (LOAN 2470-CO)
JUNE 24, 1996
Environment and Urban Development Division Country Department III Latin America and the Caribbean Region
This document has a restricted distribution and may be used by recipients only in theperforTnance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
CURRENCY EQUIVALENTS Currency Unit
Colombian Peso (Col $)
=
EXCHANGE RATE EFFECTIVE MARCH 1, 1984 US$1.00 Col$1.00
= =
Col$92.3 US$0.0108
WEIGHTS AND MEASURES Metric System FISCAL YEAR January 1 to December 31
PRINCIPAL ABBREVIATIONS AND ACRONYMS USED CRAS
Water and Sanitation Regulatory Comission
DNP
National Planning Department
EAAB
Water and Sewerage Company of BogotA
EMC
Water and Sewerage Company of Cucuta
FINDETER
Territorial Development Financing Agency
INSFOPAL
National Institute of Urban Development
SSPD
Superintendency of DomiciliaryPublic Services
UFW
Unnacounted For Water
FOR OFFICIAL USE ONLY
TABLE OF CONTENTS PREFACE. EVALUATION SUMMARY.11 PART I: PROJECT IMPLEMENTATION ASSESSMENT............................................. 1. STATEMENT OF OBJECTIVES ............................................. 2. ACHIEVEMENT OF OBJECTIVES .......................... 3. MAJOR FACTORS AFFECTING PROJECT IMPLEMENTATION ......................... 4. PROJECT SUSTAINABILITY ............................................................
5. BANK PERFORMANCE............................................................ 6. BORROWER PERFORMANCE............................................................ 7. ASSESSMENT OF OUTCOME ............................................................ 8. FUTURE OPERATIONS............................................................ 9. KEY LESSONS LEARNED ............................................................ PART II: STATISTICAL ANNEXES............................................................ TABLE 1: SUMMARYOF ASSESSMENTS ............................................................
1 1 1.....1 9 11
12 13 14 15 16 18 18
19 TABLE2: RELATEDBANKLOANS............................................................ 19 TABLE 3: PROJECTTIMETABLE ................................................................ TABLE 4: LOAN DISBURSEMENTS: CUMULATIVE ESTIMATED AND ACTUAL..................... 20 TABLE 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION ...........................................
21
TABLE6: KEY INDICATORS FORPROJECTOPERATION ..................................................... 21 TABLE 7: STUDIES INCLUDED IN PROJECT............................................................
22
TABLE8A: PROJECTCOSTS............................................................ TABLE8B: PROJECTFINANCING............................................................ TABLE9: ECONOMiCRATEOF RETURN............................................................ ............................................................ TABLE 10: STATUSOFLEGALCOVENANTS TABLE 11: COMPLIANCE WITH OPERATIONALMANUAL STATEMENTS.............................. TABLE 12: BANKRESOURCES: STAFFINPUTS ............................................................ TABLE 13: BANKRESOURCES:MISSION............................................................
23 24 24 25
28 28 29
ANNEX 1 ............................................................
29
ANNEX
31
2 ............................................................
This documenthas a restricted distribution and maybe used by recipients only in the performance of their official dutics. Its contents rnay not otherwise bc disclosed wiLhoutWorld E3ankauthorization.
IMPLEMENTATION COMPLETION REPORT COLOMBIA
CUCUTA WATER SUPPLY AND SEWERAGE PROJECT LOAN 2470 - CO
PREFACE
This is the Implementation Completion Report (ICR) for the Cuicuta Water Supply and Sewerage Project in Colombia for which Loan 2470-CO of US$18.5 millon equivalent was approved on September 11, 1984, and became effective on April 30, 1985. The loan was closed on June 30, 1995, 36 months later than the original closing date (June 30, 1992). Final disbursement took place on July 6, 1995, at which time a balance of US$374.299.24 was canceled. Cofinancing for the project was provided by the National Government and by FINDETER (Local Loans). The ICR was prepared by Mr. Menahem Libhaber (LA3EU) and by Mr. German Silva (Consultant) of the Latin America and the Caribbean Region, and reviewed by Mr. Eugene D. McCarthy (Division Chief, LA3EU) and Mr. Robert Crown (Project Adviser, LA3DR). Preparation of this ICR began during the Bank's final supervisi6n/completion mission in February 1995. It is based on material in the project files. The borrower contributed to the preparation of the ICR by working closely with the team which prepared the ICR and by providing comments on the draft ICR, which have been incorporated into the final document.
- i -
EVALUATIONSUMMARY CUCUTA WATERSUPPLYAND SEWERAGEPROJECT LOAN2470-CO COLOMBIA Introduction i. Colombia,with a populationof about 35 millioninhabitants,70% of whichis urban, has made impressivestridesin expandingits water and sanitationsector in the past decade. Over 76% of the populationhas now accessto drinkingwater, whilesanitaryseweragecovers 64% of householdsin the country. The coveragelevelsin the four biggesturban centersof Bogota, Medellin,Caliand Barranquilla,whichtogether accountfor 30% of the population,is substantiallyhigher, at 88% for water and 85% for sewerage. The demandfor improvingand expandingthe water supplyand sewerageservicesis stillhigh. Nevertheless,major institutional problemspersist,havingtheir originin highlypoliticizedutilitycompaniesand lack of accountabilityandperformance. A new regulatoryframeworkconduciveto efficiency improvements,expandedprivatesector participationin the deliveryof publicservices,greater accountability,and morearm's lengthrelationshipbetweenutilitiesand localpoliticianswas legislatedby the Governmentas PublicServicesLaw (Law 142)enactedin July 1994. The Government'smain sectorgoals are to: (a) restructurethe existinginstitutions;(b) increase nationalhouseholdcoverageof water and sewerageservices;(c) improvethe qualityof drinking water from public systems;and (d) formulateand initiateimplementationof wastewatertreatment strategyfor the largestcities. Since1968the Bank has made 14 loans,totalingUS$700million, for water supplyand sanitationdevelopmentin Colombia. Statementof ProjectObjectives ii. The Cu:cutawater supplyand sewerageprojecthad two main objectives:(a) to improve and expandwater supply,sewerageand stormdrainageservicesin the city of Cucuta; and (b) to help the water companyof Cucuta,EmpresasMunicipalesde Cucuta(EMC), developinto a strong multi-servicemunicipalcompanywhichcould serve as a modelfor similarcompaniesin other medium-sizeColombiancities. Achievementof Objectives iii. Whilethe institutionalstrengtheningof EMC was not accomplishedand its conversionto a modelutilitydid not take place,most of the physicalworks providedfor by the Staff Appraisal Report (SAR), with the exceptionof a smallcomponentof drainageworks, were executed,i.e., 100%of the upgradingand expansionof the water supplysystems,100%of the Zulia river water
-
iii -
supplyschemeand over 95% of upgradingand expansionof the seweragesystems. As a result of the project, the water and seweragecoveragerates in Cucutawere increasedto 90% each, and the water supplyflow to the city has been almostdoubledby the Zulia river water supplyscheme, a newwater source and its ancillarysupplyworks, whichhas been brought on stream. The main impactof the new water supplyworks is ensuringcontinuoussupplyto a low-incomepopulation of about 250,000 inhabitants(40 % of the city's population),whichprior to project completion, either had no accessat all to water supplyor receivedwater under severerationingconditions. Takinginto considerationthe successfulachievementof the importantproject objectiveof improvingand expandingthe water supplyand sewerageservicesin the city of Cucuta,the projecthas been rated as marginallysatisfactory,even though-theobjectiveof institutional improvementhas not been achieved. Major Factorswhich AffectedProjectImplemetation iv.
Implementationof the project was negativelyaffectedby a numberof factors: * the politicalclimatein the city, manifestedby substantialand continuousinterference by local politiciansin EMC'smanagement.The individualinterestsof these politicians took precedence over the institutionalwell being of EMC and the need for this companyto providean efficientserviceto its customers; * EMC's institutionalweaknessesandthe constantchangesin its key personnel,resulting from the politicalintervention; v
EMC's chronicfinancialproblemsand its difficultyin generatingcounterpartresources due to high administrativeand operatingcosts and the combinedimpact of a very high UnaccountedFor Water (UFW)percentage,lack of politicalwill to raise tariffsto the necessarylevels,the rigiditiescreated by the strong laborunions,and a burdensome collectivelaboragreement;
* lack of consistencyand clarityin the criteriaboth by the Bank and by EMC concerning the designof the wastewatertreatmentplant duringan extendedperiodincluding preparationand implementation.The finaldesignof the treatmentplant,whichwas preparedduringthe last year of projectimplementation,appearsto be meetingthe appropriatecapacity,technology,and environmentalprotectiondemands. v. The contractingof a FiduciaryAgencywhichacted, duringthe extensionperiod, as the project executingagency,had an obviouspositiveimpacton the project. Thisoperational arrangementallowedthe successfulcompletionof the Zulia river water supplyworks, the project componentthat willprobablyyieldthe greatest benefitfor the city of Cucuta.
