Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00004565 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-45740, IDA-H4750, IDA-H7380, IDA-H9670, and IDA-54920) ON A IDA GRANT H4750 OF SDR 5.7 MILLION (US$8.5 MILLION) MAY 26, 2009 IDA CREDIT 45740 OF SDR 11.1 MILLION (US$16.5 MILLION) MAY 26, 2009 ADDITIONAL FINANCE IDA GRANT H7380 OF SDR 8.4 MILLION (US$13 MILLION) NOVEMBER 10, 2011 ADDITIONAL FINANCE IDA GRANT H9670 OF SDR 4.12 MILLION (US$6.385 MILLION) JUNE 20, 2014 AND ADDITIONAL FINANCE IDA CREDIT 54920 OF SDR 5.84 MILLION (US$9.05 MILLION) JUNE 20, 2014 TO THE KINGDOM OF LESOTHO FOR A WATER SECTOR IMPROVEMENT APL PHASE II: METOLONG DAM AND WATER SUPPLY {June 26, 2019} Water Global Practice Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective March 26, 2019) Currency Unit = Special Drawing Rights (SDR) SDR 0.72 = US$1 US$1.39 = SDR 1 FISCAL YEAR July 1 - June 30 ABBREVIATIONS AND ACRONYMS AGOA African Growth and Opportunity Act APL Adaptable Program Loan CapEx Capital Expenditure CERC Crisis and Emergency Response Component CoW Commission of Water EFR Environment Flow Requirement EIB European Investment Bank EIRR Economic Internal Rate of Return ESMP Environmental and Social Management Plan GoL Government of Lesotho GRM Grievance Redress Mechanism LEA Lesotho Electricity Authority LEWA Lesotho Electricity and Water Authority LHDA Lesotho Highlands Development Authority LHWP Lesotho Highlands Water Project LLWSS Lesotho Lowlands Bulk Water Supply Scheme M&E Monitoring and Evaluation MA Metolong Authority MCC Millennium Challenge Corporation MDWSP Metolong Dam and Water Supply Program MTR Midterm Review NPV Net Present Value NSDP National Strategic Development Plan OpEx Operating Expense PAD Project Appraisal Document PAP Project-affected Person PDO Project Development Objective RAP Resettlement Action Plan RPF Resettlement Policy Framework TTL Task Team Leader TY Teyateyaneng WASA Water and Sewerage Authority WASCo Water and Sewerage Company WC Water Commission WEAP Water Evaluation and Planning WSIP Water Sector Improvement Project Regional Vice President: Hafez M. H. Ghanem Country Director: Paul Noumba Um Senior Global Practice Director: Jennifer J. Sara Practice Manager: Catherine Signe Tovey Task Team Leader(s): Sanyu Sarah Senkatuka Lutalo ICR Main Contributor: Zhimin Mao TABLE OF CONTENTS DATA SHEET .......................................................................................................................... 1 I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 7 A. CONTEXT AT APPRAISAL .........................................................................................................7 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) ..................................... 12 II. OUTCOME .................................................................................................................... 13 A. RELEVANCE OF PDOs ............................................................................................................ 13 B. ACHIEVEMENT OF PDOs (EFFICACY) ...................................................................................... 14 C. EFFICIENCY ........................................................................................................................... 21 D. JUSTIFICATION OF OVERALL OUTCOME RATING .................................................................... 22 E. OTHER OUTCOMES AND IMPACTS (IF ANY) ............................................................................ 22 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 23 A. KEY FACTORS DURING PREPARATION ................................................................................... 23 B. KEY FACTORS DURING IMPLEMENTATION ............................................................................. 24 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 25 A. QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................ 25 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ..................................................... 26 C. BANK PERFORMANCE ........................................................................................................... 27 D. RISK TO DEVELOPMENT OUTCOME ....................................................................................... 28 V. LESSONS AND RECOMMENDATIONS ............................................................................. 29 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 31 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 43 ANNEX 3. PROJECT COST BY COMPONENT ........................................................................... 45 ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................... 46 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 49 ANNEX 6. SUPPORTING DOCUMENTS .................................................................................. 50 ANNEX 7. EVOLUTION OF FINANCING ARRANGEMENT FOR MDWSP .................................... 51 ANNEX 8. MAP OF LOWLAND WATER SUPPLY ZONES, METOLONG DAM, AND TOWN OF TY. 52 ANNEX 9. KEY DATES FOR METOLONG DAM AND RAW WATER PUMP STATION ................... 53 ANNEX 10. SUMMARY OF PDO INDICATOR CHANGES .......................................................... 54 ANNEX 11. MDWSP COMPONENTS AND KEY FINANCIERS .................................................... 57 ANNEX 12. PICTURES FROM SITE VISITS ............................................................................... 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name Water Sector Improvement APL Phase II: Metolong Dam P108143 and Water Supply Country Financing Instrument Lesotho Investment Project Financing Original EA Category Revised EA Category Full Assessment (A) Full Assessment (A) Organizations Borrower Implementing Agency Ministry of Natural Resources, Ministry of Natural Kingdom of Lesotho Resources, Metolong Authority, Commissioner of Water, Lesotho Highlands Development Authority Project Development Objective (PDO) Original PDO The Project Development Objectives is to support the GoL in: (i) developing and sustaining an environmentally sound, sociallyresponsible, and financially viable framework for the MDWSP; (ii) an increase in the quantity of safe, bulk water supplied toTeyateyaneng;and, (iii) strengthening institutions and related instruments in the water sector. Revised PDO The Project Development Objectives are to support the Recipient in: (i) developing and sustaining an environmentally sound, socially responsible, and financially viable framework for the MDWSP; (ii) increasing the quantity of safe, bulk water supplied toTeyateyaneng; (iii) strengthening institutions and related instruments in the water sector; (iv) advancing strategic infrastructure investments; and (v) in the event of an Eligible Crisis or Emergency, to provide immediate and effective response to said Eligible Crisis or Emergency. Page 1 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 16,500,000 16,499,967 15,717,600 IDA-45740 8,500,000 8,499,971 8,823,080 IDA-H4750 13,000,000 13,000,000 12,742,053 IDA-H7380 6,385,000 5,749,859 5,112,104 IDA-H9670 9,050,000 9,050,000 7,184,386 IDA-54920 Total 53,435,000 52,799,797 49,579,223 Non-World Bank Financing 0 0 0 Borrower/Recipient 41,500,000 6,800,000 6,800,000 Total 41,500,000 6,800,000 6,800,000 Total Project Cost 94,935,000 59,599,797 56,379,224 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 26-May-2009 18-Sep-2009 18-Mar-2013 30-Jun-2015 31-Dec-2018 Page 2 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 10-Nov-2011 4.12 Additional Financing Change in Results Framework Change in Components and Cost Reallocation between Disbursement Categories Change in Procurement 20-Jun-2014 21.54 Additional Financing Change in Implementing Agency Change in Project Development Objectives Change in Results Framework Change in Components and Cost Change in Loan Closing Date(s) Reallocation between Disbursement Categories Change in Disbursements Arrangements Change in Institutional Arrangements Change in Implementation Schedule 23-Jun-2016 36.12 Change in Project Development Objectives Change in Results Framework Change in Loan Closing Date(s) Reallocation between Disbursement Categories Change in Legal Covenants Change in Institutional Arrangements Change in Procurement Change in Implementation Schedule 13-Nov-2017 40.50 Change in Results Framework Change in Loan Closing Date(s) Reallocation between Disbursement Categories Change in Implementation Schedule 31-Dec-2018 47.75 KEY RATINGS Outcome Bank Performance M&E Quality Moderately Satisfactory Moderately Satisfactory Substantial Page 3 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 04-Dec-2009 Satisfactory Satisfactory .97 02 02-Jun-2010 Satisfactory Satisfactory .97 03 18-Mar-2011 Satisfactory Satisfactory 3.69 04 16-Aug-2011 Satisfactory Satisfactory 3.69 05 26-May-2012 Satisfactory Moderately Satisfactory 7.38 06 04-Mar-2013 Satisfactory Moderately Satisfactory 8.80 07 28-Oct-2013 Satisfactory Satisfactory 19.43 08 30-Jun-2014 Satisfactory Satisfactory 21.56 09 31-Dec-2014 Satisfactory Satisfactory 28.02 10 13-Jun-2015 Satisfactory Satisfactory 28.02 11 22-Dec-2015 Satisfactory Satisfactory 30.92 12 06-May-2016 Satisfactory Moderately Satisfactory 36.03 13 07-Dec-2016 Satisfactory Moderately Satisfactory 37.77 14 19-Jun-2017 Satisfactory Moderately Satisfactory 39.67 15 04-Jan-2018 Satisfactory Moderately Satisfactory 40.64 16 03-Apr-2018 Moderately Satisfactory Moderately Satisfactory 40.65 17 02-Dec-2018 Moderately Satisfactory Moderately Satisfactory 46.37 SECTORS AND THEMES Sectors Major Sector/Sector (%) Health 3 Health 3 Page 4 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) Water, Sanitation and Waste Management 97 Sanitation 4 Water Supply 57 Public Administration - Water, Sanitation and Waste 15 Management Other Water Supply, Sanitation and Waste 21 Management Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Private Sector Development 10 Public Private Partnerships 10 Social Development and Protection 3 Social Inclusion 3 Indigenous People and Ethnic Minorities 1 Other Excluded Groups 1 Participation and Civic Engagement 1 Urban and Rural Development 65 Urban Development 57 Services and Housing for the Poor 57 Rural Development 8 Rural Infrastructure and service delivery 8 Environment and Natural Resource Management 33 Environmental Health and Pollution Management 3 Air quality management 1 Water Pollution 1 Soil Pollution 1 Water Resource Management 30 Water Institutions, Policies and Reform 30 Page 5 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) ADM STAFF Role At Approval At ICR Regional Vice President: Obiageli Katryn Ezekwesili Hafez M. H. Ghanem Country Director: Ruth Kagia Paul Noumba Um Senior Global Practice Director: Inger Andersen Jennifer J. Sara Practice Manager: Jaime M. Biderman Catherine Signe Tovey Task Team Leader(s): Marcus J. Wishart Sanyu Sarah Senkatuka Lutalo ICR Contributing Author: Zhimin Mao Page 6 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL Context 1. Lesotho is a mountainous country with high per capita water availability and a population of 2.2 million. Its gross national product has relied on remittances from those employed in South Africa, revenue from the Southern Africa Customs Union, and the sale of water to South Africa. While revenues generated from the sale of water to South Africa through the Lesotho Highlands Water Project (LHWP) remains an important contributor to Lesotho,1 the Government of Lesotho (GoL) wanted to diversify its economy by developing its industrial sector, particularly the garment industry, 2 which takes water resources as important inputs. The garment industry brought in significant foreign exchange earnings, and the expansion of industrial activities also spurred the urbanization process. 2. Despite the availability of water, the lowland areas of Lesotho suffered severe water shortages and Maseru derived its water from a single intake on the Mohokare (Caledon) River, which was inadequate and of inferior quality. The river, part of which forms the border with the Republic of South Africa, had been severely degraded before 2004 because of overuse. Drought is a recurrent phenomenon seriously undermining the security of existing supply, particularly during the dry winter months when flows are frequently inadequate to meet the city's needs and emergency releases are required from the LHWP to supplement flow in the Mohokare River. 3. GoL development of lowland water supply scheme. Urbanization, improved access to water supply and sanitation, anticipated population growth, and increased prevalence of drought led the Government to realize the need for reliable water supply for the fast-growing, urban lowland areas of Lesotho including its capital of Maseru. The feasibility study of the Lesotho Lowlands Bulk Water Supply Scheme (LLWSS) was commissioned by the GoL in 2004. It identified medium- and long-term water supply options for residential and industrial consumption across eight demand zones (Annex 8). 4. The Metolong Dam and Water Supply Program. Among these investment options, the Metolong Dam and Water Supply Program (MDWSP) is the first in a series of investments that provide the least- cost, long-term solution for bulk water supply to Maseru, the lowland areas of ‘Zone 4’, and the town of Teyateyaneng (TY) in ‘Zone 3’ (Annex 8). The Metolong Dam, along with the associated water treatment works and infrastructure, increase the water supply capacity of Maseru and surrounding towns by 75,000 m3 per day. On top of the existing supply in Maseru, this will ensure a secure supply of 120,000 m 3 of water per day to meet increasing domestic and industrial requirements in Maseru; the towns of Roma, Morija, and Mazenod in ‘Zone 4’ of the lowlands; and TY in ‘Zone 3’. 1 According to the Project Appraisal Document (PAD), income generated from the LHWP averaged around US$20 million per year in royalties alone between 1998 and 2006, or about 4.8 percent of gross domestic product. 2 At the time of appraisal, 40 percent of Lesotho’s gross national product came from exports generated from the garment industry that had been established through foreign direct investment supported by the United States’ African Growth and Opportunity Act (AGOA). Page 7 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) 5. The MDWSP was a partnership between the GoL and a number of development partners. Parallel financing supporting the MDWSP included the Kuwait Fund for Arab Economic Development, the Arab Bank for Economic Development in Africa, the Saudi Fund for Development, the Organization of the Petroleum Exporting Countries Fund for International Development, and the United States’ Millennium Challenge Corporation (MCC). The European Investment Bank (EIB) partnered with existing donors later during the process to mitigate the financing gap, especially for the downstream conveyance system (DCS). The financing gap was due to higher costs stemming from South Africa hosting the World Cup and the associated inflationary pressure to the regional economy resulting from South Africa hosting the World Cup. Annex 11 provides a summary of the MDWSP components, their associated activities, and key financiers for each component. Evolution of financing arrangements among the donors are summarized in Annex 7. 