Document of The World Bank FOR OFFICIAL USE ONLY Report No: RES14190 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF MOROCCO OUM ER RBIA SANITATION PROJECT LOAN 7925-MA JUNE 15, 2010 TO THE OFFICE NATIONAL DE L’ELECTRICITE ET DE L’EAU POTABLE (ONEE) WITH THE GUARANTEE OF THE KINGDOM OF MOROCCO JUNE 2, 2014 SUSTAINABLE DEVELOPMENT DEPARTMENT MIDDLE EAST AND NORTH 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. ABBREVIATIONS AND ACRONYMS BOD Biochemical Oxygen Demand EIB European Investment Bank ESMP Environmental and Social Management Plan IP Implementation Progress MDG Millenium Development Goals MTR Midterm Review ONEE Office National de l’Electricité et de l’Eau Potable ORAF Operational Risk Assessment Framework PDO Project Development Objective PDO Project Development Objective PNA Programme National d’Assainissement National Sanitation Program SDR Safeguards Diagnostic Review WWTP Wastewater Treatment Plant Regional Vice President: Inger Andersen Country Director: Neil Simon Gray Sector Manager: Steven N. Schonberger Task Team Leader: Richard Abdulnour KINGDOM OF MOROCCO Morocco Oum Er Rbia Sanitation Project CONTENTS A. SUMMARY OF PROPOSED CHANGES ................................................................ 2 B. PROJECT STATUS.................................................................................................... 3 C. PROPOSED CHANGES ............................................................................................ 4 D. APPRAISAL SUMMARY CHANGE IN RISK ASSESSMENT ........................... 10 ANNEX 1: RESULTS FRAMEWORK ........................................................................... 11 ANNEX 2: OPERATIONAL RISK ASSESSMENT FRAMEWORK ............................ 17 DATA SHEET Morocco Morocco Oum Er Rbia Sanitation (P098459) . Basic Information Project ID: P098459 Lending Instrument: Specific Investment Loan Regional Vice President: Inger Andersen Original EA Category: Partial Assessment (B) Country Director: Neil Simon M. Gray Current EA Category: Partial Assessment (B) Sector Director: Junaid Kamal Ahmad Original Approval Date: 15-Jun-2010 Sector Manager: Steven N. Schonberger Current Closing Date: 31-Dec-2015 Team Leader: Richard Abdulnour . Borrower: Office National de l'Electricité et de l'Eau Potable (ONEE) Responsible Agency: . Restructuring Type Form Type: Full Restructuring Paper Decision Authority: Board Approval Restructuring Level: Level 1 . Financing (as of 16-May-2014 ) Key Dates Approval Effectiveness Original Revised Project Ln/Cr/TF Status Signing Date Date Date Closing Date Closing Date P098459 IBRD-79250 Effective 15-Jun-2010 19-Aug-2010 15-Feb-2011 31-Dec-2015 31-Dec-2015 Disbursements (in Millions) % Cancelle Disburse Undisbur Project Ln/Cr/TF Status Currency Original Revised Disburse d d sed d P098459 IBRD-79250 Effective USD 43.00 43.00 0.00 2.30 40.77 5 . Policy Waivers Does the project depart from the CAS in content or in other significant Yes [ ] No [ X ] respects? Does the project require any policy waiver(s)? Yes [ ] No [ X ] 1 . A. Summary of Proposed Changes This Level I restructuring follows a request from the Office National de l’Electricité et de l’Eau Potable (ONEE) dated April 3, 2014, and its complement dated May 21, 2014. The proposed changes under this Level I restructuring are (i) to simplify the Project mainly by dropping the non-conventional technologies for wastewater systems component, and revise the original PDO, the Project description and Results Framework accordingly; (ii) to reallocate the loan proceeds among Categories of Eligible Expenditures; (iii) to revise the current financial covenant to be based on the more representative Cumulative Debt to Equity ratio; and (iv) to trigger the Safeguards Policy OP/BP 4.11 related to Physical Cultural Heritage since works implemented in the city of Bejaad might include a small portion of the Medina of Bejaad, which is classified and registered as national heritage, and add a legal covenant to that effect. There are no changes in the original institutional or fiduciary arrangements. Change in Implementing Agency Yes [ ] No [ X ] Change in Project's Development Objectives Yes [ X ] No [ ] Change in Results Framework Yes [ X ] No [ ] Change in Safeguard Policies Triggered Yes [ X ] No [ ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ ] No [ X ] Change in Legal Covenants Yes [ X ] No [ ] Change in Loan Closing Date(s) Yes [ ] No [ X ] Cancellations Proposed Yes [ ] No [ X ] Change to Financing Plan Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ X ] No [ ] Change in Disbursement Estimates Yes [ X ] No [ ] Change to