- iv -
Project Sustainability vi. Despite the success achieved in executing the Zulia river water supply works, the project's sustainability is still in doubt due to the pattern of intervention by local politicians in the company's administrative decisions, constant changing of EMC managers, lack of continuity of qualified personnel in key positions and unsatisfactory operational and administrative procedures. Sustainability will depend mainly on the commitment of local leaders to help in solving the type of problems which EMC is facing, as well as on continuous monitoring and strict control on the part of the new supervisory bodies set up recently by Law 142, the Water and Sanitation Regulatory Commission (Comision Reguladora de Agua y Saneamiento--CRAS) and the Superintendency of Domestic Public Services (Superintendencia de Servicios Publicos Domiciliarios--SSPD), with respect to the adoption of an appropriate institutional structure. Internally, project sustainability will depend on urgent implementation of the UFW control program and on financial rehabilitation of the company through tariff adjustment, a basic requirement to enable EMC to meet its operational, network expansion and debt-service costs. Bank Performance vii. The Appraisal Report accurately identified the major expansion needs. The main risks identified in the SAR were EMC's institutional and financialweaknesses, particularly those attributable to the commitment of national and local authorities to timely adjustment of tariffs. The risk of delays in implementation of physicalworks was rated as low. This risk was clearly underestimated, in view of the innumerable problems encountered during the project. Interference by local politicians in project management and in EMC's internal management, a situation that obviously had a very unfavorable impact on the project by weakening EMC's managerial and administrative capability, was not deemed to represent a risk. The estimated cost for construction of the wastewater treatment plant was considerably lower than required. Consequently, management of the program for construction of the wastewater treatment plant was not always satisfactory and the plant was eventually not constructed under the project. viii. The Bank suspended disbursements in late December, 1990, when it became convinced that the borrower was not honoring its commitments;it did not cancel the loan, however, seeking instead corrective actions by EMC. In this case, the Bank's flexibleapproach undoubtedly allowed the completion of the Zulia river works, a component essential to the supply of water to Cucuta's lower-income population. It also led EMC to a position which enables it to increase its revenues through the sale of the incremental water suppliedby the project, and improve its financial situation. However, it was not successful in resolving EMC's institutional crisis. ix. In view of EMC's limited creditworthiness and debt servicing capacity, the size of the approved loan ($18.5 million)was too big for that company.
Borrower Performance x. The institutional weakness of the borrower (EMC), the constant interference by local politicians in its administration and the resulting instability of its key personnel prevented achievement of one of the main project objectives, that of converting EMC into a model enterprise. xi. EMC's inadequate financing capacity, combined with its inabilityto reduce the UFW percentage and the lack of political will to raise water tariffs and get rid of surplus personnel, forced the guarantor (the Govemment of Colombia) to assume responsibility for repayment of the loan obligations, with only one exception, when EMC made a repayment in the second half of 1995.
xii. Chronic local political interference and the weakness of EMC's managerial capacity compelled the National Government to require that project management be entrusted to a Fiduciary Agency, independent of EMC and relatively free from local and regional political pressures and interference. xiii. The National Government, particularly DNP and, to a certain extent, FINDETER, provided continuous support to the project and contributed to resolution of the problems that arose during project implementation. However, they were not effective in bringing about institutional improvements in EMC. It also undertook a radical institutional reform by enacting Law 142 in July 1994, which created an appropriate framework for the efficient operation of water supply and sewerage utilities in the future. The success of this reform still depends on the Govemment's effectiveness in enforcing this Law. Assessment of Outcome xiv. Overall, the project results can be regarded as marginally satisfactory. Implementation of the works took place satisfactorily, though behind schedule. On the other hand, the scheduled institutional strengthening programs and studies were not all carried out, and those that were, were either not performed satisfactorily, or their recommendations were not implemented by EMC. xv. Calculation of the economic Intemal Rate of Retum (IRR) for the project, performed by EMC on the basis of project costs and marginal benefits over the next 30 years, assuming that the current tariffs remain unchanged in Dollar terms and that UFW losses are reduced to 35 percent, yielded an IRR for the principal project component of -0.08 percent, which is unsatisfactory. Sensitivity analysis of the IRR to: (i) changes in the UFW percentage; and (ii) adjustment of the average water tariff, shows that the project could have been economically satisfactory had EMC implements a strict program for reduction of UFW losses and increased the tariffs by 40%.
- vi -
FutureOperations xvi. In 1994, in light of the water supply sector's serious institutional problems, the National Congress enacted Law 142/94, regulating domestic public utilities' services. The Law assigned institutional responsibility for the water supply and basic sanitation sector to the Ministry of Economic Development. It also set up a Water and Sanitation Regulatory Commission (CRAS) and a Superintendency of Domestic Public Services (SSPD), responsible for overseeing these public enterprises and assessing their financial,technical and administrative management. Although implementation of the reform has barely begun, the situation of the sector and its enterprises is expected to improve substantiallyin the medium term. Law 142 also provides that, effective July 1996, all the public service utilities should either become share holding companies or organized as public-sector industrial and commercial enterprises, and in addition must furnish the CRAS with a study demonstrating their entrepreneurial viability. The Bank's future operations will have to be conducted with these new enterprises, once they have been restructured and adjusted financially and operationally in accordance with guidelines set out by the CRAS. Key Lessons Learned xvii. Significantparts of the institutional strengthening programs (managerial, financial, administrative and technical) ought to have been implemented up front, as a condition precedent to approval of the loan, and not as part of it. It should normally be a requirement that the borrowing entity achieve, prior to signing the loan agreement, a level of viability--managerial, financial, technical, and administrative--sufficientto guarantee proper management of the project. Overall, however, the institutional improvement objectives for Cucuta were not realistic and Ciicuta is a good example of why there has been a change in the Bank's approach in recent years to the strategy of institutional improvement in the water sector, focusing on promoting private sector participation. xviii. In the case of loans to regional or local utility companies, the local political environment should always be evaluated during project preparation and the evaluation results should be taken into consideration, so as to ensure, if warranted, incorporation of mechanisms such as up front institutional adjustments, to insulate them from political intervention,. xix. The use of a Fiduciary Agency as a project management unit was successful in that it liberated the project management from its dependence on EMC and sheltered it from political intervention and from a lack of continuity of EMC's management. Had it been used from the outset, project implementation could have been reduced by 2-3 years. xx. The size of an approved loan should be in proportion to the company's annual billing volume and hence its capacity to generate internally sufficient resources to service its debt obligations. In the present case, a loan of US$18.5 millionexceeded EMC's debt-servicing capacity, and the project should have been implemented in two stages, the first one consisting of rehabilitation and expansion of the water and sewerage networks, as well as UFW reduction, and the second consisting of the Zulia river water supply works.
- vii -
xxi. The completion of the physical works resulted in important benefits, in particular, ensuring continuous supply to a low-income population of about 250,000 inhabitants (40 % of the city's population), which prior to project completion, either had no access at all to water supply or received water under severe rationing conditions. The achieved benefits justified the decision to extend the closing date of the loan.
IMPLEMENTATION COMPLETION REPORT COLOMBIA CUCUTA WATER SUPPLY AND SEWERAGE PROJECT LOAN 2470-CO
PART I: PROJECT IMPLEMENTATION ASSESSMENT
1. I.
STATEMENT OF OBJECTIVES
The Ciucutawater supply and sewerage project had two primary objectives: (a)
to improve and expand water supply, sewerage and storm drainage services in the city of Cucuta; and
(b)
to help EMC develop into a strong multi-service municipal company that could serve as a model for similar companies in other medium-size Colombian cities. 2. ACHIEVEMENT OF OBJECTIVES
2. Achievement of the project objectives was marginally satisfactory even though the institutional strengthening objective was not achieved. The reason for the marginally satisfactory rating is that, except for a small component of drainage works, the physical works provided for by the SAR were fully (close to 100%) executed, the water and sewerage coverage rates were increased to 90% each, and a new water source (the Zulia river) and its ancillary supply works, which almost doubled the water supply capacity to the city, has been brought on stream, benefiting a low-income population of about 250,000 inhabitants (40 % of the city's population), which prior to project completion, either had no access at all to water supply or received water under severe rationing conditions. More specifically, the upgrading works and expanding of water supply (components A and B) and sewerage (component C) systems were almost fully implemented (100% implementation for components A and B and over 95% for component C), though well behind the original timetable. Construction of the wastewater oxidation ponds under component C did not take place, however, due to considerable underestimation of the construction costs during project preparation as well as due to conceptual errors in the designs prepared during the initial years of the project; this made it necessary to replace the execution of the originallyproposed works by the preparation of studies and engineering designs for a wastewater treatment plant. Neither the drainage canals lining nor the storm-water collector works provided for under part D of the project
-2were executed. Even though most of the studies proposed in parts E and F were commissioned and carried out, their recommendations were not implemented, with the result that the objective of institutional strengthening of EMC and its conversion into a model utility was not achieved. 3. Part A: Expansion of the Water Supply System. The works included in component A are defined in Table 1, which also contains details on the works executed. Table 1: Implementation of Works Under Component A
Description
Implementation provided for in the Loan Agreement
Implemented as of 06/30/95
% Execution
A. EXPANSION OF THE EXISTING WATER SUPPLY SYSTEM - Primary networks - Storage tanks - Las Lomas pumping station - Los Benefactores pumping station - Secondary networks - House connections - Domestic meters supply and installation
43.0 km 8,000 m3 120 I/s
62.4 km 9,700 m3 120 I/s
145 121 100
6 I/s 120 km 10,000 units
6 I/s 120 km 10,000+ units
100 100 100
50,000 units
50,000 units
100
4. Part B: Zulia River Water Supply System. The initiation of construction of the new Zulia river water supply system was delayed until 1991 due to EMC's serious financial problems and consideration was even given to canceling this component. It was finally decided to go ahead with this Component, which was completed satisfactorily in January 1996, raising the water supply capacity to the city of Cucuta by 70% and ensuring adequate supply to the city up to the year 2005, provided the percentage of water losses is reduced to a lower level of around 35%; if, however, the current UFW level of 42% remains unchanged, the available supply will barely sufficeto meet the current needs. While it is true that the works were completed more than three years behind schedule, their impact on the city and on the low-income residential neighborhoods, usually located in areas of high topographical level, has been so great that it mitigated the negative impact caused by the delays in execution. The achievement of this physical goal justified the decision to extend the closing date of the loan. Canceling the loan on the original closing date would have: (a) subjected the city's low-income residents to further years of water
-3 rationing,sinceEMC would have had great difficultyin obtainingnewloans to complete the works; and (b) deprivedEMC fromthe prospectof increasingits revenuesand improving its financial situation, leaving it with uncompleted works after having invested US$ 11 million (actual disbursement on original closing date). The works executed under part B of the project are summarizedin Table 2.