6. The Lesotho Water Sector Improvement Project (WSIP) Adaptable Program Loan (APL), Phase II is part of a long-term World Bank support to Lesotho’s water sector that dates to 1983. The World Bank’s engagement started with the LHWP and continued since 2004 through the two-phased WSIP APL. The WSIP program (approved in 2004) was designed to first address institutional weaknesses in the water sector of Lesotho and improve urban service delivery under Phase I and then support increased water supply under Phase II. The Program Development Objective of the WSIP APL was to improve sustainable access to safe water supply in Maseru and surrounding lowland areas by supporting the MDWSP program, i.e. by ensuring that the construction of the Metolong Dam and downstream bulk conveyance follows an environmentally sound, socially responsible, and financially viable framework. 7. In addition to the infrastructure development plan, the Government also intended to implement legislative provisions aimed at safeguarding sustainability of the water sector. The Commission of Water (CoW) prepared the 2007 Water and Sanitation Policy and the Water Act of 2008 to provide an institutional and legislative framework for strengthening the sector. The GoL committed to expanding the mandate of the Lesotho Electricity Authority (LEA) to assume regulatory responsibility for urban water supply services. There was also a plan to transform Lesotho Water and Sewerage Authority (WASA) into an independent utility company. 8. WSIP Phase II extended the World Bank’s engagement of Lesotho’s water sector reform and supported the MDWSP with US$25 million of IDA financing. While this represents only about 10 percent of the entire funding package (the original financing summary for the MDWSP can be found in Annex 7), IDA financed the essential environmental and social management, the bulk water transmission line to the town of TY under the MDWSP, and institutional capacity building activities. Table 1. MDWSP Activities Financed by WSIP Phase II MDWSP Components World Bank-financed Activities 1. Advance infrastructure • Rural electrification design and construction supervision for 80 villages • Rural water supply and sanitation design and construction supervision for 80 villages 2. The Metolong dam and raw water pump • Streamflow gauges’ design and construction supervision station • Metolong Dam and raw water pump station construction supervision post June 2014 4. Downstream conveyance system (DCS) • DCS 3: 28 km of conveyance line to TY Page 8 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) 5. Environmental and social management • Environmental management program • Integrated catchment management • Ecosystem monitoring • Cultural heritage development and management • Resettlement policy and action plan • Community water and sanitation program • HIV/AIDS education and prevention • Environmental and social panel of experts • Communications and governance • Livelihood Restoration Programme • Operating costs 6. Institutional support • Engineering manager of the Metolong Program Implementation Unit Theory of Change (Results Chain) 9. WSIP Phase II aimed to continue the process of reforms within the water sector and support the MDWSP as the first in a series of investments to increase access to safe water and support economic growth in Lesotho. 10. First, a comprehensive environmental and social management framework was designed to ensure that the MDWSP implementation was aligned with World Bank environmental and social safeguard standards. Successful implementation of these activities also served as capacity-building opportunities for Lesotho’s water sector to follow international best practices on environmental and social safeguards. Second, an infrastructure development approach, which connects water supply from the Metolong Dam to areas facing high water shortages, is appropriate considering Lesotho’s pressing needs of water supply infrastructure. Third, a well-structured institutional strengthening and capacity-building program was designed to enhance the CoW’s capacity to manage Lesotho’s water resources and transition WASA into a commercial, independent water utility (that is, the Water and Sewerage Company [WASCo]). Additional decision support tools and instruments were also planned as part of the institutional strengthening process, which will sustain institutional capacity after project closure. 11. In the long run, the project was designed to support the Millennium Development Goals (and now Sustainable Development Goals) by significantly improving access to, and sustainability of, clean water supplies. The project also supported the objective of meeting the infrastructure gap described in the World Bank’s Africa Action Plan. Additional water supply to Lesotho lowlands was expected to reduce concerns of inadequate water resources to support industrial growth and attract private investments to expand industrial activities. Page 9 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) Figure 1. Theory of Change Note: Critical assumptions A: Private sector investment supported industrial expansion after the water supply constrains have been removed. B: The Government and WASCo (formally WASA) with adequate capacity and financial resources to sustain activities. Project Development Objectives (PDOs) 12. The PDO stated in the PAD and Legal Agreements for WSIP Phase II was to support the GoL in (i) developing and sustaining an environmentally sound, socially responsible, and financially viable framework for the MDWSP; (ii) increasing the quantity of safe, bulk water supplied to TY; and (c) strengthening institutions and related instruments in the water sector.3 Key Expected Outcomes and Outcome Indicators4 13. The key expected outcome indicators were • Number of cultural heritage sites identified and recorded; 3 The original PDO entered through the portal has format issues. Thus, the PDO appeared in the information sheet may miss spacing in some of the phrases. 4 The PAD did not clearly identify PDO-level indicators. However, intermediate level indicators were given for each component and they are appropriate for PDO level. Thus, they are included in this section as key outcome indicators. Page 10 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) • Environment Flow Requirements determined, incorporated into design, and operationalized; • No deterioration in standard of living among Project Affected Persons due to the MDWSP; • Number of reservoir crossings established; • Km of pipeline laid and operational; • WASA maintains operational cost ratio >=1; and • State of Water Resources Report prepared and publicly available. Components Component 1: Environmental and Social Management Program (US$10 million approved, US$15.7 million disbursed) 14. The total cost of Component 1 was US$14.6 million, of which IDA financed US$10 million, and the GoL was to contribute US$4.6 million for cash compensation and provisions for the cost of operations within the Metolong Authority (MA) in support of the project. This component financed interventions aimed at addressing environmental, social, and cultural issues associated with the pre-construction and construction stages of the MDWSP. The compensation to project-affected persons (PAPs) are paid by the GoL. This component was implemented by the MA. Component 2: Engineering Support and Transmission Line to TY (US$13 million approved, US$16.1 million disbursed) 15. The total cost for Component 2 was US$15.10 million, of which IDA financed US$13 million and the GoL US$2.1 million. This component supported the MDWSP through (a) the construction of an estimated 28 km of transmission mains to supply the town of TY, with scope to supply surrounding settlements, and (b) support for the position of engineering manager within the MA. The GoL supported all other staff positions within the MA along with operational costs associated with the project. This component was implemented by the MA. Component 3: Institutional and Policy Support (US$2 million approved, US$12.6 million disbursed) 16. This component supported the GoL’s reform process in the water sector, building on WSIP Phase I. The support included policy analysis and capacity building, including technical assistance to support the CoW and the LEA in aspects of sector policy and regulation. Activities focused on enhancing the existing capacity within the water sector along with implementation of measures outlined in the Water and Sanitation Policy of 2007, the Water Act of 2008, and establishment of the multisector regulator under the amendments to the LEA Act. This component was implemented by the office of the CoW. Page 11 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) 17. WSIP Phase II (P108143) was approved on May 26, 2009, for SDR 16.8 million (US$25 million equivalent at the time), comprising an IDA Grant (H4750) of SDR 5.7 million and an IDA Credit (45740) of SDR 11.1 million. It became effective on September 18, 2009. During project implementation, it went through the following changes: • An additional financing of SDR 8.40 million (US$13 million equivalent at the time) in an IDA Grant (H7380) was approved in November 2011. • A second additional financing was approved in June 2014 of an IDA Grant (H9670) of SDR 4.12 million (US$6.385 million equivalents at the time) and an IDA Credit (54920) for SDR 5.84 million (US$9.05 million equivalents at the time). The FY14 additional financing was approved along with a Level 1 restructuring to expand the PDO and extend the original closing date from June 30, 2015, to June 30, 2016. • A restructuring was approved in June 2016 which expanded the PDO, revised the Results Framework, and extended the revised closing date. • A restructuring was approved in November 2017 which revised the Results Framework and extended the revised closing date. • A restructuring was approved in December 2018 which cancelled unutilized funds. Revised PDOs and Outcome Targets 18. The PDO was modified twice during the implementation process. The June 2014 additional financing expanded the PDO to reflect the addition of a new component to be implemented by a new implementation agency, the Lesotho Highlands Development Authority (LHDA) to prepare hydropower studies for Phase II of the LHWP. A fourth PDO component was added, that is, ’advancing strategic infrastructure investments’. The June 2016 restructuring expanded the PDO to reflect the addition of a new Crisis and Emergency Response Component (CERC). A fifth PDO component was added, that is, ‘in the event of an Eligible Crisis or Emergency, to provide immediate and effective response to said Eligible Crisis or Emergency’. The CERC component (with no funding) was added to allow easy channeling of emergency funds for drought relief if and when available. Adding of this component was requested by GoL on May 13, 2016, and it was in line with the FY16-20 Country Partnership Framework's risk management strategy, which sought to strengthen the World Bank Group’s (WBG's) flexibility and responsiveness to emergencies. The CERC was not triggered under the project as no savings were generated from other components for emergency responses. 19. Revision of PDO indicators are summarized in Annex 10. Revised Components 20. The June 2014 additional financing added a new component, Component 4: Lesotho Highlands Water Project Phase II Hydropower Component (US$6.385 million approved, US$5.83 million disbursed). Page 12 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) The additional financing supported the GoL to prepare studies for the hydropower component under Phase II of the LHWP. The June 2016 restructuring added a CERC component, which could be used to channel emergency funds for drought relief if and when available. Other Changes 21. The closing date of the project was extended three times for a cumulative 42 months. 22. The December 2018 restructuring5 cancelled unused funds in the amount of SDR 3.09 million to reallocate the remaining funds back to Lesotho's IDA envelope. Rationale for Changes and Their Implication on the Original Theory of Change 23. Cost increase. The first additional financing (US$13 million equivalent approved November 2011) was requested to enable completion of the original project activities given an unanticipated cost overrun of the broader MDWSP and extend the benefits through additional project activities. Preparation of all construction cost estimates for the MDWSP financed by MCC (including the World Bank-funded TY transmission line) preceded the expansive period of infrastructure construction related to the 2010 World Cup in neighboring South Africa. This additional financing ensured that the project could achieve its original development objectives. 24. Expansion of activities. The second additional financing (US$15.435 million equivalent approved on November 2014) was requested to enable a scale-up of activities and introduce an additional component to enhance development impacts. The additional financing was allocated to a new component to support preparation of Phase II of the LHWP and technical assistance to the GoL, LHDA, and Lesotho Highland Water Commission (LHWC) during the preparation process. The third completion date extension extended the closing date by 12 months to December 31, 2018, to allow the borrower to complete the LHWP hydropower and the LLWSS studies. 25. Fulfill obligations on environmental and social safeguards. The June 2014 additional financing, the June 2016 restructuring, and the December 2017 restructuring extended the project closing date by 42 months, to fulfill obligations related to safeguards activities for MDWSP. II. OUTCOME A. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating Rating: High 26. The project was originally developed to support the national development goals articulated in the GoL’s Poverty Reduction Strategy6, which acknowledged that increasing access to water and improving 5 Unable to edit the reason of restructuring in the portal, and thus no information was given for ‘Key Revisions’ column under the Restructuring and/or Additional Financing Table in page 2 of the information sheet. 