Components and Cost Yes [ X ] No [ ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ ] No [ X ] Change in Procurement Yes [ ] No [ X ] Change in Implementation Schedule Yes [ ] No [ X ] Other Change(s) Yes [ ] No [ X ] Appraisal Summary Change in Economic and Financial Analysis Yes [ ] No [ X ] Appraisal Summary Change in Technical Analysis Yes [ ] No [ X ] Appraisal Summary Change in Social Analysis Yes [ ] No [ X ] Appraisal Summary Change in Environmental Analysis Yes [ ] No [ X ] Appraisal Summary Change in Risk Assessment Yes [ X ] No [ ] 2 . B. Project Status The Project was approved on June 15, 2010, signed on August 19, 2010 and became effective on February 15, 2011. The current closing date is December 31, 2015. Total project financing amounts to US$43 million (Loan IBRD 7925-MA consisting of Euro 25.9 million and US$8.6 million). As of May 15, 2014, the project committed US$23 million and disbursed a total of US$2.3 million representing respectively 54% and 5% of the total loan amount. The midterm review (MTR) of the Project took place from January 27 to February 5, 2014. The review concluded that the Project is exemplary in responding to high social demand for sanitation and empowering local officials and communities to fulfill their mandate for sanitation. This has at the same time been one of the major factors of implementation delays, a situation exacerbated by long procurement delays due to lack of readiness at Project initiation, and the belated mobilization of technical assistance. ONEE invested significant efforts with close Bank support to accelerate procurement and resolve arising opposition in a number of the towns where it planned to improve access to sanitation. The unanticipated opposition of the Communes of Afourer/Beni Ayat, Demnate and Boujniba lead ONEE, after having exhausted all other options, to proactively request the cancellation of interventions in these towns. These were substituted with new interventions in five towns, which are currently being implemented. In El Ksiba, works were suspended due to local opposition to the location of the WWTP after the start of the works. This situation was resolved positively thanks to intensive efforts by ONEE and local authorities. As a result, Project implementation quickly improved as ONEE pursued and initiated further actions on all fronts, with tangible results. Works have resumed in El Ksiba, started in El Brouj, Ouaouizerth, Youssoufia and Hattane, and are expected to start soon, at least partially, in five additional towns (Aghbala, Azilal, Boulanouare and Chemaia). The technical assistance has been fully mobilized and is being expanded to cover the entire Project area. Procurement has notably improved and commitments have doubled. Disbursements are following suit steadily as works start and physical progress increases. Implementation of environmental and social safeguards has benefitted from lessons learned during the first years of Project implementation. The Project is a pilot for the use of country systems for managing safeguards, including the implementation of agreed project specific measures. Environmental Impact Assessments (EIAs) have been carried out by ONEE for all twelve towns and deemed acceptable according to the national legislation. These EIAs identified reversible impacts which are currently mitigated by ONEE, with the support of its technical assistance, through the implementation of the Environmental and Social Management Plan (ESMP). Land acquisitions for wastewater treatment plants, pumping stations and other small structures are carried out by the Communes. There is no involuntary resettlement as most land is being acquired voluntarily from private land owners, with the rest being incorporated or occupied under specific procedures that do not require acquisition. Technical assistance to Communes, public awareness and documentation of the land acquisition process have been carried out by ONEE according to the agreed procedures. Actual access of beneficiaries to their compensation, though previously budgeted by the Communes, did not always take place prior to the initiation of works. ONEE is currently undertaking an assessment to identify pending payments in the four locations where works have been initiated. ONEE will intensify their assistance to local authorities to take all necessary actions to ensure that payments are processed and brought into full compliance with the agreed procedures. A full review of the land acquisition process under the project will be undertaken by December 2014 to identify any needed improvements in the overall process, as well as to identify and address any instances requiring remedial actions. Furthermore, the Physical Cultural Resources policy (OP 4.11) is hereby triggered because a small portion of sewerage rehabilitation works in the city of Bejaad might include a small part of the Medina of Bejaad, which is classified and registered as national heritage. 