Table2: Implementationof Works UnderComponentB Implementation
Descriptin .the Description
providedfor in Loan Agreement
Implementation as of 06/30/95
Execution
B. ZULIA WATER SUPPLY SYSTEM - 48" pipe connecting the intake to the raw water pump station - Raw water pumping station (Termotasajero) - 36" pipe connecting the raw water pumping station to the pressure break structure - 39" pipe connecteng the pressure break structure to Dofia Nidia treatment plant - Dofia Nidia treatment plant - Treated water pumping station at Dofia Nidia - Loma de Bolivar pumping
station - Storage tanks: * Antonia Santos * Loma de Bolivar Bajo * Loma de Bolivar Alto
0.45 km
0.45 km
100
1.0 m3/s
1.0 m3/s
100
1.5 km
1.5 km
100
15.0 km
15.0 anm
100
1.0 m3/s
1.0 m3/s
100
1.0 m3/s
1.0 m3/s
100
0.3 m3/s 3200 m3 2000 m3 2700 m3
0
0
3200 m3 0 0
100 0 0
5. The Loma de BolivarBajo andLoma de BolivarAlto tanks and the corresponding pumpingstations,whichare essentialto supplythe neighborhoodsof Los Alpes, Victoria and Belen, were not constructed due to lack of resources. These investments amount to
less than US$ 1 million,andEMC will most probablycompletethese works, by utilizing its own resources,when they becomeavailable.
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6. Part C: SewerageWorks. The works under part C werepartiallyexecuted,as specifiedin Table 3. Table3: Implementationof Works UnderComponentC
Description
Implementation providedfor in the Loan Agreement
Implemented as of 06/30/95
% Execution
C. SEWERAGESYSTEM -
*
Primary collectors Secondary networks House connections Construction of the wastewater treatment plant
11.0km 100.0 km 8200 units 1.0 m3/s
10.2 km 124.72 km 6636 units
90 125 81
Design Only*
0
Design has been completed in April 1966.
7. The scheduled works, except for construction of the wastewater treatment plant, were almost fully executed, with small differences in relation to the preliminary estimates, resulting from adjustments made after completion of detailed design. 8. The construction of the wastewater treatment plant was originally included in the project to recover the water quality in the Pamplonita river to which the Cuicuta wastewater is discharged and to prevent deterioration of the water quality in the Zulia river to which the Pamplonita river discharges and which flows into Venezuelan territory. The upgrading of the water quality in the rivers downstream of Culcutawas supposed to benefit communities living next to the rivers and to ensure that Venezuela's reparian rights on the Zulia river would not be adversely affected. Before signing the Loan Agreement, the Bank had sent the Executive Director representing Venezuela a letter of commitment to construct, as part of the project, a wastewater treatment plant which would ensure that no incremental pollution would reach Venezuelan territory as a result of implementation of the project. 9. During project preparation, EMC requested the local consulting firm which was preparing the sewerage master plan, to draw up a preliminary report on alternative wastewater treatment systems, including their location and preliminary cost estimates. An oxidation ponds treatment plant was recommended as the most appropriate alternative but its cost was considerably underestimated. As a result, an unrealisticallylow budget was allocated for construction of the treatment plant. In July 1985, while initiating the supervision of the project, the Bank suggested that additional studies be carried out for site verification and revision of the preliminarycost estimates. At the beginning of 1986,
- 5EMC hired a foreignconsultingfirm to performthe correspondingfeasibilitystudies, utilizingBank financing. The consultantsrecommendedan oxidationpondstreatment systemand selecteda site whichinvolvedthe constructionof a 10 km collector/interceptor.As a resultof this feasibilitystudy, the estimatedcost amountedto US$7.5 million(comparedto the originalestimateof US$1.3million),a figurethat exceededEMC's financingcapacity. Withthe adviceof the consultingfirm whichcarried out the feasibilitystudyand the local consultingfirm whichwas in chargeof supervising the works, EMC proposedto the Bank that the designcriteriabe revisedto reduce treatment capacityfrom the originalvalue of 1.0 m3/s to 0.30 m3/s. It also committedto carryout simultaneouslya programfor controlof industrialwastesdischargesand permanentmonitoringof water quality,the effectof whichwould be to reduce the adverse impact on the qualityof the water of the Zuliariver withinthe territorialbordersof Venezuela. 10. EMC awardedthe contractfor finaldesignof the 0.3 m3/s treatmentplantto the same consultingfirmwhichcarriedout the feasibilitystudy,and in 1991acquiredthe land requiredfor constructionof the treatmentplant. In July 1992,however,EMC requested the Bank (in its fax of July28, 1992)to postponethe initiationof the biddingprocessfor constructionof the treatmentplantbecauseit had foundseriousshortcomingsin the structuraldesignsand cost estimatesand had reservationsabout the concept of phased developmentof the projectwith the initialphase treatingonly0.3 m3/s. As a consequence of these concerns,the Bank carriedout a furtherreviewfrom whichit concludedthat, in additionto EMC's observations,the selectedtreatmentplant site was not suitablefor an oxidationponds plantsinceit was locatedwithinthe city limitsand an environmental impact study of the proposedplant had not been carriedout (aide-memoireof September 24, 1992). 11. In September1992,EMC, DNP and the Bankjointlyagreedto carryout a new study to find a suitablesolutionto Cucuta'ssewagetreatmentproblem;this led to amendmentof the descriptionof part C of the loan agreement(loanagreementamendment of May 24, 1993),whichreflectsa modificationin the Bank's approach,acceptingthat, becauseof budget constraints,the treatmentplantcouldnot be constructedunder the project and would have to be constructedat a later stage', but ensuringthe completionof its detaileddesignin the frameworkof the project.The modificationof the Bank's approachwas communicatedto the ExecutiveDirectorrepresentingVenezuelaon March 1, 1993. The extensionperiod of the loan closingdatewas grantedto allowfor the completionof the wastewatertreatmentplant detaileddesign. 12. In December1993,EMC awardeda consortiumof a foreignand a local consulting firms a contractto carry out a feasibilitystudyfor treatmentof the entire flowof the wastewaterof Cuicuta,with a firststage plant capacityof 1.0 m3/s, as originallyenvisaged duringproject preparation. The consultantscompletedthis study in August 1994. In The Colombian Govermnenthas committed,in DNP letter UDU-DEM No. 8955dated February3, 1993, to condruct a watowader treatment plant which would be economically,financially, institutionally and environmentallyviable. Moreover, the Bank informed the Executive Director representing Venezuela, in March 1, 1993 that it was willing to financethe treatent plant
-6 February 1995, following a call for bids among prequalified bidders, EMC awarded the contract for detailed design of the treatment plant to the same consortium that had prepared the feasibility studies. The final design report was completed in April 1996. The final design, which is based on compliance with Colombian Decree 1594 of 1984, related to discharge of treated wastewater to receiving water bodies (which requires 80% removal of: (a) organic matter expressed as Biochemical Oxygen Demand (BOD); and (b) suspended solids, from municipalwastewater prior to its discharge into a river), provides for the construction of a first phase plant for a capacity of 1.25 m3/s, consisting of a train of ponds which include: (i) anaerobic ponds; (ii) recirculated facultative ponds; and (iii) maturation ponds. The second and third stage are identical, each with a capacity of 0.625 m3/s, consisting of anaerobic ponds followed by biological filters with secondary sedimentation tanks. The cost of construction of the first phase plant is estimated at US$18.5 million and that of the associated main collectors US$20.5 million,amounting to a total cost of US$39.0 millionfor wastewater treatment, as compared to an estimate of US$1.3 millionten years earlier. 13. The Pamplonita river flows 55 km downstream of Cujcutain a remote, isolated and uninhabited border zone within the territory of Colombia, before it discharges into the Zulia river. The flow of the Zulia river is over 10 times bigger than that of the Pamplonita, with the result of: (a) considerable self purification of the water during its flow in the Pamplonita river; and (b) high dilution of the Pamplonita river water before it reaches the Venezuelan border after several additional kilometers of flow of the Zulia river. The feasibility study carried out in 1994, found that the self purification which takes place in the Pamplonita river before it flows into the Zulia river is significant. Consequently, for complying with the requirement of preventing an incremental contamination of the Zulia river within the Venezuelan territory in the medium term (up to the year 2005), not even a minimaltreatment is required (while in order to maintain satisfactory conditions in terms of BOD and Dissolved Oxygen (DO) in the Pamplonita river, only a minimum - primary level - treatment is required). This conclusion of the report casts serious doubts about the basis for the SAR concern in regard to the need for preventing an incremental pollution from reaching Venezuelan territory, and the resulting approach of the necessity to treat the expected incremental 1 m3/s of wastewater. From this new information it seems reasonable to conclude that the modification in the Bank's approach in early 1993, which resulted in postponing the construction of the treatment plant, would not have resulted, therefore, in adverse environmental effects in Venezuelan territory in the medium term. It follows that the willingnessof the Bank to finance the treatment plant should be revisited. 14. In conclusion, the detailed design of an appropriate wastewater treatment plant with a capacity for: (a) maintaining the quality of the Pamplonita river water within Colombian river quality standards; and (b) preventing future contamination of the Zulia river water in the long run, is now complete and available to the decision makers of Cuicuta,providing them with accurate data on which to base the decision to construct the plant, and enabling them to: (a) assess its financialviability in light of current commitments and the new ones stenmmingfrom the wastewater treatment plant project; and (b) negotiate with the National Government its participation in financing the treatment plant.