6 Lesotho Poverty Reduction Strategy 2004/2005 – 2006/2007. The latest development plan is the Kingdom of Lesotho’s Page 13 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) the reliability of supply is a critical element of Lesotho’s strategy for continued economic growth. This project was also consistent with the key strategic objectives of the World Bank’s 2006 Country Assistance Strategy7 for Lesotho— improving human development outcomes and improving the environment for private sector development through improving access to infrastructure and basic services.8 27. The project’s interventions remained highly relevant to the Country Partnership Framework (CPF) (2016–2020) 9 and Lesotho’s national development priorities. Both the CPF and National Strategic Development Plan (NSDP) consider strategic investments in water, that is, the lowlands water strategy, including the 2015 completion of the Metolong Dam in its first phase, and the LHWP Phase II as key drivers for economic growth. Under Focus Area II (iv), the CPF highlighted the importance of increasing water supply for industrial, agriculture, and export opportunities as Lesotho’s garment manufacturing industry (one of the country’s largest employers) depends on a reliable water supply and connections through WASCo.10. The CPF also noted that the GoL will continue to invest significant resources to build a water security platform that simultaneously harnesses competitiveness and job creation. The NSDP (2012–2017) further puts water as one of the top infrastructure priorities that could enable the country to achieve shared prosperity. According to the NSDP, economic growth will be driven by major investments and expansion of strategic investments in water. B. ACHIEVEMENT OF PDOs (EFFICACY) Assessment of Achievement of Each Objective/Outcome 28. The expected objectives of this project, measured by eight unique PDO indicators, were • Objective 1. Developing and sustaining an environmentally sound, socially responsible, and financially viable framework for the MDWSP; PDO Indicator 1: Environmental Management Plan successfully implemented PDO Indicator 2: Comprehensive Resettlement and Compensation Action Plan successfully implemented PDO Indicator 3: WASCo's operational cost ratio maintained at equal or more than 100% • Objective 2. Increasing the quantity of safe, bulk water supplied to TY; PDO Indicator 4. Potable water supplied through the pipeline to Teyateyaneng constructed under the project. Poverty Reduction Strategy Paper and National Strategic Development Plan (NSDP) 2012/13–2016/17. A new NSDP is under development in draft form. 7 Report Number 35621 8 PAD, WSIP in Support of the Second Phase of the Water Sector Improvement Program, April 2009. 9 Report Number 106720 10 See Lesotho CPF 2016–2020, Focus Area II, Section (iv). Pages 25–26. Page 14 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) • Objective 3. Strengthening institutions and related instruments in the water sector; PDO Indicator 5. 11 WASCo's operational cost ratio maintained at equal or more than 100% PDO Indicator 6. State of Water Resources Report prepared, consulted and publically available • Objective 4. Advancing strategic infrastructure investments; PDO Indicator 7. Progress with feasibility study for hydropower component of Phase II of the highlands water project (includes feasibility of export opportunities) PDO Indicator 8. Priority areas identified in the Infrastructure Gap Analysis for provision of bulk supply to meet water demand especially in areas of high industrial, commercial and/or agricultural use and potential • Objective 5. In the event of an eligible crisis or emergency, providing immediate and effective response to said eligible crisis or emergency. PDO Indicator 9. If the CERC is triggered: number of beneficiaries benefiting from emergency response and recovery activities. 29. A split evaluation was not deemed necessary for the assessment as the revision of the PDO indicators was not substantive and expanded the scope of the project by increasing components with no reduction in target values. Objective 1: Developing and sustaining an environmentally sound, socially responsible, and financially viable framework for the MDWSP 30. As illustrated in theory of change (figure 1), 10 activities were developed under Component 1 aimed at addressing environmental, social, and cultural issues associated with the pre-construction and construction stages of the MDWSP. The following section will discuss the achievements of these three PDO indicators and the outcome from three aspects: (a) developing and sustaining environmentally sound framework for MDWSP, (b) developing and sustaining socially responsible framework for MDWSP, and (c) developing and sustaining financially viable framework for MDWSP. Overall, this project has substantially achieved its first objective. Developing and Sustaining Environmentally Sound Framework for MDWSP 31. The environmentally sound framework for the MDWSP was achieved through the development and implementation of an Environmental and Social Management Plan (ESMP) for the overall MDWSP and for specific subprojects. The project provided on-the-job training for water sector officials from the Department of Water Affairs, CoW, and WASCo in Environmental Flow Requirements (EFR) monitoring system and Dam Safety and Surveillance. After project completion, the Government decided to replicate the ESMP framework and apply the environmental quality monitoring and EFR policy among other river 11 This indicator measures both the financial viability of the MDWSP as well as the strengthening of institutional capacity, i.e. financial management capacity of WASCo. Thus, it is used twice, for objective 1 and 3. Page 15 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) basins within Lesotho. The Government has also financed a dam safety and surveillance monitoring team in WASCo to ensure continued monitoring of dam safety practices. An annual hydrological yearbook has been maintained and hourly data on dam safety have been collected. Thus, the associated PDO-level indicator target ‘Environmental Management Plan successfully implemented’ has been met consistently throughout the project implementation and will be sustained through the Government’s efforts to apply them in future water resources management practices. Developing and Sustaining Socially Responsible Framework for MDWSP 32. The socially responsible framework for the MDWSP was substantially achieved through designing and implementing a comprehensive resettlement and relocation strategy for PAPs. The design of the dam and ancillary infrastructure minimized physical displacement requirements. Thus, only six households required relocation under the Replacement Housing Program and the replacement houses were completed and used. 33. Status of compensation of PAPs. Disbursement of compensation payments is still ongoing at project closing with 183 (6.5%) outstanding cases to be compensated. The delay was mainly due to compensation associated with rural electrification activities which expanded its scope from 35 villages to 80 villages and was implemented late in the overall MDWSP program. There are 2,798 affected households across different contract work areas. M 59.36 million was disbursed with M 3.82 million (6 percent) left to be disbursed. According to the MA, more than 107 outstanding cases can be completed without anticipated challenges. The remaining 76 cases include 36 cases with disputes in courts of law and 40 cases of PAPs who have since migrated to South Africa or elsewhere. Outstanding disputes relate to (a) property ownership; (b) compensation amounts, which in some cases result in PAPs not claiming the payments due to them; or (c) difficulty locating the PAPs some of whom seem to have migrated to South Africa or elsewhere. 34. A livelihood restoration program was implemented and focused on the following areas (a) to guide the PAPs to consider other livelihood options and facilitate sustainable implementation of preferred options and (b) to assist the affected communities in identifying and implementing sustainable strategies for livelihood restoration and improvement. To expedite the implementation of this program, in 2013, a decision was made to engage a livelihood restoration program coordinator to prepare and implement a new plan, which included capacity building and establishment of trust fund companies to manage the program. Intensive training of the two affected communities of Ratau and Motanasela was conducted, covering livelihood activities such as poultry, piggery, value chain, group dynamics conflict resolution, and social cohesion. Both communities established trust funds managed by the Standard Lesotho Bank to continue to support the program. Implementation of the livelihood restoration program will continue to be guided by the community councils under the Ministry of Local Government and MA. 35. Grievance redress mechanism. The project had a detailed grievance redress mechanism (GRM) in place during implementation. The local Dam Committee representative was the first avenue of reporting a grievance. If the Dam Committee could not resolve an issue, the issue was referred to the Joint Committee that consisted of the Government community councilors for the districts. Following project closure, the outstanding compensation cases are being handled by the MA through an ongoing payment protocol for the undisputed cases. Some of the disputes over ownership of affected properties are being settled through mediation with the assistance of the project’s legal services office or in the courts of law. Page 16 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) A GRM remains active for receiving complaints. All grievances and complaints are reported through community liaison officers, registered in a log book, some received telephonically and in person, and logged grievance are discussed during the Dam/Joint Committees’ meetings which are held every two months since January 2019. There were 10 fatalities that happened during the implementation of the MDWSP. All of them were properly reported and settled following the requirements of the Labor Code of Lesotho, well before GRMs were the norm in projects. 36. To address the issues relating to outstanding compensation and livelihood support activities highlighted in the latest ISRs, the Government has made a budgetary provision for pending compensations in the amount of M 1,800,000 for the current financial year, and additional funds are available in the MA account. The MA has continued to effect compensation payments after the project closed. In addition, the GoL issued a new legal notice, in March 2019, to ensure that the MA continued its legal mandate until October 2019 to complete outstanding social and environmental activities including the compensation payments as well as the livelihood restoration program (Legal Notice No. 26 of 2019: Metolong Authority - Extension of Objectives and Purposes). Post project completion, in response to the suggestions from the draft RAP-Social Audit report, the Bank task team developed a framework for post-closure implementation and follow up in May 2019. Thus, both the GoL and the Bank task team are continuously implementing and monitoring remaining social safeguard obligations. 37. The project funded and implemented the Cultural Resources Management and Development Plan to mitigate the negative impacts and promote protection and preservation of the Southern Phuthiatsana subregion of the MDWSP area. Construction of the Metolong Dam inundated a 14 km stretch of the Phuthiatsana River where archeological findings and rock paintings were located. A total of 32 cultural heritage sites were identified and exceeded the intermediate target of 30 such sites.12 Some of the rock art and open-air stone artefacts found are of subcontinental importance such as the Ntloana Tsoana (Charles Arthur and Peter Mitchell 2010). In addition, a visitor center was constructed next to the Metolong Dam. Visits to the dam and visitor center have been popular among high school and university students as water supply and sanitation is part of the curriculum. 38. Lastly, an HIV/AIDS management program was planned and successfully implemented among the communities affected by the MDWSP. The program improved compliance of the contractors with the HIV/AIDS specifications within their contract documents through facilitation of the engagement of the HIV/AIDS service providers responsible for implementation of the constructor’s HIV/AIDS awareness programs. The midterm review (MTR) conducted for the World Bank in 2013 indicated an increase of 38 percent in HIV testing and counselling enrollment (25 percent at situation analysis and 63 percent at midterm), 100 percent condom availability, and 21 percent voluntary medicinal male circumcision enrollment. 39. The project funded the design and construction supervision of rural water supply and sanitation and rural electrification programs which increased access to safe drinking water and electricity to 80 villages (expanded from the original plan of 35 villages). This impact was not captured in the results framework but critical to changing the quality of life of the rural population. 12 Draft Government Project Completion Report by the CoW. Page 17 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) 40. Considering the length of implementation; complexity of the project components; the proper responses from the MA, the GoL, and World Bank when issues arised; and the GoL’s commitment on completion of RAP implementation, the project has substantially achieved its target of ‘Comprehensive Resettlement and Compensation Action Plan successfully implemented’. Developing and Sustaining Financially Viable Framework for MDWSP 41. A financially viable framework for MDWSP was developed and sustained. As mentioned earlier, the MDWSP is a major infrastructure development program financed by nine different donors during the implementation process. The initial idea of the MDWSP was financed and developed by EU and MCC as the least cost, first investment project within the broader Lowland Water Supply System. The World Bank joined the initial group of funders to share the costs. After the significant cost overrun, the World Bank provided additional financing for the MDWSP construction supervision when the MCC’s funding ended after September 2013 to ensure that the MDWSP could be completed at proper quality. 42. The management of the Metolong Dam and associated assets will be transferred to the GoL after the MA’s mandate ends. The likely bulk water asset (Metolong Dam) management agency will be WASCo. WASCo has set aside budgets for operation and maintenance of the Metolong Dam, while the GoL has allocated an annual budget in case there is a major breakdown of the system. In addition, throughout the nine years of project implementation, WASCo has maintained its operational cost recovery ratio above 100, that is, the PDO indicator target, proving its capability to generate revenue while controlling cost at a manageable level. 