3 At this stage, it is unlikely that the project would achieve its development objectives without restructuring to ensure the Project focuses on its core activities, maintains the improved implementation momentum. . C. Proposed Changes . Development Objectives/Results Project Development Objectives Original PDO The objectives of the Project are to: (i) increase access to sewerage services and reduce wastewater-related pollution in selected towns in the Project provinces; and (ii) pilot non-conventional technologies for wastewater systems in selected locations. Change in Project's Development Objectives Explanation: In order to maintain the Project’s renewed implementation momentum and to successfully achieve its development objectives, the main recommendation of the MTR was to focus on core infrastructure activities. A decision to simplify the project by consolidating the infrastructure component and dropping the technology pilots component was therefore made in agreement with ONEE. Consequently, the current Project Development Objective will be revised to exclude the second part “pilot non-conventional technologies for wastewater systems in selected locations”. Moreover, the wording of the PDO is slightly modified by replacing “sewerage” with “sanitation”, to better align it with the MDG terminology. Proposed New PDO The objective of the Project is to increase access to sanitation services and reduce wastewater-related pollution in selected small and medium towns in the Project provinces. Change in Results Framework Explanation: Based on changes to the PDO and Project description, the original results framework and monitoring is revised accordingly, made better aligned with MDG terminology and Bank core indicators, and simplified to focus on key results indicators. As a result, all relevant outcome indicators are maintained or refined, whereas (i) the “direct beneficiaries” core indicator will be added as a PDO indicator, (ii) the “new sewerage connections” indicator will be transferred from PDO to intermediate indicators, and (iii) output indicators that will be monitored in regular Project monitoring reports will be deleted. In addition, target values have been revised based on updated designs and calculations, and submitted by the client on April 10, 2014. New target values have therefore been included in this restructuring. 4 . Compliance Change in Safeguard Policies Triggered Explanation: During the MTR mission, it was confirmed that works to be carried out in the city of Bejaad might include a small part of the Medina of Bejaad, which is classified and registered as national heritage. As a result, the Physical Cultural Resources policy (OP 4.11) is triggered. The environmental legislation concerning the cultural heritage is Law 22-80 (1-80-341) of 1980 amended and supplemented in June 2006 with Law 19-05 (1-06-10215) on the conservation of historic monuments and sites, inscriptions, art and antiquities objects. Article 47 of the amended law specifies the process to be followed in case of chance find. On the OP 4.11, the team will rely on the environmental and social guidelines for civil works in the city of Bejaad, which include the Bank’s chance find procedures. These guidelines were submitted to the Bank, found to be satisfactory, and disclosed accordingly. Current and Proposed Safeguards Policies Triggered: Current Proposed Environmental Assessment (OP) (BP 4.01) Yes Yes Natural Habitats (OP) (BP 4.04) No No Forests (OP) (BP 4.36) No No Pest Management (OP 4.09) No No Physical Cultural Resources (OP) (BP 4.11) No Yes Indigenous Peoples (OP) (BP 4.10) No No Involuntary Resettlement (OP) (BP 4.12) Yes Yes Safety of Dams (OP) (BP 4.37) No No Projects on International Waterways (OP) (BP 7.50) No No Projects in Disputed Areas (OP) (BP 7.60) No No . Change in Legal Covenants Explanation: In its letter dated May 21, 2014, the Borrower has requested that financial ratios under Legal Covenants in existing World Bank Projects be harmonized to be brought in line with the most recent and more representative Cumulative Debt to Equity financial ratio. In particular, it has requested that the financial covenant it is held to under the current Loan Agreement be replaced with the financial covenant which was included in the Rural Water Supply Project, which was approved on April 29, 2014, as described hereunder. In addition, a Legal Covenant is added to ensure that the Project is carried out in accordance with the Environmental Legislation, the Land Acquisition Legislation, and the Environmental and Social Guidelines for Civil Works in the City of Bejaad. Finance Ln/Cr/T Date Recurre Frequen Agreement Description of Covenant Status Action F Due nt cy Reference Each fiscal year, the Section V of IBRD- Borrower's estimated Net Not yet the Loan Yearly Revised 79250 Revenues shall be at least due Agreement. 