-715. Part D: Storm Water Drainage. In agreement with the Bank, this project component was not executed due to EMC's lack of resources. This is a small component, involving an investment of US$ 1.4 millionand EMC may complete it using its own resources, when they become available. The works of component D provided for in the loan agreement are defined in Table 4. Table 4: Works Under Component D of the Project
Description
Implementation provided for in the Loan Agreement
Implemented as of 06/30/95
% Execution
0 0
0 0
D. STORM WATER DRAINAGE SYSTEMS - Storm water drainage collectors - Relining of Bogota canal
5.0 km 13.0 km
16. Part E: Institutional Strengthening. A number of studies and advisory assistance services were contracted under this project component. The following is a description of these studies and their impact on EMC: *
Preparation of a management control information system. The study was carried out but the developed system was not put into operation due to difficulties EMC had in being able to use it;
*
Study of the reorganization of EMC, revaluation of assets and actuarial calculation of pension obligations. This study was not completed satisfactorily because of the inexperience of the selected consulting firm and the lack of commitment of EMC's management to implement institutional improvements;
*
Study of improvement of operational practices and UFW control. This study was carried out only partially and with a substantial delay. As a result of the suspension of disbursements the study was interrupted, and was not renewed when the suspension was lifted because of the slow response of the consultant. Consequently, the network simulationand telemetry portion of the study was not executed at all and the implementation of the study's recommendations was very limited. The UFW index continues to be very high (42%), a fact that clearly demonstrates a continuing need for implementingthe consultant's recommendations;
-8-
* Vehicles and laboratory equipment were acquired, and training of various officials and professional in Colombia and abroad was financed. 17. Although the aforementioned studies and advisory services were carried out in part, the goal of institutional strengthening of EMC was never achieved due to lack of political commitment and too frequent changes of management. The concept of achieving better performance of an ailing public utility by attempting to implement the institutional improvement program proposed in the Cucuta project proved to be unrealistic; even if additional efforts had been invested in implementingthat program prior to suspension of disbursements, it is very doubtful that the expected institutional improvement would have been achieved. Cucuta is a good example of why there has been a change in the Bank's approach towards institutional improvement, which is now directed to promoting private sector participation as a means for such improvement. Two attempts to bring about significant institutional reform were in fact carried out after the suspension was lifted in 1992. These reforms were not part of the original institutional strengthening program and were based on newer concepts, including in one case the concept of private sector participation The first one took place in 1992 and was aimed at liquidating EMC and creating a new company with private sector participation which would take over the responsibility for providing the water supply, sewerage and solid wastes services in Cucuta. The concept was based on the process which was undertaken in Barranquilla, i.e., creating a mixed capital company with a minority of private share holders who would have the control of the company in the Board of Directors and would eliminate the Mayor's and Municipal Council's control of the board and help insulate the company from political intervention. A mixed capital company, "Metroservicios", was constituted but the private sector of Cucuta showed no interest in purchasing its shares and the effort failed. One possible reason for the unwillingnessof the private sector to participate is the location of Cucuta in a guerrilla activity zone and the fear of the guerrilla reaction. Private sector participation requires stability and is not expected to be achieved in unstable guerrilla controled areas. The second attempt at institutional reform took place in 1993/94 by creating the "SAAC" (Sociedad de Acueducto y Alcantarillado de Cucuta), an association between several public entities including the Municipality,the "Area Metroplolitana", the Local Government of the Department of Norte de Santander and the local power company, which was formed to take over responsibilityfor providing the water supply and sewerage services and was not controlled by the Mayor. The consolidation of "SAAC" and the preparations for transfer of responsibility were supported by the Bank but lack of political commitment of the Municipality and of EMC's management, as well as the objection of EMC's labor union, the transfer of responsibility for the services never took place. After the closing of the loan, "SAAC" was liquidated. 18. Part F: Studies. The feasibility ,tudy for integrating municipal public services in the metropolitan area of Cuicutawas not carried out. Supervision of the civil engineering works and the designs of the wastewater treatment plant were carried out under this part of the project.
-9-
3. MAJOR FACTORS AFFECTING PROJECT IMPLEMENTATION 19. Implementation of the project was hampered by a number of factors. These can be grouped into five categories: (a)
The political climate in the city. The individualinterests of local political leaders, who changed every two years, i.e five times during the implementation period, took precedence over: (i) the provision of basic services to the city's population; (ii) the interests of EMC; and (iii) the goal of providing an efficient and high quality service to the consumers. There was a continuous interference by local politicians in EMC's day-today management, constant pressures to meet bureaucratic requests and an unwillingnessto approve adequate tariff levels. The most pronounced adverse effect of the political interference was the resulting lack of managerial autonomy in EMC and the frequent management changes that ensued.
(b)
EMC's institutional instability and lack of managerial autonomy. The institutional instability of EMC and its financial weakness caused delays, failure to take timely decisions and project implementation problems. As a result of the political interference and the lack of managerial autonomy, the frequency of replacement of the general manager and EMC's senior staff was extremely high. During the project execution period (1984-1995) 11 general managers were officiallyappointed and a number of others were appointed as acting managers for short periods; on average, each administration lasted a year. The project suffered greatly from the constant changes in EMC's general manager and in key personnel. The necessary continuity of management and of operational staff with adequate technical competence to maintain EMC's technical, operational and institutional memory was lacking.
(c)
EMC's financial weakness. The chronic financial problems of EMC are apparent from the Bank's supervision reports and the analyses of the available audit reports (1986-94). EMC experienced operating losses in the years 1986, 1991, 1992 and 1993 and annual losses in 1986, 1987, 1988, 1991 and 1992. EMC's financial deficits are attributable to high administrativeand operating costs, the hiring of unnecessary personnel as a result of political interference, and the combined effect of a very high UFW percentage and lack of political decision to raise tariffs to the necessary levels during a number of years. These problems were aggravated by a strong labor union and a burdensome collective labor agreement. The cost of the social benefits of EMC's personnel is equal to 140% of their salary, in contrast to the 56% value that private enterprises in Colombia usually have to pay.
- 10-
(d)
The lack of clear and consistent criteria on the part of EMC and the Bank in regard to the design of the wastewater treatment plant. During appraisal the cost of the treatment plant was considerably underestimated and consequently, an unrealisticallylow budget was allocated for its construction. This led to changes in the conceptual basis of the plant design and its capacity was altered and adjusted during the course of the project, in light of availabilityof funds, without any clear and persuasive technicaljustification. The unsatisfactory performance of the consultants initiallyhired by EMC to conduct the studies and design of the plant further hampered the project.
(e)
Suspension of disbursements for a period of 15 months. On December 28, 1990, as a consequence of a prolonged failure to comply with the conditions of the loan agreement, which was a result of EMC's weak institutional, managerial and financial capacity, the Bank suspended disbursements. The specific reasons for suspension of disbursements were: (i) frequent changes in management and in the professional team; (ii) inefficient performance coupled with transfers of the cost of inefficiencies to the customers through increasing tariffs and then offsetting the resulting revenues by hiring unnecessary employees; (iii) noncompliance with major financialcovenants, in particular, the rate of return covenant, and not covering the cost of the market service but rather subsidizing it from the revenues of the water service; (iv) shortage of counterpart funds; (v) delays in implementation of the physical works; and (vi) failure to meet commitments concerning the wastewater treatment plant. The suspension was lifted in March 1992, following a period of intensive supervision by the Bank, effective participation by the National Government through DNP, corrective actions taken by EMC so as to comply with the Bank's conditions, and constitution of an external project management unit under a contract with a Fiduciary Agency. The corrective actions taken by Cucuta which led to the suspension being lifted were: (i) authorization by the Cucuta Municipal Council to liquidate EMC and create a new company with private sector participation for provision of the services of water supply, sewerage and solid wastes; (ii) agreement to implement a voluntary staff separation program to reduce personnel costs; (iii) formulating a financing plan involvingfunds from different sources including, National Government grant using funds administered by FINDETER, ear-marked VAT and betterment levies revenues of the Municipality, grants from the Local Government of the Departamento de Norte de Santander and short term loans; (iv) contracting a Fiduciary Agency to execute the project and manage the project funds; and (v) approval of a tariff increase of 20%.
20. The appointment of a Fiduciary Agency, which acted as the project management unit, operating in practice, though not officially,independently of EMC's management, had an obvious positive impact on the project. The successful completion of the Zulia river water supply works, the component that will probably yield the greatest benefit for
- 11 -
the city of Cucuta, can be attributed to this project management arrangement. The Fiduciary Agency managed to execute 30% of the project works during 1994 and to realize in that year disbursements of close to US$ 5 million, equivalent to 27% of the loan amount and to 2.5 times the largest disbursement carried out in earlier project years. 4. PROJECT SUSTAINABILITY 21. Despite the achievement of implementingthe Zulia river water supply works, the project's sustainability is in doubt due to: (i) interference by local politicians in the management of EMC and lack of managerial autonomy of the company; (ii) the resulting frequent changes of management; (iii) lack of continuity of qualified personnel in key positions; and (iv) shortcomings in EMC's operational and administrative procedures. Project sustainabilitywill depend basically on the commitment that local leaders and politicians (Government, Senators, Mayor's Office,Municipal Council, Board of Directors, labor unions and civic leaders) are prepared to make in order to tackle the problems affecting EMC as well as on continuous monitoring and strict control on the part of the new supervisory entities (the CRAS and the SSPD) set up recently by Law 142, with respect to actions aimed at: * Facilitating the adoption of an appropriate institutional structure which would protect EMC from interference by local politicians and the heavy burden imposed by the current collective labor agreement; = Supporting EMC in achieving efficiencyand effectiveness, and monitoring its operational, commercial, administrativeand financial performance, as well as the quality, reliabilityand continuity in service delivery; v
approving periodic tariff adjustments which will enable EMC to finance its: (i) operating costs; (ii) maintenance costs; (iii) equipment renewal costs; (iv) necessary investments to maintain service coverage; (v) actuarial pension costs; (vi) debt-service obligations; and (vii) earn an acceptable return on its fixed assets.