43. It is also worth noting that other donors have decided to adopt the ESMP from this project for future engagements in Lesotho. For example, the EIB adopted the MDWSP ESMP, especially the Resettlement and Compensation Policy, for its Lowlands Water Development Project which has been under implementation since 2017.13 Objective 2: Increasing the quantity of safe, bulk water supplied to TY 44. The project constructed 24 km of pipeline connecting the Metolong Dam and TY. The transmission system included a break pressure reservoir of 750 m3, a command and sump reservoir of 2,000 m3, and a pump station for 138 liters per second at the Command Reservoir. The target (530,000 m3 per year) of the PDO-level indicator ‘potable water supplied through the pipeline to Teyateyaneng constructed under the project’ has been exceeded with current water supply at 560,000 m3 per year. Intermediate level indicator that measures the safety aspect of water supply, that is, ‘90% of the samples of water transferred to Teyateyaneng through the pipeline constructed under the project that meet the required standards’, has also been met fully. Thus, this project has fully achieved its second objective. 45. Field visits and interviews indicated significant improvement in the quality of life/services level among households and businesses in TY. Before the construction of the MDWSP, the average per capita consumption of households with individual connections was 60 liters per capita per day while those 13In its project Environmental and Social Data Sheet, the EIB stated that “A Resettlement Policy Framework (RPF) has been developed in 2017 building on the previous extensive experience and lessons learned in Lesotho from the various dam projects. Of particular importance was the Resettlement and Compensation Policy of the Metolong Dam and Water Supply Program (MDWSP) of February 2010.” See: https://www.eib.org/en/registers/all/85418885. Page 18 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) without connections was only around 15 liters per capita per day. No reliable water supply existed before the construction of the transmission line and people experienced frequent service disruptions during the dry season, sometimes without water for months. After the implementation of TY transmission line, average supply reached more than 60 liters per capita per day.14 The local hospital indicated that they had to abolish infection prevention measures during the days when water supply was cut. The TY transmission line brought reliable and safe water supply and reduced the hospital administrator’s psychological burden of constantly needing to identify alternative water sources. The local hospitality industry also greatly appreciated the TY transmission line as they do not need to turn away customers. In addition, they were able to serve as an alternative water supply for hotels/guest houses under the same franchise but located in other towns not yet connected to reliable water supply sources. Thus, the objective of increasing the quantity of safe, bulk water supplied to TY has been fully achieved. Objective 3: Strengthening institutions and related instruments in the water sector 46. Component 3 is the key element of WSIP Phase II as it provides strategic long-term support for the water sector. Support was provided in the form of specific activities covering all aspects of the sector, as well as through general support and advisory service. This component also aided the Lesotho Electricity and Water Authority (LEWA) to assume responsibility for the regulation of urban water supply services. Additional financing provided resources for additional technical assistance and studies, specifically the development of a hydraulic model for optimization of WASCo’s water supply operations in Maseru. The Additional Financing also financed consultant services to address the shortfall in other institutional and policy initiatives. Targets for both PDO indicators, i.e. ‘WASCo's operational cost ratio maintained at equal or more than 100%’ and ‘State of Water Resources Report prepared, consulted and publically available’, have been fully achieved. This project has fully achieved its third objective. 47. This project made significant contributions to Lesotho’s water sector policy development. At the policy level, the project supported the implementation of the Water and Sanitation Policy of 2007 and Water Resources Act of 2008 including the Strategic Plan for Sector Vision and Policy Review, Environmental Flows and River Classification, Catchment Management Guidelines, Environmental Assessment and Water Quality Guidelines. The World Bank also supported the review of the Water and Sanitation Policy and Water Resources Act after 10 years of implementation between 2017 and 2018. Improvements were recommended for the policy, while no significant change were proposed for the act. 48. This project assisted the transition/establishment of two institutions (LEWA and WASCo) that are key to Lesotho’s water sector. WSIP Phase II strengthened the LEA (later LEWA)’s capacity to assume responsibility for the regulation of urban water supply services, including capacity building, training, and technical assistance for the LEA in water supply and sewage issues, particularly in economic regulation and service standards. The project assisted the development of water and sanitation instruments for monitoring and evaluation (M&E) of WASCo performances. Capacity-building activities were offered for Board of Directors for both the LEA and WASCo. The assistance enabled the LEA to expand its mandate and transfer into LEWA, that is, establishing the water sector regulator for Lesotho. The World Bank also assisted the development and issuance of operating license for WASCo, thus enabling the transition of WASA into an independent utility. The financial status of WASCo was challenging, but it did manage to 14 24,000 people were served in 2018, covering about one third of the TY population. Page 19 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) maintain an operational cost recovery ratio above 100 percent throughout project implementation which is a PDO-level indicator. 49. The project also developed instruments (State of Water Resources Reports and water resources management model) and enhanced human capacity for Lesotho’s water resources management. To date, four State of Water Resources reports were developed. All reports are available on the Ministry of Water’s website. Thus, the PDO-level indicator ‘State of Water Resources Report prepared, consulted, and publicly available’ has been fully achieved. The report has been used by universities, such as the National University of Lesotho and Lerotholi Polytechnic, to train the next generation of water resources management specialists. In addition, the Ministry of Agriculture and Food Security used information from these reports to develop the Lesotho Irrigation Master Plan. This project financed the development of a Water Evaluation and Planning (WEAP) system model for Lesotho and associated training. The WEAP model has been continuously updated and has been used to support water resources management decision making and future planning. The WEAP model was used to inform Lesotho’s position in transboundary water management projects such as the Lesotho-Botswana Water Transfer Project. Objective 4: Advancing strategic infrastructure investments 50. This component covers two main activities: (a) support to the LHDA for the preparation of hydropower studies of Phase II of the LHWP and (b) support to complete the LLWSS studies to enable development of the lowland project. Overall, the project has partly achieved its fourth objective with high likelihood to achieve it fully by July 2019. 51. The LHWP consultancy faced multiple delays, and two extensions of the closing date did not provide enough time for completion of the study. The LHDA has applied for additional funding through the Ministry of Water from a special funding allocated for the Government feasibility studies, which is managed by the Ministry of Development Planning. If no further delays are experienced, a feasibility study on bankability of the project will be completed by July 2019. The LHDA has expressed strong interest in seeking World Bank funding for implementation of these projects once the feasibility study is completed. The PDO indicator target ‘progress with feasibility study for hydropower component of Phase II of the highlands water project (includes feasibility of export opportunities)’ was partially achieved (60%) at project closing. 52. There were initial setbacks related to the LLWSS consultancy and the tertiary line design works contract. The CoW subsequently strengthened its implementation and supervision capacity by enlisting technical and safeguards staff from the Lowlands unit and the MA. Thus, the LLWSS studies were completed and its associated PDO-level indicator ‘priority areas identified in the Infrastructure Gap Analysis for provision of bulk supply to meet water demand especially in areas of high industrial, commercial and/or agricultural use and potential’ has been fully achieved. Objective 5: In the event of an Eligible Crisis or Emergency, to provide immediate and effective response to said Eligible Crisis or Emergency 53. No emergency response efforts were implemented. The World Bank considered channeling funding for this component and financing the tertiary lines in response to the 2015–2016 drought. Page 20 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) However, considering the limited capacity of local agencies, disbursement of funds within a short time frame was deemed unrealistic. Justification of Overall Efficacy Rating 54. Overall, the efficacy is Substantial. The operation achieved most of its objectives and targets. It supported the development and use of an environmentally sound, socially responsible, and a financially viable framework for the MDWSP. It financed a major transmission line to the town of TY, which provided reliable and safe drinking water for residents and businesses. It strengthened Lesotho’s water sector through assistance in policy implementation, institutions set up, and human capital development. It also prepared studies and documentations for key water sector infrastructure development projects, which significantly contributed to the future improvement of Lesotho’s water sector by laying the foundation for GoL’s upcoming projects of LHWP phase 2 and LLWSS. C. EFFICIENCY Assessment of Efficiency and Rating 55. The focus of the economic analysis at appraisal stage was on the broader MDWSP program, funded by a consortium of donors, rather than the specific investments supported by the World Bank— support for the environmental and social management of the MDWSP, the bulk water transmission line to TY, and institutional and policy support. 56. An ex post economic analysis was carried out using a methodology similar to the one used at appraisal stage (see Annex 4 for details). The analysis was based on a typical ‘with project/without project’ methodology over a 30-year time horizon, with two categories of project benefits: (a) benefits for urban households in the project area and (b) benefits to industries in industrial parks in and around Maseru. The updated analysis shows a decline in the economic internal rate of return (EIRR) for the MDWSP from an estimated 16.7 percent at appraisal to 6.5 percent at completion. This gap is due primarily to: • Delays in implementation pushed the project benefits further into the future; • Increases in capital expenditure (CapEx) of US$88 million increased project costs relative to benefits; and • Optimistic assumptions on the number of household connections and number of jobs in the textile sector created or preserved because of the MDWSP. At project completion, total individuals in project area served by piped connections in 2039 is estimated to be 647,530. This is about 120,000 fewer than estimated at project appraisal, mainly due to lower than expected population growth. 57. While WSIP Phase II experienced cost and time overruns, many of these were because of construction delays in the MDWSP (see Annex 9 for details). Implementation challenges, an expanded scope, and increased construction costs because of the FIFA World Cup in South Africa resulted in higher costs and slipped deadlines for the MDWSP. As the World Bank-financed aspects of the MDWSP were closely linked to the construction of the Metolong Dam and related infrastructure, the only alternative to Page 21 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) extending the closing date of WSIP Phase II and incurring additional costs related to project management would have been cancellation. 58. Many additional benefits from this project are not easily quantifiable. The abovementioned analysis was not able to include short- and long-term environmental benefits achieved through this project. The impoundment of Metolong Dam coincided with a severe drought between 2015 and 2016. The availability of water supply reduced the damage such as poor harvest, food price rises, limited labor opportunities, and poor access to water from this natural disaster. The avoided damage from this event and future flood or drought risks were not accounted for in this economic analysis. Integrated catchment management program; environmental flow management program; and associated policies, instruments, and human capacity developed through this project will have positive impacts on Lesotho’s water resources. 