1.2 times the estimated 5 Principal Debt Service Requirements of the Borrower. Except as the Bank shall otherwise agree, the Borrower shall take, in consultation with the Guarantor, all actions necessary to ensure that Financial its Cumulative Debt to IBRD- Covenant Not yet Equity shall be lower Yearly Proposed 79250 (Debt : Equity due than 4.5 by closing of Ratio) each fiscal year during Project implementation, subject to the provisions of Section V of Schedule 2 to the Loan Agreement.. The Borrower shall carry out the Project in accordance with the Environmental Legislation, the Land Acquisition Legislation, IBRD- Safeguards and the Environmental Complie CONTIN New 79250 Covenant and Social Guidelines for d with UOUS Civil Works in the City of Bejaad, subject to the provisions of Paragraph E of Section I of Schedule 2 to the Loan Agreement. . Financing Reallocations Explanation: During the mid-term review ONEE requested to reallocate project funds from “Category (5) Unallocated” to “Category (1) Works and goods under Part I of the project” in anticipation of a potential shortage of funds following an assessment of its overall financing needs, as they relate to all activities to be financed under Part I of the project. In addition, the “Category (2) Works, Training and consultants’ services under Part II of the Project” will be cancelled and replaced with “Category (6) Training and consultants’ services under Part II of the Project” to reflect that works related to technology pilots will not be implemented anymore. Disbursement percentages are inclusive of taxes. 6 Current Category of Disbursement % (Type Ln/Cr/TF Currency Allocation Expenditure Total) Current Proposed Current Proposed (1) Works and goods IBRD-79250 EUR 19,240,000 22,415,250 50 50 under Part I of the Project (2) Works, Training and consultants’ services 3,420,000 0 100 0 under Part II of the Project (3) Front-End Fee 64,750 64,750 (4) Premia for Interest Rate Caps and Interest 0 0 Rate Collars (5) Unallocated 3,175,250 (6) Training and consultants’ services 0 3,420,000 0 100 under Part II of the Project Total: 25,900,000 25,900,000 (1) Works and goods IBRD-79250 USD 6,400,000 7,438,500 50 50 under Part I of the Project (2) Works, Training and consultants’ services 1,140,000 0 100 0 under Part II of the Project (3) Front-End Fee 21,500 21,500 (4) Premia for Interest Rate Caps and Interest 0 0 Rate Collars (5) Unallocated 1,038,500 0 (6) Training and consultants’ services 0 1,140,000 0 100 under Part II of the Project Total: 8,600,000 8,600,000 7 Disbursement Estimates Change in Disbursement Estimates Explanation: Disbursement estimates will be formally revised after the restructuring package has been approved to reflect progress to date and changes in the procurement plan and implementation schedule. Fiscal Year Current (USD) Proposed (USD) 2010 0 0 2011 0 0 2012 2,850,000 0 2013 8,000,000 285,000 2014 12,500,000 3,215,000 2015 18,000,000 16,500,000 2016 1,650,000 23,000,000 Total 43,000,000 43,000,000 8 . Components Change to Components and Cost Explanation: The Project description will be revised to reflect the simplification of the Project. In particular: (i) Part I of the Project will be updated to include odor-control pilots; (ii) Part II will be updated to reflect that it no longer contains any pilot activities and is now restricted to implementation support through technical assistance activities. As a result, The project description is amended as follows: “Part I:Wastewater Collection and Treatment Rehabilitation and expansion of existing sewerage systems, including collection networks and treatment plants, provision of equipment for the maintenance and operation of said systems, and provision of odor- control technologies for selected small and medium towns in the Project Provinces. Part II: Implementation Support Provision of implementation support to the Borrower, including support for: construction supervision; Project management, monitoring and reporting; monitoring of environmental management plans, awareness raising