22. Within the management of the company, operational sustainability of the project will depend on continuous monitoring of the basic performance indicators and on the efficient management of EMC's technical, human and financialresources, placing the achievement of EMC institutional objectives above political interests; in particular sustainabilitywill depend on the: *
urgent implementation of the UFW contitolprogram to reduce losses to around 25 percent;
- 12 -
*
implementation of an institutional, technical and financial strengthening program which would include appointing of qualifiedkey technical, administrative and operational personnel;
*
implementation of a financial rehabilitation of the company in terms of tariff adjustment and control of UFW, which is a basic requirement to enable EMC to meet its operational, system expansion and debt-service costs and cease to be a heavy burden on its loan guarantor, the Government of Colombia. 5. BANK PERFORMANCE
23. The identification, preparation and appraisal of the project by the Bank was based on its previous knowledge of the water sector in Colombia, in which it had already carried out nine lending operations, with INSFOPAL, EAAB and the municipalities of Cali, Palmira and Barranquilla. In response to the negative experience with INSFOPAL, the Bank changed its strategy for the water supply and sanitation sector in Colombia, concluding that multi-city lending was not feasible and that direct lending to the larger municipal utility companies, with careful prior selection, would be preferable in future. 24. The SAR pinpointed the major needs to expand the conveyance and distribution networks, raise water treatment capacity and storage volumes as well as to expand the sewerage system. 25. The main risks identified in the SAR were the institutional and financial weaknesses, particularly those attributable to the attitude of central and local authorities to timely implementation of the required tariff increases. This did in fact transpire over most of the project implementation period, confirming the SAR's risk assessment. Interference by local politicians in project management and in the internal management of EMC, a situation that clearly had a very unfavorable impact on the project by weakening EMC's managerial and administrative capability, was not deemed to represent a risk. 26. A total of 20 supervision missions were carried out during the 10 year implementation period, utilizing 202.8 person-weeks. Both the back-to-office reports and the project archives allow easy tracking of project implementation, the problems encountered, monitoring of compliance with legal commitments and the plans of action agreed upon. 27. Management of the wastewater treatment plant construction program was not always satisfactory. During appraisal, the cost of the treatment plant was considerably underestimated and consequently, an unrealisticallylow budget was allocated for its construction. This budget constraint was a major cause of the problems and confusion related to the treatment plant component and the reason for eventually not constructing the plant. The changes in the conceptual plant design and the unsatisfactory performance of the consultants initiallyhired by EMC utilizing loan proceeds, resulted in a cumulative delay of seven years for completion of design. During the last three years of the project
- 13 -
implementation (1993-1995), however, the wastewater treatement plant design was put back on course, and the studies and designs as finally executed, following amendment of the loan agreement, are appropriate and complete. The final design will provide EMC with accurate data on which to base the decision to construct the plant, enable it to assess the plant's financial viability in light of current commitments and the new ones stemming from the wastewater treatment project, and to negotiate with the National Government its participation in its financing the treatment plant. 28. In general, it is advisable to cancel a loan promptly after the Bank becomes convinced that the borrower is not in a position to honor its commitments with respect to the proposed works and physical targets, repeatedly fails to comply with the conditions and legal commitments of the loan, or fails to take institutional decisions that ensure the project's fuiture sustainability. In this case, the tolerant attitude taken by the Bank undoubtedly enabled EMC to complete the Zulia river water supply works, a component essential in providing water to Cuicuta'slower-income population. Had the loan closing date not been extended, the city's population, especially its lower-income residents, would have been subjected to many more years of water rationing. However, it was not successful in resolving EMC's institutional crisis, despite the correction actions taken (Paragraph 19 (e)) as a condition of lifting the suspension. 29. The size of the Bank loan-which was made directly to EMC with the guarantee of the Government-was probably too big for EMC in view of its weak financing capacity and limited creditworthiness. It was approved on the basis of overly optimistic assumptions, and as a result of change of sector strategy from multi-city lending through INSFOPAL to direct lending on a selective basis to the larger municipalutility companies, with EMC being the first of these companies. It is most likely that the National Government, as guarantor, will eventually have to assume responsibility for repaying the debt to the Bank and FINDETER. 6. BORROWER PERFORMANCE 30. The institutional weakness of the borrower (EMC), the continued interference by local politicians in its administration, and the resulting instabilityof its key personnel prevented achieving one of the main project objectives,i.e. that of converting EMC into a model enterprise. 31. EMC's inadequate financing capacity, combined with its inabilityto reduce the UFW percentage and the lack of political will to raise water tariffs and dismiss unnecessary personnel, forced the guarantor (the Government of Colombia) to assume responsibility for repayment of the loan obligations, with one exception, when EMC made a repayment in the second half of 1995. 32. Serious local political interference and the weakness of EMC's managerial capacity compelled the National Government to require that the project management be entrusted to a Fiduciary Agency, independent of EMC and relatively free from local and regional political pressures and interference.
- 14 -
33. The National Government, particularly DNP and to a certain extent FINDETER, provided continuous support to the project and contributed to resolution of the problems that arose during project implementation, but was not effective in imposing institutional improvements of EMC. It also undertook a radical institutional reform by enacting Law 142 in July 1994, which created an appropriate framework for the efficient operation of water supply and sewerage utilities in the future. However, the enforcement of this Law and the regulation of the water sector has not yet reached full effectiveness, and the success of the reform still depends on the decisiveness and effectiveness in enforcing this Law in the future. 7. ASSESSMENT OF OUTCOME 34. Overall, the project results can be regarded as marginally satisfactory. Implementation of the water supply networks expansion works, the new Zulia river water supply system, the sewerage works and the design of the wastewater treatment plant was accomplished satisfactorily, though behind schedule. The storm water drainage expansion works were not carried out because of lack of funds; however, this was a minor component of the overall project works. The main impact of the new water supply works is that from now on, the lower-income population, accounting for 40% of the city's residents, will enjoy continuous water supply, while prior to project completion this population either had no access at all to water supply or received water once every 15 days. 35. Not all the scheduled institutional strengthening programs and studies were carried out. Those that were have either not been completed satisfactorily, or their recommendations were not implementedby EMC. In essence, there was no real commitment on the part of EMC's owner, the Municipalityof Cucuta, nor on part of EMC's management to the institutional strengthening programs. 36. EMC's calculation of the economic internal rate of return (IRR) of the project, based on project costs and projected marginal income generated over the next 30 years, assuming that the current tariffs (0.193 US$/m3 for water and an additional 50% for sewerage) remain unchanged in US$ terms and that UFW losses are reduced to 35%, yielded an IRR of 0.08%, which is clearly unsatisfactory. Analysis of the sensitivity of the IRR to changes in the UFW percentage, assuming a tariff increase of 40%, yields the results presented in Table 5. The IRR value estimated at appraisal was 12%.
- 15 -
Table 5: Sensitivity Analysis of IRR to UFW and Tariff Levels IRR
I
UFW ~(%)
42 35 30 25
(/) Average Tariff Maintained in Current Value
Average Tariff Increased by 40%
-2.73 0. 08 2.62 4.43
6.57 9.60 11.78 13.72
37. This analysis indicates that the project could have been economically satisfactory, if EMC had implemented a strict action plan to reduce UFW and had adjusted the water tariffs. 8. FUTURE OPERATIONS In 1994, in light of the water supply sector's serious institutional problems and the 38. failure of the existing public utility model in Colombia (including water supply and sewerage utilities) as a result of chronic financial crises, poor planning capacity, management shortcomings, service coverage deficienciesand other factors, the Government enacted Law 142 for regulating the domestic public services. The Law assigned institutional responsibility for the water supply and sanitation sector to the Ministry of Development, which set up a Vice Ministry of Water Supply and Sanitation. It also created a Water and Sanitation Regulatory Commission(CRAS), responsible for promoting competition among service providers, controlling monopolies, approving tariffs and laying down the technical standards to be applied by utility companies. It also created a Domestic Public Services Superintendency (SSPD), responsible for overseeing the utility enterprises and their financial,technical and administrative management and ensuring that central government, departmental and municipalsubsidies are used in the way prescribed in the regulations. Although implementation of the reform has barely begun, the situation of the sector and its enterprises is expected to steadily improve in the medium term. 39. Law 142 provides that, effective July 1996, all utility enterprises be transformed into either share holding companies or organized as public-sector industrial and commercial enterprises; in addition, each of them must furnish the CRAS with a study demonstrating their entrepreneurial viability. The Bank's future operations will have to be conducted with these new enterprises, once they have been restructured and adjusted financiallyand operationally in accordance with guidelines set forth by the CRAS.