59. Administrative efficiency. The MDWSP had a delay of 14 months which delayed implementation of the World Bank-funded transmission line to TY. However, the project made a good effort to control costs and the construction of TY transmission line was within the original cost. Two additional financings were justified for the expansion of the project scope, including an additional component to support the LHWP hydropower study and cover additional operational costs associated with the MDWSP because of funding depletion from other donors. Two proactive restructurings were conducted in response to implementation progress and expansion of project scope. The first project extension was due to the delay of the MDWSP. The second extension was to allow full completion of the compensation activity and the LHWP hydropower study. However, the extension was not enough to complete both activities and resulted in the cancellation of funds through a third restructuring on the project closing day. Justification of Overall Efficiency Rating 60. Overall, the efficiency is Modest. While an economic analysis of the MDWSP indicates a decline in EIRR because of time and cost overruns, this was largely beyond the World Bank’s ability to directly influence. In addition, the EIRR of 6.5 percent at completion remains above the hurdle rate of 6 percent recommended by the World Bank Sustainable Development Practice Group. WSIP Phase II itself was implemented relatively efficiently given the constraints imposed by the implementation of the MDWSP. Activities under Components 1 and 2 had significant positive impacts on the environmental and social sustainability of the MDWSP, with delays in implementation because of construction delays in the MDWSP. However, the hydropower study, added during an additional financing, was delayed and ultimately was not completed before closing. Component 3, which included the transmission line to TY, was implemented on budget, with delays in launching operations because of the MDWSP construction delays. The overall efficiency assessment also considered the administrative efficiency. D. JUSTIFICATION OF OVERALL OUTCOME RATING 61. Rating: Moderately Satisfactory. Given the ‘High’ relevance of objective, ‘Substantial’ efficacy, and ‘Modest’ efficiency, the overall outcome rating is ‘Moderately Satisfactory’. E. OTHER OUTCOMES AND IMPACTS (IF ANY) Gender Page 22 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) 62. The local community councils formed as part of the community outreach strategy ensured better gender representation. The communications strategy also included a guiding principle that ‘informing while respecting the diversity within the communities in terms of culture, language, and gender’ (PAD). 63. Improved water supply through the MDWSP and the World Bank-funded transmission line to TY also brought additional benefits for women. During field interviews, community members indicated that owing to improved water access, women no longer needed to wake up before dawn to stand in the queue and wait for their turn to collect water. It reduced risks of sexual harassment and violence during the process. One notable testimonial from a female community member was how better water access allowed her to spend more time with her husband, which improved family relationship. In addition, the project financed training for a Southern African Development Community Region focal person and two members of the Ministry of Water on gender mainstreaming (gender-sensitive project planning and development) in Rwanda in 2018. Poverty Reduction and Shared Prosperity 64. During field visits to the MDWSP and TY, a few female community members mentioned that improved water supply allowed them to have enough water for family gardens which supplied food for self-consumption or additional income generation. One of the community members rented out his resettlement house to a daycare provider, as the resettlement house was built at the site of his choice and of better quality. Community representatives also indicated that before the Metolong Dam and the transmission line to TY, water supply only met minimal need. Improved access to reliable water not only improved their quality of life but also created income-generation opportunities15. III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A. KEY FACTORS DURING PREPARATION 65. Incorporation of lessons learned. Lessons have been drawn from the experience of the LHWP and incorporated into the development of the environmental and social activities supported under the MDWSP. The community water supply and sanitation subcomponent were initiated before construction to ensure appropriate service delivery and distribution of benefits to communities within the Metolong area. An HIV/AIDS education and prevention program was developed before the civil works to ensure that communities were properly equipped to deal with the associated challenges. A clearly articulated communications strategy, central to ensuring transparency and long-term sustainability, was developed and stakeholder consultations were initiated early through the establishment of locally based institutions under the Environmental and Social Impact Assessment. 66. Institutional capacity. The APL was designed with a phased approach to first develop and support institutions that were prerequisites to investments in large infrastructure, including the CoW, WASA, and LEA, along with the enabling policy environment, including the Water and Sanitation Policy, the Water Act, and amendments to the Lesotho Electricity Act. WSIP Phase II continues support to these agencies 15 Additional evidence is also captured in this video: https://www.youtube.com/watch?v=-Hrrtlkazwo. Page 23 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) and consolidate their role in water resource management and service delivery, which are central to ensuring the long-term sustainability of the MDWSP and its associated investments. 67. Government commitment. The project benefited from the GoL’s long-term commitment and continuity to the process of reforms in the water sector. The 1999 Water Policy initiated a series of reforms in the water sector that resulted in the establishment of the office of the CoW and the Policy Planning and Strategy Unit (PPSU). This process was supported by significant investments in capacity building within the PPSU, successfully reflected through the Water and Sanitation Policy of 2007. Despite occasional delays because of the legislative process, the GoL has provided necessary policy support to create the enabling environment for successful development and implementation of the WSIP. 68. Partnership arrangements. The MDWSP is a larger multi-donor-funded program aimed at improving water supply to Maseru and nearby towns in support of the GoL’s efforts to sustain socioeconomic growth and development. The complex institutional arrangements for the MDWSP require the GoL to exercise a high level of coordination. This is being facilitated through the MA that has been established under the Ministry of Natural Resources to ensure timely and successful implementation of the MDWSP. To ensure efficient and timely implementation, the financing of all activities under the MDWSP has been streamlined through parallel financing, with each partner and the GoL co-financing specific activities. Activities are packaged into discrete lots and integrated through a master schedule managed by the MA. B. KEY FACTORS DURING IMPLEMENTATION Factors Subject to Government and/or Implementing Entities’ Control 69. Turnover of key project personnel. There were frequent turnovers of leadership teams in WASCo, CoW, MA, and GoL, which adversely affected project implementation. All WASCo executives (chief executive officer and four heads of divisions) left WASCO under various reasons including natural attrition. Since the inception of the project, there has been two substantive Commissioners of Water and three Acting Commissioners. The MA had four chief executive officers during implementation. In 2015, the Ministry of Water became a stand-alone ministry from Ministry of Energy, Meteorological, and Water Affairs. The split caused a strain on the ministry as resources had to be shared, causing temporary decision making and services disruptions. 70. Safeguard issues. During the implementation of the MDWSP, there were issues with compliance with certain elements of safeguards policies. In 2012, the dam contractor began dam construction and blasting activities without an approved environmental protection plan, a blasting plan, a blasting method statement, a mining permit, an approved evacuation plan, or a satisfactory dilapidation survey.16 This resulted in the suspension of some activities, and complaints were made following an uncontrolled blast in August 2012. Errors were made in the assessment of assets, which led to overestimated compensation requirements. Subsequent adjustment of evaluation methods was made, 17 but disputes arose and delayed compensation and necessitated the involvement of the ombudsman to reach a settlement.18 Each 16 MTR report. 17 Completion report for the EIB. 18 MTR report. Page 24 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) of the abovementioned issues was identified and measures to ensure compliance were proactively determined. Factors Outside the Control of Government and/or Implementing Entities 71. The 2015–2016 drought. A severe drought took place between 2015 and 2016, which led to changes to the MDWSP and associated implementation schedule. The drought triggered vandalism on established transmission lines connecting the Metolong Dam to nearby towns. Standpipes were set up to mitigate potential crisis. Additional financing was considered to scale up rural tertiary lines but rejected due to the slow pace of water sector procurement. 72. Cost escalation. Soon after the project inception, unintended cost escalation was caused by price increase in construction materials because of other large infrastructure development projects associated with the 2010 World Cup. All components under the MDWSP experienced various levels of cost overruns. The GoL had to seek additional financial resources to cover the cost gap. The World Bank also provided resources to address cost gaps through additional financing. 73. Delay of MDWSP implementation. Implementation of the contracts for the TY transmission lines was dependent upon overall implementation of the MDWSP and the completion schedule for the dam, pump stations, and water treatment work. Delays in the overall program were due to a variety of reasons—delays in the design and tendering processes, delays in accessing materials, and delays in issuing visas to foreign contractors. IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A. QUALITY OF MONITORING AND EVALUATION (M&E) 74. M&E design. The project structure was clear with specified objectives and theory of change. Project result indicators and associated targets for each component were specified with proper data collection and reporting methodology. However, PDO indicators were not clearly defined in the PAD at appraisal. M&E responsibilities were carefully designed and outlined in the PAD and other relevant documents with the MA taking responsibility for monitoring and semiannual reporting on Components 1 and 2, while the CoW prepared semiannual reports on progress of Component 3. The indicators were gradually adjusted during project implementation (as early as in 2011 additional finance) to align with project structure changes and better reflect the intended outcomes. 75. M&E implementation. The MA was responsible for integrating the semiannual reporting requirements and submitting to the World Bank. The MA also ensured that procurement reports and interim unaudited financial reports were integrated into a single semiannual report and submitted to the World Bank on time. An MTR was conducted with a 12-month delay. 76. M&E utilization. Progress reports were submitted to the World Bank quarterly, confirming the compliance of the agreed activities and issues. Project changes, that is, two additional financings and three restructurings, were informed by implementation progress. The project Results Framework was revised Page 25 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) thrice to align indicators with project components and intended outcomes that suggest proactivity and good M&E utilization. Justification of Overall Rating of Quality of M&E 77. Considering the comprehensive M&E system design and implementation, the overall rating of quality of M&E is Substantial. B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE Environmental Safeguards 78. The project was classified as environmental assessment Category A. The World Bank safeguards policies were properly implemented. In accordance with OP/BP 4.01, a full-size Environmental and Social Impact Assessment report and related ESMP were prepared for the project, and supplemental subproject- specific ESMPs were prepared for the various project components. Mitigation measures, specified in the ESMPs, have been satisfactorily implemented. An independent panel of experts consisting of an environmental expert and social expert was established to provide independent expert advice to the MA on monitoring compliance with environmental and social safeguards aspects of project planning and implementation. Progress reports on ESMP implementation were submitted to the World Bank quarterly, confirming the compliance of the agreed ESMPs and other mitigation measures. 79. The project engaged a panel of dam safety experts to assist the MA and the World Bank in monitoring and evaluating dam safety-related issues and preparing a dam safety review report. The project implemented an effective dam safety plan. Additionally, it has developed an emergency preparedness plan for the Metolong Dam in compliance with World Bank policy on Safety of Dams (OP/BP 4.37). WASCo has employed a dam safety engineer who monitors the dam operation. If required, the WASCo engineer receives technical support from LHDA which has signed an MOU with WASCo for supporting the safe operation of Metolong dam. Social Safeguards 80. The MA had a well-staffed and dedicated safeguards unit, which oversaw the implementation of the RAP, including substantial outreach and consultation in the project area. During implementation, amendments were made to ensure full consideration of direct and associated impacts, and several project investments were made to increase development outcomes in the affected communities. 81. Of the project-affected households, 550 were female headed and almost 10 percent of household heads were the disabled. The mitigation and compensation program therefore developed specific measures to address the high level of vulnerability, including livelihood programs. A completion report of the RAP implementation was conducted at the close of the project to (a) verify that all physical inputs specified were delivered, (b) assess the development outcomes, and (c) provide a detailed plan for any outstanding activities. As the RAP implementation did not finish by the time the project closed, the World Bank will continue supervision until implementation is completed, which is expected at the end of 2019. Page 26 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) Financial Management 82. The project was compliant with financial management covenants throughout the implementation period. Quarterly financial reports and unqualified audit reports were submitted on time. The project closed with a challenge of over- and under documentation on some project categories. For example, there were instances where expenditures appeared in wrong categories. Underestimation of budget for different activities also led to overspending under certain categories. This is attributable to numerous restructuring of the project. Procurement 83. Procurement under the project was carried out by three entities—the CoW, MA, and later LHDA. 84. Most delays for CoW managed contracts were caused by the government staff’s inability to draft terms of reference on time, unavailability of government staff to attend evaluation meetings, and weak negotiation and contract management practices on the side of government counterparts, leading to lengthy negotiations process and contractual delays. The procurement specialist too needed constant handholding despite having been hired under the original project. The CoW did not attach its own government procurement staff to benefit from skills transfer/capacity building under the project thus it has limited internal capacity to undertake a project of similar scope. The CoW’s stance of delaying the procurement specialist’s contractual renewal also dampened morale and created a negative work environment. 