The World Bank Report No: ISR14793 Implementation Status & Results Tunisia TN-Urban Water Supply (P064836) Public Disclosure Copy Operation Name: TN-Urban Water Supply (P064836) Project Stage: Implementation Seq.No: 16 Status: ARCHIVED Archive Date: 16-Jun-2014 Country: Tunisia Approval FY: 2006 Product Line: IBRD/IDA Region: MIDDLE EAST AND NORTH AFRICA Lending Instrument: Specific Investment Loan Implementing Agency(ies): Key Dates Board Approval Date 17-Nov-2005 Original Closing Date 30-Jun-2012 Planned Mid Term Review Date 21-Jan-2011 Last Archived ISR Date 05-Jan-2014 Effectiveness Date 21-Mar-2006 Revised Closing Date 30-Jun-2015 Actual Mid Term Review Date 15-Apr-2011 Project Development Objectives Project Development Objective (from Project Appraisal Document) The Project development objectives are to: - Sustain the reliability and quality of water service in Greater Tunis and selected urban centers, through augmentation, upgrade and renewal of water supply infrastructure. - Enhance the competitiveness and sustainability of SONEDE operations, through modernization of management practices and information systems, for better cost control, enhanced revenue and more responsive customer service. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) Component Name Component Cost 1. Greater Tunis Infrastructure 25.86 2. Urban Centers Infrastructure 9.11 3a. Corporate Plan & Organizational Audit 0.48 3b. Financial Model 0.22 3c. Customer Service Information System 2.64 Public Disclosure Copy 3d. Human Resources Mgt System 0.53 1. Greater Tunis Infrastructure 25.86 2. Urban Centers Infrastructure 9.11 3a. Corporate Plan & Organizational Audit 0.48 3b. Financial Model 0.22 3c. Customer Service Information System 2.64 3d. Human Resources Mgt System 0.53 Overall Ratings Page 1 of 5 The World Bank Report No: ISR14793 Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Public Disclosure Copy Overall Risk Rating Moderate Moderate Implementation Status Overview The project continued smooth progress. Overall disbursement stands at about 78%, and commitment at 93%. Infrastructure. The construction of all infrastructure components has been completed. The new ST4 water treatment facility of the Greater Tunis treatment plant has been in operation (2 m3/s) since June 2013. The only remaining activity is the operationalization of the sludge treatment station, due to an argument between SONEDE and the building company regarding the responsibility for buying chemical product during the semi-industrial operationalization phase. To avoid further delays SONEDE decided to purchase the chemical products, while awaiting the results of the conciliation process. Joint ONAS-SONEDE "SIC". Installation of the new IT customer billing system continues to progress. In January, the Bank discussed with the staff at SONEDE responsible for the management of the SIC contract, about technical features for updating the categorization and identification of clients, classify client information, and establish the database access protocols. The SIC pilot site is due to be launched in June 2014. Good coordination with the contractor and ONAS remains essential in order to avoid delays in the contract implementation. The schedule for completion (June 2015) is tight and implementation remains complex given the full revamping of the utilities’ commercial management and billing chains. The longer timeframe provided by the Additional Financing to be presented for Board approval on June 9, 2014 (see below) will ensure potential delays during the implementation and start-up phases can be managed smoothly. Social safeguards. A due diligence review on OP 4.12, carried out as part of the appraisal of the new additional financing, provided evidence of compliance of the Project with agreed- upon land acquisition procedures. The note also indicates in detail the transparent system established in consultation with SONEDE to regularize pending land contracts. As of end of April 2014, the only expropriation pending issue had been resolved through amicable arrangement between SONEDE and the landowner. Financial planning model. SONEDE confirmed its decision to launch the tender for the installation of the financial planning model, thanks to the extension of the project that will be granted in parallel with the new additional financing. The Bank gave NO on the RFP (estimated TDN 310,000). Four of the six bidders on the initial short list have confirmed their interest to bid (Hydroconseil, Fitchner, CCM, IDEA). Procurement. Three additional activities were introduced in the revised procurement plan to use the loan remnant (€1.8 million or about $2.7 million) and are progressing as follows: (i) Reinforcement of the power supply of the Greater Tunis water treatment plant (under Component 1) – Bid was completed for the intra-muros component and the contract (direct contracting) with STEG (TDN 664,952) is ongoing (ii) Rehabilitation of two pumps at the raw water intake of the Greater Tunis water treatment plant (under Component 1) – this contract is ongoing (iii) purchase of operating equipment and vehicles for network repairs (under Component 3). This contract is of value under the NO threshold, and will be reviewed ex-post. Public Disclosure Copy These activities are expected to be fully disbursed by June 2015. Tariff