campaigns; and promotion of wastewater reuse projects.” Component costs are adjusted to reflect the new Project description and account for contingencies and Borrower financing, whereas current component costs do not account for contingencies and Borrower financing. Current Component Proposed Component Current Cost Proposed Action Name Name (US$M) Cost (US$M) Component 1: Part I: Wastewater wastewater collection and 32.00 69.40 Revised collection and treatment treatment Component 2: Piloting of Wastewater technologies Part II: Implementation 5.70 5.70 Revised and implementation support support Total: 37.70 75.10 9 . D. Appraisal Summary . Appraisal Summary Change in Risk Assessment Explanation: The overall implementation risk is deemed substantial, driven mainly by risks related to the need for additional leverage from the technical assistance for the preparation and supervision of works, as well as the implementation and monitoring of social safeguards, in particular land acquisitions. Strong mitigation measures have been put in place, and are currently being intensively implemented, with the support and assistance of the Bank. 10 ANNEX 1: RESULTS FRAMEWORK . Results Core sector indicators are considered: Yes Results reporting level: Project Level . Project Development Objective Indicators Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target New Direct project beneficiaries Number Value 0 0 220,000 Date 30-Jun-2010 31-Dec-2013 31-Dec-2015 Comment New Female beneficiaries Percentage Value 50 50 Sub Type Supplemental New Extremely poor beneficiaries Percentage Value 15 15 Sub Type Supplemental New Rate of access to sanitation Percentage Value 0 65 services in selected towns Date 30-Jun-2010 31-Dec-2013 31-Dec-2015 Comment Baseline is not Current access known. rate is zero as no works have been completed yet. 11 Revised Number of people in urban Number Value 0 0 130,000 areas provided with access to Date 30-Jun-2010 31-Dec-2013 31-Dec-2015 Improved Sanitation under the project Comment Revised WWTPs constructed under the Number Value 0 0 6 Project complying with Date 30-Jun-2010 31-Dec-2013 31-Dec-2015 national discharge standards Comment Includes El Ksiba, Ouaouizerth, El Brouj, Chemaia, Hattane, Aghbala. Revised Volume(mass) of BOD Tons Value 0 0 800 pollution load removed by Date 30-Jun-2010 31-Dec-2013 31-Dec-2015 treatment plant under the project Comment Accounts only for BOD eliminated by WWTPs of El Ksiba, Ouaouizerth, El Brouj, Chemaia, Hattane, Aghbala. Marked for Number of non-conventional Number Value 0 0 4 Deletion systems piloted. Date 30-Jun-2010 19-Sep-2013 31-Dec-2015 12 Comment Marked for Number of new sewage Number Value 0 0 13,000 Deletion connections provided under the Date 30-Jun-2010 19-Sep-2013 31-Dec-2015 project Comment Intermediate Results Indicators Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target Revised Additional treatment capacity Number Value 0 0 115,000 of WWTPs constructed under Date 30-Jun-2010 31-Dec-2013 31-Dec-2015 the Project Comment Accounts only for capacity of WWTPs of El Ksiba, Ouaouizerth, El Brouj, Chemaia, Hattane, Aghbala. New WWTPs associated with the Number Value 0 0 12 project complying with Date 30-Jun-2010 31-Dec-2013 31-Dec-2015 13 national discharge standards Comment Includes 6 WWTPs built under the Project + Khouribga, Azilal, Zaouiet Cheikh, Oued Zem, Bejaad. New Average BOD abatement rate Percentage Value 0 0 75 of WWTPs constructed under Date 30-Jun-2010 31-Dec-2013 31-Dec-2015 the Project Comment Accounts only for abatement rate of WWTPs of El Ksiba, Ouaouizerth, El Brouj, Chemaia, Hattane, Aghbala. New Household sewer connections Number Value 0 0 20,000 rehabilitated under the project Date 30-Jun-2010 31-Dec-2013 31-Dec-2015 14 Comment Target based on estimate of 90% of total connections that are rehabilitated (actual number will only be known at completion of works) New New household sewer Number Value 0 0 2,200 connections constructed under Date 30-Jun-2010 31-Dec-2013 31-Dec-2015 the project Comment Target based on estimate of 10% of total connections that are new (actual number will only be known at completion of works) New Length of newly installed or Kilometers Value 0 0 400 rehabilitated sewerage network Date 30-Jun-2010 31-Dec-2013 31-Dec-2015 Comment Marked for Environmental Impact Number Value 0.00 6.00 10.00 15 Deletion Assessment studies approved Date 30-Jun-2010 19-Sep-2013 31-Dec-2015 Comment . Marked for Delegated management Number Value 0.00 8.00 10.00 Deletion conventions signed. Date 30-Jun-2010 19-Sep-2013 31-Dec-2015 Comment Marked for Number of subprojects where Number Value 0.00 9.00 10.00 Deletion consultation meetings with Date 30-Jun-2010 19-Sep-2013 31-Dec-2015 local stakeholders were carred out. Comment Marked for Number of ONEP's operation Number Value 0.00 0.00 10.00 Deletion teams equipped with adequate Date 30-Jun-2010 19-Sep-2013 31-Dec-2015 O&M equipment. Comment Marked for Number of plants where odor Number Value 0.00 0.00 2.00 Deletion problems were addressed. Date 30-Jun-2010 19-Sep-2013 31-Dec-2015 Comment Marked for Twinning contract signed and Yes/No Value No No Yes Deletion implemented as per schedule. Date 30-Jun-2010 19-Sep-2013 31-Dec-2015 Comment . . 