85. The MA had a seasoned procurement manager and a small team hired and paid for under the greater MDWSP (these staff contracts were not IDA financed). The procurement team was strong in all aspects and exhibited very good professional capacity and capability. Delays were occasioned by contractual issues on civil works projects, leading to slowing down of dependent activities. 86. The LHDA managed the LHWP Phase II studies. A firm was sole sourced to assist them in this regard. Toward the end of the project, this component experienced challenges in executing works that appeared to have been rushed with little planning being done. As a result, a key geo-technical contract has been left incomplete. C. BANK PERFORMANCE Quality at Entry 87. The World Bank team worked closely with the GoL to ensure that WSIP Phase II’s design would lead to successful implementation of the MDWSP and address the country’s long-term water sector development needs. The World Bank incorporated lessons learned from its past experiences in the LHWP and developed a rich environmental and social management program to support implementation of the MDWSP. 88. Phase II of the project was triggered after meeting six out of seven triggers achieved under Phase I of the project. The World Bank team worked with other development partners to ensure that sound Page 27 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) financial schemes and implementation arrangements were made. Robust M&E arrangements were envisaged during appraisal and included a well-defined component on M&E. 89. Risks were adequately identified during appraisal. Cost escalation risk was anticipated. However, large infrastructure development projects in the region, that is, the 2010 World Cup, could have been anticipated, which could have prompted the design of mitigation measures during implementation. Quality of Supervision 90. The World Bank’s supervision schedule was strategically designed to coincide with annual meetings of the MDWSP’s financiers and panel of experts in March and September. The team provided regular supervision, undertaking 17 support missions and additional technical missions. 91. The Implementation Status and Results Reports and Aide Memoires were candid about the project's performance across components. The team remained responsive to changes in circumstances during implementation and worked with MA and GoL counterparts to make the required changes to project design, contract management, and other relevant changes based on field visits, consultation with implementing agencies, and M&E feedback, especially during the early years of implementation. 92. The MTR was conducted in March 2013. The project was rated Satisfactory during the MTR. The MTR highlighted the multifaceted and strategic support provided by the World Bank team, noting that the support was robust in nature and “in the context of strong inter-personal relationships between the Bank and the client, based on mutual respect, interactions are direct, following a ‘tell it like it is’ approach which enhances accountability, confidence and capacity.” 93. During the ICR mission, the CoW, MA, WASCo all expressed concerns about the high turnover of the World Bank task team leader (TTL) in the final phase of the project. Between 2016 and 2018, the project TTL changed four times. The time overlap between the outgoing and incoming TTLs was limited, and occasionally decisions had to be delayed because of the time required by the new TTL to get up to speed on project status. Justification of Overall Rating of Bank Performance 94. Overall, the World Bank performance is considered Moderately Satisfactory. The World Bank provided sufficient financial and technical support during project implementation. However, the frequent turnover of TTLs, since 2016, adversely affected client satisfaction of the World Bank’s performances. D. RISK TO DEVELOPMENT OUTCOME 95. There is a moderate risk to institutional strengthening outcomes, especially the capacity of WASCo to take over operations of MDWSP assets. Training and institutional memory gained over the years have been partially lost because of the turnover of key personnel. Interviews with WASCo indicated that capacity-building efforts were partially maintained among mid-level technical staff. However, capacity within WASCo remains fragile as it would be difficult to identify replacement of key personnel who choose to move to other government agencies or regional development programs. To address this potential Page 28 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) sustainability risk, the World Bank has purposely included targeted capacity-building components within its new Lowland Water Supply Project which was approved by the Board on May 2019. V. LESSONS AND RECOMMENDATIONS 96. A few lessons were identified from the project ranging from project design considerations to implementation arrangements that enable lasting impacts from capacity building activities. 97. The importance of tertiary lines, that is, those transmission lines that branch out from main conveyance lines and connect rural households, should be consistently planned. During project appraisal, tertiary lines were not included because of limited financing envelope and difficulties in ensuring cost recovery. This project financed the designs of the tertiary lines and the task team helped the GoL to identify alternative funding sources (such as grants) to finance the investments. To date, the African Development Bank has provided about USD 13 million for these investments. As an emergency measure, during the 2015–2016 drought, standpipes had to be added along the main transmission line to mitigate the impact of severe drought which led desperate residents to vandalize the main pipeline. As the frequency of drought increases, further development of tertiary lines will be needed to provide basic services to rural areas. During the drought, considerations of meeting basic needs and equal access took precedence over the original evaluation of economic return. 98. Secondment from WASCo in the MA team should be incentivized to ensure smooth handover of bulk water assets. The Project Implementation Management Unit supporting the MA was funded by the MCC and consisted of a strong team of expatriates under the MCC instruction. However, while they ensured successful implementation of the MDWSP, capacity building was limited due to lack of funding in WASCo to hire additional staff. This may make transferring bulk water asset management to the CoW and WASCo challenging. In future operations involving multi-donor-funded infrastructure development program, secondments from government agencies should be embedded in Project Management/Implementation Unit teams so that adequate training and knowledge transfer can be secured. 99. In addition, project design should avoid excessive complexity. The project was of moderate size (US$50 million at project completion) but includes four components and more than two dozen subactivities ranging from infrastructure development to preparation studies to training to modeling to institutional strengthening. While such an integrated approach is plausible, future projects may want to assess whether the complexity of project design is proportionate to the project’s size. 100. Stronger supervision and clarity in communication protocols of project management consultants are critical in ensuring that clients’ needs are properly addressed. Despite the successful implementation of the MDWSP and World Bank-funded components, the client felt that communication between various implementation teams and the World Bank could be improved. Supervision of the Metolong Programme Management Unit, who were hired to support the management of the MDWSP, could have been stronger to hold them accountable for key decisions. 101. Hiring local labor reduced potential social issues. The GoL had a strong policy of recruiting local labor for construction of infrastructure and other project-related tasks as much as possible. The community councils were used to support local recruitment, and the local government provided facilities Page 29 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) to minimize the need to construct temporary housing. There was no influx of outside labor, and the associated social risks were significantly reduced. 102. Both the project implementation team and the client expressed concerns regarding the impacts of the high turnover rate of project TTLs. The frequent change of TTLs and the short tenure increased the length of decision-making time. The World Bank is advised to provide enough time for TTLs to overlap to ensure that project implementation is not affected. . Page 30 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS A. RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: Developing and sustaining an environmentally sound, socially responsible, and financially viable framework for the MDWSP; Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Environmental Management Text No Yes Yes Plan successfully implemented 30-Jun-2009 30-Jun-2009 31-Dec-2018 31-Dec-2018 Comments (achievements against targets): Target Achieved at 100% Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Comprehensive Resettlement Text No Yes No and Compensation Action Plan successfully 30-Jun-2009 30-Jun-2009 31-Dec-2018 31-Dec-2018 implemented Comments (achievements against targets): 7% of PAPs were not compensated yet at project closing. GoL has allocated funding and personnel to continue the compensation payment. Page 31 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion WASCo's operational cost Percentage 100.00 100.00 105.00 ratio maintained at equal or more than 100% 30-Jun-2009 30-Jun-2009 31-Dec-2018 31-Dec-2018 Comments (achievements against targets): Target Achieved 100% Objective/Outcome: Increasing the quantity of safe, bulk water supplied to Teyateyaneng Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Potable water supplied Cubic 0.00 530000.00 530000.00 530000.00 through the pipeline to meters/year Teyateyaneng constructed under the project. 30-Jun-2009 06-Jun-2017 31-Dec-2018 31-Dec-2018 Comments (achievements against targets): Target Achieved 100% Objective/Outcome: Strengthening institutions and related instruments in the water sector Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion WASCo's operational cost Percentage 100.00 100.00 105.00 Page 32 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) ratio maintained at equal or 30-Jun-2009 30-Jun-2009 31-Dec-2018 31-Dec-2018 more than 100% Comments (achievements against targets): Target Achieved 100% Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion State of Water Resources Yes/No N Y Y Report prepared, consulted and publically available 10-Nov-2011 10-Nov-2011 31-Dec-2018 31-Dec-2018 Comments (achievements against targets): Target Achieved 100% Objective/Outcome: Advancing strategic infrastructure investments Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Progress with feasibility study Percentage 0.00 100.00 100.00 60.00 for hydropower component of Phase II of the highlands 20-Jun-2014 06-Jun-2017 31-Dec-2018 31-Dec-2018 water project (includes feasibility of export opportunities) Comments (achievements against targets): 60% of the target achieved at project closing. GoL has identified funding to complete the study by July 2019. Page 33 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Priority areas identified in the Number 0.00 4.00 4.00 4.00 Infrastructure Gap Analysis for provision of bulk supply to 20-Jun-2014 06-Jun-2017 31-Dec-2018 31-Dec-2018 meet water demand especially in areas of high industrial, commercial and/or agricultural use and potential Comments (achievements against targets): Target Achieved 100% Objective/Outcome: In the event of an Eligible Crisis or Emergency, to provide immediate and effective response to said Eligible Crisis or Emergency Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion If the CERC is triggered: Number 0.00 0.00 0.00 0.00 number of beneficiaries benefiting from emergency 30-Jun-2016 06-Jun-2017 31-Dec-2018 31-Dec-2018 response and recovery activities. Comments (achievements against targets): CERC Component was not triggered. A.2 Intermediate Results Indicators Component: Environmental and Social Management Page 34 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Environmental Flow Text no EFR determined Monitored Monthly monitoring Requirements determined, continuing, staff SASS incorpo-rated into design, accredited and applied 30-Jun-2009 30-Jun-2016 31-Dec-2018 31-Dec-2018 Comments (achievements against targets): Target Achieved 100% Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Cultural Heritage sites Number 0.00 30.00 32.00 identified and recorded 23-Apr-2009 30-Jun-2016 31-Dec-2018 31-Dec-2018 Comments (achievements against targets): Target Achieved 106% Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion % PAPs with assets directly Text None 100% 93% impacted receiving compensation as agreed in 30-Jun-2009 30-Jun-2016 31-Dec-2018 31-Dec-2018 CRCAP Comments (achievements against targets): 93% of target achieved. GoL has allocated funding and personnel to continue the compensation payment. Page 35 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) Component: Engineering Support and Transmission Line to TY Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Improved community water Number 0.00 473.00 400.00 points constructed or rehabilitated under the 30-Jun-2009 30-Jun-2016 31-Dec-2018 31-Dec-2018 project Comments (achievements against targets): 85% Target Achieved. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion # kms of pipeline laid & Kilometers 0.00 24.47 24.47 operational 30-Jun-2009 30-Jun-2016 31-Dec-2018 31-Dec-2018 Comments (achievements against targets): Target Achieved 100% Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Samples of water transferred Percentage 0.00 90.00 90.00 to Teyateyaneng through the pipeline constructed under 30-Jun-2009 31-Dec-2017 31-Dec-2018 31-Dec-2018 the project that meet the required standards Page 36 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) Comments (achievements against targets): Target Achieved 100% Component: Institutional and Policy Support Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of water utilities Number 1.00 1.00 1.00 that the project is supporting 30-Jun-2009 30-Jun-2016 31-Dec-2018 31-Dec-2018 Comments (achievements against targets): Target Achieved 100% Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Regulatory instruments Yes/No N Y Y governing the urban water sector updated 30-Jun-2011 30-Jun-2016 31-Dec-2018 31-Dec-2018 Comments (achievements against targets): Target Achieved 100% Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion WASCo Hydraulic Model Yes/No N Y Y Prepared 30-Jun-2011 30-Jun-2016 31-Dec-2018 31-Dec-2018 Page 37 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) Comments (achievements against targets): Target Achieved 100% Component: Advancing strategic infrastructure investments Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Progress with updating the Percentage 0.00 100.00 60.00 Lowlands Water Program studies 26-Jun-2014 31-Dec-2017 31-Dec-2018 31-Dec-2018 Comments (achievements against targets): 60% Target Achieved. GoL allocated funding to complete the study by July 2019. Unlinked Indicators Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Direct project beneficiaries Number 0.00 30000.00 30000.00 30-Jun-2009 30-Jun-2016 31-Dec-2018 31-Dec-2018 Female beneficiaries Percentage 0.00 60.00 60.00 60.00 30-Jun-2009 30-Jun-2016 31-Dec-2018 31-Dec-2018 Comments (achievements against targets): Target Achieved 100% Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Page 38 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) OLD Version of Indicator: Number 0.00 25000.00 24000.00 People in project areas with access to Improved Water 30-Jun-2009 30-Jun-2016 31-Dec-2018 31-Dec-2018 Sources Comments (achievements against targets): 96% Target Achieved. Population growth was not as high as anticipated in PAD. Page 39 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) KEY OUTPUTS BY COMPONENT Objective/Outcome 1 Environmental and Social Management 1. Environmental Management Plan successfully implemented Outcome Indicators 2. Comprehensive Resettlement and Compensation Action Plan successfully implemented 1. Environmental Flow Requirements determined, incorporated into design, and applied Intermediate Results Indicators 2. Cultural heritage sites identified and recorded 3. % PAPs with assets directly impacted receiving compensation as agreed in CRCAP 1. Environmental Flow Requirements determined, incorporated into design, and applied; flow gauges installed at Metolong Dam; monthly monitoring continuing, staff accredited for water quality monitoring. 100% target met Key Outputs by Component 2. 32 cultural heritage sites (29 rock art sites and 3 archaeological (linked to the achievement of the Objective/Outcome 1) sites) identified and recorded. 106% target met 3. Six households were resettled. Out of 2,798 households affected, 2,615 received compensation. 93% target met 4. Provision of rural water supply and sanitation and electrification services to 80 villages (expanded from the original 35 villages). Objective/Outcome 2 Engineering Support and Transmission Line to Teyateyaneng 1. Potable water supplied through the pipeline to TY constructed Outcome Indicators under the project. 1. Improved community water points constructed or rehabilitated Intermediate Results Indicators under the project 2. # kms of pipeline laid and operational Page 40 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) 3. Samples of water transferred to TY through the pipeline constructed under the project that meet the required standards 1. 24 km pipeline laid and operational with four offtake provisions to supply en-route villages along the pipeline. 100% target met 2. Three reservoirs constructed 3. 560,000 m3/year portable water supplied through the pipeline to TY Key Outputs by Component constructed under this project. 106% target met (linked to the achievement of the Objective/Outcome 2) 4. 400 improved community water points constructed or rehabilitated under the project. 85% target met 5. 90% samples of water transferred to TY through the pipeline constructed under the project that meet the required standards. 100% target met Objective/Outcome 3 Institutional and Policy support 1. WASCo’s operational cost-coverage ratio maintained at equal to or more than 100% Outcome Indicators 2. State of Water Resources Report 2014 to 2017 prepared, consulted, and publicly available 1. Number of water utilities that the project is supporting Intermediate Results Indicators 2. Regulatory instruments governing the urban water sector updated 3. WASCo hydraulic model prepared 1. WASCo’s operational cost ratio maintained at equal or more than 100%. 100% target met through the entire project implementation period. Key Outputs by Component 2. Four State of Water Resources Reports prepared and publicly (linked to the achievement of the Objective/Outcome 2) available. 100% target met 3. The project is supporting one water utilities. 100% target met 4. Regulatory instruments governing the urban water sector updated. 100% target met Page 41 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) Objective/Outcome 4 advancing strategic infrastructure investments 1. Progress with feasibility study for hydropower component of Phase II of the highlands water project (includes feasibility of export opportunities) Outcome Indicators 2. Priority areas identified in the infrastructure gap analysis for provision of bulk supply to meet water demand especially in areas of high industrial, commercial, and/or agricultural use and potential Intermediate Results Indicators 1. Progress with updating the Lowlands Water Program studies 1. Feasibility study for hydropower component of LHWP Phase II 60% completed. 60% target met Key Outputs by Component 2. Four priority areas identified in the infrastructure gap analysis. (linked to the achievement of the Objective/Outcome 2) 100% target met 3. 60% of Lowland Water Program studies updated. 60% target met Objective/Outcome 5 CERC 1. If the CERC is triggered: number of beneficiaries benefiting from Outcome Indicators emergency response and recovery activities. Intermediate Results Indicators n.a. Key Outputs by Component n.a. (linked to the achievement of the Objective/Outcome 2) Page 42 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Role Preparation N. Jane Walker Co-Task Team Leader Marcus Wishart Co-Task Team Leader Elisabeth Sherwood Financial Analyst Joao Tinga Financial Management Specialist Wedex Ilunga Procurement Specialist Edmund Motseki Operations Officer Paul Martin Sr. Environmental Specialist L. Thandiwe Gxaba Sr. Environmental Specialist Satoru Ueda Sr. Water Resources and Dam Specialist Kristine Schwebach Social Development Specialist Andrew Asibey Sr. Monitoring and Evaluation Specialist Peter Okwero Sr. Health Specialist Elvira Morella Economist Andrew Macoun Lead Water and Sanitation Engineer David Weston Water Supply Engineer Archer Davis Water Supply Engineer Leonardo Mazzei Sr. Communications Specialist Luz Meza-Bartrina Sr. Counsel Suzanne Morris Sr. Finance Officer Belinda Asaam Program Assistant Supervision/ICR Sanyu Sarah Senkatuka Lutalo Task Team Leader(s) Chitambala John Sikazwe, George Daniel Procurement Specialist(s) Tandile Gugu Zizile Msiwa Financial Management Specialist Minerva S. Espinosa-Apurada Team Member Chloe Oliver Viola Team Member Kristine Schwebach Social Specialist Satoru Ueda Team Member William Rex Team Member Edmund Motlatsi Motseki Team Member Kisa Mfalila Environmental Specialist M. Yaa Pokua Afriyie Oppong Social Specialist Ruxandra Costache Counsel Marcus J. Wishart Team Member Majbritt Fiil-Flynn Team Member Zvikomborero Hoko Team Member Page 43 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) Keneuoe Francoise Mofolo Team Member A. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY08 36.761 281,528.32 FY09 53.213 261,783.82 FY16 0 118.68 Total 89.97 543,430.82 Supervision/ICR FY09 0 6,399.47 FY10 24.215 116,268.63 FY11 19.825 171,734.23 FY12 44.035 360,006.32 FY13 26.018 275,808.80 FY14 21.111 211,699.92 FY15 6.600 93,888.25 FY16 20.084 180,326.43 FY17 20.621 296,040.40 FY18 25.104 206,512.84 FY19 56.325 177,439.42 Total 263.94 2,096,124.71 Page 44 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) ANNEX 3. PROJECT COST BY COMPONENT19 Components Amount at Approval Actual at Project Percentage of Approval (US$, Millions) Closing (US$, Millions) Component 1: Environmental and 14.60 20.30 139 Social Management Program Component 2: Engineering Support 15.0 18.20 121 and Transmission Line to TY Component 3: Institutional and 2.2 12.78 581 Policy Support Component 4: Advancing Strategic 0 5.11 n.a. Infrastructure Investments Component 5: Contingent 0 00 0 Emergency Response Component (CERC) Total 31.8 56.38 177 19 1) amount at approval is the total project cost at appraisal, 2) Original amount as per financing section of the datasheet is equivalent to the amount at appraisal and the two additional financing. The borrower amount of US$41.50 million reflected in the financing section was an error as amount should be US$6.8 million Page 45 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) ANNEX 4. EFFICIENCY ANALYSIS Economic Analysis - MDWSP and WSIP Phase II 1. A detailed cost-benefit analysis was carried out at appraisal to determine the EIRR of the MDWSP. The net present value (NPV) of the project at a discount rate of 10 percent was also calculated.20 The focus of the analysis was on the broader program, funded by a consortium of donors, rather than the specific investments supported by the World Bank—support for the environmental and social management of MDWSP, institutional and policy support, and the bulk water transmission line to TY. The analysis was based on a typical ‘with project/without project’ methodology over a 30-year time horizon, with two categories of project benefits: (a) benefits for urban households in the project area and (b) benefits to industries in industrial parks in and around Maseru. 2. At project completion, assumptions used to develop the cost-benefit analysis were updated with actual figures for 2009–2018.21 Forecasts for the amount and timing of project CapEx were also replaced with actual figures. Core assumptions driving the model in future years were adjusted based on the growth rates implied by the actual figures. 3. Project benefits: urban water supply for households. The principal intended beneficiaries of the MDWSP were the populations in the urban centers of Maseru, Roma, Mazenod, Morija, and TY, who were expected to benefit directly through the improvement in security of water supply. The removal of supply constraints was expected to generate two effects on domestic water consumption. First, water usage by the covered households—through individual connections or public water points—was forecasted to increase because of more reliable water supply. Second, water consumption was expected to increase because of the progressive expansion of coverage to peri-urban areas. In addition, households with new individual connections were expected to benefit from time savings in water collection. At appraisal, the economic analysis used a conservative estimate of 10–30 minutes per day to collect water from communal sources. The value of time saved was measured using the opportunity cost of labor. 4. Project benefits: urban water supply to industry. Project beneficiaries were also assumed to benefit indirectly from the MDWSP due to preserved and new employment in the textile sector because of increased water supply. The removal of supply constraints is expected to generate two effects on industrial water consumption in the Maseru district. First, consumption by the existing firms will increase because of the more reliable water supply. Second, water consumption will increase because of the creation of additional industry space, which would not be feasible at the current water supply capacity. This is associated with safeguarding the existing employment in manufacturing, to which improved water supply would highly contribute by raising production capacity and competitiveness in the sector. The additional income associated with Metolong derives from the new jobs created by the expansion of the garment industry made possible by more reliable water supply. 20 At completion, the NPV was also calculated using a 6 percent discount rate—the standard rate for infrastructure projects recommended by the World Bank Sustainable Development Practice Group. 21 In addition, the original model was adjusted to remove depreciation from project costs, which had been included in the analysis at appraisal. Page 46 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) 5. Project costs. CapEx, operating expenses (OpEx), and investments costs result from the construction of several functional components, including the dam, treatment plant, and conveyance system. The investment costs generated by the construction of the dam are expected to occur based on the following phasing scheme: 10 percent in the first year, 30 percent in the second year, 40 percent in the third year, and 20 percent in the fourth year. The investment costs generated by the construction of the other project components were expected to be as follows: 0 percent in the first year, 40 percent in the second year, 40 percent in the third year, and 20 percent in the fourth year. Operations and maintenance costs include the cost of labor, chemicals, electricity, and all recurrent administrative costs to operate and maintain the components mentioned earlier. All costs are expressed in real terms. Inflation and financial contingencies have been eliminated wherever they were part of financial costs. Shadow factors have not been estimated, and prices are therefore actual on the basis that most items, with the possible exception of skilled labor, reflect the true market/economic value of the particular item concerned. Costs associated with mitigation of social and environmental impact and compensation have been included to account for project negative externalities. 