increase plan. SONEDE has obtained, in January 2014, Ministerial Council approval for a 7% water tariff increase, in compliance with the tariff adjustment program agreed upon with GOT for 2010-2016. This highlights the strong consensus that exists on guaranteeing SONEDE's financial viability. It is expected, subject to continuation of this tariff adjustment program, SONEDE will be able to break even by 2016. Financial management. Based on the January supervision mission and IFRs submitted thus far, SONEDE's financial management arrangements are acceptable to adequately control, manage, account, and report on project allocated funds. As regards auditors’ reservations on the financial statements for 2012, these were related inter alia to issues regarding commercial accounts management, as well as fixed assets valuation. SONEDE's Board has already taken a number of corrective measures, including hiring in November 2013 an accounting firm to solve the issue with fixed assets. The difficulties with commercial accounts management are largely related to the current state of SONEDE’ customer billing system, which dates from the 1980s and is fundamentally obsolete, and will be replaced by the SIC financed under the Project. In the meantime, SONEDE has alread y Page 2 of 5 The World Bank Report No: ISR14793 submitted in March 2014 an action plan addressing the above-mentioned concerns, which was reviewed and deemed satisfactory by Bank. Additional Financing. SONEDE sent a request to the Bank on January 2 2014 for an emergency additional loan for the Urban Water Supply Project (P064836) to reinforce the treatment capacity of potable water in Greater Tunis. The AF is due to be considered for approval by the Bank Executive Directors on June 9 2013. The amount of the additional loan Public Disclosure Copy requested is Euros 19 million (US$26.2 million equivalent). The AF also includes a restructuring for revising the Project Development Objective (PDO), results framework, closing date, and some covenants set forth in the legal documents of Loan 7339-TN. Extension of closing date. Level 2 restructuring approved by RVP on April 25, 2014. Locations Country First Administrative Division Location Planned Actual Tunisia Not Entered Sbiba Tunisia Not Entered La Sebala du Mornag Tunisia Not Entered Ras Tabia Tunisia Not Entered Jammal Tunisia Not Entered Ghardimaou Tunisia Not Entered Borj et Touil Tunisia Not Entered Bir Kassa Tunisia Not Entered Ayn ad Darahim Tunisia Not Entered Rohia Tunisia Not Entered Kelaa Kebira Tunisia Not Entered Jedelienne Tunisia Not Entered Nasrallah Tunisia Not Entered Ouerdanine Public Disclosure Copy Tunisia Not Entered La Gazelle Tunisia Not Entered Ghdir El Golla Results Project Development Objective Indicators Page 3 of 5 The World Bank Report No: ISR14793 Indicator Name Core Unit of Measure Baseline Current End Target Events of intermittent supply due to water Number Value 0.00 0.00 0.00 shortage in the distribution systems covered by Date 30-Jun-2006 31-Dec-2013 30-May-2014 Public Disclosure Copy the project Comments Capacity reinforcements in areas covered by the project have ensured that SONEDE can continue to provide 24/7 water supply Ratio of labor costs to sales Percentage Value 0.54 0.54 0.46 Date 30-Jun-2006 31-Dec-2011 30-May-2014 Comments Value based on 2012 financial statements. Intermediate Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target Completion rate of construction of new ST4 Percentage Value 0.00 100.00 100.00 potable water plant in Tunis Date 31-Dec-2006 30-Jun-2013 31-May-2014 Comments New production facility is fully The new production facility operational. should be fully operational by mid 2013. Implementation of a joint Customer Text Value Not in place Operational management system common to SONEDE and Date 31-Dec-2005 15-Dec-2013 30-Apr-2014 ONAS Comments Installation has been 25% complete progressing over the last 11 months. NUmber of new connections in areas in Number Value 18603.00 22436.00 20000.00 Greater Tunis covered by the project Date 31-Dec-2006 31-Dec-2012 30-Apr-2014 Comments number of new connections target value already largely per year installed by exceeded Public Disclosure Copy SONEDE in greater Tunis area Number of new connections in the center and Number Value 10878.00 13697.00 12000.00 West of the country in distribution systems Date 31-Dec-2006 31-Dec-2012 30-May-2014 covered by the project Comments number of new connections Value for 2012. target value already largely per year installed by exceeded SONEDE in other urban centers Data on Financial Performance (as of 02-May-2014) Page 4 of 5 The World Bank Report No: ISR14793 Financial Agreement(s) Key Dates Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P064836 IBRD-73390 Effective 17-Nov-2005 05-Dec-2005 21-Mar-2006 30-Jun-2012 30-Jun-2015 Public Disclosure Copy Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P064836 IBRD-73390 Effective USD 38.03 38.03 0.00 34.94 6.90 92.00 Disbursement Graph Key Decisions Regarding Implementation official business only Public Disclosure Copy Restructuring History Level two Approved on 07-Feb-2012, Level two Approved on 29-Jun-2012, Level 2 RVP Decision on 20-May-2014 Related Projects P150011-Addnl Fin. for Urban Water Supply prjct, P150033-Urban Water Supply additional financing Page 5 of 5