16 ANNEX 2: OPERATIONAL RISK ASSESSMENT FRAMEWORK Project Stakeholder Risks Stakeholder Risk Rating Substantial Risk Description: Risk Management: The Project is part of the National Sanitation Program As part of the communication strategy, perform a detailed screening of neighboring (PNA), which has extended sanitation to almost 90 small inhabitants and farmers to identify potential options for benefit -sharing in areas targeted and medium towns since 2009 (out of 200 towns under for WWTP construction, which could include access roads, electricity, or reuse options ONEE's stewardship), to the high satisfaction of in agriculture. concerned beneficiaries.. Resp: Status: Stage: Recurrent: Due Date: Frequency: However, there is a substantial risk of potential opposition Client In Progress Implementation CONTINUO from neighboring inhabitants and farmers to the location US of wastewater treatment plants implemented by the project. Recent experience has shown that unanticipated opposition might translate into cancellation of the planned works (e.g. in Afourer, Demnate, and Boujniba). Implementing Agency (IA) Risks (including Fiduciary Risks) Capacity Rating Substantial Risk Description: Risk Management: Strong technical assistance by Bank to ONEE for the implementation of gap-filling The Project builds on the Bank’s strong relationship with measures of the SDR. a repeat, high-capacity Borrower, and leverage existing ONEE structures and skilled staff, a solid public Resp: Status: Stage: Recurrent: Due Date: Frequency: procurement system operating in a structured and reliable Bank In Progress Implementation CONTINUO control environment, and a well-structured financial US 17 department. However, there is a substantial risk related to Risk Management: the implementation by ONEE of gap-filling measures of An evaluation of the SDR process under the project will be undertaken in coming the Safeguards Diagnostic Review (SDR) in the context of months to identify any needed improvements in the overall process, as well as to the pilot use of country systems for environmental recommend any necessary adjustments. assessment and land acquisition. The risk is mainly driven by the necessary assistance and follow-up by ONEE to Resp: Status: Stage: Recurrent: Due Date: Frequency: ensure the timeliness of land acquisitions which are Both In Progress Implementation 31-Dec-2014 carried out by the Communes themselves. The risk for the environmental monitoring is low. Governance Rating Low Risk Description: Risk Management: ONEE has constantly demonstrated efficient and sound decision-making. It is a very experienced entity that has in Resp: Status: Stage: Recurrent: Due Date: Frequency: place procedures and systems to prevent financial irregularities and which issues year-end financial statements that are audited by qualified external independent auditors. Risk Management: Resp: Status: Stage: Recurrent: Due Date: Frequency: Project Risks Design Rating Substantial Risk Description: Risk Management: 18 The design of sanitation works is straightforward and Finalize the expansion of the Technical Assistance contract to cover the entire Project simple. The complexity initially due to the implementation area and provide ONEE with additional leverage. of technology pilots is lifted since this component has Resp: Status: Stage: Recurrent: Due Date: Frequency: been dropped. However, sanitation works are implemented in small towns scattered over sometimes Client Completed Implementation 30-Apr-2014 difficult to reach areas in the Oum Er Rbia Basin. This calls for increased preparation and supervision capacity on ONEE's part, with constrained resources, and little time left before the Proejct's closing date. Social and Environmental Rating Substantial Risk Description: Risk Management: There is a substantial risk of potential opposition from A full review of the land acquisition process under the project will be undertaken in neighboring inhabitants and farmers to the location of coming months to