- 16-
40. Participation of the private sector in the provision of water and sewerage services through various models of association with the new enterprises created under Law 142, is undoubtedly the route that will be adopted by many enterprises. This has already occurred in the case of the water company of Cartagena. Support for such initiatives, which will help to improve operational efficiency of water companies, represents a possible area of interest for the future Bank operations. 9. KEY LESSONS LEARNED 41. The Need for a New Approach for Institutional Reform. In general, the initial steps of any institutional strengthening programs (managerial, financial,administrative and technical) ought to be implemented, at least in part, up front, as a condition precedent to approval of the loan, and not as part of it. It should normally be a requirement that the borrowing entity demostrate prior to signing the loan agreement, a minimumlevel of viability--managerial,financial, technical, and administrative--sufficientto guarantee proper management of the project. The institutional improvement objectives of the Cucuta project were not realistic and Ciucutais a good example why there has been a change in recent years in the Bank's overall approach to institutional improvement in the water sector, focusing on promoting private sector participation. 42. Evualuation of Local Political Environment. In the case of loans to regional or local utility companies, the local political environment should always be evaluated during project preparation and the evaluation results should be taken into consideration, so as to ensure, if warranted, incorporation of mechanisms which will prevent political intervention, such as requiring up front institutional adjustments. 43. Use of a Fiduciary Agent in Project Implementation. The use of a Fiduciary Agency as a project management unit (which took place following lifting of the suspension) was successful in that it liberated the project management from its dependence in EMC and sheltered it from political intervention and from lack of continuity of EMC's management in latter part of project implementation. Had it been used from the outset, project implementation could have been reduced by as much as 2-3 years. 44. Need for Adequate Determination of the Size of the Loan. The size of an approved loan should be in proportion to the company's annual billing volume and hence its capacity to generate internally sufficient resources to service its debt obligations. In the present case, a loan of US$18.5 million exceeded EMC's debt-servicing capacity, and the project should have been implementedin two stages, the first one consisting of rehabilitation and expansion of the water and sewerage networks, as well as UFW reduction, and the second consisting of the Zulia river water supply works. 45. Importance of Completion of the Physical Works. The extension of the closing date, which allowed completing the works, resulted in: (a) increasing water supply to the city by 70%; (b) achievingwater and sewerage coverage rates of 90% each; (c) ensuring continuous water supply to a low-income population of about 250,000 inhabitants (40 % of the city's population), which prior to project completion, either had no access at all to
- 17water supply or received water under severe rationing conditions; and (d) improving significantlythe financial situation of EMC. Canceling the loan on the original closing date would have: (a) subjected the city's low-income residents to further years of water rationing, since EMC would have had great difficultyin obtaining new loans to complete the works; and (b) deprived EMC from the prospect of increasing its revenues and improving its financial situation, leaving it with uncompleted works after having invested US$ 11 million(actual disbursement on original closing date).
- 18 -
PART II: STATISTICAL ANNEXES TABLE 1: SUMMARY OF ASSESSMENTS
A
Achievementof Objectives
Substantial
'
Partial
Macroeconomnicpolicies Sector policies Fiancial objectives
Negligible
,
Not applicable
x a
Instiutional development Physicalobjxctives
x x
Poverty reduction Gender concenns Other social objectives Environntntal objectives Public sector rnanagentent Private sector development Other (specify)
B.
Project Sustainability
C.
Bank Performance
.x x
Likely
Unlikely
Uncertain
Highly Satisfactory
Satisfactory
Deficient
Highly Satisfactory
Satisfactory
Deflcient
Identification Preparation assistance Appraisal Supervision
D.
Borrower Performaance Preparation hIplemnentation
x
Covenant conpliance Operation (if appliable)
7 -
E
Assessment of Outcome
--
--Highly -Satisfadory
Marginally Satisfactory
.~~~~~~~~E .l
.
Unsatisfactory
j.
Highly Unsatisfactory
- 19-
TABLE
Loan
2: RELATED BANK LOANS
Purpose l_______________________________
Year of approval
Status
Preceding Operations 1072-CO
Sec ond Multi-City Water Supply and Sewerage project
1975
Completed in 1982
1967-CO
Barranquilla Water Supply Project
1985
Canceled in Nov. 1991
2512-CO
Fourth Bogota Water Supply and
1985
Loan Closing -April 1993 Project Completion Report,June 28, 1994
1988
Loan closing date 31-Dec-96
Sewerage Project. Following Operations 2961-CO
Colombia Water and Sewerage Sector Project
TABLE 3: PROJECT TIMETABLE
Steps in project cycle
Date planned
Date actual/ latest estimate
Identification (Executive Project Summary) Preparation
Sep-83
11-Jul-83
Appraisal
Nov-84
14-Aug-84
Negotiations
8-May-84
Board presentation
11-Sep-84
Signing
21-Sep-84
Effectiveness
30-Apr-85
Project completion
30-Dec-91
31-Dec-95
Loan closing
30-Jun-92
30-Jun-95
- 20 -
TABLE4: LOANDISBURSEMENTS: CUMULATIVEESTIMATEDANDACTUAL
_____ _ _____
FY
__
__
85
Appraisal Estimnate :Actual
Actual as % Estimate Date of final disburs.
1--
___
(US$ Thousands)
____
86
87
1.6
4.4
1.05.
3.05
8.3 5.17
_
_
__
_
89[g0
88
13.3j
16.7
6.77
886
_
_
17.7j 1054i
_
_
__
_
92
91 18.2 11;55
_
_
_
93
18.5
_
18.5
12899 13.11
_
_
18.51 18-5 18.13
65.625 69.318 62.289 50.902| 53 054 59.548i 63 462 69.676i 70.865 97.405 July 6, 1995
98.00
-
0-
=Estimated DReal
3
_
195
18.02
2
2
__
94
4
5
6
7
8
9
10
11
- 21 -
TABLE
5: KEY INDICATORS FOR PROJECT IMPLEMENTATION
I. Key implementation indicators in SAR President's Report
Estimated (1992)
Actual (1992)
Financial Tar2ets
Average Water tariff (US$/m3)
0.24 (1)
0. 18
Rate of return
6.9
-1.47
(1) Calculated, based on average water tariff estimated in SAR in current Colombian peso and the SAR estimated exchange rate for 1992
TABLE
6: KEY INDICATORS FOR PROJECT OPERATION
1. Key operating indicators in
SAR/
President's
ESTIMATED
ACTUAL
l
Report
(1992)
(1992)
(1995)
42.2 31.2 26.0 72,200.0 60,800.0 80.0
50.8 31.6 38.3 81,622.0 77,041.0
38.0 * 21.2 * 44.1 * 100,321 89,878 90.3
OPERATIONS I-Water produced (m3 million) 1-Water sold (m3 million) 2-Water unaccounted for (%) 3.-Water connections (1992) 4.Sewerage connections 5-Water coverage (% Pop. served) PERSONNEL Employees/1000
*
water connections
Up to September 1995
6.0
4.70
- 22 -
TABLE 7: STUDIES INCLUDED IN PROJECT
Study
Purpose as deflned
status
at appraisal/redefined 1. Administration and Management
StrengtheningAdministrationand Management
Impact of study I
Executed
through introductionof appropriate MIS systems.
Recommendationspartially implementedwith minor positive inpact
2. Operation and Maintenance
Implement more efficient practices and systems
Partially Executed
Recommendationspartially implemented with minor positive impact
3. Control of water unaccounted for
Strengthen EMC capabilities in reducing
Partially Executed
unaccounted for water
Recommendationspartially implementedwith minor positive impact
4. Integration of Municipalservices
Improvementof service quality
Not executed
Planning, reviewof design and supervision of
Executed
in the Cucuta "MetropolitanArea". 5. Project Administration and Supervision of construction 6. Design of wastewater treatment plant
Construction Preparationof funaldesigns, cost estimates
Executedafter
and bidding documents
many problems and substantial delays
Very positive
- 23 -
TABLE 8A: PROJECT COSTS
Item
Appraisal
Actual /Latest Estim.
Estimate US$M
US$M
Local Costs
Foreign Costs
Total
Local costs
Foreign Costs
Total
CAT. 1- EQUIPMENT& MATERIALS
3.75
7.86
1161
6.9
9.54
16.44
CAT.-2- CIVIL WORKS
8.77
2.88
11 65
10.85
3.75
14.6
CAT.3 -CONSULTANTS' SERVICES
1.26
0.16
1.42
1.48
1.12
2.6
3A- GEN. PROJ. SERVICES
0
0
0
0
0.11
0.11
3B- DESIGN WASTEWATER
0
0
0
1.85
1.38
3.23
CAT.4- TRAING & SCHOLARSHIPS
0.45
0.31
0.76
0.12
0.18
0.3
CAT.5- INTEREST & OTHER CHARGES.
1.86
3.19
5.05
0.49
2
2.49
CAT. 6- INITIAL DEPOSIT
0
0
0
0
0
0
CAT. 7-FEE
0
0.05
0.05
0
0.05
0.05
3.31
4.05
7.36
0
0
0
18.5
37.9
21.69
18.13
39.82
CAT. UNALLOCATED RICE CONTINGENCIES) TOTAL
19.4 1=
.
-
_-
- 24 -
TABLE 8B: PROJECT FINANCING
Financing Source IBRD/IDA
Foregin Costs 18.50
Appraisal Estimate Local Total Costs Costs 0.00
18.50
Actual/latestestimate Local Costs Total
Foregin costs 18.12
0.00
18.12
8.30
4.96
4.96
EMC Internal cash generation
8.30
Gover nment
6.90
6.90
13.20
13.20
Local Loan
4.20
4.20
3.53
3.53
19.40
37.90
21.69
39.81
Total
_____
18.50
18.12
TABLE 9: ECONOMIC RATE OF RETURN
EIRR
UFW
42 35 30 25
Average Tariff Maintained in Current Value
Average Tariff Increased by 40%
-2.73 0.08 2.62 4.43
6.57 9.60 11.78 13.72
TABLE 10: STATUS OF LEGAL COVENANTS
11 A&reement
Secton Covenant _________ :__Ape
GUARANTEEAGREEMENT 2.02 (a) and (b) .__________ ____________ LOAN AGREEMENT 2.02 (c) 3.02
3.05
1 Swtus ._
~~~~~~~~~~~~~~~~~~ Revwise-t
Onginal fus4fiilment date
2
Descnptionof covenant
_______
I 5
C C
EMC to open and satisfactorily maintain a Special Account. EMC to appoint Consultants on terms and conditions satisfactory to the Bank.
5
CD
EMC shall not later than June 30, 1993 hire the consultant services for preparation of the feasibility study and, if applicable and warranted, for the detailed design of the wastewater treatment plant, both under part C of the Project, and shall by, not later than February 2S, 1994 and December 31, 1994, furnish to the Bank final findings and recommendations of the feasibility and the detailed design respectively.
CD
3.07 (a)
4
C
3.08
5
C
3.09
6
NC
S
NC _____
_
EMC to acquire land for waste water treatment. (Target Date December 31, 1986). EMC to make arrangements for borrowing ColS600 million towards project financing.