6. Results of economic analysis. The updated analysis shows a decline in the EIRR from an estimated 16.7 percent at appraisal to 6.5 percent at completion.22 This gap is due primarily to the following reasons: • Delays in implementation. Project benefits were initially estimated to begin accruing in 2010. However, because of delays in the construction of the Metolong Dam, significant benefits were not realized until 2014. By pushing the benefits further into the future, construction delays negatively affect the EIRR by underweighting projects benefits in relation to costs. • Cost overruns. Increases in CapEx of US$88 million negatively affected the EIRR by increasing project costs relative to benefits. In addition, as OpEx was estimated as a percentage of capital costs, there was a corresponding increase in these project costs. • Overly optimistic assumptions. Project benefits are largely driven by the number of household connections and the number of jobs in the textile sector created or preserved as a result of the MDWSP. However, there is a large gap in the actual figures from 2009 to 2018 and the initial assumptions. Based on statistics from WASCo, approximately 120,000 fewer individuals23 are expected to benefit from the project in 2039. Table 4.1. Summary of Assumptions and Results Items At Appraisal At Completion EIRR (%) 16.7a 6.5 NPV at 10% US$74 million US$52.8 million 22 Approved by the United States Congress in 2000, the AGOA provides trade preferences for a group of Sub-Saharan Africa countries and was instrumental in the development of Lesotho’s textile industry. In the analysis at appraisal, it was assumed that AGOA would phase out beginning in 2012, resulting in a rapid contraction of the textile sector. Project benefits included income from jobs preserved by the MDWSP as improved water supply encouraged some companies to stay in Lesotho and continue or expand operations. However, AGOA was extended to 2025, affecting the project benefits. As this was outside of the control of the project, the ex post economic analysis was developed as if AGOA had phased out in 2012. In the scenario where AGOA phases out starting in 2025, the estimated EIRR for the MDWSP is 4.6 percent. 23 Approximately 24,000 connections, based on the assumption of five individuals per household used in the economic analysis. Page 47 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) Items At Appraisal At Completion NPV at 6% US$189 million US$12.0 million Benefits: Total individuals in project area 768,972 647,530 served by piped connections in 2039 Benefits: Total new jobs generated in the 19,000 17,000 textile sector because of the MDWSP by 2039 Benefits: Total value of increased US$81 million US$69 million domestic water consumption in project area, 2009–2039 Benefits: Total value of increased US$72 million US$71 million industrial water consumption in project area, 2009-2039 Costs: Total CapEx US$162 million US$250 million Costs: Total OpEx US$28 million US$34 million Costs: Total costs associated with US$8 million US$8 million environmental impacts and compensation Note: a. In the PAD, the EIRR was reported as 14.6 percent, with an NPV of US$64 million, due to the inclusion of depreciation as an economic cost. Financial Analysis - MDWSP 7. A financial analysis of the MDWSP and its impacts on WASA/WASCo was also conducted at appraisal. The analysis was updated at completion using the same actual figures from the economic analysis, as well as inputs from WASCo’s annual audited financial statements for 2009–2017. The updated financial analysis shows a significant decline in the financial internal rate of return for the MDWSP, from an estimated 3.5 percent at appraisal to –10.4 percent at completion. This gap is driven by the same reasons for the decline in EIRR noted earlier and is amplified by the focus of the financial analysis on monetizable benefits—time savings—and assumptions on jobs saved were not included in the financial analysis, only the incremental revenues from increased water supply. 8. Despite the negative financial internal rate of return, there is minimal financial impact of the project on WASCo even after adjusting the forecasted number of connections and amount of water consumed. For 2018–2029, WASCo is expected to generate positive operating income. Page 48 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS Near final draft ICR report was shared with GoL. Both CoW and MA provided in-line comments to the report. Their suggestions were incorporated where appropriate. “Participation of the World Bank was the most thorough of all funders in monitoring and assessing the progress of the MDWSP activities. As a bare minimum, bi-annual Missions were conducted in making these appraisals. Adherence to the World Bank safeguards was stipulated in the multiple loans and grants supporting the work. The World Bank Missions brought a wealth of experience and direction to be taken in achieving the goals of the program. Although the World Bank primarily funded the socio-environmental aspects in addition to DCS Contract 3, the Missions reviews derived holistic evaluations of the components comprising the MDWSP. It should be further noted that the Missions also encompassed the entire Lesotho Water Sector.” – Paul J. Collins in his Engineering Manager’s Completion Report for the Metolong Authority and MDWSP “A Resettlement Policy Framework (RPF) has been developed in 2017 building on the previous extensive experience and lessons learned in Lesotho from the various dam projects. Of particular importance was the Resettlement and Compensation Policy of the Metolong Dam and Water Supply Programme (MDWSP) of February 2010,…” – EIB in its Environmental and Social Data Sheet for Lowlands Water Development Project. Page 49 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) ANNEX 6. SUPPORTING DOCUMENTS 1. World Bank. 2006. Kingdom of Lesotho - World Bank Country Assistance Strategy (2006). Washington, DC: World Bank. 2. World Bank. 2009. Kingdom of Lesotho - Water Sector Improvement Project in Support of the Second Phase of the Water Sector Improvement Program (Adaptable Program Lending). Washington, DC: World Bank. 3. World Bank. 2011. Water Sector Improvement Project Phase II: Metolong Dam and Water Supply. Project Paper for Additional Grant. Report No: 64983-LS. Washington, DC: World Bank. 4. World Bank. 2013. Lesotho: Water Sector Imporvement Project (WSIP) Phase II- Metolong Dam and Water Supply Program. Midterm Review Report. Washington, DC: World Bank. 5. World Bank. 2014. Water Sector Improvement Project, Phase 2. Project Paper on a Proposed Additional Grant. Report No. PAD1039. Washington, DC: World Bank. 6. World Bank. 2016. Kingdom of Lesotho: Country Partnership Framework (2016–2020). Washington, DC: World Bank. 7. World Bank. 2017. Water Sector Improvement Project in Support of the Second Phase of the Water Sector Improvement Program (Adaptable Program Lending): Restructuring. Report no.: RES29042 Washington, DC: World Bank. 8. World Bank. 2018. Water Sector Improvement Project Phase II: Metolong Dam and Water Supply. Restructuring Paper. Report No.: RES35653. Washington, DC: World Bank. 9. Metolong Authority. 2018. Metolong Dam and Water Supply Program Project Completion Report for the European Investment Bank 10. Charles Arthur and Peter Michell. 2012. Lesotho’s Metolong Dam: A lasting legacy? 11. Charles Arthur and Peter Michell. 2010. The archaeology of the Metolong Dam, Lesotho: a preliminary assessment. 12. Paul J. Collins. 2018. Engineering Manager’s Completion Report for Metolong Dam and Water Supply Program. Page 50 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) ANNEX 7. EVOLUTION OF FINANCING ARRANGEMENT FOR MDWSP At Appraisal24 At November 2014 Additional Financing25 24 PAD. 25 Project Paper for Additional Financing November 2014. Page 51 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) ANNEX 8. MAP OF LOWLAND WATER SUPPLY ZONES, METOLONG DAM, AND TOWN OF TY Figure 8.1. Map of Lesotho Lowland Water Supply Zones, Metolong Dam, and Town of YT Page 52 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) ANNEX 9. KEY DATES FOR METOLONG DAM AND RAW WATER PUMP STATION Table 9.1. Key Dates for Metolong Dam and Raw Water Pump Station Activity Contract Date Revised Date Commencement Date June 30, 2011 January 12, 2012 Commence Impoundment October 31, 2012 February 15, 2014 Water delivery of 25 Ml/day January 31, 2013 May 10,2014 Water delivery of 35 Ml/day March 2, 2013 July 30, 2014 Water delivery of 93 Ml/day July 1, 2013 October 8, 2014 Section 1 Completion August 9,2013 November 16, 2014 Section 2 Completion 821 days March 29, 2015 Page 53 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) ANNEX 10. SUMMARY OF PDO INDICATOR CHANGES Original PDO and Targets Changes in PDO Indicators and Targetsa Originalb Target Additional Financing Target Additional Target Restructuring 2016 Target 2011 Financing 2014 Number of cultural 30 Kept as IOI 30 heritage sites identified and recorded Environmental Flow Yes Kept at IOI Yes Requirement determined, incorporated into design, and operationalized No deterioration in No Kept at IOI Yes standard of living among Project Affected Persons due to the MDWSP Number of reservoir 2 Deleted: EIB provided 2 crossings established financing thus no longer relevant Kms of pipeline laid 28 km Kept as IOI 28 km and operational State of Water Yes No change Yes No change Yes No change Yes Resources Report prepared, consulted and publicly available WASA maintains >=1 Change of wording: >=100% No change >=100% No change >=100% operational cost WASCo’s operational ratio >=1 cost ratio maintained Page 54 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) Original PDO and Targets Changes in PDO Indicators and Targetsa Originalb Target Additional Financing Target Additional Target Restructuring 2016 Target 2011 Financing 2014 at equal or more than 100% New: Environmental Yes No change Yes No change Yes Management Plan successfully implemented New: CRCAP Yes No change Yes No change Yes successfully implemented New: Number of 30,000 No change 30,000 Moved to IOI 30,000 direct project (60%) (60%) (60%) beneficiaries, of which female New: People in 25,000 No change 25,000 Moved to IOI 25,000 project areas with access to ‘Improved Water Sources’ New: Strategic Yes Deleted: Being replaced by Yes investments two separate PDO level advanced indicators. New: Potable water supplied 53,000 through the pipeline to TY cum/year constructed under the project (cum/year). New: Number of 1 beneficiaries benefiting from emergency response and Page 55 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) Original PDO and Targets Changes in PDO Indicators and Targetsa Originalb Target Additional Financing Target Additional Target Restructuring 2016 Target 2011 Financing 2014 recovery activities (if the CERC is triggered). New: Progress with 100% feasibility study for hydropower component of Phase II of the highlands water project (includes feasibility of export opportunities). To replace ‘Strategic Investments Advanced’. New: Priority areas 4 identified in the Infrastructure Gap Analysis for provision of bulk supply to meet water demand especially in areas of high industrial, commercial and/or agricultural use and potential. To replace ‘Strategic Investments Advanced’. Note: a. Two additional restructurings happened in 2017 and 2018 which did not change the PDO indicator and targets but extended the target achievement year to December 31, 2017, and December 31, 2018, respectively. b. The PAD did not clearly indicate PDO-level indicators. Thus, intermediate outcome indicators are shown here as PDO indicators. Page 56 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) ANNEX 11. MDWSP COMPONENTS AND KEY FINANCIERS Components Subcomponents Key Financier (Italic indicates added financier during implementation) 1. Advance • Access roads to the dam site • GoL Infrastructure • Bulk power supply to the dam site • Republic of South Africa (RSA) • Telecommunications • EIBa • Operator’s Village and Visitor’s Center • World Bankb • Rural electrification • Rural water supply and sanitation 2. The Metolong • 83 m high roller compacted concrete • GoL dam and raw dam with storage capacity of 64 million • Kuwait Fund for Arab Economic water pump m3 Development station • Multi-stage raw water intake • Arab Fund for Economic Development • Pumping stations in Africa • OPEC Fund for International Development • Saudi Fund for Development • Abu Dhabi Fund for Development • EIBa • World Bankb 3. The water • Raw water transmission line from dam • MCC treatment to water treatment plant • Abu Dhabi Fund for Development works • Water treatment plant with average • EIBa capacity of 75,000 m3 per day • Pumping station at the water treatment plant 4. Downstream • DCS 1: Conveyance line to Maseru • MCC conveyance • DCS 2: Conveyance line to Mazenod, • World Bank system (DCS) Roma and Morija • Abu Dhabi Fund for Development • DCS 3: Conveyance line to Teyateyaneng • EIBa 5. Environmental • Environmental management • GoL and social • Integrated catchment management • World Bank management • Ecosystem monitoring • EIBa program • Cultural heritage development and management • Resettlement policy and action plan • Compensation program • Community water and sanitation program • HIV/AIDS education and prevention • Environmental and social panel of experts • Communications and governance • Operating costs 6. Institutional • Metolong Dam Program Management • GoL support Unit • MCC • MA expatriate costs • World Bank Page 57 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) Components Subcomponents Key Financier (Italic indicates added financier during implementation) • MA local employee and other operating • EIBa expenses Note: a. At the inception of the MDWSP, the regional economy became overheated because of South Africa’s hosting of the World Cup. The MCC had planned to fund most of the components. However, available funding from the MCC allocation at that time was insufficient to cover the estimated cost of the water treatment works, DCS, and institutional support. It was at this juncture that the EIB partnered with the existing funders and closed the perceived cost gap. b. The GoL was to support an advanced infrastructure program needed to ensure appropriate conditions to facilitate the MDWSP which included provision of electricity to the dam site and interim measure of water supply and sanitation improvements in eight villages near the dam. Later, due to availability of the EIB funding, such provision was expanded to provide electrification and water and sanitation for 80 rural villages. The World Bank funded the design and construction supervision costs while the EIB financed the construction costs. Page 58 of 59 The World Bank Water Sector Improvement APL Phase II: Metolong Dam and Water Supply (P108143) ANNEX 12. Pictures from Site Visits Metolong Dam Metolong Dam - Reservoir Visitor Center Rural Water Supply and Sanitation Resettlement Housing Livelihood Restoration Program Page 59 of 59