identify any needed improvements in the overall process, as well as to wastewater treatment plants implemented by the project. identify and address any instances requiring remedial actions. Recent experience has shown that unanticipated Resp: Status: Stage: Recurrent: Due Date: Frequency: opposition might translate into cancellation of the sub- project (e.g. Afourer, Demnate, and Boujniba). Both In Progress Implementation 31-Dec-2014 Risk Management: In addition, land acquisitions for wastewater treatment Intensification of assistance to Communes for land acquisitions, including proper plants, pumping stations and other small structures are documentation and monitoring of each step of the acquisition process, to ensure that carried out by the Communes. In practice, there is no payments are processed and brought into full compliance with the agreed procedures.. A involuntary resettlement as most land is being acquired first critical milestone was agreed with ONEE that the situation for the towns where voluntarily from private land owners, with the rest being works have started be quickly, fully and satisfactorily documented. incorporated or occupied under specific procedures that do not require acquisition. Technical assistance to Resp: Status: Stage: Recurrent: Due Date: Frequency: Communes, public awareness and documentation of the Client In Progress Implementation 30-Jun-2014 land acquisition process have been carried out by ONEE Risk Management: 19 according to the agreed procedures. At the same time, Intensive implementation of well-designed communication and awareness raising plan, actual access of beneficiaries to their compensation, which was reviewed and refined during the MTR, specifically in locations where works though previously budgeted by the Communes, did not have already started or will start soon. always take place prior to the initiation of works. Resp: Status: Stage: Recurrent: Due Date: Frequency: Client In Progress Implementation CONTINUO US Risk Management: As part of the communication strategy, perform a detailed screening of neighboring inhabitants and farmers to identify potential options for benefit -sharing in areas targeted for WWTP construction, which could include access roads, electricity, or reuse options in agriculture. Resp: Status: Stage: Recurrent: Due Date: Frequency: Client In Progress Implementation CONTINUO US Risk Management: Reinforce capacity for communication actions (either through continuous assistance by the Belgian Cooperation or through additional consultant services for social animation) and monitoring of land acquisition processes (by leveraging the Technical Assistance). Resp: Status: Stage: Recurrent: Due Date: Frequency: Both In Progress Implementation 30-Jun-2014 Program and Donor Rating Low Risk Description: Risk Management: Communes finance 50% of the costs of collection, treatment and maintenance equipment costs for each town, Resp: Status: Stage: Recurrent: Due Date: Frequency: 20 through timely financial support from the Government, under the National Sanitation Program (PNA) agreement which is updated annually. In addition, ONEE has managed to mobilize either local funds or donor financing (multilateral or bilateral) for the completed works in 90 towns since 2010 and the on-going works in 30 towns. Delivery Monitoring and Sustainability Rating Low Risk Description: Risk Management: The sanitation infrastructure that is being built will be maintained and operated by ONEE, a high-capacity utility, Resp: Status: Stage: Recurrent: Due Date: Frequency: under delegation agreements signed with the Communes (as a prerequisite to the start of works). However, the general sustainability of ONEE's sanitation activities may be strained by a deteriorating fiscal balance due to increasing costs and resource constraints, and inadequate tariff adjustments, usually compensated by cross-subsidies from other activities. The risk is deemed to be low given ONEE's prominent role in the sector, and the continuous policy dialog that is on-going between the Government, ONEE and its donors, including the World Bank. Overall Risk Overall Implementation Risk: Rating Substantial Risk Description: The overall implementation risk is deemed substantial, driven mainly by risks related to the need for additional leverage from the technical assistance for the preparation and supervision of works, as well as the implementation and monitoring of social safeguards, in particular land acquisitions. Strong mitigation measures have been put in place, and are currently being intensively implemented, with the support and assistance of 21 the Bank. 22