_
______
_______
inadequate financingequate_financing
________
3
_____________
__________
_
_
|
Comments _
The Government to provide Col$800 million, towards project financing and agree to make arrangements for meeting
3.06
3.10
Fulfl ment 4 date |
Government contributions are expected due to cost overrun (in pesos costs)
Appointment of Consultants in certain areas (unaccounted for water reduction study, for example) has not been timely however. The feasibility study for the Cucuta wasewater treatment plant has not yet started and considering the present state of the hiring process, the work would start, at best, only towards end January 1994, with a seven month dely in regard to the date agreed upon in the amendment to the loan agreement. Consequently, EMC is in no condition to comply with its commitments regarding the completeion of the design of the wastewater treatment plant before the loan closing date.
Preparation of details on sewerage network construction under the project. (Target Date - March 31, 1985). EMC to take actions to protect environment and maintain quality of the receiving Pamplonita River.
The Municipality has made arrangements to borrow ColS2,000 for transferring the to EMC. Delayed submission however, did not have any significantirnpact. See Sec. 3.05 for related details; EMC recognizes the need to provide for waste treatment prior to discharge in Panmplonita;EMC has also initiated in Sept. 1988 an industrial waste pollution
EMC to establisha Project Coordination Unit for carrying out the project.
A coordination unit was establihd isaperformancewaspoor. Aa a
~~~~~~~~~~~~~~~~~~~~~~~~~proceeds
but
F'
A4g.reernnt
S::e
Covenant
Status
__________
Revsised Otig,lnal F:: llmeis fs4~~~~ypefuYlllmet date date
:
Des
::: : nof conant
:
.. Coments consequence, the Bank required contracting of a fiduciary agency for project management.
5.01 (a)
2
C
5.02
1
CD
5.03
1
CD
Auditing of Special Account and submission to the Bank certified copies of above audit. (Target Date - Not later than
5.05
2
NC
5.06
2
NC
EMC not to incur additional debt - except that noted in Sec. 3.07(a) above - unless revenues exceed 1.5 times the debtservice. EMC not to undertake major capital expenditures (outsideof the Project) in excess of US$I million without the Bank's
5.07
1
NC
5.08
2
C
5.09 (a), (b) and (c)
2
NC
5.10 (a),(b) and (c)
2
NC
5.11
2
NC
5.12
2
NC
EMC to maintain separate financial needs for each of its Departments (Water, Solid Wastes, Slaughter House and Market Operations). EMC to arrange for yearly auditing of its financial statements and submit to the Bank certified copies of audits. (Target Date -not later than May 30 of each year).
Usually submitted after significant delays. The audit report for FY 92 abd FY 93 were submitted with a delay of 4 months. See remark for 5.02 above.
_May30of eachyear).
Additional debts (mainly from the Municipality) were warranted with adequate Bankmonitoring.
_concurrence.
EMC to revalue fixed assets annually. (Target Date - Not later than February 28, of eachyear). EMC to submit to the Bank a rolling 3-year Financial Plan. (Target Date - Not later than September 30, of each year). EMC to achieve following ROR for water and sewerage operations: 1-5% in '84; 3-5% in '85; 5% in '86; 5.5% in '87 and '88; 6% in '89; and 7% thereafter; EMC to review with the Bank and undertake measures to meet compliance as needed.
EMC to produce adequate revenues to cover the operation of other Departments except the Water and Sewerage Department, and to review with the Bank and undertake measures to meet compliance as needed. EMC to reduce Accounts Receivable (not to exceed 3.0 in 1984 and 2.5 in 1985 and thereafter). EMC not to tranafer funds betwen Departments except there is a Surplus.
_
Agreed values of ROR were never achieved. A new covenant of working ratio was introduced as follows: - WR not higher than 70% by Dec. 31, 1992 (achieved) - WR not higher than 60% by Dec. 31, 1993
EMC is activating collections to reduce arrears. The Water and Sewerage Service has been subsidizing other services since project inception.
Key covenantTypes: I = 2 = 3 = 4 = 5 = 6 = 7 = Status C = CD = NC =
Accounts/audit FinancialPerformance/revenuegenerationfrom beneficiaries Flow and utilization of projed funds Counterpart fiunding Managementaspects of the project of executing agency Environmentalcovenants Involuntary resettlement
8 9 10 11 12 13
= = = = = =
Indigenous people Monitoring review, and reporting Project Implementationnot covered by categories 1-9 Sectorial or cross-sectorialbudgetary or other resource allocation Sectorial or cross-sectorialpolicy/regulatory/institutionalaction Other
covenantcompliedwith compliedwith aflterdelay not complied with
t' l3
- 28 -
TABLE 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS
No significant lack of compliance with applicableBank Operational Statement (OD or OP/BP).
TABLE 12: BANK RESOURCES: STAFF INPUTS
Stage of Project Cycle Through Appraisal Appraisal-Board _ Board-Effectiveness Supervision
Planned Weeks US$ (1)
Revised Weeks US$ (1)
Actual Weeks US$ (1) 61.8 6.4 134.6
Completion
TOTAL (1) Information not available
I
202.8
- 29 -
TABLE13: BANKRESOURCES:MISSION
Number of
Days in field
Specialized Staff Skills
Performance Typesof Rating(overall) problems
Stage of Project Cycle
Month/ year
Throughappraisal
Oct-81
2
5
SE,FA
Jun-83 Dic-83
2
30
SE,FA
Board Approval through Effectiveness
Oct-84
2
6
SE,FA
1
Supervision
May-85 Nov-85 Ene-86 May-86 Mar-87 Ago-87 Dec-87 May-88 Oct-88 Mar-89 May-89 Jun-90 Jul-91 Sep-92 Abr-93 May-93 Oct-93 Jul-94 Feb-95
2
8
SE,FA
2 1 1 1 2 2 2 1 3 2 2 1 1 2 2 2 1
10 5 3 4 12 32 22 4 9 2 18 11 2 6 10 10 1
2 3 2 2 2 2 3 4 3 2 3
AF AF,PM AF,PM AF,PM AF AF AF AF,PM AF,PM AF,PM AF,PM,CLC
3
(1) AF,PM,CLC
Represented
persons
Appraisal through Board Approval
FA,C SE FA SE SE,FA SE-FA SE,FA SE FA,SE,UT FA,C C SE FA SE,FA SE,FA SE,FA SE
3 3 U U
AF,PM,CLC AF,PM,CLC AF,PM,CLC
Completion
TOTAL
SE=Sanitary Engineer AF=Availability of funds PM=Project Management Perf. (1)=Disbursemsnt suspended
210
C=Consultant UT=Urban/Transport Planner
FA=Financial Analyst CLC=complianceLegalCovenants
ANNEX 1
AVERAGE WATER TARIFF AND WATER LOSSES YEAR
Vol. Produced
Vol. Billed
Losses
Water Billed
Sewerage Billed
Tatal Billed
M3 (1)
M3 (1)
(%)
1,000
1000
1000
Peso(l)
Peso(l)
Peso(l)
1985 1986
Average Tariff
Average Average Total Water (Water & Sew) Tariff Tariff (Peso/m3 (June 30) (US$/m3) (US$/m3) Billed)
15,724,708 =
1987
_
1988 1989 1990 1991 1992 1993 1994
45,491,710 45,453,929 45,191,072 46,797,608 50,801,097 51,223,474 50,769,167
_
_
_
_
1995(2) 38,004,893
_
_
_
_
_
_
_
_
__
_
142.9 213.76 9
__ _
__
_
_
_
20,260,765 27,664,417 26,531,550 30,404,420 31,620,724 30,643,864 30,179,118
55.46 39.14 41.29 35.03 37.76 40.18 40.56
656,361 313,153 969,514 1,208,221 570,469 1,778,690 1,416,044 667,418 2,083,462 1,998,453 919,030 2,917,483 3,245,887 1,492,416 4,738,303 4,317,987 2,021,634 6,339,621 4,848,092 2,277,717 7,125,809
21,243,320
44.10
4,009,218
.
(1) Extracted from availableaudit reports and EMC data (2) Production and billing data refer to the period January-September 1996
Exch. Rate
__
_
__
47.85 64.30 78.53 95.96 149.85 206.88 236.12
243.32
299.28 381.79 502.39 628.82 758.62 787.12 819.64 881.23
0.108 0.114 0.109 0.104 0.135 0.187 0.196
0.160 0.168 0.156 0.153 0.198 0.263 0.288
-31 -
ANNEX 2 PROJECT REVIEW FROM BORROWER'S PERSPECTIVE GG-00195 San Jose de Ciicuta, May 27, 1996
Messers. WORLD BANK Att. Ing. Menahem Libhaber Environment and Urban development Division Department III Regional Office for Latin America and the Caribean 1818 H street, N.W. Washington D.C. 20433 U.S.A.
Ref: Implementation Completion Report of the Cucuta Water Supply and Sewerage Project In response to your request we would like to present our opinion regarding the captioned document. Achievement of Objectives We do not share the opinion that, from the institutional standpoint, EMC is currently in a condition which is worse than its condition at the date of signing the Loan Agreement. In the following paragraphs the executed works of the various project components are indicated and compared with the implementation levels provided for in the Loan Agreement:
-
32 -
Implementation of Works Under Component A: Extension of the Existing Water Supply System
Description
Implementation provided for in the Loan Agreement
Implemented as of 06/30/95
% Execution
A. EXPANSION OF THE EXISTING WATER SUPPLY SYSTEM - Primary networks - Storage tanks - Las Lomas pumping station - Los Benefactores pumping station - Secondary networks - House connections - Domestic meters supply and installation
43.0 km 8,000 m3 120 I/s
62.4 km 9,700 m3 120 V/s
6 Vs 120 km 10,000 units
6 Is 120 km 10,000+ units
50,000 units
50,000 units
145 121 100 100 100 More thanI 00 100
Implementation of Works Under Component B: Zulia River Water Supply System Out of component B works, the Loma de Bolivar Bajo and Loma de Bolivar Alto tanks and the corresponding pumping stations, which are essential to supply of the high western part of the city, were not constructed due to lack of resources, although the pumping equipment was purchased. Nevertheless, during project implementation the pressure break chamber (consisting of two tanks with a volume of 1600 m3 each) and the Antonia Santos tank (with a volume of 3200 m3), essential structures for adequate operation of the new Zulia river supply scheme, were incorporated into the system. In total, 9,600 m3 of storage volume was constructed, i.e., more than the projected 7000 m3. Implementation of Works Under Component C: Sewerage Networks The programmed works of this component were fully executed, providing adequate sanitation to the periferic neighborhoods of San Martin, Panamericano, Aeropuerto, Virgilio Barco, Ospina Perez, Belisario and Doia Nidia. Following is a summary of the executed works:
-33 -
Description
Implementation provided for in the Loan Agreement
Implemented as of 06/30/95
% Execution
C. SEWERAGE SYSTEM - Primary collectors - Secondary networks - House connections
11.0km 100.0 km 8200 units
10.2 km 124.72 km 6636 units
90 124.72 81
In addition, the final design of the collection, conveyance and treatment plant of the wastewater of Ciicuta have been completed. It is important to clarify that, although the construction of a wastewater treatment plant with a capacity of I m3 formed part of the project, the financial resources allocated for the construction of the plant were considerably under estimated and were sufficient only for design of that plant. Consequently, it was impossibleto construct the plant by utilizing the loan proceeds, especially when taking into consideration that the cost of this plant, including the collection and conveyance systems, amounts to US$ 40 million. Component C: Storm water Drainage This component was postponed due to lack of resources. Major Factors Affecting Project Implementation The ICR failed to mention the incidence of devaluation of the Colombian peso in relation to the Dollar, which generated an increment in the required counterpart funds and resulted in shortage of funds for project implementation. The report should also mention that the loan proceeds allocated for the wastewater components, especially for the wastewater treatment plant, were not sufficient for achieving the objective. Bank Performance It is acknowledged that the Bank's decision to extend the loan closing date allowed the effective completion of the new Zulia river water supply works (except for Loma de Bolivar Alto and Loma de Bolivar Bajo tanks), which are essential for the city and are currently in operation.
- 34 Lessons Learned Taking into consideration that the Bank provides only partial financing for projects and the Borrower is required to contribute counterpart funds, it is necessary that the Bank applies a more flexible policy in regard to compliance with goals by the Borrower, with the objective of avoiding delays in project implementation resulting from shortage of counterpart funds caused by the devaluation of the local currency (the Colombian Peso). Because of the devaluation of the local currency, the Bank should also consider incrementing the financing percentage of civil works
Sincerely, Jesus Javier Duarte Quintero General Manager, EMC
-35
11UCUTA
oc- 001951 Gi San Jos6 del ,Q
27 MAynw9g
JH1.- 4 i996
Daterc'd. Project No. :
Senores
Assigned t
_
INCOMLELOG
7-0-C
_
e:
C:ontrolN Action Taken_
WORLD B Attu. geniero Menahem Libbaber Divishh de Medio Ambiente y Desarrollo Urbano Departamento m MOWiRegioS Paa America Latik y el Caribe N.W. I818 H*.Street. WashingtonD.C. 20433 U.S.A.
Referencia: Informe de cumnPlinientode la mp Acueductoy Alcantarilado de Cu lta.
1ec
nos perjtim,s eresa I'm atencifn a s solicitu, atentamente refrezcia: en la indicado sobre el dmmw=o~
de Proyecto de
nuestro concepto
LOGRO DE OBJrElVoS No estamosde acuerdocon la afirmwin de que las EMC desde el punto de vista asucional'l estii en peores condicicnes,que al momento de fimar el cridito. oIoLdepo~dnepei mlaclwn~an~~dieet w~~ A conhinuaci6n e, dOneprevia dopntsde &royes S~~ revzi6n Y correccic1 se indcan ins obras ejccutuasj y se comparan con io 2470-Co., estab1ec'd enCionfraO de PrMMMzO
AVNDA 6 CALLE11 IDIlN. JOBg EL'WPONO.713W.1.372= FAX (975) 714112
-
36 -
IMCUCUTA S~mu
hnw
2
hau3dh
COMONENTE A. EXPANS1ONDEL SISTEMAEXISTENTE DESCRIPCIO)N
SEGUN CONTRATO
PRtSTAMO Rude MWrice. -
43 Km
Twiquesde AlJmenrrerto
-
tdao6n BombooLao Berefactoros Pude Seouarias C*rC.kn
doryioIijmrie
-. $unstros e Instde Medidores
COMPONENTE B. SISTMA
%;DE AVANCE
FISICO 62.4 km
145
9.700.0mB
121
120.0Lps
100
-0-
150 Lps
100
120 Kms
120 Kms
100
8000 Its
-Esueoi6ndeBombeoLas Lors -
E-JECUTADO A JUNIO30 IM9
1201ps
10.000
Mis do 10.000
50.000
bO.00D.0un
Mk 10O 100
DEL RIO ZULIA
De la componente B de] Proyecto Zulia, por falta de fmanciaci6n no fueron construidoslos TanquesLoma de BolfvarBajo y Lomade BolivarAlto y aunque se adquirieronlos equiposrespectivos,no se construy6la Estaci6nde BombeoLoma de BolfvarBajos, componentesnecesaios pam abastecerla zona occidentalalta de la ci5dad,sin embargo, durante la ejecuci6ndel proyectose incorporaronlos Tanques de la CAmarade Quiebre(2 Tanquesde 1600m3 c/u.) y el TanqueAntoniaSantos (1 Tanquede 3200 m3), estructurasnecesariaspara la adeazadaoperaci6ndel Nuevo Acueductodel Rio Zulia. En total se construyeron9600 m3 de almacenamientode 7000 m3 programados.
COMPONENTE
C. ALCANTAR,LLADO
De esta componeznte las obras previstasfueronejecutadasen su totalidadsaneindose los banios perifricos de San Martfn, Panamencano,Aeropuerto,Virgilo Barco, OspinaPerz, Belisanoy Dofia Nidia,cuyo resamense muesta a continuaci6n:
AVCNIDA6 CALLS 11 EDIF.SANJOSE TELIZONOS 71305-7nm2 FAX (975)714112
-
37 -
CMCUCUTA 3
S0mm DIU=
DESMRIPCION -
BEGUNCONTRATO PRESTAMO
Contr.de cokctors prlnw Dieho de Laune de oiddaci6n
11 Kne 1000 Wgseg.
-
Redosde alcart. secwunderias -
C
r~
n
&danSiewia*
100 8200
Kms
EJECUTADO A JUNIO30 1995 10.2 Krn 1000 Its/seg 124.72 Kms n
on
un
% DEAVANCE FiSiCo 90 100 124.72 8t
(*) Diseos terminadosen Abril de 1996. AdemAsse alcanz6a realizarel disenodefnitivo del sistemade colecci6n,conducci6n y planta de tratamientode aguas residuales para la ciudad de Cicuta. Sobre el particular,es importanteaclarar, que en la programacionfmancieradel proyecto, aunquese habia contempladola construcci6nde una planta de tratamientode aguas residualescon capacidadde I m3/seg.,los recmusosque se previeronpara este fin solamentealcanzl7onpara la fase de disefios;de ahi tambienla miposibilidadde constnirla con cargoal contratode pr6stamosuscritocon el BancoMundial,mAxime si se tiemeen cuentaque el valor de la irnsinaasciendea los US 40.000.000incluido el sistemnade coleccid6n y conducci6nde aguas negras.
COMPONENTE D. ALCANTARILLADODE AGUASLLUVIAS Este componentese aplaz6 por falta de fianciaci6n.
PRINCIPALESFACTOS
QUE AEECTARONEL PROYECTO
En el informe falt6 incluir la incidenciade la devaluaciondel peso frente al d6lar, situaci6nque gener6el incrementode recursosde contrapartidapor partede las EMC, causando desfinanciaci6n en el proyecto.
AVENIDA 6 CAlLE DIKDJDIFAN JOSE TILONOS
n30n3722
Ax Mg) W7sXn74
-
38 -
EMCICUTA SdmamBhW JAnmdi
4
Debe incluirse que las partidas previstas en el contrato de prnstmo para la componentesde aguas negras, especialmentepara la construeci6nde la Plmta de Tratamientode Aguas Residuales,no fueron suficientespara lograrel objetivo.
DESEMPENO DEL BANCO Se reconoceque la decisi6ndel BancoMundialde prorrogaren el tiernpola vigencia del contratode prsamo, pennitio la terminaci6nefectivadel NuevoAcueductodel Rio Zulia (con excepci6n de los tanques Loma de Bolivar Alto y Bajo), obras priritarias para la ciudad y que actualmentese encuentraen operacion.
LECCIONES APRENDIIDAS Teniendoen cuentaque la financiaci6nde los proyectospor parte del BancoMundial
se hace en forma parcal, requinmndoserecursas de contaparida por parte del ente presaatario,se hlacenecesario la aplicaci6n por parte del Banco Mundialde una politica mnisflexibleen lo referenteaI cumplirnientode metas por parte del rnismo ente prestatariocon el objeto de que el proyectono se dilateen el tiempo,situacion que por efectos de la devaluaci6n de la moneda (pesos colombianos)genera mcranentosen los diras de contrapartida,desfinanciandopor consiguientelos proyectos. Por la inisma circunstanciade la devaluaci6nde la moneda, debe considerarsela poslbilidadde irementar el porcentajede financiaci6npor parte del BancoMundial para las obrasciviles. Atentamente,
AVENIDA6 CALLE 11 EDIFSAN JOS
TKIZONOSM0-7137M FAX("7) 714132
I
IMAGING
Report Type:
No: ICR
15806
